Leveraging on its existing US$800m tie-up with Holcim, Gujarat Ambuja Cement (GACL) plans to extend its relationship with holcim in the Middle East. The company is in talks with Holcim for an exclusive cement supply arrangement for Holcim’s readymix cement (RMC) operations in the Middle East although the actual location is not specified.
Holcim, along with Cemex, are significant suppliers of ready-mix in the Middle East, which is witnessing a surge in demand due to the ongoing construction boom. "We are in a dialogue with Holcim for an exclusive supply arrangement," GACL’s whole -time director Anil Singhvi said.
According to the Saudi National Commercial Bank’s (NCB) recent report, cement consumption in Saudi Arabia has reached 25Mt. The construction boom in the Middle East has created a shortage of cement production in the region. GACL, as Mr Singhvi pointed out, would be interested in supplying to Holcim only if there is an exclusive arrangement. "We would not want to be just one of the suppliers," he added.
Holcim’s RMC operations in the Gulf consume 4-5Mt of cement annually, and a formal supply agreement with GACL would offer a big boost to its export plans. The NCB report said that a total of 504 construction contracts were commissioned between April ’04 and March ’05, amounting to a combined value of Saudi Riyal 212.4bn. The boom has accelerated in recent months with the Saudi government approving a raft of projects to develop the holy cities of Mecca and Medina worth $8bn.