Differing priorities for Oman's leading cement players
This week, Oman Cement Co announced that it is planning a 5600tpd brownfield expansion of its plant in Rusayl, Oman, as it builds a new kiln line, upgrades an existing line and shuts down some capacity. The capacity programme will improve its domestic production, which is currently behind market leader Raysut Cement. The latter catapulted its cement capacity ahead with the acquisition of Sohar Cement in 2019. The lure of foreign markets has also seen Raysut Cement expand its capcity, but both companies will anticipate a pick-up in domestic cement demand on hearing the recent government plans for a huge infrastructure programme.
Oman Cement's new 10,000tpd kiln line will be the largest in the country and will operate using alternative fuels with the potential to include a waste heat recovery system. The company is also upgrading Line 3 from 4000tpd to 5000tpd but will close two small kiln lines. These investments follow the digital system overhaul that has seen ABB implement its Ability™ system 800xA to optimise kiln line performance at the start of this year.
New cement plants in progress and on hold
Already under construction in Oman is Raysut Cement's Duqm 0.75Mta grinding plant and the 2Mta Al Sahara cement pant. Meanwhile, announcements for two greenfield cement plants have been made by Dhofar Cement and International Cement project in Dhofar and Duqm, respectively.
However, the speed of investment in Oman's cement sector has been checked. CemNet's plant database records that four cement projects in the country are currently on hold. The projects include Al-Yamama General Contracting Co's 2Mta grinding plant, the Ministry of Commerce, Industry and Investment Promotion's (MoCIIP) 0.3Mta white cement plant in Doqum, Oman Cement's Al Wusta 1.75Mta plant in Duqm and Hormozgan's 1Mta Al Anwar cement plant. This leaves domestic cement capacity at around 9.79Mta.
Creating domestic cement demand
The sultanate has been looking to increase cement production particularly around the Duqm Port area. The additional capacity will be needed to support a massive US$7.2bn infrastructure programme that has just been announced by the MoCIIP.
Oman is making a concerted effort to kickstart investment in its tourism, mining and industry, logistics and food, fishing, health, ICT, waste management and education sectors with 90 investment programmes. Tourism, food and mining will spearhead the government's plans for creating new investment. Among the programmes, Madayn, the state-backed entity managing industrial cities, is seeking investments for new manufacturing hubs in Shinas, Marmul and Thamrait.
The domestic cement market needs to recover. Oman Cement Co saw a decline in revenues of 16 per cent in the 1Q21 and a five per cent net profit fall in the 1H21. Raysut Cement Co faired slightly better with a five per cent increase in revenues in the 1Q21, and recorded a net loss after tax in1H21 to OMR3.2m (US$8.3m) from OMR10.9m in the 1H20.
Raysut Cement looks to other markets
The slow pick-up in domestic demand has forced Raysut Cement to look at various export options. It recently received certification to export to the European Union and already it exports 50 per cent of its output to east Africa, India, Maldives, South Africa and the Indian Ocean Islands. The company also secured a new export order from Réunion recently and will send 8000tpm of cement to the market.
Raysut Cement's capex plans go further with a new 0.75Mta grinding unit planned for Madagascar, where it aims to benefit from the 7-8 per cent market expansion. It is also investing, through its Pioneer Cement subsidiary, in a 1.2Mta greenfield plant in Georgia. While Raysut Cement has a current capacity of 6Mta of cement, it says it will increase this to 10Mta by 2022 and later to 22Mta.
Summary
Oman's government recognises that more needs to be done to encourage infrastructure investment, especially with COVID-19 still slowing the economy. Its fresh stimulus for infrastructure will be welcomed by the established cement plants in the country. Raysut Cement has firmly grasped the need to expand and looks towards export markets as well as aiming to expand capacity at home, while Oman Cement's next step is to make its domestic output more efficient.
