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Cement prices to rise on back of fuel hikes

AMMAN -- The Jordan Cement Factories Company (JCFC) will increase the price of cement after the implementation of the government's decision to hike the price of oil derivatives in April, JCFC Managing Director Rasheed Ben Yakhlouf said this week.

"The increase in cement prices will reflect the new oil prices in the Kingdom," Yakhlouf said.

The government announced this week that the price of oil derivatives would rise by an average of 25 per cent.

In order to offset the effects of the hike on low-income families, the government has set up a JD61.7 million fund to be distributed in April and September of this year.

Yakhlouf said the cement market grew by 16 per cent in 2005, with the price of cement rising by 18 per cent as a result of oil prices increasing by more than 100 per cent.

JCFC Board Director Omar Bdair told journalists this week that the cement market is expecting a further boost this year as the construction sector is expected to grow by 10-15 per cent.

"The growth in the market has been a trend since 2003, when it grew by 20 per cent," Bdair said.

Yakhlouf said the current cement price in the Kingdom is JD55 per tonne, excluding taxes.

"The company supplies its distributors at JD73-74 per tonne, while they sell it on at JD80-85 per tonne," said Yakhlouf.

However, Yakhlouf said that prices had reached as high as JD90-95 per tonne in 2005.

"We are ready to cooperate with the Ministry of Industry and Trade to maintain stable cement prices," Yakhlouf stressed.

Bdair told The Jordan Times that "the company's performance had improved since privatisation, adding that the company posted a 2005 net profit of JD67 million, while in 2004 it stood at JD52 million.

In 1998, the French cement company Lafarge bought a 33 per cent stake

in the JCFC for JD72 million in what was considered the first major privatisation step in the Kingdom. The French company increased its stake in 2002 and now is the major shareholder with 48.1 per cent. The Social Security Corporation is the second major shareholder with 23.3 per cent.

"Production capability has also increased from 3.908 million tonnes in 2004 to 4.046 million tonnes last year," Yakhlouf said.

This year the JCFC is planning to produce 5.5 million tonnes, in order to meet the expected increase in local demand.

In order to avoid the impact of the hike in oil prices, Yakhlouf said the company has been looking at alternatives, particularly the use of oil shale in the production of cement and power generation.

"Experiments are being carried out in the Rashadiyah Factory to assess the feasibility of using oil shale there. If it proves to be a viable alternative, it will come into use by the middle of the year," he added.

By Khaled Nuaimat

© Jordan Times 2006