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Raysut and Oman Cement Company suspend joint venture

World Cement,

The now suspended proposal for the construction of a cement plant at Al Duqm in northern Oman was a joint venture between Raysut Cement and Oman Cement Company, along with active support from a government-owned company.

The chief executive of Oman Cement Company, Jamal Shamis Al Hooti, explained that the plan is on hold as the ministry could not commit natural gas for the project. He added that they “did not appoint a consultant to conduct a feasibility study for the project".

The new cement plant was intended to boost availability of cement within the country to meet the additional demand arising from major government-supported infrastructure projects.

The two cement producers have a combined capacity of 4.7 million tpa of cement. When the capacity of Ras Al Khaima-based Pioneer Cement Industries, recently acquired by Raysut is included, the total installed capacity reaches a total of 6.4 million tpa.

The chief executive officer of Raysut Cement Mohammed Ahmed Al Dheeb noted that he "expect[s] the demand for cement to grow in the range of 6 – 8% this year."

In a recent directors report, Mohammed bin Alawi bin Ali Muqaibal, the chairman of the company stated: "The multi-speed recovery of the construction sector in Oman is expected to continue on the background of the improving economic environment, thanks to sound fiscal and monetary policies, low inflation, reduced systemic risk in the financial system and the OMR6 billion investment in infrastructure projects for 2011 just announced by the government."

The export market is also expected to strengthen, particularly with a surge in demands from East African markets. Oman Cement Company expects the demand for cement to reach 5 million t this year.

Last year as a result of government initiatives on infrastructure projects and improving business confidence, the demand for cement grew by 7.5%. However the plummeting sales caused by the worst recession in decades in the neighbouring United Arab Emirates, has somewhat overshadowed the prospects in Oman.

In 2010 there was an over supply of ca. 6 million t in the UAE, resulting in suppliers offloading products into Oman, causing a 25% drop in cement prices. Additionally, because of a slow economic recovery, cement sales in Yemen dropped by 8.8% in 2010.

Recently, Raysut Cement commissioned a new cement grinding unit with an annual capacity of 0.75 million tpa, increasing the total production capacity to 3 million tpa. Oman Cement Company also commissioned a new clinker production line with a capacity to produce 4000 tpd, to enable the company to be self-sufficient and thereby avoid clinker imports.

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