Saudi cement providers raise output for Saudi megaproject Neom

Riyadh –   Several Saudi cement companies are believed to be increasing their production to contribute to the building of the megaproject Neom, Bloomberg reported, citing industry analysts.

Since the beginning of 2018, Hail Cement and Tabuk Cement raised their output the most, the news agency added.

Tabuk Cement’s production jumped 20%, while Hail Cement’s surged 55% year-on-year in the first six months of 2018.

“Hail and Tabuk are beating volume trends as some contracts were awarded in the Neom area earlier this year,” Anoop Fernandes, an analyst at Bahrain-based investment bank SICO, told Bloomberg.

Saudi cement producers are facing price competition at a time when the sector’s performance is declining this year, Fernandes added.

Meanwhile, Sameer Kattiparambil, an analyst at the research arm of EFG-Hermes Holding in Muscat, noted that Tabuk and Hail were “comparatively the main beneficiaries of Neom project.”

In October, Saudi Crown Prince Mohammed bin Salman unveiled plans to launch the megaproject Neom at $500 billion in investments. The project has reportedly been allocated an area of 26,500 square kilometres, which is larger than Rwanda or Belize.

Many mega international companies are expected to take a part in the building of Neom, including: Amazon.com Inc., Alibaba Group, Airbus Group, Russian Direct Investment Fund (RDIF), and the Bill & Melinda Gates Foundation.

It is worth noting that according to the EFG Hermes analyst, cement demand across the kingdom had been “consistently slower, lower by 13% year-to-date, as the construction sector activities continue to stay weak.”

Kattiparambil forecast that demand for cement would pick up in early 2019 in Saudi Arabia.