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Orimix Concrete expands into Saudi Arabia and Qatar

World Cement,

Orimix Concrete Products, based in Fujairah, Dubai, has recently divulged plans to expand and launch operations in both Saudi Arabia and Qatar. The current favourable market conditions are cited as a cause for this announcement. Chairman Abdullah Ahmad Al Shaheen noted “the cost of raising capital is at its lowest in ten years, and that’s one of the key factors which has prompted us to go in for the expansion now. The rates available now would never have been possible in 2007 or 2008.”

The company launched in 1989 and has a capital base of AED30 million. It presently operates ten plants along the northern coast of the United Arab Emirates, and has subsidiary interests in Egypt and Morocco. The company intends to tap into its internal resources as well, but has commenced talks with international banks over the financial aspect of the expansion. Al Shaheen reports optimistically, “it’s only this year we started the process to leverage the company; banks have responded uniformly well to our plans and, of course, to our balance-sheet and performance of the last six years.”

The proposed projects in Saudi Arabia and Qatar will both be achieved as joint ventures, with the company holding up to 50% of the stakes. Land has already been acquired for the plants, and it is expected that the commissioning process will take place in a little less than two years’ time.

Analysts confirm the choice of the two markets makes perfect business sense. Both Saudi Arabia and Qatar are undergoing considerable expansions in infrastructure development as well as creating new capacities in their housing stock. Al Shaheen has reported that part of Orimix’s business strategy is to closely align itself with government led expansions.

Orimix’s plant in Casablanca, Morocco, is operating at full capacity and plans for its upgrade have been revealed. However, the company’s presence in Egypt is currently on hold, awaiting a clear resolution to recent events. Additionally, when asked about the company’s future plans for the local Fujairah market, where the Orimix plants are running at a 60 – 75% capacity, Al Shaheen said, “there’s a lot of new emphasis on development activity in the emirate, both at the local and federal levels. That will keep our production units busy for time to come.”

In the UAE, cement prices are currently stable, ranging from AED190/t to AED210/t cement. The prices rose as a high as AED400/t cement during the recent construction boom.

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