OCI Invests in North Korea

Orascom Construction Industries, Egypt, has announced that it has signed an agreement with the state-owned Pyongyang Myongdang Trading Corporation to acquire a 50 per cent stake in Sangwon Cement which owns and operates the cement plant nearest to Pyongyang, the capital city of the Democratic People’s Republic of Korea (“DPRK”).

The plant, which is originallysupplied by German equipment supplier KHD, has two dry-process production lines with a combined design-based nominal capacity of 2.5Mta.

Based on the signed agreement, OCI will acquire 50 per cent of Sangwon Cement for a total value of US$ 115 million. The acquisition will take the form of a capital increase from which the proceeds will be used to modernise, rehabilitate and upgrade the plant capacity to reach 3Mta. The proceeds will also be used to invest in ready-mix concrete and distribution activities.

In addition to the Sangwon cement plant, the agreement also includes mining operations related to the cement production including limestone quarries, a coal mine and a gypsum quarry. It also includes a dedicated hydroelectric power station near the plant. The plant also has its own railway connection to the national railway grid which connects the plant to the Port of Nampo thus allowing for exports.

Technical proposals for the rehabilitation and upgrade of the Sangwon cement plant are currently being prepared by F.L.Smidth, Polysius and KHD, all global leaders in the field of cement plant equipment technology. With surveys of the plant already completed, a decision on the award is imminent and should be finalized during the third quarter. Work on the plant is expected to begin soon after.

OCI Chief Executive Officer, Nassef Sawiris commented “we have been impressed by the level of professionalism and technical know-how demonstrated by our partners. We have sensed an earnest eagerness for development and modernisation. Our investment in cement marks the beginning of a variety of investments including the potential establishment of an economic trade zone in the northern part of the country. We are also exploring opportunities in the mining and power sectors. North Korea is very keen to develop the infrastructure in the country and that would significantly drive up demand for cement."