The leading Saudi cement firm is taking a cautious approach to adding new capacity
Date established: 1977
Main business sectors: Cement production
Main business regions: Saudi Arabia, exports to Europe, Middle East, Africa
CEO: Saud Islam
Chairman of the board: Prince Mishaal bin Abdulaziz al-Saud
Yanbu Cement Company (YCC) is one of the four leading Saudi cement companies in terms of value of sales. Combined, these four firms, which also include Southern Province Cement Company, Saudi Cement Company and Yamama Cement Company, accounted for more than 60 per cent of cement production in the kingdom in 2007.
YCC is a publicly listed company with two branches: a head office in Jeddah and a branch in Medina, employing just under 1,000 staff. It also has a subsidiary company, Yanbu al-Shuaiba Paper Products Company, in which it holds a 60 per cent stake. Total shareholder equity is slightly above SR2bn ($533bn), and its market capitalisation is SR8.6bn.
It has two main operational divisions: the projects and planning department, and the production and technical department. The projects and planning department operates under the direct control of director general and chief executive officer (CEO) Saud Islam, and is the main division responsible for new projects.
The department was instrumental in the construction of a 7,000-tonne-a-year (t/y) clinker line and is responsible for a project to reduce the operational costs of the existing 20-year-old production line. The production and technical department, staffed by engineers, formulates the production plans to ensure that cement outputs match the market requirements, as assessed by the sales department.
YCC markets ordinary Portland, sulphate resistant, pozzolana, low heat and other types of cement at a plant located north of the city of Yanbu in the Western Province. It was the first producer of sulphate-resistant cement on the west coast and the first producer of 25-kilogramme cement bags in the Middle East.
The company’s domestic market share is estimated at about 17 per cent, which is roughly equal to that of its main listed rivals: Southern Province Cement Company (SPCC) and Saudi Cement Company (SCC). Yamama Cement Company, with a capacity of 6.5 million t/y, is the biggest Saudi cement producer. YCC’s cement production in 2007 was 4.6 million tonnes.
The company commissioned its fourth and largest kiln, with 7,000-tonne-a-day (t/d) clinker production capacity, in 1997, and recently completed the upgrade of line 4 from 7,000 t/d of clinker to 9,500 t/d.
YCC’s output is 4.6 million t/y from its four-line capacity. In the past, it has exported its product, shipping about 1 million t/y over a three-year period before domestic demand started to increase. It has marketed its products in countries around the Red Sea area, including East Africa, making sales as far as Yemen.
One of the company’s key advantages is its close proximity to most of the raw materials needed for cement production. Limestone and gypsum reserves are located adjacent to its facilities, with more than 50 years mine life. Clay is mined 20 kilometres southeast of the plant, while sandstone and iron ore are transported from other parts of the kingdom.
Given the remote location of the plant, YCC has subcontracted its operation and maintenance to Associated Cement Companies of India. YCC’s technical department is responsibility for monitoring the progress of production on a day-to-day basis.
The company plans to replace all its old production lines, though it is unwilling to identify a date for their replacement - a reflection of the company’s cautious outlook in the current market. It plans to raise clinker capacity at line 4 by a further 1,500 t/d. The company has also increased grinding capacity from 7,600 t/d to 11,500 t/d through the addition of a new mill.
Perhaps the biggest statement of YCC’s ambition is its plans for a fifth cement production line. The YCC board has approved a new line of 10,000 t/d capacity and the contract award for its construction is expected to take place within three months.
However, YCC is wary of over-committing itself and being caught out by weaker demand conditions. Islam argues that getting the timing right is critical for cement companies. With large volumes of new capacity coming on stream across the Saudi cement sector, YCC will have to gauge when and if demand will be sufficient to absorb the new output.
YCC plans to enforce Saudisation of the technical workforce at the site and has established a training centre that is equipped to receive trainees from other cement companies, offering courses under the auspices of the Arab Union for Cement & Building Materials.