Displaying items by tag: Oman
Raysut Cement’s turnover grows in first half of 2018
16 July 2018Oman: Raysut Cement’s turnover grew by 14.5% to US$111m in the first half of 2018 from US$97.2m in the same period in 2017. However, its profit after tax fell by 85% to US$1.8m from US$12m. The cement producer also noted that it is expected to receive US$10m from insurance claims relating to a loss of a ship and other claims relating to Cyclone Mekunu.
Oman: Northern Ireland’s Telestack has won a Euro5.7m deal to supply a mobile shiploading system to the Port of Salalah. The system will be used to load limestone, gypsum and cement clinker and will be operational later in 2018, according to the Irish News newspaper. The project is part of an on-going Euro17bn government infrastructure investment to support mining, quarrying and the cement industry. It is Telestack’s largest single order to date.
Oman: Oman Cement has been included on a list of Sharia-compliant companies for the first quarter of 2018 compiled by the Muscat Securities Market. The 32 companies on the list conform to the requirements of Islamic Sharia according to the rules approved by the Accounting and Auditing Organization for Islamic Financial Institutions, according to the Oman Daily Observer newspaper. Companies on the list cover a cross-section of industry including building materials, banking, food production and more.
Germany’s Knauf announced this week that it is set to buy North American wallboard producer USG. The news is relevant for the cement industry because both companies are prominent gypsum producers. They are leading gypsum wallboard producers, with assets around the world, including gypsum mines. Although their focus is on wallboard a significant proportion of raw gypsum ends up being used in cement production. Hence, the takeover of a major North American producer by a European one deserves attention.
First a little background on the deal between Knauf and USG. The takeover has been a particularly acrimonious one at times, with both parties throwing strong language at each other and, although it has avoided being a hostile takeover, at times it seemed close. The deal became public in March 2018 when USG publicly said that it had rejected a bid of US$5.9bn from Knauf. It described the offer at the time as ‘wholly inadequate.’ Knauf then fought back by sending a letter to USG’s shareholders urging them to vote against director nominees at the next annual general meeting. Knauf owns 10.5% of USG’s shares. Then, in April 2018, Warren Buffett, the chief executive officer of Berkshire Hathaway, USG’s largest shareholder with a 31% stake, swung behind Knauf’s scheme. At this point it was revealed that Buffett had facilitated the initial talks between USG and Knauf. He even described the investment in USG as ‘disappointing.’ Buffett’s public move against USG in April 2018 signalled the death knell to USG’s independence. The US$7bn deal between Knauf and USG was agreed and announced on 11 June 2018. The transaction is expected to complete in early 2019.
USG operates 12 mines or quarries in North America. It also has other assets around the world including three gypsum mines in Oman, Thailand and Australia respectively that it runs in conjunction with its USG Boral joint venture in the Middle East and Asia. By contrast Knauf held over 60 quarries in 2014 with a focus on Europe.
The interesting implications from the merger may arise from what Knauf plans to do in certain regions. North America for example saw a reduction in raw mined gypsum production since the financial crash in 2008 as building markets suffered. Rising levels of synthetic gypsum production from coal power plants partly compensated for this. Buying USG gives Knauf a truly global base of natural gypsum production with which it can supply both itself and any cement customers. Knauf has a real shot of cornering the market in raw gypsum production provided it can keep the price low enough to stop enough rival mines being opened. Knauf might decide, as the construction market continues to recover in the US, to bring in the extra gypsum from elsewhere if it proved cost effective. Hooking up USG-Boral gypsum resources in Asia with Knauf’s might have implications for cement producing countries that lack sufficient gypsum supplies such as India. Oman is building itself up as the major gypsum exporter to Asia and USG-Boral is a part of it, with major gypsum resources in the country.
In terms of the cement industry it seems likely that there will be no immediate shakeup of gypsum supply. Long term supply contracts with either USG or Knauf should remain as they were and will stransfer to the new enlarged company. Knauf’s main market for gypsum is to use it to make wallboard but gypsum use for cement is a significant market as well. The ‘fun’ starts when or if Knauf starts to reorganise its supply chains. As its focus is on the wallboard business there may be implications thereafter for cement users. And since Knauf’s only major competitor at scale is Saint-Gobain, the market has just shrunk.
Suhar Cement back on track after delays
12 June 2018Oman: Suhar Cement, the Sultanate's third cement plant after Oman Cement and Raysut Cement, will come into operation later in 2018, helping add to domestic production capacity and reduce the nation's dependence on imports.
The new facility, featuring a cement-grinding unit with a capacity of around 240t/hr, is being developed by a partnership between Sohar Cement (70% of the equity) and UAE-based Fujairah Cement Company (30%). Construction work on the plant is nearing completion at a site located within Phase 7 of Suhar Industrial Estate, one of several industrial parks administered by the Public Establishment for Industrial Estates (PEIE) around Oman.
The original plans to bring the new cement plant into operation by the first quarter of 2018 have been hamstrung by two key factors: 1. The absence of a paved road to provide suitable access to the site of the plant, and; 2. A lack of power supply to the site. Both impediments are being addressed by the relevant government agencies following the intervention of the Implementation Support and Follow-up Unit (ISFU) - a special task force of the Diwan of Royal Court overseeing the timely execution of a number of proposals and initiatives designed to spur the nation's economic diversification.
Significantly, the new Suhar Cement plant, along with a flurry of other cement plant projects planned in the Special Economic Zone (SEZ) at Duqm, will go a long way in ramping up Oman's domestic cement production by 2021. By that year, and assuming all of the project proposals have progressed through to implementation and commissioning, Oman is projected to be self-sufficient in meeting its domestic cement requirements. At present, Oman is dependent on imports for just over half of its cement demand.
Cyclone Mekunu shuts down Raysut Cement
29 May 2018Oman: Cyclone Mekunu has forced Raysut Cement to stop production for eight to 10 days. The cement producer said that the storm caused external damage to its plant at Salalah and flooded production buildings and the stockyard.
Oman: Raysut Cement has inaugurated a new packing unit at its Salalah cement plant. The upgrade doubles the plant’s packing capacity. This will allow the cement producer to export an additional 1Mt/yr of bagged cement to markets in Yemen, Somalia and elsewhere in East Africa. The company spent just under US$4m on the project.
Raysut Cement to consider building plant in Georgia
21 March 2018Georgia: Oman’s Raysut Cement has approved an initial study to consider building a 1Mt/yr cement plant in Georgia. The company’s subsidiary Pioneer Cement Industries Georgia owns a limestone mine with reserves of over 30Mt about 60km from Tiblisi. A final decision on the project is expected to be made by June 2018. Discussions have also commenced with possible partners for both equity participation and engineering, procurement and construction (EPC) contracting.
Oman: Kuldip Chadha has been appointed as the financial officer of Raysut Cement. The Indian national is a qualified chartered accountant with over 40 years’ experience in internal audit, including 26 years at a senior management level.
The cement producer has also appointed Gopal Parikh as its chief operation officer. Gopal, also an Indian national, holds a BE (Mechanical) from Engineering College in India and has more than 30 years’ experience in cement industries at a senior management level.
Raysut Cement’s revenue falls by 22% to US$187m in 2017
15 January 2018Oman: Raysut Cement’s revenue fell by 22% year-on-year to US$187m in 2017 from US$240m in 2016. Its profit after tax fell by 66.6% to US$18m from US$53.8m. In November 2017 the cement producer blamed its falling profit on lower sales due to competition locally and in export markets, disruption to its export market in Yemen resulting from the on-going civil war and increased energy prices.