![](/templates/proglobalmedia-main/images/globe-blue-whitebg.gif)
Displaying items by tag: Saudi Arabia
Saudi Arabia: Finland’s Wärtsilä has provided an update on a three-year asset management deal for Northern Region Cement’s (NRC) power plant at its Turaif plant signed in October 2017. Wärtsilä will continue to be responsible for the operation and maintenance of the power plant and to ensure the reliability and availability of its operations. This agreement is an extension of Wärtsilä’s previous service agreements for NRC’s power plant. The first service agreement with NRC was signed in 2008.
“We are proud to be able to continue our 10-year cooperation with NRC. By having full responsibility for the operation and maintenance of NRC’s power plant, we have been able to ensure reliable operations, optimised fuel consumption and reduced maintenance costs for NRC,” said Haidar al Hertani, managing director, Wärtsilä Saudi Arabia.
The agreement covers all aspects of operating and maintaining NRC’s power plant, including the day-to-day operation of the power plant as well as preventive and predictive maintenance. Wärtsilä’s Customer Centre in Dubai remotely monitors the power plant’s condition. Wärtsilä has also carried out electrical and automation services to improve the performance and extend the lifespan of NRC’s power plant.
The 62MW power plant is equipped with nine Wärtsilä 32 engines and provides energy for NRC’s Turaif cement plant. The cement plant has two production lines, producing nearly 10,000t/day of cement.
Construction of new cement grinding plant in Uzbekistan starts
24 January 2018Uzbekistan: Construction work has started on Popcement’s new grinding plant in the Pap district of Namangan region. The US$50m plant will have a production capacity of 0.5Mt/yr, according to Uzbekistan Daily. The project is expected to be completed in September 2018. It is a joint venture between Uzbek, Chinese and Saudi Arabian investors.
Update on Saudi Arabia
25 October 2017Arabian Cement Company had some choice words for a contractor this week when it blamed it in a bourse statement for a delay for a new mill at its Rabigh plant. The project has been pushed back to the third quarter of 2018 from the fourth quarter of 2017. The second phase of the plan, to build a new clinker production line, has also been placed under review.
The contractor may have given Arabian Cement an excuse to put a question mark over its new line, but the market reality has been stark. Also this week, Saudi Cement Company reported that its net profit had fallen by 51.5% year-on-year, to US$92.3m in the first nine months of 2017 compared to US$190.4m in the previous period. It blamed falling sales.
Graph 1: Cement sales (Mt) by quarter in Saudi Arabia, 2015 to September 2017. Source: Yamama Cement.
As Graph 1 shows, cement sales volumes in Saudi Arabia have been dropping since 2015. Sales fell by 5.3% year-on-year to 10.5Mt in the third quarter of 2017 from 10.9Mt in the same period in 2016. Year to date figures show a worse trend with a drop of 17.4% to 35.2Mt in the first nine months of 2017 compared to 42.7Mt in the same period in 2016. This decline has accelerated compared to a decrease of 5.4% from 45.1Mt in 2015 for the first three quarters.
Analyst Al Rajhi Capital provided some context to this situation in its September 2017 report on the August 2017 sales figures. It reported particularly steep declines in cement sales volumes of over 35% for Northern Cement, Najran cement and Hail Cement for the first eight months of the year. However, some producers - including City, Qassim, Yanbu and Al Safwa - did manage modest gains. Overall though the financial services company did not expect any pickup for the second half of 2017.
Last time this column covered the kingdom’s cement industry in early 2016 it asked when the government was going to relieve the export ban. Cement production was high, inventory was pilling up and infrastructure spending was falling. The ban was subsequently lifted but commentators worried that it would be too restrictive to have much effect due to tariffs and volume restrictions. A steady stream of cement producers has applied for export licences since then, but exports have not alleviated the situation. With inventory remaining high for the producers, current export policy failing to help and the local construction market subdued, it is unlikely that anything is going to change soon for the local cement industry. In fact it may even get worse if the government decides to revise its energy price policy later in 2017 or in early 2018, adding to the input cost burden of the producers.
Talk of market consolidation in this kind of market environment seems inevitable. This is exactly what happened earlier in the month when Jihad Al Rashid, the head of the Saudi National Committee for Cement Companies, said to local press that the local market only needed four large cement producers rather than the 17 companies it has at present. The question at this stage seems to be when, rather than if, will this process start.
Saudi Cement profit slumps 51.5% in first nine months of 2017
24 October 2017Saudi Arabia: Saudi Cement Company has seen its profit drop by 56.9% year-on-year in the third quarter of 2017. Its net profit fell to US$23.2m from US$53.7m in the third quarter of 2017. The profit was 7.5% lower than the second quarter of 2017. Saudi Cement Company attributed the decrease to falling sales, the decline of the firm’s stake in net financial results of associate companies and a fall in other revenues.
During the first nine months of 2017 the company’s net profit was 51.5% down year-on-year, falling to US$92.3m compared to US$190.4m in the first nine months of 2016.
Delays announced to new mills at Arabian Cement Company
23 October 2017Saudi Arabia: The Arabian Cement Company (ACC) says that the construction of new cement mills at its Rabigh plant has been delayed to the third quarter of 2018 from the fourth quarter of 2017. The delay has been blamed on, “…the contractor's failure to comply with the timetable.” The second-phase of the project, to build a new clinker production line, is under review. The cement mill order was placed with China National Building Material (CNBM) in 2015.
Umm Al Qura Cement secures US$13.3m loan
13 October 2017Saudi Arabia: Umm Al Qura Cement Company has signed an Islamic financing agreement with Riyad Bank to secure a US$13.3m loan. The investment will be used to finance the working capital of the company and to pay for capital purchases. The cement producer produces both Ordinary Portland Cement (OPC) and white cement from its 1.98Mt/yr plant at Taif.
National Committee for Cement Companies says Saudi Arabian market only needs four producers
10 October 2017Saudi Arabia: Jihad Al Rashid, the head of the Saudi National Committee for Cement Companies, has said that the local market only needs four large cement producers. He added that the industry does not need the 17 cement companies it has at present, according to the Al Eqtisadiah newspaper. The owners and shareholders of these companies are ‘seriously’ considering merger options. Al Rashid also said that the government and consumers would benefit from a consolidated industry.
Saudi Arabia: The Saudi Industrial Exports Company (SIEC) has signed a memorandum of understanding with Al Jouf Cement Company to export its products internationally. The Saudi government lifted a ban on exporting cement in 2016.
Egypt/Saudi Arabia: The Saudi Arabian Al Sharbatly Group is reported to be looking to invest up to US$3bn in Egyptian interests, including setting up a second clinker line at its South Valley Cement plant. Egypt’s Minister of Investment and International Cooperation Sahar Nasr said that he welcomed all investors in Egypt after meeting with Sheikh Abdel Rahman al Sharbatly and Sheikh Fahd Al Shobokshy to discuss ways to increase their investments in Egypt.
Saudi Arabia: Clinker production fell by 10.9% year-on-year to 29.3Mt in the first seven months of 2017. The Saudi Economic Review by the National Commercial Bank has attributed the slowdown in production to weak domestic demand, which fell by 9.8% in 2016, and ‘record high’ clinker inventory levels of 32.5Mt in July 2017, according to the Saudi Gazette newspaper. The local cement industry has also suffered from rising input costs due to higher energy and fuel prices following government policy changes.