DAMMAM, 16 August 2003 — The reconstruction of Iraq has made cement the most sought-after construction commodity there, and contractors are turning to Saudi Arabia to meet their requirements. According to cement industry sources, there have been several queries from contractors as well as middlemen, and currently the initial requirement in Iraq is about 20 million tons, which is equal to the combined cement production of all the eight factories in the Kingdom.
There already exists a shortage of cement in the Kingdom as the country is passing through a construction boom. According to estimates, the domestic requirement for cement stands at more than 22 million tons. There are factories that have sold their entire production up to 2004, and some are in the process of expansion to enhance their production capacity.
According to M. Iftikhar Khan, general manager of Rashed Al-Rashed Cement Division, there has been a continuous growth in the cement market, and this year’s projections see a growth of 5 percent over last year.
In 2002 the country consumed 20 million tons of gray cement, and this year it is expected to increase to 22 million tons.
The high domestic consumption has cut back exports of cement from the Kingdom. There are eight cement factories in Saudi Arabia — two in the Eastern Province, two in Yanbu and one each in Riyadh, Al-Qasim, Tabuk and Jeddah. According to cement industry sources, two of these — Eastern Province Cement Company and Qasim Cement Company — have already signed agreements for the expansion of their plants.
Iftikhar said that after the stagnation of the late 80s, the cement industry recorded higher growth and the market anticipations are that the present trend will continue. He admitted that there was now a need for new cement factories in the country. “We have cut back on our exports. The international market is quite huge and any excess production could easily be consumed in the international market,” he said.
The reconstruction in Iraq provides a challenge to the cement industry in the GCC. He said it was unlikely that Saudi Arabia would be able to sell cement for Iraqi reconstruction in the immediate future. But he did not rule out future sales. “The reconstruction in Iraq is a long drawn-out process, and demand for cement is going to persist for a long time. The Saudi cement factories will be able to meet the Iraqi demand once they expanded their production capacity,” he added.
Cement industry sources say that the sale of cement to Iraq involves complex logistics. The biggest hurdle is procuring safe passage to the construction sites.
“Conditions in Iraq are not very conducive,” said a cement broker who is on a buying spree. “Not many transport companies are prepared to send their trucks to Iraq for safety reasons. There have been instances of attacks on trucks from Saudi Arabia,” he told Arab News.
