Uzbekistan's fast-changing cement market

Uzbekistan's fast-changing cement market
06 September 2019

This week CemNet reported that Eurocement's new 3Mta line at its Akhangarancement plant in Uzbekistan was nearing the last phase of construction, as Beijing Triumph International Engineering Co confirmed that 90 per cent of the project has been constructed. The large-scale expansion is expected to make a big difference to the country's cement production, even though it is having phased start-up stages between 2020-21. Eurocement has a strong position in the Uzbekistan cement sector, but it is soon to come under pressure from the entry of Chinese manufacturers, which will also have many modern cement plants operating in the country.

Rising demand
Akhangarancement's strong cement sales in the first seven months of 2019 reached 1.1Mt, an increase of 29 per cent YoY. In July alone the company shipped 190,349t of cement. Between January and July 2019, domestic cement production also rose to 5.4Mt, up 17.6 per cent compared with the 4.69Mt in January-July 2018.

Cement demand in the country has skyrocketed in 2019 with the first seven months seeing a 32.3 per cent rise YoY in cement imports, according to the State Statistics Committee. Moreover, the country is expected to abolish the customs duty for cement imports that was imposed in October 2018 in the next few weeks.

In February 2019, President Shavkat Mirziyoyev announced that by 2021 there would be a significant increase in the production of building materials in the country and especially over the next three years when cement production capacity is forecast to rise by 17Mta.

New start-ups
The higher demand for cement has been identified by several cement companies that are looking to establish themselves in Uzbekistan’s market. The latest project is the 1.5Mta cement plant to be built in Yanguikurgan district that was announced in July. This plant is being built by Chinese investors, Namangan Jinmingyang Building Materials, and is expected to come on-stream by the end of 2020. 

Meanwhile, UTD Cement, a joint venture of two German-based companies and a private investor, announced in June 2019 that a 4Mta cement plant would be built in the Farishky district of Jizzakh province. This plant is scheduled to start-up in 2021 and is being designed to produce both grey and white cement and will be exempt from paying taxes until 1 January 2025.

China's Huaxin Cement is also nearing the completion of its 1.2Mta Zafarabad cement plant, also in the Jizzakh region. This plant is expected to be operational in February 2020. China-based Gansu Hengya Cement Co is building a 2.4Mta cement plant in Samarkand to be completed in two stages with the first 1.2Mta line scheduled for commissioning in 2020 and the second 1.2Mta line expected to begin operation in 2021. Qarshi Conch Cement (Anhui Conch group) is another Chinese entrant that will have a 1.2Mta plant in Karshi as early as December 2020.

Before that we should see the completion of the 1200tpd cement plant in Angren which is being constructed for Sweden's ABA GTS group and is expected to be commissioned in November 2019.

Uzbekistan’s government also said in May 2019 that the Fergana Yasin Construction Mollari cement plant would shortly open in the Besharyk district and produce 0.8Mt of cement in 2019 and 1.2Mta of cement in 2020.

There have also been discussions between representatives of a French construction company and Uzbekistan railway company Temir Yo’llari for a new 1Mta cement plant in Pakhtachinsky, but is only believed to be at the initial geological survey stages. Even so, there are numerous other cement plants that have been announced that could come to fruition in the next two to three years.

Foreign investors have been searching for markets where there are opportunities and reasonable returns on the investments and Uzbekistan ticks all the boxes. It is the fastest-growing country in Central Asia and has a population in excess of 33m. Uzbek-Chinese relations are tightly linked in trade and the cement sector is following a similar pattern as China looks to make headway on its Belt and Road Initiative (BRI).

The Uzbekistan landscape is changing quickly. Akhangarancement may find it can keep ahead of the new entrants in the short term, but construction companies will soon have far more choice as to where to buy their cement in Uzbekistan.

Published under Cement News