BUILDING the future

With new mega construction projects on the way in Saudi Arabia, Al Safwa Cement Company has reasons to be optimistic that demand will increase domestically.

The Saudi cement industry witnessed a contraction of 57% in the last few years. What is your current assessment of the market?

This is a market correction period; demand for cement will not go beyond or below this point, as we have reached the bottom line. In the cement market, like in any other, the business has a normal lifecycle. In the last few years, we were in the saturation phase, though now new projects have been announced such as NEOM and the Red Sea and Sakani projects, which will bring new demand and areas to tackle. We have several projects and megaprojects in our region that will start soon or have already started, so we will definitely benefit from those, bringing our quality and range of products to serve different demands. At the same time, the government has taken supportive measures by lifting the export fees of the cement sector, giving us the opportunity to export and capitalize on our competitive advantage in terms of production costs. There are some markets near the Saudi borders like East Africa and even Central Africa that are now growing markets in regard to cement.

“We have several projects and megaprojects in our region that will start soon or have already started, so we will definitely benefit from those, bringing our quality and range of products to serve different demands.”

Regarding the export strategy, what is the key to gain access to these markets?

We are trying to look around for suitable markets and have found two main areas, Africa and Southeast Asia, although we also have Bangladesh as a hub for other countries. Demand is always dynamic in the cement sector. For example, Libya is absorbing a competitive market like the Egyptian one from the export standpoint, and if Libya is open and develops aggressively, that will leave us with other countries such as Kenya, Mozambique, and others that can be supplied by the Saudi market. Iraq, Jordan, and Syria will also provide an opportunity for the northern region in Saudi Arabia, while Yemen represents an opportunity for the southern one.

What main challenges are cement companies facing in Saudi Arabia today?

The market is correcting itself; transportation costs are one of the main problems facing players in the industry. In the last few years, with the liberalization of the transport sector, our costs will soon be positively affected. If we have higher domestic demand, that will lead to a self-correction in the market. We have been in a survival mood for the last few years. The fuel price revision will impact the industry in general, and we should be ready for that, not by increasing the quantity of produced cement but by enhancing our cost performance. Having said that, we have a long-term strategy that started five years ago to optimize our fuel mix strategy to enhance our competitiveness and increase our autonomy. ✖