Qatar could face shortages due to lack of capacity additions

Qatar could face a “major cement shortage” in the near term with no major capacity expansions in the pipeline to meet expected strong rises in demand, a new report by Global Investment House (GIH) has cautioned.

In anticipation of the FIFA World Cup in 2022 in Qatar, there are numerous projects planned and underway to ensure that the country has the right infrastructure and competition venues to support an influx of visitors. Projects are currently focused on housing, hotels, 12 stadiums, a new port, roads, metro and rail system, malls and various other mixed asset developments. The government is also focussed on boosting its tourist industry with plans underway for purpose-built luxury hotels and futuristic holiday venues.

"Given the rapid rise in cement demand, Qatari companies are still not ready to gear up capacity to meet the same. With no other major capacity addition announcements, we feel Qatar will face a major cement shortage scenario going forward," Global said in its latest report.

Demand is expected to average 5.5Mta over the 2013-15 period, higher than the 3.5-4Mta estimated by the government. With many big-ticket projects set to be implemented thereafter, consumption is expected to rise to 10Mta, the report said.

The country's dominant producer Qatar National Cement Co (QNCC) has set its sights or raising capacity. "QNCC is in the process of boosting its production capacity as it has hired TPF, Basse Sambre of Belgium to study the prospects expanding the design capacity 5000 or 7500tpd of clinker," GIH said. Moreover, Qatari Investors Group last week unveiled expansion plans for its cement subsidiary, the equipment supply contract for which is currently being negotiated with FLSmidth.