Shake-up in cement sector

19 December 2003
The biggest ever takeover in the local cement sector was approved in mid-December with the sale of state-owned Khuzestan Cement Company (KCC) to Abyek Cement Company (ACC), a subsidiary of state-affiliated Fars & Khuzestan Cement Company (FKCC). Plans for a major new cement line at KCC are now subject to the approval of the new ACC management team.

ACC was the highest bidder at IR 2,060,000 million ($246 million) during a public auction handled by the Iranian Privatisation Organisation for KCC, which is one of Iran's largest cement producers. KCC has existing production capacity of almost 1 million tonnes a year (t/y), while ACC's is 2.7 million t/y. ACC's parent, FKCC, is Iran's largest producer with around 6 million t/y. Total annual output in Iran is 30 million t/y. FKCC is majority owned by the state social security fund, which does not receive direct government funding. The social security network is now Iran's largest shareholder in cement production.

The local cement industry is growing rapidly, driven by a local construction boom, reconstruction contracts in neighbouring Afghanistan and the promise of high demand in Iraq. Cement shares have led the Tehran Stock Exchange (TSE) in a bull run that has lasted for more than a year. Cement accounts for more than a quarter of TSE stock.

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