Bahrain's GFH plans $2bn cement firm

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SURGING DEMAND: GFH plans to set up a $2 billion cement firm. (Getty Images)

Islamic investment bank Gulf Finance House (GFH) plans to create a cement company at a cost of as much as $2 billion to tap surging demand for the material amid a real estate boom in the Gulf.

Manama, Bahrain-based GFH, the country's second-largest company by market value, aims to start production by the company in 2010 and hopes to secure 10% of the Middle East and North Africa market, it said in a statement on the Dubai bourse website on Monday.

The cement company will initially have production capacity of 12 million tonnes per year, rising to as much as 24 million tonnes, the investment bank said, without making clear over what period of time.

Gulf Finance House, which operates according to Islamic law, will partner companies including Emirates Islamic Bank, Holtec and China National Building Material Group Corporation, it said.

"The shortage of cement supply in the region is well documented," Emirates Islamic Bank General Manager Abdulla Showaiter said in the statement.

The planned cement company, which will be called Cemena, will initially operate in seven countries, including the UAE, Syria and Libya, GFH said, without giving details about capacity.

Cemena "will inject critical new volumes into domestic markets and serve huge growth in regional construction", Showaiter said.

Demand for cement in Saudi Arabia, the UAE and four other Gulf oil producers - where economies are surging on a six-fold increase in oil prices since 2002 may grow 40% within three to five years from 62 million tonnes per year now, GFH said. (Reuters)

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