TBY talks to Atilla Yıldız, Managing Director of Shymkentcement, on being a part of the Italcementi family, local market conditions, and the role of its new retail arm.
TBY Founded in 1958, Shymkentcement became a part of the Italcementi (ITC) Group in 1998. How has Shymkentcement’s production benefited from ITC’s expertise and excellence?
ATILLA YILDIZ After the acquisition of Shymkentcement and until today, ITC Group has invested around €42 million in its plant facilities on safety, the environment, and cost-reduction projects. The most important investment, carried out in 2009, was the installation of two completely new filters for kiln gas de-dusting. Shymkentcement is the only cement plant in Kazakhstan boasting these modern filters. Currently, the emission level is around four times less than the local required limits. These days we are trying to complete another investment project regarding Continuous Emission Monitoring (CEM), which will be put into operation at the end of July 2011. There are many other projects ongoing at Shymkentcement, such as the installation of a pelletizer, a cement loading system, and so on. Those projects are set to be completed in 2011.
Shymkentcement has a wide range of products. For which products do you experience the highest demand?
Shymkentcement’s product quality is controlled by integrated management system ISO 9001, certified by the AFNOR Certification Company. We also have nine types of products certified by GOST (local) standards, and one very special product called oil well cement used in oil production. This product is certified by the American Petroleum Institute (API) and controlled by ITC’s central laboratory. Our main competitive advantage in being a part of a multinational company is using the ITC trade name and selling high-quality products to our valued customers. Our main products are D20 and D80, and they make up most of our production. In addition to that, we are enlarging our storage facilities in regional areas to enlarge our market coverage. We currently have two terminals in Almaty with a storage capacity of 5,000 tons. It helps us to deliver cement to our customers on time.
What are the strongest segments your company is involved in, and in which segments are you planning to increase volumes?
Construction investment can be divided into three categories: civil engineering, residential investment, and non-residential investment. In 2011 two new players—one local and one international—entered the market. We expect that by 2015 overall cement capacity should increase by 4.4 million tons, reaching 13 million tons with four new plants. The 2009-2011 period will be remembered for its years of outstanding results—when Shymkentcement considerably strengthened its leading position in the market by opening its “Bravo Build” distribution centers with a new formula, “From Producers to Consumers”. “Bravo Build” consists of retail shops that allow end-users to buy products directly from Shymkentcement. We have already opened three retail shops: one is located near the plant, the second is in Shymkent city center, and the third is in Mankent.
How have your operations been affected by the recent economic downturn? What changes are you observing as market conditions improve?
During the crisis of 2008 cement consumption in Kazakhstan decreased by 28% over 2007, and in 2009 the growth was down 10% on 2008. However, in 2010 the market recovered again and responded positively with a growth level of 10% over the 2009 results. In Kazakhstan most of the cement processes are wet systems and new plants under construction will have dry process designs. Shymkentcement is also considering such an investment, and it is under discussion with our shareholders. Therefore, we think that the wet process plants will experience difficulties in gaining a competitive advantage in the future, mainly due to the cost difference, and either the wet process plants will switch to dry process or they will lose their market share.
What role will the construction materials sector play in widening Kazakhstan’s industrial base?
The construction sector is the locomotive of the industry and decreases the unemployment rate considerably. The Business Road Map 2020 is a good plan to boost the construction and building materials sector even further. One challenging issue is infrastructure, i.e. the weak transportation network in the country. Today we are facing a lot of problems in finding trucks to transport raw materials and finished products. We realize that the country is big, and it is difficult to transport cement from one part of the country to another, making it very costly. Therefore, if extensive transportation investment is realized, we believe that it will help the country develop.
How has Shymkentcement worked toward improving innovation?
ITC has an innovation department and every country management team has innovation objectives. Innovation means developing new processes in order to limit energy and raw material consumption, and creating new products in order to meet the needs of the market and the environment. An innovation ratio is determined by comparing total industrial turnover to each innovative action or product introduced. This displays how much significance we attach to innovation in our group and the company. We have many innovative products. For example, oil well cement is one of them. Pelletized cement is another innovative technique that we will introduce to the market.
© The Business Year