The 19 member countries of the Arab Union of Cement and Building Materials (AUCBM) are at varying levels of economic and cement industry development. Table 1 shows various data information of all member countries: number of integrated cement plants and grinding stations, available cement production capacity, cement production and sales volume in 2016, and macro GDP per capita, population, etc.
The per capita GDP of this alliance is as low as $990 per person in Yemen, and as high as $59330 per person in Qatar, which is still in the midst of a humanitarian crisis. The scale of their cement industries is also very different. For example, Palestine has no cement production capacity, while Egypt has a cement production capacity of 67.3 million tons per year; The population ranges from 1.5 million in Bahrain to 95.7 million in Egypt. This paper will mainly focus on four countries with large cement production capacity. .
Table 1: Cement and Building Materials Union in the Arab World Cement Industry Statistics
I. Egypt
1.1 Overview of cement industry in Egypt
Egypt has the largest cement industry in AUCBM. According to AUCBM data, in 2016, there were 23 integrated cement plants and 1 grinding station in Egypt, with a total cement production capacity of 67.3 million tons. In 2016, Egypt produced 48 million tons of cement, imported 1 million tons of cement, and sold 49 million tons domestically.
At present, there are 17 cement producers in Egypt, and almost all the multinational cement giants are involved in the Egyptian cement market. These giants operate a total of 42.1 million tons of cement production capacity in Egypt, accounting for about 62% of Egypt's national cement production capacity. Figure 1 shows a detailed listing of all integrated cement plant producers in Egypt.
Figure 1: Cement production enterprises in Egypt (enterprise name, production capacity of 10,000 tons/year, proportion)
Source: Union for Cement and Building Materials in the Arab World
The largest cement producer in Egypt is Heidelberg Cement of Germany. Last year, Heidelberg acquired Italian Cement, and Italian Cement's assets in Egypt were also included in Heidelberg. At present, Heidelberg has six integrated cement plants in Egypt, accounting for 14.2% of Egypt's total cement production capacity.
Egypt's second-, third-, fourth- and fifth-place cement players remain foreign cement producers. LafargeHolcim operates a cement production capacity of 10.6 million tons/year in the El Ain Al Sokhna near Cairo, Egypt, accounting for 15.6% of the total production capacity in Egypt; Cemex operates Assiut Cement in Egypt, a local subsidiary with a very large single cement production capacity, with a design capacity of 5.7 million tons/year; Intercement follows with 5.5 million tons/year capacity in Alexandria in the Nile Delta; Titan Cement also operates 2 million tons of cement capacity in Alexandria and 3.2 million tons in Beni Suef; Cement companies owned by local Egyptian companies account for an absolute minority in the entire country, the largest of which is Arab Cement (5 million tons/year), and no local Egyptian cement producer operates more than one integrated cement plant.
1.2 Recent developments in the cement industry in Egypt
Egypt's cement industry began to shift from using oil and gas as fuel to using coal as fuel. This change has weakened the Egyptian authorities' incentive to promote alternative fuels, and the depreciation of the Egyptian pound has increased the cost of the Egyptian cement industry and reduced profits. In August 2017, Vicat Cement said its operations had been negatively affected by its business in Egypt, describing it as a "poor macroeconomic and industrial environment" in its earnings report. Cimpor said in its semi-annual report that its operations in Egypt remain "difficult.". Misr Beni Suef, one of Egypt's domestic producers, said its half-year net profit fell 41% to $31m compared with the same period last year.
However, new players don't seem to be affected by these poor performance statements. In January 2017, the Electro-Mechanical Design Group announced the construction of a US $300 million cement plant in Foukag, Mashamatru. Meanwhile, Egyptian Cement plans to build a $221 million cement plant in Sohaj province and announced that it has ordered three vertical roller mills from Cement Machinery and Equipment Company. Finally, Southern Valley Cement, Egypt's smallest cement company, announced that it had received a major investment from Saudi Arabia's Al Sharbatly Group to build a second cement production line.
II. Saudi Arabia
2.1 Overview of cement industry in Saudi Arabia
Saudi Arabia's cement industry ranks second in AUCBM. By the end of 2016, Saudi Arabia has 20 integrated cement plants and 1 grinding station, with a total capacity of 56 million tons per year. In 2016, Saudi Arabia produced 54.4 million tons of cement and sold 44.8 million tons.
Saudi Arabia's cement industry is different from that of Egypt. Except for LafargeHolcim's 25% stake in Al Safwa Cement, the remaining cement enterprises in Saudi Arabia are all local enterprises, and no foreign cement enterprises are involved in the Saudi market. Saudi Arabia currently has 17 cement producers in the country, as shown in Figure 2.
The largest cement enterprise in Saudi Arabia is Southern Province Cement. Southern Province Cement operates three integrated cement plants in Saudi Arabia, the largest of which has a design capacity of 9.3 million tons per year. Together with the other two modern cement plants, Southern Province Cement operates a total capacity of 15.7 million tons, accounting for nearly a quarter of Saudi Arabia's national capacity. All of the remaining cement producers each operate a cement plant, most of which are large cement plants with a single capacity of more than 3 million tons or more.
2.2 Recent developments in the Saudi Arabian cement industry
In the first seven months of 2017, Saudi Arabia's cement clinker production decreased by 10.9% year-on-year to 29.3 million tons. The Economic Review issued by the National Commercial Bank of Saudi Arabia attributed the decline to weak domestic demand, which was 9.8% lower than same period in 2016, while domestic clinker stocks reached a record high of 32.5 million tons by July 2017. As energy and fuel prices continue to rise due to changes in government policies, local cement producers need to invest more in production costs. However, if we only focus on July, we can see that Saudi cement sales in July 2017 are higher than same period in 2016. This is because after Ramadan, various construction projects were postponed, and the demand for cement was concentrated after the resumption of work.
In order to improve Saudi Arabia's poor performance in the cement market, Jihad Rashid (Jihad Al Rashid), head of the cement industry of the Saudi National Council, believes that Saudi Arabia only needs four cement production enterprises, adding that the current 17 cement enterprises are too many for Saudi Arabia. The owners and shareholders of these companies should "seriously" consider the option of consolidation. Jihad believes that both the government and end users can benefit from a stronger and more stable cement industry.
Figure 2: Cement production enterprises in Saudi Arabia (enterprise name, production capacity of 10,000 tons/year, proportion)
Source: Union for Cement and Building Materials in the Arab World
III. Iraq
3.1 Overview of Iraqi cement industry
According to AUCBM statistics, Iraq's cement industry currently ranks third in AUCBM. Iraq has 19 integrated cement plants and 2 grinding stations, totaling 37.9 million tons/year. However, due to the turbulent political situation in China, its cement production and sales are far from the scale of production capacity. In 2016, Iraq produced only 16.2 million tons of cement, with a capacity utilization rate of only 43%. Of course, this result is not surprising. At present, many factories in Iraq are under the control of militants, and even some factories have been destroyed in the armed conflict.
Because of the ongoing conflict, the statistics are not necessarily completely accurate. Iraq's seven cement producers in 2017 have nearly 29.1 million tons of cement capacity listed in Figure 3, of which 2 million tons have been destroyed. At present, the enterprise with the largest cement production capacity in Iraq is LafargeHolcim, which operates three integrated plants in Iraq, located in Tasluja (2.3 million tons/year), Karbala (1.8 million tons/year) and Bazian (2.5 million tons/year). It was followed by MASS Group, which operates a 6 million ton/year integrated cement plant in Sulamaniyah, Kurdistan Region. Southern Cement is the third largest cement production enterprise in Iraq, with seven integrated plants in the country, with a total capacity of 5.3 million tons per year.
Figure 3: Cement production enterprises in Iraq (enterprise name, production capacity of 10,000 tons/year, proportion)
Source: Union for Cement and Building Materials in the Arab World
3.2 Recent developments in the cement industry in Iraq
Although there are still cement plants in conflict and continue to be destroyed, the construction of new cement projects in Iraq continues. In June 2017, Norinco signed a $4.45 contract with Jabal Bazian to build a new cement plant. The contract includes the design, procurement, construction management and operation of the production line of the factory, as well as the supporting administrative buildings, dormitories, canteens and other facilities, which are scheduled to be completed in the second half of 2019. In November 2016, FLSmidth announced a $200 million contract with Iraqi Cement to build a 6,000-ton/day production line in the Al Muhana area. The contract includes design, procurement and construction. Meanwhile, CMEC signed a $250 million deal with local companies to build a plant in Caraxter, also a 6,000-ton/day production line, which is expected to come online by August 2018.
Overview of the cement industry in the United Arab Emirates
4.1 Overview of UAE Cement Industry
The UAE's cement industry ranks fourth in the AUCBM, with 13 integrated cement plants and 8 grinding stations with a combined capacity of 29.5 million tons per year. Although the UAE's cement production capacity is not particularly large, the UAE has a small population, and its per capita cement production capacity has far exceeded the AUCBM average, exceeding 3.1 tons per person per year. This led the UAE to become a net exporter of cement in 2010. In 2012, the UAE exported 2 million tons of cement, and these cement companies received high energy subsidies from the government. Before that, the UAE needed to import a large amount of cement every year and build cement plants on a large scale to meet the demand for cement from the local real estate.
Figure 4: Cement production enterprises in the United Arab Emirates (enterprise name, capacity of 10,000 tons/year, proportion)
Source: Union for Cement and Building Materials in the Arab World
4.1 Recent Developments in the UAE Cement Industry
The largest producer in the UAE is Arkan Group, which commissioned its 5.7 Mtpa integrated cement plant in Al Ain in 2014. Before Arkan closed its 1 million tons/year plant in 2017, the capacity of the enterprise was even larger. Prior to the closure, Arkan's cement business saw revenue fall 9% in 2016, from $239 million in 2015 to $220 million in 2016. Net profit continued to fall 25% to $20.6 million.
Other local cement producers are going through a similar process. Fujairah Cement reported a 2.5% drop in revenue to $162 million from $169 million, but its net profit rose 12% to $15.4 million, thanks to the company's efficient management. The company blamed rising cement prices and tight cost controls. Meanwhile, United Cement's sales revenue in 2016 fell 10% to $153 million from $170 million in 2015, and its net profit fell 19% to $22.9 million.
The Dubai Chamber of Commerce reported that the potential value of construction projects totaled $36.5 billion in 2016, with the value of contracts across the GCC region down 17% year-on-year from 2015. A recent report by the Chamber of Commerce called on local cement producers to improve their competitiveness, save production costs, use more alternative fuels and promote cement exports.
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