LOOKING FURTHER AFIELD

Oman 2019 | INDUSTRY & MINING | INTERVIEW

Raysut Cement Company has built strong distribution networks and seeks to play a key role in Oman's continued development.

BIOGRAPHY
Joey Ghose has over 25 years of experience in the cement industry across the Middle East, Africa, India, China, and the Far East. His focus is to grow Raysut to a 10-million-ton company by 2022.

What key investments is Raysut making in its different operations around Oman?

The first step is to increase our capacity in Salalah to grow our supply in North Oman. Although Raysut has always been present in the north of Oman through its terminals in Muscat and Sohar, it needs to expand there because north Oman is the biggest market. According to our estimate, it has a demand of 5 million tons per annum, growing at about 9% compound annual growth rate (CAGR). We plan to take advantage of that demand growth by investing in a grinding unit with a capacity of 2 million tons per annum in Sohar. We expect this to come on-stream in the next 18 months, which will make up for our exit from Muscat Port, which has been transformed into a tourism port. Our next area of growth is in Duqm, where we are considering investing in a grinding unit with a capacity of 3 million tons per annum, boosting Raysut's total capacity to 10 million tons.

How are you investing to increase Raysut's exports and capacity of international plants?

We are adding another 3 million tons per annum clinker line to address the export market. In addition, we are moving into East African markets, such as Somaliland and Eritrea. We are working closely with our sovereign fund in Oman to invest in those two markets, which altogether would add 5 million tons per annum to Raysut's capacity. We have already started investing in Uganda, Kenya, and Tanzania, where each facility will produce 2 million tons. Oman's presence is already strong in these markets, so it makes sense to extend that to manufacturing. By doing this, our yearly capacity will hopefully reach 20 million tons, up from our current capacity of 5.6 million tons. At present, the rest of the demand is met by other countries, including Iran, Egypt, Pakistan, and Saudi Arabia.

Raysut exports to Yemen and Iraq. Have you seen demand in those places increase as a result of rebuilding work?

We have not seen that demand materialize yet, but the indications are there. Yemen has historically been one of our strong market; we used to supply 25% of our production to Yemen. That figure has declined primarily due to logistical issues, not because demand has fallen. There are long waiting times now in all the ports in Yemen, mainly because clearances are required, and priority is given to food shipments. Once a peaceful solution is agreed upon, demand will quadruple, and we are preparing our logistics channels for such a scenario. Several port handling facilities in Yemen are currently undergoing upgrades to accommodate modern vessels and discharge systems.

How is Raysut adapting to increases in industrial cost drivers?

The company's cost structure has doubled over the last three years, meaning our competitive cost advantage has declined. This is compounded by the global markets opening up, specifically markets such as Iran, Egypt, more recently Saudi Arabia, and Pakistan. Suppliers in these countries are now at a cost advantage over a plant here in Salalah. The main reason for the cost increases is the withdrawal of gas subsidies in Oman and electricity costs doubling. Therefore, the main investments we are focusing on immediately are all geared to bring our cost structure back in line with global cement manufacturers; we have to invest in capturing losses in our process. The first one is waste treatment recovery, which we are investing in on an urgent basis. Another investment we are making is to enhance our coolers. Raysut has not reinvested in its plant over the past seven or eight years; however, it is vital in our industry to keep up with the latest technologies. Therefore, in-house, we are investing a significant amount of money to increase productivity, which will reduce the cost per ton and make us globally competitive again.