Displaying items by tag: Raysut Cement

Oman: Bank Nizwa has granted US$50.7m to Raysut Cement, the country’s largest cement producer, as part of its commitment to national economic diversification.

Oman: Raysut Cement’s revenue fell by 5% year-on-year to US$108m in the first half of 2019 from US$114m in the same period in 2018. Its profit after tax dropped by 27% to US$1.3m from US$1.8m.

Somaliland: Oman’s Raysut Cement has agreed to build a 1Mt/yr grinding plant with MSG Group. The project will have an investment of US$40m. Raysut Cement will own 55% of the joint venture with MSG Group holding the remainder. Raysut Cement previously had plans to build a cement terminal in the country with Barwaaqo Cement Company.

Oman: Resolve Marine Group (RMG) says it has completed the wreck removal of the bulk cement carrier MV Raysut II. The ship was grounded on Fazayah Beach in May 2018 due to poor weather. The location is home to several endangered species of sea turtle which nest there and RMG worked to remove the ship without causing environmental damage.

At the time of its grounding the vessel held around 6750t of cement. After attempts to refloat the ship failed it was declared a constructive total loss. In November 2018 RMG was awarded the contract to remove the ship and its cargo. It was partially repaired and refloated with its cargo onboard in February 2019. It was then towed to the Port of Salalah where the cargo was discharged and the ship was recycled.

Kenya: ARM Cement has signed a deal to sell its business in Kenya to the National Cement Company for US$50m. The transaction is subject to customary regulatory approvals, according to the Business Standard newspaper. ARM Cement also has operations in Tanzania, Rwanda and some interests, in the form of unexploited mineral deposits, in South Africa.

“This transaction is in line with National Cement’s growth strategy in Kenya to position itself as the leading cement manufacturer in the region. The industry is poised for growth and we are excited about the prospects for this next chapter of our business. We will endeavor to safeguard the interests of all stakeholders including the employees, customers, and suppliers in the overall interest of Kenya,” said Narendra Raval, chairman of National Cement.

The cement producer was placed under administration in August 2018. In late 2018 Oman’s Raysut Cement said it planned to buy ARM Cement as part of its expansion plans. Nigeria’s Dangote Cement was also linked to a potential purchase of the company.

Oman: Raysut Cement Company has signed an agreement to buy Sohar Cement for US$60m. The transfer of ownership for all the shares in the company was completed in mid-May 2019, according to the Oman Daily Observer newspaper. Sohar Cement held a 70% stake in a 1.7Mt/yr grinding plant and UAE-based Fujairah Cement Company owned the rest of the shares.

Oman: Raysut Cement has confirmed its plans to buy a 1.7Mt/yr grinding plant owned by Sohar Cement based in Sohar. The acquisition also includes purchasing the company’s distribution network, according to the Oman Daily Observer newspaper. Sohar Cement holds a 70% stake in the business, with UAE-based Fujairah Cement Company owning the remaining share.

Oman: Raysut Cement’s sales revenue rose by 27% year-on-year to US$236m in 2018 from US$187m in 2017. However, its operating profit fell by 85% to US$7.02m from US$17.5m. It blamed this on lower prices due to imports from the UAE, higher packaging costs, higher shipping costs and other general costs. Its cement sales volumes increased by 13% to 3.33Mt from 2.94Mt. The cement producer noted that excess production capacity in the UAE reduced prices in that country as well as in northern Oman.

Kenya: ARM Cement has extended its bidding period to mid-march 2019 following requests by potential buyers. Administrator PricewaterhouseCoopers (PwC), which took over the cement producer in August 2018, originally set the deadline to the end of February 2019, according to the Business Daily newspaper. Bidders have asked for a longer period to complete due diligence tests and decide what they think the value of the company is.

14 companies have already made non-binding bids for the cement producer. These will later be shortlisted before a winning bidder is selected. No bidders have publicly been announced but Nigeria’s Dangote Cement and Oman’s Raysut Cement are believed to be interested, according to local media.

The UAE is having a moment. Over the last week Fujairah Natural Resources, a new entrant to cement, said it is going to build a clinker plant at Habbab in Fujairah. It’s also looking likely that Raysut Cement might buy UAE-based Fujairah Cement Company’s shares in Sohar Cement in Oman. Then, Ras Al Khaimah (RAK) Cement announced that it had purchased the Newtech cement plant. What’s happening here?

The last couple of years have been tough ones for Emirati cement producers, which have been fighting falling sales and beleaguered profits. The largest producer, Arkan Building Materials - a group majority controlled by the Abu Dhabi government, reported flat sales growth for the first nine months of 2018. It blamed this on falling sales of clinker due to imports from Iran and a tough pricing environment. Its profits were hit by rising clinker production costs due to its reliance on imported limestone from Oman whilst it resolves problems with its own local quarry. Arkan had closed its Emirates Cement plant in Al Ain following revenue and profit falls in 2016. This story thread reached its end earlier in February 2019 when Arkan sold the closed plant for around US$14m. National Cement reported a similar experience in its nine months results, with growing revenue but sales sapped by mounting costs.

Data from Riyad Capital in early-2018 suggested that the UAE only consumes about half of its own cement production. The rest is exported to the Middle East and North African region, particularly Oman and Egypt, and African countries. The country has 14 integrated cement plants with a production capacity of 31.4Mt/yr and eight grinding plants with a capacity of 10.4Mt/yr. These are owned by a mixture of local companies and multinationals.

The European producers still have a presence through LafargeHolcim’s Lafarge Emirates plant in Fujairah and a grinding plant run by Cemex. Although how long LafargeHolcim will remain seems uncertain given a report by Bloomberg earlier in February 2019 suggesting that the group is seriously looking at exiting the Middle East and Africa. Oman’s Raysut Cement holds a plant too via its Pioneer Cement subsidiary but the majority of the foreign-owned plants are Indian. Their presence has been steadily growing.

Aditya Birla/UltraTech Cement, JK Cement and Shree Cement all run plants in the UAE and JSW Cement said in mid-2018 that it was going to build a 1Mt/yr integrated plant in Fujairah. UltraTech Cement renamed its grinding plant UltraTech Nathdwara Cement in December 2018. This plant was formerly a Binani Cement plant and part of the rancorous bidding war between UltraTech Cement and Dalmia Bharat.

The background to all of this has been a country that is very willing to spend big on infrastructure projects when the need arises. Forbes reckoned, for example, that the UAE had awarded US$20.7bn on infrastructure projects in 2018 in the first nine months of 2018. Impending projects like the Expo 2020 are still generating construction activity and longer ones like Dubai Metro are in progress. However, the country is in a dynamic place geographically between the two-major economic and cement-producing powerhouses of Saudi Arabia and Iran. For the cement industry this explains the prominence of the grinding sector and the growing interest from Indian companies looking to expand overseas. For the new project and acquisition this week it’s looking more like local variation in the market at this stage. In this context though the fourth quarter results from local producers will make interesting reading to see if anything bigger is going on.