New cement plant will aid industry's recovery

Contractors are currently paying up to twice the normal price per tonne for cement in order to complete projects.

The UAE construction industry is expected to recover from the current cement shortage when a new production facility in Ras Al Khaimah comes on stream over the next few weeks.

The plant, being developed by Union Cement Company, will generate 10 million tonnes of cement a year.

A three million tonne-a-year plant in Fujairah will also be operational by the end of the year, doubling the current production capacity in the region to 26 million in 2008.

The industry has been hit by cement shortages of around 30% over the last two months, forcing many contractors to pay double the price per tonne in order to complete their projects on time.

"We've really struggled over the last two months. There's been a shortage of up to 30%, but I think we'll get over this soon with the new production plants in Ras Al Khaimah and Fujairah," said Khalid Mohammed Bakhit, vice president, Al Bakhit Group of Companies, which owns Universal Concrete Products (Unimix).

"The shortage has affected everyone. Some contractors are paying twice the price per tonne, if not they'll pay penalties for being late with their projects."

Bakhit added that a continuing surge in construction activity in Dubai and unforeseen development in the other emirates led to the current shortage.

"The demand for cement wasn't considered in places like Ras Al Khaimah and Ajman. Abu Dhabi is also starting to open up and the Dubai market hasn't slowed down."

Bakhit estimated that the market would likely see more of a level playing field for cement prices, which currently stands at US $280 (AED1,028) per tonne, once the new capacity comes on board, rather than a reduction.

Consumption of cement in the UAE reached 14 million tonnes in 2006, according to figures from Union Cement Company, and is expected to rise by 10% for 2007.

"The current shortage situation will improve, but it may take four to six months before we see any real difference. The cement capacity in the UAE is currently around 13 million tonnes a year - in 2008 it will be around 26 million," said Mohammed Shehadeh, general manager, Unibeton Ready Mix. "But I do feel sorry for contractors paying more. The trick is to establish good long-term relationships with one supplier, rather than jumping from one to the other. At Unibeton we have good strategic partnerships with manufacturers, who give us priority and supply our requirements regularly."

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