The countries of Central Asia, namely Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, are all former Soviet Union countries with a combined population of 76.3 million in 2015. With the exception of Azerbaijan, they are colloquially known as the 'stans.' All are emerging market economies, although their growth in recent years has been disparate (Figure 1). Here, Global Cement reports on their cement industries, including key players, market developments and recent major events.
| Country | GDP (US$bn) | GDP growth (%) | GDP/capita (US$) | Population | Plants | Cement capacity (Mt/yr) | ||
| 2014 | 2015 | 2016 | ||||||
| Azerbaijan | 166 | 2.8 | 4.0 | 2.5 | 17,800 | 9.78 million | 3 | 4.70 |
| Kazakhstan | 420 | 1.5 | 1.5 | 2.4 | 24,100 | 18.2 million | 8 | 11.85 |
| Kyrgyzstan | 19.2 | 3.6 | 2.0 | 3.6 | 3300 | 5.66 million | 5 | 3.16 |
| Tajikistan | 22.4 | 6.7 | 3.0 | 3.4 | 2700 | 8.19 million | 2 | 2.10 |
| Turkmenistan | 47.9 | 10.3 | 8.5 | 8.9 | 14,200 | 5.23 million | 4 | 4.65 |
| Uzbekistan | 172 | 8.1 | 6.8 | 7.0 | 5600 | 29.2 million | 9 | 7.60 |
Above - Table 1: The 2014 GDP, 2014 GDP growth rates (and projections for 2015-2016), 2014 GDP/capita, 2015 population, active integrated cement plants and active cement production capacity of the Central Asian countries. Sources: The Global Cement Directory 2016, CIA World Factbook, IMF World Economic Outlook (October 2015 update).
Azerbaijan
Azerbaijan is one of the major emerging market economies with a population of 9.78 million in 2015.1 The country is largely dependent upon the oil and gas industries, affording it a steadily-growing, at 2.8% in 2014, GDP of US$166bn (Purchasing power parity - PPP) and a GDP/capita of US$17,800. Azerbaijan stands out from the other Central Asian countries discussed here for the spike in GDP growth that it experienced in 2004 - 2007, when GDP growth hit 26.4%, 34.5% and 25%, respectively (Figure 1). The sharp growth was attributed to rapid increases in oil production at the time. Its 2015 GDP growth estimate was 4%, falling to 2.5% in 2016.2 Government corruption is reportedly widespread and in 2009, presidential term limits were eliminated in a referendum.
Cement industry
Azerbaijan has three active integrated cement plants with 4.7Mt/yr of cement production capacity (Figure 2). Two of the plants, those owned by Norm Sement and Akkord Cement, started operations in the last two years. Prior to that, Holcim Azerbaijan was the only integrated cement plant in the country.
Azerbaijan's cement sector has seen a mixture of highs and lows in recent years. The rate of infrastructure and housing development has been uneven and the country's reliance on the oil and gas industries has seen the economy suffer since prices crashed in 2014. The devaluation of the Azerbaijan Manat has also raised production costs across many sectors. Indeed, Holcim Azerbaijan said in its 2014 annual report that, while there have been improvements, the country's economy is still negatively impacted by a non-freely convertible currency and rapidly-changing tax, currency and customs regulations. Despite this, in 2014 construction materials production grew by 22.2% year-on-year to US$585m. Cement production grew by 40.5% to 2.98Mt and gypsum production increased by 23.3% to 192,800t, according to the Azerbaijan State Statistics Committee.
Norm Sement's CEO Hasan Yalcinkaya said that, in 2014, domestic cement demand was 4.3Mt and it would be much the same in 2015. "Currently, about 60% of the market is provided by local producers and 40% of cement is imported from neighbouring countries," said Yalcinkaya. He said that, since the start up of Norm Sement and Akkord Cement, domestic cement plants were able to meet market requirements. "Our goal is to reduce cement imports as much as possible. The import of cement products is gradually decreasing. The share of imported cement is only 5% of the total market volume, while the share of clinker is 10%," said Yalcinkaya. In a recent visit to Norm Sement featured in the November 2015 issue of Global Cement Magazine, the company's Chief Operations Officer Osman Nemlisaid said that, in the first eight months of 2015, Azerbaijan's cement imports fell by 72% year-on-year to US$22m.
Azerbaijan plans to double its production of building materials, including cement, in 2016 - 2019, according to the government's draft concept of socio-economic development. "It is planned to expand the production of building materials and bring their quality to international standards. Supplementary investments will be raised in this area, modern eco-designed technology will be introduced and the export of local building materials promoted," said the draft. The government expects building materials production to grow by 6.1% to US$608m in 2016, by 13.1% to US$708m in 2017, by 20.3% to US$871m in 2018 and by 16.2% to US$1.03bn in 2019. However, according to other government forecasts, the construction sector is expected to decline by 4.6% in 2016 to US$17.5bn. The Deputy Minister of Economy and Industry, Sevinj Aliyeva, had previously said that the decline of the construction sector continued against a background of cuts in public investments. "Measures to attract additional sources of financing, the use of new financing mechanisms in the housing market and the expansion of mortgage lending are important to revive the construction sector," said Aliyeva.
In the summer of 2015, local media reported that Azerbaijan's construction industry was benefitting from the sporting and tourism sectors.3 Following the Eurovision Song Contest 2012 and the 2015 European Games, upcoming events include the 2016 Baku European Grand Prix, the 42nd Chess Olympiad in 2016, the 2017 Islamic Solidarity Games and four matches of the 2020 UEFA European Championships. These events have and will continue to provide a significant rise in the construction of hotels, restaurants, stadia and infrastructure, among others, prompting higher demand for cement and other building materials.
Norm Sement
Norm Sement is the largest cement plant in Azerbaijan and in the south Caucasus region, with 2Mt/yr of cement production capacity in Garadagh, Baku (Figure 3). Cement production using imported clinker started in September 2013 and clinker production started later in May 2014. The US$326m plant reached its installed production capacity in January 2015. Norm Sement's Chief Operations Officer Osman Nemli said that the plant held 30% of the market share by February 2015.
According to Hasan Yalcinkaya, Norm Sement's CEO, 2014 was successful for the company and Azerbaijan's cement industry as a whole. "Since its inauguration in July 2014, the plant has been working very efficiently, has started to produce its own clinker and has reached its design capacity," said Yalcinkaya. "510,000t of cement and 471,000t of clinker was produced in 2014. We were able to cover 20% of the market for the six months since starting clinker production. We plan to increase our market share with the production of high-quality cement."
Norm Sement also has investment plans for the near future. "We have several projects on efficiency and production improvements, in particular the expansion of the product range. We will continue to reduce our energy consumption," said Yalcinkaya. With regards to new products, Norm Sement plans to start oil well cement production in 2016 and potentially white cement too, depending on market demand. According to Yalcinkaya, oil well cement is a very sought-after product in Azerbaijan and its domestic production would reduce imports. Norm Sement is also preparing to export its products to the Caspian Sea countries. "Currently, we are considering exporting our products to the south of Russia, Kazakhstan and Turkmenistan," said Yalcinkaya. In addition, Nemli divulged that the plant would install a waste heat recovery (WHR) system to use hot gas from the cooler and the preheater to produce electricity.
Holcim Azerbaijan (LafargeHolcim)
Holcim Azerbaijan, part of the recently-formed LafargeHolcim group, has a 1.7Mt/yr cement plant in Garadagh, Baku. It is the oldest and second-largest cement plant in the country. The plant was constructed in 1949 and has since been upgraded and expanded with new kilns and other technologies. Holcim bought the plant when it was privatised in 1999 and renamed it from Garadagh Cement OJSC to Holcim Azerbaijan in 2012.
In 2014, the latest year for which information is available, Holcim Azerbaijan's sales fell by 24% year-on-year to US$128m and its profit fell by 23% to US$37.9m. However, the company's fuel and electricity expenses dropped significantly during the year, by 12% and 17.5% respectively.
Akkord Corporation
Akkord Corporation was established in 2005 as a construction materials company with interests in the cement, concrete, steel and other building materials industries. The 1Mt/yr Akkord Cement plant in Gazakh, Dash Salakhli, currently the smallest in the country (Figure 4), started clinker production in August 2014 and today serves the domestic market by road and the export markets by the Black Sea and the Caspian Sea. There are plans for the Sinoma-built plant to be expanded to 3Mt/yr by 2017.
Kazakhstan
Kazakhstan is a major emerging market economy that has had the same President, Nursultan Nazarbayev, since declaring independence from the former Soviet Union in 1991. Its population was 18.2 million in 2015. With a land span of 2,724,900km2, it is the ninth-largest country in the world and the largest in Central Asia.1 The economy is dependent upon the hydrocarbon sector. Its GDP grew by 4.3% in 2014 to US$420bn (PPP) and was estimated to grow by 1.5% in 2015 and by 2.4% in 2016. Its 2014 GDP/capita was US$24,100. Kazakhstan has the largest GDP and GDP/capita of all of the Central Asian countries discussed here, although its 2014 GDP growth rate was the lowest. The Kazakhstan Tenge was devalued by 19% in February 2014 and in November 2014 the government announced a stimulus package to cope with the economic challenges linked to Russia's slowing economy and the weakening Russian Ruble.
Cement industry
Kazakhstan has eight active integrated cement plants with 11.85Mt/yr of cement capacity (Figure 5). This includes BaselCement's Sastobe White Cement plant, which has 350,000t/yr of white cement production capacity. There are another three integrated cement plants in the planning phase, all of which were announced in 2015. In addition, three cement plants are under construction with a combined capacity of 8.1Mt/yr.
In contrast with Azerbaijan, Kazakhstan has three prominent international cement producers, namely Italy's Italcementi, Germany's HeidelbergCement and China's Huaxin Cement, which is 39.9% owned by Holcim (now LafargeHolcim). Huaxin Cement is a major and growing player in many Central Asian countries. Kazakhstan's United Cement Group (UCG) also has cement industry interests in much of Central Asia and Russia, as well as the 1.2Mt/yr Semey Cement plant in Semey, Kazakhstan.
November 2014 saw Kazakhstan's President Nursultan Nazarbayev announce the start of the Nurly Zhol ('Bright Path') Programme, a new economic policy to launch massive state investment in infrastructure in the next few years. The programme is expected to steer the economy towards sustainable growth and provide a large boost to many sectors, including the cement industry.
In December 2014 Albert Rau, Vice Minister for Investments and Development, said that Kazakhstan intended to meet domestic cement demand soon. "Given that at the start of 2015, a 500,000t/yr cement plant will be launched in Rudny, 2Mt/yr of new capacity will be launched by Kokshe Cement, the BI Cement plant will be started and a number of cement plants in Shymkent are to be modernised, we are ready to meet domestic cement demand," said Rau. He added that Kazakhstan had imported more than 1Mt of cement in 2013. "Most of the issues are geographical. All the production facilities are concentrated in the east, in Karaganda and in the south. The west of Kazakhstan relies on imported cement." However, in October 2015 it emerged that the launch of the 500,000t/yr Rudny Cement plant had been delayed again due to problems and delays in obtaining financing.4 Cement production was initially expected to start at the end of 2013. Since its inception, Rudny Cement's construction costs have increased by 37% to US$55.8m. No further updates regarding the other cement plants due for completion have been made.
Cement consumption in Kazakhstan increased by 4% year-on-year to 8.5Mt in 2014. During the year, Kazakhstan's cement imports fell by 26% to 1.1Mt, while its exports grew by 150% to 500,000t. Domestic cement demand in 2015 was expected to increase by 3% year-on-year to 8.8Mt.
2014 was mixed for Kazakhstan's cement producers. Steppe Cement's cement production grew by 18% year-on-year to 1.61Mt/yr and its revenue grew by 7% to US$114m. However, the company swung to a US$8.1m pre-tax loss compared to a US$13m pre-tax profit in 2013. It said that its results were affected by the depreciation of the Kazakh Tenge and the Russian Ruble, lower cement prices and lower oil prices. Steppe Cement observed that these factors had, however, helped local producers to gain market share. Steppe Cement's market share increased from 17% in 2013 to 19% in 2014. Meanwhile, Italcementi's revenue in Kazakhstan fell by 21.1% year-on-year to US$41.4m in 2014, while its recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 90% to US$3.19m.
Steppe Cement's cement sales volumes grew by 1.16% to 717,654t in the first half of 2015, but its cement sales fell by 9.2% to US$44.4m. In the third quarter of 2015, its revenue rose by 1.44% to US$28.2m and its sales volumes rose by 8% to 630,329t. For the first nine months of 2015, Steppe Cement's revenue fell by 4.27% to US$58.3m.
Cement plant projects
A significant number of new cement plant projects were announced in 2014 - 2015.
In December 2014 Italcementi won a US$21.2m loan from the European Bank for Reconstruction and Development (EBRD) to upgrade its 1.6Mt/yr cement plant in Shymkent. The EBRD also bought US$4.25m of shares, giving it a 21% stake in the plant. The financing will be used to convert the four existing wet-process cement lines to one energy-efficient 1.2Mt/yr dry-process line. The project is due for completion in 2016.
In March 2015 Semey Cement's production capacity was increased to 1Mt/yr. In the frame of the Nurly Zhol Programme, most of the cement will be utilised for road construction. The contracts for cement deliveries have already been signed.
In July 2015 International Cement Kazakhstan (ICK), an indirect wholly-owned subsidiary of Singapore's Compact Metal Industries, entered an agreement with Nurzhan Shakirov to establish a joint venture cement plant in Almaty, Kazakhstan. No further details have been released.
In September 2015 Kazakhstan's Vice Minister of Investment and Development, Albert Rau, met with the President of France's Vicat, Guy Sidos, and Honorary President of Vicat, Jacques Merceron-Vicat, to discuss the possible extension of the 1.1Mt/yr Zhambyl Cement plant, which is 60% owned by Vicat (Figure 7). The extension would see a new, duplicate line installed, doubling the plant's cement production capacity to 2.2Mt/yr. The meeting also announced the construction of a US$10m terminal in Astana in 2016. The terminal will act as a packing plant,
research and testing centre.
In October 2015 China's Huaxin Cement said that it plans to build a 5Mt/yr dry-process cement plant in Kazakhstan. No further details were released. Construction of the US$111m plant was due to start at the end of 2015.
In November 2015 Gezhouba Cement Group said that it would construct a joint venture cement plant in Shiyeli, Kyzylorda with Corporation Dan Ake, to be called Gezhouba-Shiyeli Cement. Construction of the 1Mt/yr plant is due to begin in February 2016 and will create 400 jobs. Gezhouba Cement said that the region has created favourable conditions for investors and the implementation of joint venture projects.
HeidelbergCement's Italcementi acquisition
In July 2015, HeidelbergCement announced that it plans to acquire Italmobiliare's 45% stake in Italcementi for US$1.77bn. The transaction is subject to approval by competition authorities; to date, only India has approved the deal. Following the completion of the deal, which is due in the first half of 2016, HeidelbergCement will offer the same price for each share held by outstanding investors.
"With the market recovery gaining traction in southern Europe and the US, it is now the right time for us to accelerate our growth," said HeidelbergCement's CEO Bernd Scheifele. The deal will be paid for in cash and will be underwritten by Deutsche Bank and Morgan Stanley. Some of the financing will be repaid through asset sales, although none has yet been announced.
Kazakhstan is one of the six countries in which both HeidelbergCement and Italcementi operate. Combined, the companies have 4Mt/yr of cement production capacity from three cement plants, representing 33.8% of the market's capacity and 37.5% of the country's cement plants. It is possible that the deal could attract the attention of anti-competition authorities in Kazakhstan, although, as elsewhere, no asset sales have yet been stipulated.
Kyrgyzstan
Kyrgyzstan, with its population of 5.66 million 2015, is one of the poorer Central Asian countries discussed here.1 The country has been blighted by major political disputes since gaining independence in 1991, although the situation appears to have stabilised under President Almazbek Sharshenovich Atambayev, who was elected in 2011. The Kyrgyzstan economy's major sectors are the agriculture and mineral extraction industries. Its main exports are cotton and tobacco. Its GDP grew by 3.6% in 2014 to US$19.2bn (PPP), the lowest in Central Asia, while its GDP/capita was US$3300. Its 2015 GDP growth estimate was 2% and is expected to hit 3.6% in 2016.2
Cement Industry
Kyrgyzstan has five active integrated cement plants with 3.16Mt/yr of combined production capacity (Figure 8). There is also one plant under construction and two more in the planning stages, all of which were announced in the last two years.
According to the Ministry of Economy of the Kyrgyz Republic's 'Medium and long-term strategy of mining industry development of the Kyrgyz Republic' report in 2014, Kyrgyzstan produces around 3Mt/yr of cement, enough to meet domestic market needs.5 In 2014, Kyrgyzstan's cement production volumes grew by 25% year-on-year, breaking all previous records, although no figures were provided.6 The same reports said that the country's inconsistent investment and political climate were prompting foreign investors to look elsewhere, notably to Tajikistan. "Unfortunately, whether due to conflicts with the local population or problems with licenses, very few projects reach the stage of completion in our country," said Askar Sydykov, Deputy Director of the International Business Council. Compared to Tajikistan, "Some Chinese companies have found it harder to operate within Kyrgyzstan's fractious semi-parliamentary political system, full of 'different interests'."
Cement plant projects
All three of Kyrgyzstan's new cement plant projects announced in the last two years were funded, at least partially, via foreign investments.
In August 2014, Shangfeng Cement's subsidiary Tongling Shangfeng Cement started a cement joint venture with Zhu Rongjun under the name Zeth Cement. Tongling Shangfeng holds 58% of the shares of the newly-formed company, while Zhu Rongjun owns the remaining 42% stake. Zhu Rongjun agreed to supply limestone mining rights and land-use rights that it owns or controls. A ground-breaking ceremony was held on 29 August 2014 at the site of the US$70m, 1Mt/yr cement plant in Kemin, Chui (Figure 9). Zeth Cement's General Manager, Zhu Rongjun, said that the plant would start production within 15 months.
In May 2015, Gansu Qilianshan Cement and 8th Metallurgical Corporation signed a memorandum for the joint construction of a US$130m cement plant in Osh with contractor JBK. The Chinese and Kyrgyzstan sides hold 80% and 20% of the project respectively.
In September 2015, China's Jinlong Group said that it plans to invest US$65m to build a 800,000t/yr single line cement plant in Issyk Kul. It will operate as a subsidiary called Yatai Cement. US$15m of the project funds will come from self-financing, while the remaining US$50m will be funded through project financing. Approximately 400 workers will be hired to work at the new firm, which has a 30-year operation term.
Tajikistan
Tajikistan had a population of 8.19 million in 2015. Its GDP/capita was US$2700 in 2014, the lowest in Central Asia. The country's economy remains weak due to 'the uneven implementation of structural reforms, corruption, weak governance, seasonal power shortages and a large external debt burden.'1 Its GDP grew by 6.7% to US$22.4bn (PPP) in 2014 and was expected to grow by 3% in 2015 and 3.4% in 2016.2 Tajikistan's economy is dependent on cotton, aluminium and, according to several resources, narcotics trading.
Cement industry
Tajikistan has two active integrated cement plants with 2.1Mt/yr of combined cement production capacity (Figure 11). This is the lowest number and smallest combined capacity in Central Asia, although another seven integrated plants are in the planning or construction phases. There is also a 1.2Mt/yr grinding plant in Vahdat, which is operated by Toj-China.
In 2014, Tajikistan produced 1.15Mt of cement, some 190% more than the 385,000t it made in 2013.7 - 8 Huaxin Gayur Cement produced 865,000t or 75.2% of the total in 2014, up from 287,000t or 74.5% in 2013. The increased cement production that resulted from the commissioning of the Huaxin Gayur Cement plant in 2013 reportedly prompted a fall in cement prices from US$180/t to US$120/t. According to local media, Tajikistan's cement demand has sharply increased recently in connection with construction of the Roghun hydroelectric power plant, highways and other infrastructure.
In September 2015, Tajikistan's Ministry of Economic Development and Trade announced that the country would increase its cement capacity to start exports by 2020. At the time, there were six cement plants under construction, which would more than cover its domestic needs. Cement plants are planned for construction in Dangara, Bobokon, Isfara and Istiklol City. By improving the country's cement sector, Tajikistan expects to become a net cement exporter. Previously, Tajikistan had imported large quantities of cement from Pakistan, Iran and China.
Cement plant projects
There were five new cement plant projects announced in 2015, which, if they are all completed, would provide an additional 5.6Mt/yr of production capacity.
In February 2015 Tajikistan's government made an agreement with China's Huaxin Cement for the construction of two new cement plants, including a 1Mt/yr plant in Ghafurov, Sughd and a 1.2Mt/yr plant in Dangara. Tajikistan will possess a 30% stake in the Ghafurov plant and a 45% stake in the Dangara plant.
China's Shangfeng Cement announced plans to raise US$240m through a non-public share offering in September 2015, partly to fund investments in Central Asia. In Tajikistan, it will invest US$130m in a 1.2Mt/yr capacity cement plant, due for completion in 18 months. The cement will be sold to southern and central Tajikistan, Uzbekistan and northern cities in Afghanistan.
Also in September 2015, President Emomali Rahmon officially opened the US$30m, 1.2Mt/yr 'Toj-China' grinding plant in Chormaghzak Pass, Vahdat. The plant, which has two 600,000t/yr production lines, is a joint venture between Tajikistan and China. Under the law passed by Tajikistan's lower house of parliament (Majlisi Namoyandagon) on 12 November 2014, Toj-China was exempted from paying value added tax (VAT) and customs duties of US$4.6m on equipment shipments for the plant construction.
Later in 2015, local media reported that Tajikistan's government signed an investment agreement for the construction of a 1.2Mt/yr cement plant, a cement sack production plant and a gypsum wallboard plant in Yovon, Khatlon for a combined cost of US$145m.9
In December 2015, the government of Tajikistan announced that it was looking for investors for the construction of a US$350m, 1Mt/yr cement plant near the Tuyun-Tao limestone deposit in Shaartuz, Khatlon. The project is included in the government's investment portfolio for implementation through direct investments. Russian, Iranian and Chinese companies have all expressed interest. In 2012, China's CNBM prepared a feasibility study for the project, but it was not implemented due to its high cost and the absence of infrastructure.
Turkmenistan
Tajikistan's population of 5.23 million has been ruled by President Gurbanguly Mälikgulyýewiç Berdimuhamedow since 2007.1 It is widely considered an inefficient authoritarian regime with numerous bureaucratic obstacles that impede business activity. According to the CIA World Factbook, the country's outlook is poor due to 'endemic corruption, a poor educational system, government misuse of oil and gas revenues and a reluctance to adopt market-oriented reforms.' The majority of Turkmenistan's economic statistics are state secrets. GDP numbers and other statistics that the government makes public are subject to wide margins of error. The country's GDP grew by 10.3% to US$47.9bn (PPP) in 2014 and was expected to grow by 8.5% in 2015 and 8.9% in 2016.2 Its GDP/capita was US$14,200 in 2014. The major exports of Turkmenistan are cotton and gas.
Cement Industry
Turkmenistan has four active integrated cement plants with 4.65Mt/yr of total cement production capacity (Figure 14). Two of the four plants are owned by state-owned Turkmencement, while the other two plants are owned by Turkish construction materials group Polimeks, which produces Ordinary Portland Cement (OPC), oil well cement and sulphate-resistant cement (Figure 13). According to the USGS, in 2013 Turkmenistan's cement production grew by 12% year-on-year to 2.65Mt, up from 2.37Mt in 2012 and 1.95Mt in 2011.10
Daishiro Yamagiwa, Japan's State Minister of Economy, Trade and Industry, said in July 2015 that Japan wished to pursue further cooperation in Turkmenistan, including the potential construction of a new cement plant.11 "Turkmenistan is steadily showing high economic growth," said Yamagiwa. "The country is rich in natural resources." No further details have yet been announced.
In December 2014 Turkmencement announced plans to build a new 1Mt/yr cement plant in Koytendag, Lebap. Railway infrastructure has already been established in the region to support the project. The new plant is part of the country's 'Programme for Development of Construction and Industrial Sectors in 2012 - 2016,' which is designed to modernise the country's building materials industries.
Turkmenistan is the only country in Central Asia with no foreign investment cement plants planned.
Uzbekistan
Uzbekistan is one of the most-populous Central Asian countries with 29.2 million inhabitants in 2015.1 The country's growth has been driven by state-led investments and exports. It recently started exporting gas to China and has since seen growing levels of Chinese investment. Its GDP grew by 8.1% to US$172bn (PPP) in 2014 and was expected to grow by 6.8% in 2015 and 7% in 2016.2 Its GDP/capita was US$5600 in 2014. Uzbekistan exports large amounts of natural gas, cotton and gold.
Cement industry
Uzbekistan has nine active integrated cement plants, the largest number in Central Asia, with a combined cement production capacity of 7.6Mt/yr (Figure 15). There is also a 1Mt/yr grinding plant in Tashkent operated by UCG.
Until recently, Uzbekistan's construction materials industry was state-owned under Uzstroymaterialy, its construction materials company. In 1997, Uzstroymaterialy became a joint-stock company and stakes in many of its cement plants were sold. Uzbekistan recently launched a new wave of privatisations with the publication of a list of 1200 companies that it planned to privatise in accordance with the April 2015 decree of the President of Uzbekistan 'On measures to increase the share and the value of private property in the economy.' The list included the 3.08Mt/yr capacity Qizilqumsement plant, the largest in the country (Figure 16). In November 2015, Germany's HeidelbergCement announced plans to acquire a 35.9% stake in Qizilqumsement from Uzstroymaterialy.12 Currently, Uzstroymaterialy holds an 86.92% stake and minority investors hold the remaining 13.08% of shares. The HeidelbergCement acquisition would leave Uzstroymaterialy with a 51% stake.
The State Statistics Committee of the Republic of Uzbekistan said that, in the first six months of 2015, construction materials production grew by 11.3% year-on-year to 2.11Mt. Compared with the first half of 2014, large enterprises in Uzbekistan increased their production of OPC by 113%, gypsum by 108%, lime by 135%, non-refractory ceramic building bricks by 116% and fibre cement by 118%. Meanwhile, Ahangarancement achieved record production figures in August 2015. The plant produced 164,000t of cement from 127,205t of clinker in August 2015, year-on-year rises of 2.5% and 12.2%, respectively. Ahagarancement shipped 164,863t of cement to consumers in August 2015, a 1.2% year-on-year rise.
Cement production in Uzbekistan was expected to grow from 7.5Mt/yr in 2014 to 7.9Mt/yr in 2015 and to 8.9Mt/yr by 2019. Within a programme of structural reforms, several cement plants will be modernised in 2015 - 2019. Qizilqumsement will invest US$30.7m to update equipment, while Bekabadcement will invest US$5.5m to modernise its milling technology.
In November 2015, Erkin Akramov, Chairman of the Board of Uzstroymaterialy, said that Uzbekistan's cement plants had been unable to meet domestic cement demand for several years.13 "At present, the existing facilities do not satisfy the demand of the market," said Akramov. He added that the share of construction and installation works in GDP had increased from 9.3% in 2004 to 11.9% in 2014.
Cement plant projects
Several new cement plant projects were announced in 2015, including, as for most of Central Asia, multiple foreign investments.
In July 2015 Almalyk Mining and Metallurgy Complex (AMMC) announced that it plans to expand the 750,000t/yr grey cement production of its cement plant in Zafarabad, Jizzakh to 1Mt/yr (Figure 17).14 The plant produced 155,000t of cement in 2014. Around 70% of its products are exported.
China's Shangfeng Cement said in September 2015 that it would invest US$137m to build a 1.2Mt/yr cement plant in Uzbekistan. It plans to sell the cement to eastern Uzbekistan, southern Kyrgyzstan and northern Tajikistan.
In November 2015, Turkey's Dal Engineering Group and AMMC agreed to build a 1.5Mt/yr, US$225m cement plant in Surkhandarya, which is due to start production late in 2017. It will potentially be financed by a US$90m loan from the Fund for Reconstruction and Development of Uzbekistan, US$110m of commercial bank loans and the US$24.4m equity of AMMC.
Troubles at Akhangarancement
In July 2014, the Tashkent Regional Economic Court seized the assets and bank accounts of Akhangarancement. This amounted to US$177.8m of cash and US$19.1m of fixed assets. The move followed a suit brought by the Uzbekistan State Competition Committee on 21 July 2014 regarding Akhangarancement's privatisation in 1994. Eurocement, which became a shareholder of Akhangarancement eight years after it was privatised when it bought 75.5% of its shares in 2006, said that it would appeal the decision. If Eurocement loses the case, Akhangarancement will be re-nationalised. In September 2014 the Board of Appeals of Tashkent Regional Economic Court postponed the consideration of the case. Eurocement requested extra time to sign a settlement with the State Committee of Uzbekistan. No further updates have been released.
In other news, in October 2015 the Higher Economic Court of Uzbekistan upheld a penalty tax on the excess profit of Akhangarancement for 2009-2014 and penalties for its late payment. Akhangarancement said that it would appeal the decision because it had calculated the excess profit tax in accordance with the country's laws. It added that the calculation had been confirmed as correct by the Ministry of Finance and the Expert Council at the State Tax Committee. "The decision changes the legal practice on issues of the formation of profits of cement companies, significantly encumbers the plant with an additional tax burden, leads to a reduction of investment opportunities and jeopardises the implementation of the plant modernisation project," said Akhangarancement.
References
Note: All news not explicitly referenced was featured at http://www.globalcement.com/news.
1. CIA World Factbook.
2. IMF World Economic Outlook, October 2015 Update.
3. https://www.buildingshows.com/market-insights/azerbaijan/how-sport-is-boosting-azerbaijan-s-construction-industry/801793157
4. http://www.ceeconstruction.com/news/215208/rudny-cement-plant-in-kostanay-scheduled-for-commissioning-by-end-2014.
5. http://mineconom.gov.kg/Docs/nedropolzovanie/Medium_and_Long_Term_Mining_Strategy_Eng_02042014.pdf
6. http://www.economywatch.com/features/Are-Chinese-Investors-Ditching-Kyrgyzstan-for-Tajikistan.01-23-15.html
7. http://news.tj/en/news/huaxin-gayur-cement-co-ltd-expected-be-put-register-dominant-companies
8. http://news.tj/en/news/tajik-chinese-jv-accounts-some-75-cement-produced-tajikistan-last-year
9. http://www.asiaplus.tj/en/news/one-more-large-cement-plant-be-built-yovon
10. http://minerals.usgs.gov/minerals/pubs/country/2013/myb3-2013-tx.pdf
11. http://en.trend.az/casia/turkmenistan/2413355.html
12. http://en.haberler.com/german-company-intends-to-become-shareholder-of-843209/
13. http://www.ut.uz/en/business/uzbekistans_cement_industry_no_longer_able_to_meet_domestic_demand
14. http://www.ite-uzbekistan.uz/industrialweek/eng/press/news.php?ELEMENT_ID=12667
