After Saudi Arabia became the first cement producer in the region in 1955, it took another 23 years before Oman’s Commerce & Industry Ministry established a cement plant in 1978.

This venture, Oman Cement Company, was established as part of Omani ruler Sultan Qaboos bin Said al-Said’s efforts to create a domestic cement production capacity to supply Oman’s ongoing infrastructure modernisation and economic development.

Oman Cement Company in numbers

2.07 million tones – Production in 2008

4.63 million tones – Forecast cement demand in Oman in 2009

OR16.9m – Net profits at the end of the third quarter of 2009

Source: Oman Cement Company

Originally 100 per cent state-owned, the government reduced its share holding in Oman Cement to 63 per cent in 1993 through a public offering of shares on the Muscat Securities Market.

In 2003, the government divested a further 12 per cent of its holding, reducing its share to 51 per cent. This is split between the Commerce & Industry Ministry, which holds 30.43 per cent, and the Finance Ministry, with a holding of 20.57 per cent. Private individuals and companies hold a combined 20.64 per cent stake in the company.


Oman Cement employs about 700 staff at its production facilities at Rusayl, 60 per cent of whom are Omani.

The company produces ordinary Portland cement and sulphate-resistant cement. New markets for oil well cement classes A and G, used in the construction of deep oil wells, have also been developed. These products are sold locally and exported to other GCC countries, as well as Yemen, Sudan, Pakistan, Syria, Iraq, India and Turkmenistan.

The Rusayl plant was commissioned in 1983 with an initial clinker capacity of 600,000 tonnes a year (t/y). Clinker is the solid material formed into lumps at the kiln stage of the cement manufacturing process. It is then ground and gypsum is added to produce Portland cement. With the excep-tion of bauxite, all the raw materials required for the production of clinker are available locally. Gypsum is mined at Ghaba, in Oman’s Wusta region. Other feedstocks, such as limestone deposits, are mined in the vicinity of the plant.

In 1998, clinker production capacity was doubled to 1.2 million t/y with the construction of a new plant at the same site at a cost of $100m. In the same year, a 30MW power station was built to supply the new plant and the existing one.

In 2006, Oman Cement installed a 3,000 tonne-a-day (t/d), cement-grinding mill at Rusayl. Ongoing work on an expansion project to double clinker production capacity to 2.4 million t/y is expected to be completed in the first quarter of 2010.

Company snapshot

Date established: 1978

Main business sectors: Cement production

Main business regions: Oman

Chairman: Qahtan bin Yarub al-Busaidi

Clinker production in 2009 is running at 97 per cent capacity, with Oman Cement producing 873,285 tonnes by the end of September.

With 1,578,081 tonnes of cement produced in the first nine months of 2009, the company is well on its way to exceeding its 2008 production figure of 1,735,272 tonnes.

In 2008, local demand was such that Oman Cement had to import additional clinker and 264,728 tonnes of cement. The imports were purchased under directions from the government and the company says it will be making a claim against the government in the current financial year for reimbursement for the shortfall in profits due to import costs below a base level of OR16.1m ($41m) after tax.


An upgrading and modernisation project at the company’s packing plant at Rusayl is expected to be completed by the end of 2009. The contract, worth $162m, was awarded at the end of 2007 to China National Building Material Equipment Corporation, a subsidiary of China National Material Industry Group.

Oman Cement will expand its operations again next year, when it brings on line a new clinker production line with a capacity of 4,000 t/d, or 2.4 million t/y. Construction is under way and the project is expected to be completed by the end of April 2010.

Oman Cement is using loans to partially finance the installation of the new production line. Loans provided by an unnamed local bank constitute OR20m of the project cost, while the balance is financed by the company’s available surpluses.

On the feedstock side, Oman Cement is developing a new limestone quarry, with estimated reserves of 50 million tonnes.

The gulf Cement sector

The supply of cement in the region will exceed demand in 2009 for the first time in five years, according to GCC Cement 2009, a report by MEED Insight.

Oman’s excess supply is estimated at 1.2 million tonnes, of the 4.2 million tonnes produced domestically.

The Omani cement sector recorded robust demand from 2003 to 2008, on the back of spiralling oil prices, which resulted in fiscal surpluses for the sultanate and massive government expenditure on public projects.

According to research by Kuwait-based NBK Capital, Omani cement consumption grew by 16.7 per cent between 2003 and 2008.

In 2008, the total domestic demand for cement was estimated at 4.5 million tonnes. Oman’s two producers accounted for about 3.5 million tonnes of this, with the remainder being supplied through imports.

Growing demand

Oman Cement Company estimates domestic demand for cement will total 4.63 million tonnes in 2009.

Demand in the coming year is difficult to predict, as the full impact of the slowing construction market and lower demand for cement is only starting to be felt.

Capital expenditure by the government will remain the main driver for infrastructure spending – and hence demand for cement – in Oman.

While real estate projects have been hit by the economic slowdown, government infrastructure schemes have largely proceeded on schedule. Omani government officials estimate that about 10 per cent of the $2.1bn allocated to infrastructure projects in the 2009 budget will be spent on cement.

NBK Capital says it remains optimistic about upcoming infrastructure projects, to which the government has said it is committed, but NBK retains a conservative outlook on both domestic and export prices from 2010 onwards.

To date, regional com-petition has not had a significant impact on Oman’s cement producers. Average cement prices for the company are expected to increase by about 5 per cent in 2009 to OR31.2 ($52.2) a 50kg bag, compared with OR29.5 a 50kg bag in 2008.

But analysts predict there will be a decline in selling prices in the first half of 2010, primarily due to competition from cement producers in the UAE.

Domestic prices are likely to decrease by as much as 11.1 per cent to OR27.8 a 50kg bag in 2010, says NBK Capital.

Further ahead, prices could fall a further 5 per cent in 2011, due to added production cap-acity and the expectation of excess supply in Saudi Arabia and the UAE.

This is in addition to the threat of cheap imports from other markets, such as India, Pakistan and China.

Increasing competition

Downward pressure on prices could come from the potential lifting of the cement export ban in Saudi Arabia, imposed in June last year because local demand was spiralling upwards.

The dumping of cheap cement would be a novel experience for the Omani market and would put Omani prices under pressure.

There are currently no restrictions on cement imports into Oman, and independent cement distributors have easy access to cheap imports, given the country’s proximity to the UAE and Saudi Arabia.

The small size of the Omani project market and its relative isolation from the regional real estate crunch should ensure that the cement sector remains relatively robust.

Combined with the limited number of local producers, this should also ensure that the long-term outlook for the industry remains stable.