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An acquisition in Uzbekistan by Russia-based Akkerman Cement this week highlights resurgence in the local market.

The subsidiary of USM has just purchased a majority stake in Akhangarancement with the help of financing from Gazprombank. No value for the acquisition has been disclosed. However, the move follows the sale of Russia-based Eurocement to Smikom in early 2021. Then in June 2021 Eurocement sold off its majority stake in Akhangarancement to Cyprus-based Lamanka Enterprises for US$53m. Now, as part of the sale to Akkerman Cement, the start of a new 2.5Mt/yr dry process production line at Akhangarancement in 2021 has also been highlighted. As for Akkerman Cement’s interest in become a multinational cement producer, it said that, “The investment in Akhangarancement, like all USM investments in Uzbekistan, is primarily aimed at the development of this country, the small homeland of Alisher Usmanov, the main shareholder of USM.”

Aside from any potential sentimental yearnings from a billionaire, the Akhangarancement deal follows a few developments in the Uzbek market in recent months. At the start of January 2022 the state assets management agency UzAssets agreed to sell the government’s majority stake in Qizilqumcement for US$174m to United Cement Group (UCG). This was a significant move locally given the size of UCG in the Central Asian states. UCG operates two integrated plants and one grinding unit in Uzbekistan. The acquisition of Qizilqumcement’s 3.4Mt/yr plant now makes UCG the largest cement company by production capacity in the country. It has also been building a new production line, like Akhangarancement, with commissioning last reported as scheduled as sometime in 2022.

Finally, the other recent development in Uzbekistan occurred in December 2021 when China-based Anhui Conch announced that it had started building a new 2.5Mt/yr cement plant in the Akhangaran district in Tashkent. The project has a price tag of US$200m.

Graph 1: Cement production in Uzbekistan, 2016 – 2020. Source: State Committee of the Republic of Uzbekistan on Statistics.

In early 2021 the government suspended tariffs on cement imports and this was then later extended into late 2022. President Shavkat Mirziyoyev says he signed the decree to keep house prices low. Subsequently, imports grew by 26% year-on-year to 2.2Mt in the first nine months of 2021. The main importers were Kazakhstan (44%), Tajikistan (25%) and Kyrgyzstan (25%). Graph 1 above shows recent annual production trends over the last five years. So far in 2021, to September 2021, overall domestic cement production rose by 17% to 9.08Mt. In 2020 annual production was about the same as the country’s production capacity of 10.3Mt/yr.

The mixture of Russian and Chinese companies involved with the recent plant acquisitions and new projects chimes with the general position of the Uzbek economy and its geographical position between the larger economies of Russia and China. For example, January 2022 data from the Uzbek State Statistics Committee showed that bilateral trade with Russia overtook that with China in 2021 for the first time since 2014. The two countries have had similar trade turnover with Uzbekistan over this period. Since the mid-2010s the national economy has liberalised and investment by foreign companies into industries like cement reflects this. The sale of Qizilqumcement also shows the further movement of state assets into private ownership. With apparent production utilisation closing to 100% and the government encouraging imports, it’s a good time to be a cement producer in Uzbekistan. Accordingly, foreign cement companies are investing.

Russia: Iskitimcement, part of Siberian Cement, manufactured 1.18Mt of cement in 2021, a 20% rise year-on-year compared to 2020. It said that increase was primarily caused by demand growth. Iskitimcement shipped 0.45Mt of cement to customers by rail and 0.74Mt by road in 2021. Sales of bulk cement grew to 0.95Mt, around 80% of all sales. The manufacturer supplied 86,000t in 1t big bags and 145,000t in paper bags.

Uzbekistan: Russia-based Akkerman Cement has acquired a 98.6% stake in Akhangarancement. Gazprombank provided a loan to the subsidiary of USM to support the deal after previously supporting Akkerman Cement’s acquisition of its Gornozavodsk plant in 2018. Eurocement started selling its majority stake in Akhangarancement in early 2021 prior to its own acquisition by Smikom later in the year. No value for the latest Akkerman Cement deal has been disclosed.

“The investment in Akhangarancement, like all USM investments in Uzbekistan, is primarily aimed at the development of this country, the small homeland of Alisher Usmanov, the main shareholder of USM. All the profit that will be generated here will remain in Uzbekistan and will be directed to the socio-economic development of the republic. We see great potential in this. A growing population, demand for quality new housing, and in the long term support for consumer demand through mortgage lending, all this will contribute to the growth of cement consumption,” said Anton Selyavko, chairman of the board of directors of Akkerman Cement. He added that growth in Uzbekistan might not be easy due to production overcapacity and high levels of imports from Kazakhstan, Kyrgyzstan and Tajikistan but that Akkerman Cement had experience of this from the Russian market.

Founded in 2002 Akkerman Cement was previously known as the South Ural Mining and Processing Company. It operates two integrated cement plants in Russia, at 2.3Mt/yr unit at Novotroitsk and a 2Mt/yr unit at Gornozavodsk, and 12 terminals including sites at Ekaterinburg, Izhevsk, Kazan, Moscow, Orenburg, Perm, Samara, Tumen and Ufa. The company also runs metal and lime divisions. Akhangarancement reportedly started a new 2.5Mt/yr dry process production line in late 2021.

Russia: Spasskcement’s Novospassky Cement Plant in Primorsky reached a clinker production record of 1.96Mt in 2021. Clinker output beat the previous record set in 1988 by 20,000t and exceeded the design capacity of the unit of 1.84Mt of clinker by over 100,000t. Victor Ivanov, manager of Spasskcement, attributed the result to new equipment, longer lasting refractory material, the gasification of the plant and a good team of staff.

Russia: Germany-based Wacker has opened an additional laboratory in Moscow. The development site will focus on water-repellent silicone additives for cement and concrete. Mechanical pressure tests and ultrasound and temperature measurements are among the services that the new laboratory offers for water-repellent treatment of cement and concrete. The site is part of Wacker’s Innovation Hub for Cement and Concrete.

Wacker opened its first technical laboratory in Moscow in 2003. Both Wacker Silicones and Wacker Polymers now operate multiple labs in Moscow for construction chemical products. The new laboratory also hopes to collaborate with local universities and testing facilities and the first projects have already been commissioned.

Russia: SibCem subsidiary KuzbassTransCement has appointed Eduard Ishimov as its managing director. He succeeds Alexander Chagaev, who will continue to work as an advisor to president of Sibcem on transport and logistics. KuzbassTransCement is responsible for the operation of the railway fleet of SibCem.

Ishimov, aged 53 years, started working in the railway sector in the late 1990s. In 2006 he began working at KuzbassTransCement and has held the positions of Director for Transportation and Operation of Rolling Stock and Director for Transportation and Logistics. A graduate of the Novosibirsk Electrotechnical Institute, he also holds qualifications from t he Siberian State University of Communications and the Moscow International Higher Business School.

Russia: Asia Cement has extended its contract with Freight One for the transportation of its cement by rail from Chais, Penza region. The producer said that it will aim to dispatch 164,000t of cement under the contract in 2022.

Afghanistan: The acting deputy prime minister of the interim government in Afghanistan hosted talks between investors from Afghanistan and Russia on 4 January 2021. Anadolu News Agency has reported that the investors plan to collaborate on the establishment of a new cement company.

Acting deputy culture and information minister Zabiullah Mujahid tweeted that the meeting covered the establishment of cement plants‘in detail’. He added that the government will strive to establish investor-friendly laws.

Georgia: Cement imports rose by 16% year-on-year to 0.78Mt in the first eleven months of 2021 from 0.68Mt in the same period in 2020. Data from the National Statistics Office of Georgia and the Trend News Agency show that the value of these imports increased to US$40.2m from US$34.6m. Azerbaijan was the leading cement exporting nation to Georgia with a 75% share followed by Turkey with most of the rest. Russia, Greece and Germany have also exported cement to Georgia so far in 2021.

Russia: SLK Cement says it has purchased over 230 gondola-style railway wagons so far in 2021 as it modernises its fleet. At present the company owns 701 units of rolling stock. 445 of these are open wagons. Its latest addition was 61 gondola wagons in October 2021. The cement producer has made the investment to reduce its delivery costs. It added that it has subsequently reduced its unit costs for rail transportation in 2021.