Qiziliqumsement prepares to launch Kiln Line 4

Uzbek cement producer Qiziliqumsement has invested US$112m to add a fourth production line. This is the company’s the first significant investment in the plant since 1989 and it is due to come on-stream in December.

Qiziliqumsement's new line, located just outside Navoi, will add 2.2Mta of cement to its output, bringing the total output to 5.8Mta, a bit less than a third of Uzbekistan’s entire cement production.

“The contractors are Russian, Turkish and Chinese, although most of the equipment is German,” says Abduqahhor Salomov, the general director of Qizilqumsement. “We have mostly financed it from our own funds and the return on investment should take about seven years. There is huge domestic demand. We can’t even meet that. Even with the new capacity there won’t be enough of a surplus to do any exports. Maybe next year.”  

Domestic demand in Uzbekistan is currently outstripping domestic supply by 6Mt, forcing the importation of cement. In the first eight months of this year Uzbek companies bought a total of 8Mt of cement, up 18.2 per cent YoY and driving the prices up by 2.4 per cent as a construction boom gathered momentum in the same period. But thanks to the production deficit the country had to import 550,000t of cement from its neighbours in that period.

In October the company reported its nine month results under Uzbek accounting standards that saw revenues fall by 11.5 per cent YoY despite the construction boom in Uzbekistan, but a 4.4 per cent decline in the cost of goods. 

At the moment the company is ploughing much of the cash it is earning into the construction of the fourth line. Construction work increased by 4.5 per cent in the period, the Bluestone investment bank reported, although the pace of increase in the construction had slowed somewhat.