Cement production in the third world has become big business with increasing environmental restrictions elsewhere
CAIRO: Orascom Construction Industries (OCI) Cement Group announced that they have commissioned a cement facility in northern Iraq and are in the process of production.
According to an official company statement, the rehabilitation of the 2.3 million ton per year Tasluja cement factory in northern Iraq has been completed for a total investment cost of $70 million (LE 400 million). In addition, an OCI-led consortium that includes the Farouk Rasool Group, a prominent industrial group in northern Iraq, was awarded a tax-exempt 12-year lease for the Tasluja cement plant located near the city of Suleimaniyah in the Kurdistan region of Iraq in November 2004.
OCI is one of the few privately owned companies maximizing on the benefits of cement production and exportation from a third world country. While the environmental hazards derived from cement production have become better known, the demand has remained high, which has forced international leaders in the industry to turn to the cement facilities of third world countries, where environmental standards are still low and regulations are not rigid.
In Egypt, the cement sector, which until 1999 was lagging behind the global industry due to low utilization of production facilities and an unhealthy dependence on imports, has undergone a massive transformation, as the government has strategically used the environmental issues facing foreign companies in this industry to the country’s benefit.
Major stakes in cement companies were sold off in a series of privatization plans, while local companies have entered the market to gain a share of the profit that multinationals in Egypt, who have established operations in the country as part of their expansion plans, have been enjoying at sky-high prices.
Once the price war began, the market capacity increased and imports took a nosedive, all of which benefited the Egyptian economy and turned the Egyptian cement industry into an independent export player.
Under the terms of the contract, the OCI consortium is responsible for the rehabilitation, operation and maintenance of the Iraqi plant and receives a right of first refusal on any potential privatization of the plant.
Since the award date, OCI has increased its stake in the leasing vehicle from 51 percent to 60 percent.
“We are committed to raise our production capacity in northern Iraq to over 5 million tons during 2007, says Nassef Sawiris, OCI chief executive officer. “We hope that the new capacity in the Tasluja plant and the Bazian greenfield currently under construction (currently 3 million cement tons annually) will help alleviate the inconsistent imports coming into Iraq and contribute to the reconstruction process. The rehabilitation process was a difficult one given the severely battered condition of the plant two years ago, but our technical team has delivered once again.
The Tasluja plant has two dry process production lines supplied by ThyssenKrupp Polysius with a designed production capacity of 2.3 million tons annually. An OCI Construction Group/Polysius team was left in charge of completing the rehabilitation project.
“The successful commissioning of the Tasluja plant is an important milestone in the industrial development of the region, having created numerous employment opportunities and brought in foreign direct investment, says Farouk Rasool, founder of Farouk Rasool Group, in an official company statement.
The OCI Cement Group currently owns and operates cement plants in Egypt, Algeria, northern Iraq, Turkey and Spain, all of which have a combined annual production capacity of 18 million tons of cement. Furthermore, with the additional new investments and expansion projects currently in the works, OCI aims to increase the company’s annual production capacity to 31 million tons of cement by 2007.
