Celebrating industry excellence

Cemtech Middle East and Africa 2020 welcomed delegates from over 35 nations to the Grand Hyatt Dubai, UAE, on 16-19 February. The conference and exhibition offered a comprehensive overview of the regional cement industry and gave attendees the opportunity to network with cement producers and international industry specialists.

The 15th Cemtech MEA conference and exhibition was successfully held at the Grand Hyatt Dubai, UAE, on 16-19 February 2020. Thomas Armstrong, managing editor of ICR, opened proceedings by welcoming delegates to the city and also provided an outlook of the cement supply-demand dynamics of the GCC countries.

Overall, the six countries of the GCC showcase the broader issues facing the entire MEA region. Namely, these consist of overcapacity, declining demand and the potential for recovery. The GCC region reached a peak cement demand level of 95Mt in 2015, with consumption subsequently dropping back to 73Mta in 2018. Meanwhile, total capacity soared to 157Mta in 2018, up from 110Mta in 2010. Thus capacity utilisation has fallen to around 46 per cent in the Gulf, intensifying competition, eroding profits and driving increased exports.

Saudi Arabia, the GCC’s largest market, has recently begun to provide some relief to the sector by posting several consecutive months of solid demand growth, although progress could be undermined by the evolving political situation and coronavirus epidemic.

Economic forecasts

Providing an economic context for the conference programme, Paul Roger of Exane BNP Paribas (UK) noted the disappointing growth in the world economy in 2019. However, he also forecast an overall 2.6 per cent expansion in global cement consumption for 2020. Particularly strong markets over the coming year are expected to include North America and certain European countries, such as Poland and India.

Frank Brannvoll, Brannvoll ApS (Denmark), assessed the global energy markets and anticipated how they could perform in 2020. Brent oil is expected to remain in the US$55-75 range with an average of US$68/bbl. Elsewhere, there remains a general uncertainty about petcoke prices for this year as the availability of the fuel increases while demand may fall. Mr Brannvoll also looked at the EU-ETS carbon market and forecast an average range of €25-35+ for carbon prices in 2020.

Regional cement industry

Following the economic overview, the conference programme directed its focus towards specific MEA cement markets.

Joey Ghose of Raysut Cement (Oman) noted how one of the most significant challenges for the domestic industry is that it remains the largest market for UAE cement exports, with this having a knock-on effect on local production and sales. However, Raysut Cement has recently started enjoying a resurgence in financial performance and is also planning further international projects.

As part of these plans, Mr Ghose detailed the company’s intentions for a 16Mta expansion into eastern Africa.

Noha Bakr, Egyptian Centre for Strategic Studies (Egypt), highlighted the fundamental issue of Egypt’s declining demand against a constantly expanding supply. In 2019 cement consumption is estimated to have fallen to 48.4Mt from 51Mt in 2018, while capacity reached 81.2Mta. This comes as megaprojects that have previously propped up demand complete major construction phases, resulting in a high risk of this demand continuing to deteriorate over the short- to medium-term. If unfavourable regional dynamics can be overcome, exports could be boosted to lessen the strain on the domestic industry.

Hamid Reza Tajik, ICEM AB (Iran), showed how new export markets, alongside housing and infrastructure projects, are expected to support the domestic expansion of the Iranian cement industry. Consumption in 2019 reached 53.96Mt, while cement production capacity is forecast to grow to 100Mta by 2021. Importantly, exports are projected to recover from the impact of ongoing sanctions and continue to increase from the 14.21Mt recorded in 2019.

Trading
Sharique Siddiqui, Pakistan International Bulk Terminal (Pakistan), gave a presentation on the country’s first purpose-built terminal for bulk cement, clinker and coal handling. Involving an investment of over US$300m, the terminal became operational in 2017, and can process up to 12Mta of coal imports and 4Mta of clinker and cement. It is expected to be instrumental in facilitating Pakistan’s clinker export trade, which has reached 2.077Mt in the 1HFY19-20 against 2.148Mt in the FY18-19.

Tony Hadley, Tony Hadley African Advisory, considered how oversupply in east African markets may impact upon cement exporters in the Middle East. Mr Hadley concluded that, due to local clinker capacity expansion, manufacturers should not base export plans on clients in the east coast of Africa. Despite this, there remains a good opportunity for the uptake of bagged cement in South Africa.

Plant projects and operational upgrades

Manoj Rustagi, JSW Cement (UAE), detailed the company’s successful project to set up a 1Mta clinker production unit in Fujairah, UAE. The plant, constructed on an EPC basis by Sinoma, started kiln ignition in early March 2020. Once fully commissioned, the facility will ship clinker, alongside high-quality limestone from a nearby mine, to Mumbai, India, for processing and dispatch.

Elsewhere, Yanbu Cement’s Amr Nader provided a case study of how the Saudi Arabian company flourished while the global and domestic cement industry came under significant pressure between 2011-20. The local sector was a sold-out market until 2015, however, as demand fell, clinker stocks increased, companies started making losses and some even began halting production. Despite this, Yanbu started an operational excellence programme and managed to develop sustainability-led growth through efficiency gains and innovation to remain distinctive in the oversupplied market.

In addition to the economic forecasts and market reports, the Cemtech speaker programme also featured a selection of case studies from leading manufacturing technology suppliers, showcasing how issues facing the modern cement plant can be overcome.

Event sponsor, Total Lubricants (France), detailed how its products can improve the lifespan of open gears by reducing abrasion and abrasive wear without impacting production.
Industry experts

Peter Hoddinott, Peter Hoddinott Consulting (UK), discussed how many popular preconceptions about the cement industry are no longer applicable due to a wave of new developments in recent years. For example, the industry no longer has such a high barrier to entry for new players as it once did, due in part to the influx of cheaper technology from Chinese equipment suppliers. This has had major consequences for both cement producers and established equipment suppliers worldwide.

Sustainability concerns

Muhammad Mehmood, Fauji Cement (Pakistan), outlined the sustainability initiatives that the company has implemented in the face of spiralling energy costs. The facility successfully put a 15MW captive solar power plant into operation at the end of 2019, which is the largest of its kind in the country’s industrial sector. The unit is expected to save 16,752t of CO₂ emissions and reduce the cost of energy to US¢2.96/kWh against US¢13/kWh from the National Grid.

Jim O’Brien, Jim O’Brien CSR Consulting (Ireland), analysed the key sustainability metrics of the MEA cement industry to 2030 and detailed its high potential for improvement. In comparison to areas such as Europe, it still has fairly low utilisation rates of alternative fuel (AF). In addition, the Middle East has a high clinker/cement ratio at around 85 per cent, while the global trend shows an average of around 77 per cent. However, drivers for change such as population growth will be heavily felt in the MEA region as the population is projected to reach 3.4bn people by 2050.

Bassem Nassouhy of Scientific Business Solutions (UAE) continued exploring the topic of alternative fuel usage in the Middle East by providing an extensive overview of the requirements that need to be met before utilisation. This includes local regulations, such as whether the AF can be imported, all the way through to processing equipment.

Extended programme

Delegates also had the opportunity to network and discuss manufacturing solutions with a range of international exhibitors at the 21-stand exhibition.

This article was first published in International Cement Review in April 2020.