The prices of cement increased dramatically last week from YR 1100 to YR 1400 for a 50kg bag. The increase is due to increased demand, as well as price hikes by traders. Mohammed Shuneif, the deputy chairman board of General Cement Corporation said that there is a higher demand for cement due to the GCC, as it produces only 30 per cent of the market’s needs.
“The price for one bag of cement that is produced by General Cement’s factories is YR 1018. Therefore, we are searching for traders who raise the price of the cement that is produced by the corporation factories,” he said. General Cement has brought many traders to court because of their greed, Shuneif said. “In order to face the market demand for cement, we have to think of a strategy to improve the productivity of the company’s factories.
For example, the Chinese company SMEC is establishing a new cement factory this year near the old Bajel Cement Factory in the Hodeidah governorate, costing US$113m,” he said. General Cement and SMEC recently signed the final agreement in the Chinese capital, Beijing, to start the construction of the new factory. The agreement to establish this new factory includes as signatories the Chinese government and the Chinese Export Bank, which will fund 80 per cent of the total project by means of a loan, and the remaining 20 per cent will be given provided by General Cement. According to Shuneif, the project is expected to take two years and four months to complete.
The Chinese company will also establish a new 32MW capacity electricity-generating plant that will supply the new factory with energy. The new factory is expected to produce 850,000tpa of cement using new techniques that will decrease the cost of the cement and reduce environmental damage, said Shuneif. Shuneif said that this project was important for the country in that it would cover domestic consumption of cement and possibly allow for the export to neighboring countries. The new factory would bridge the shortfall in cement production and reduce the need for imports from abroad, thereby saving millions of dollars in import costs.
The new cement factory comes within the tenets of a new strategy, in which General Cement Corporation is working to increase the production capacity of cement in the country through the establishment of a number of new factories affiliated with both the private sector and the government, in order to meet the exponentially growing demands for cement that is a result of numerous construction projects in the country. In addition to the new factory, there is a planned expansion of the productive capacity of the Amran Cement Factory to reach 1.2Mta, with an investment cost estimated at US$140 million.
The project is financed by General Cement Corporation, but will be executed by the Japanese company, Ishikawajima-Harima Industries (IHI). The General Cement’s new strategy also includes the establishment of five new factories for cement production in the governorates of Hadhramout, Lahj, and Abyan, to be funded mainly by Saudi private investors at a total estimated cost of one billion dollars and a production capacity reaching 7,800 million tons annually. The General Cement Corp. manages three factories that are owned by Yemeni government: Amran, Bajel, and Albrah.
The Albrah Cement Factory is currently negotiating with the Japanese company, to set up a new production line and increase the current production capacity of 500,000t to 750,000tpa. The upgrade has an estimated cost of US$20 million. The total of the production of Yemeni cement is about 1.5Mta.
The Yemeni government plans to raise the production of cement to 7Mta by the end of 2009 and 9Mta by the end of 2012. Cement is a crucial industry in the country. The net profits of the Bajel Cement Factory claimed by the Yemeni government amount to YR 8 to 10bnta.