Iran cement sale.

Iran cement sale.
Published: 04 December 2003

Iran has sold a state-run cement producer in a public auction in an important step towards loosening Tehran's control over industry, even though the buyer is publicly owned.  Aybek Cement Company beat local rivals with a bid worth $248 million bid for a 96 per cent stake in Khuzestan Cement Company, the largest ever stake in a company sold by the state, a Privatisation Organisation official told Reuters on Thursday.  Abyek, which paid 2.06 trillion rials ($248 million) for Khuzestan, compared with a minimum bid price of 1.29 trillion rials, is itself a subsidiary of Fars and Khuzestan Cement Company (FKCC), a major cement holding owned by the country's Social Security investment company.  The Social Security Organisation now controls more than a third of total cement production in Iran which, at 30 million tonnes per annum, is the largest cement producer in the Middle East.

Currently only about five percent of Iran's cement industry is in private hands. The rest is owned by the government or public sector entities.  Leylaz said the government aimed to gradually transfer more of the shares of these publicly-owned holdings to the private sector in future through share offerings on the Tehran Stock Exchange.  The privatisation official said the results of Wednesday's tender reflected a consolidation in Iran's cement sector.  "A big merger is happening in the ownership of Iran's cement industry," the official told Reuters.

Abyek, with a daily output capacity of 7500 tonnes, runs the largest single cement plant in Iran.

Construction has been a boom sector in the Iranian economy in recent years and analysts said Iranian companies could also be well-placed to serve growing demand in neighbouring Iraq and Afghanistan where massive post-war reconstruction is under way.  The government has set a target of doubling cement capacity over the next decade.

Having now realised 28 percent of its privatisation plans for the current fiscal year, the government hopes to cede around $1 billion worth of shares by March 2004.  "Today's tender gives us the confidence to think we can hit the target by that time with more major bids to come in the next four months," the privatisation official said.