Musings on MENA

It is a fact that the cement industry of the MENA region has, for the most part, fairly recent origins, with some exceptions being small scale and limited productivity operations in countries such as Egypt, Morocco and Syria.

Since the mid-1970s, the cement industry across the Arab world began to expand as demand for construction and infrastructure in these countries grew. At present, the number of companies and factories in operation has reached 171, with 32 additional cement mills. Design capacity for the region has thus reached 355 million tpy.

In recent years, prior to the spread of the COVID-19 pandemic, demand for cement fell in several Arab countries as a result of difficult economic conditions and war; a number of factories were shut down or destroyed, and some projects were suspended or postponed. Currently, Egypt and Saudi Arabia lead the region in terms of factory numbers and production capacity. Cement consumption also declined during 2018 and 2019 in the GCC countries, across North Africa, Jordan, and Lebanon at rates ranging from 1.5% to 17%.

With the global spread of the COVID-19 pandemic at the beginning of 2020, measures such as factory closures and the halting of operations were seen across the world, including the MENA region, which lead to significant declines in both production and demand, with the decrease in demand exceeding 39%.

With a view to ensuring that factories continue to operate at an acceptable rate while maintaining preventive measures, AUCBM has circulated a roadmap that details the health measures to be taken in order to maintain the continuity of production. Many factories managed to endure this epidemic and have resumed their operations. Some countries recorded growth in consumption during the second half of 2020, such as Saudi Arabia, where sales increased by more than 20%.

In addition to the above, the challenges facing the cement industry of the Arab world can, at this stage, be summarised as follows:

• Some of the measures taken to combat the COVID-19 pandemic still constitute an obstacle to factories, especially those involving reductions in the number of workers on site.
• The tough economic conditions faced by many Arab countries and the suspension or postponement of numerous planned projects (especially in the GCC countries), though the execution phase of some of these projects has already started this year.
• Decreased market demand for cement, occurring naturally as a result of the difficult economic conditions and ongoing conflict in the region.
• Security problems and ongoing conflicts in some countries.
• Recent expansions of cement factories in some countries created large production surpluses, which were compounded by the fact that some countries already export cement (Algeria and Saudi Arabia, for example).

The increase of cement consumption in the MENA region, primarily requires the existence of construction and infrastructure projects, which the Arab world still needs. It is true that modest consumption growth has been recorded in some countries since mid-2020, but these rates continue to fluctuate due to the absence of constant and continuous projects.

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