Cement firm building capacity.

(Image: ArabianCement.jpg )

A recent increase in the companyCOs paid-up capital will help Arabian Cement Company to finance to some extent the build-up of capacity through an expansion at its Saudi plant and implementation of a greenfield project in Jordan.

Arabian Cement raised SR500 million ($133.56 million) through a rights issue, increasing the companyCOs paid-up capital to SR800 million. The company produces ordinary Portland cement, sulphate resistant cement and Portland pozzolan cement. Its current production capacity is 2.6 million tonnes of clinker and 3 million tonnes of cement. It is expanding its annual capacity at Rabigh, which will rise to 4.5 tonnes of clinker and 5.1 tonnes of cement after the completion of the expansion this year. Arabian Cement Company plans to set up a new cement plant for which it has signed an MoU with Italcementi of Italy. Italcementi is preparing a feasibility study for the new plant which is planned to be sited near Jeddah. Italcementi also features in a joint venture with Arabian Cement for establishing a ready-mix unit in Jeddah. Additionally, the Saudi company is negotiating to acquire existing ready-mix companies in Jeddah and plans to set up a greenfield batch plant in Rabigh. On August 7th, 2007, the company signed a $110 million deal with GermanyCOs KHD Co to supply equipment for its 5,000 tonnes per day cement plant in the Al Katrana district of Karak Governorate in Jordan. The plant is scheduled to be operational in September 2009. Arabian Cement has a 95 per cent stake while the remaining 5 per cent is owned by a Jordanian investor. The Saudi company plans to invest up to 30 per cent of its stake in the plant. C[pounds sterling]Lower cement prices projected from 2008 could, however, slow its revenue growth thereafter, which could get partly offset by the scaling up of its capacities,C[yen] a company spokesman said. Arabian Cement made a net profit of SR113.2 million in first-quarter 2008, up 23.6 per cent over the corresponding period in 2007. Net profit for the whole of 2007 was SR392.1 million, an increase of 17.6 per cent over 2006. The Jordanian plant is located near sizeable local deposits of limestone, a key basic raw material in cement production. Al Katrana has limestone beds that are up to 40 m deep in places, while in Sultani, just 15 km south of Al Katrana, and in Siwaqa Damekhi, to the north-east of the city, the beds can be even deeper. Work on the Jordan plant began at a time when demand for housing in Jordan slipped due to over supply. It is expected that construction will pick up again by the time the plant is completed. Notwithstanding the demand situation in Jordan, the cement there will never go abegging as the nearby GCC states are in the midst of a construction boom which is likely to continue and intensify. Demand is also expected from such Arab states as Yemen, Syria and Sudan. While its Jordan plant progresses, Arabian Cement has made it clear it is eyeing acquisitions in Africa and the Middle East. Arabian Cement president and CEO Muhammad Uthman remarked it was looking at any opportunity to construct a cement factory and seize the chance by focusing on the Middle East and North Africa region. The company plans to more than double capacity to 7 million tonnes annually in the Saudi market by 2010 and sees countries such as Sudan, Zimbabwe and others in East Africa as particularly attractive. Arabian Cement is also likely to undertake regional acquisitions in partnership with Italcementi, with which it is already an equity partner in a $600 million plant in Labuna, in western Saudi Arabia. The two firms are building a plant with 4 million tonnes of annual capacity to be completed by 2010, Uthman said. Arabian Cement CompanyCOs origins go back to 1956 when it established a plant in Jeddah, claimed to be the first cement cement factory in Saudi Arabia. A new plant was inaugurated in 1984 in Rabigh, close to areas rich in limestone deposits. It has since underwent expansions from time to time. The latest one will be completed by the end of this year.

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