Saudi Arabia: Southern Cement may freeze expansion plans

Saudi Arabia: Southern Cement may freeze expansion plans
Published: 22 June 2009

A Saudi ban on cement exports may force Southern Province Cement Company (SPCC) to freeze expansion plans and prevent it from meeting contracts worth a fifth of its 2008 production, its chief executive said. SPCC, which was the biggest Saudi cement firm by turnover in 2008,had been planning to expand one of its three factories by the end of 2010 but has now decided to wait until market conditions improve, Safar Dhufayer told the press. ’As long as the ban exists we might consider delaying or changing the plan,’he said in an interview.

The firm produced 5.7Mt of cement in 2008.

Saudi Arabia, where multi-billion dollar infrastructure projects are under way, faced a cement shortage in the local market last year as firms exported large quantities abroad, causing local prices to soar and leading to a government ban on exports.

Dhufayer said the last year’s ban has prevented his firm, based in Abha in the south of the Kingdom, from fulfilling some of its contracts with firms based in Spain, Yemen, and South Africa.

The contracts were for the delivery of a total of 1.3Mt of cement. ’I am sure they are now looking for other sources to fulfill their needs and we are losing opportunities as they are looking for other suppliers,’ he added.

The ban, which coincided with an increase in cement production facilities,caused an oversupply in the local market that eventually drove cement prices down. ’Supply now is more than demand ...

The only solution is to lift the ban,’ said Dhufayer, adding that cement was now being sold for SAR12/bag, compared to SAR23/ bag in 2008.