Cement industry in KSA, Kuwait set to flourish


The cement industry in Saudi Arabia and Kuwait is expected to flourish due to the current construction boom in GCC region where the total value of projects planned or underway is estimated at $2.3 trillion, according to Kuwait Finance House ( KFH ).
The weekly economic report of KFH , also known as Baitak, said government support has been a key factor driving growth in regional construction and cement sectors.
Most GCC countries have allocated large portions of their respective budgets for construction activities.
For the 2013-14 fiscal period, GCC’s aggregate budget expenditure stood over $400 billion.
Of this, substantial allocations have been made to the education, health and infrastructure segments. Saudi Arabia has allocated almost a quarter of its total budget on education and increased spending on Infrastructure and transportation by around 16 percent year-on-year, the report cited by the Kuwait News Agency said.
It said Kuwait cement accounts for roughly 10 percent of GCC construction materials distribution market. In previous years, demand had slowed down as a result of postponement or delay in major infrastructure projects.
In addition, weak business environment further slowed down the industrial expansion, it said.
Kuwait, however, is also in line to join the current construction boom in the GCC, with projects worth of $188 billion already underway.
The Kuwaiti government has been showing adequate support for infrastructural development.
Some major projects underway in the nation include Kuwait City’s $7 billion on going metro project, which is expected to be completed by 2020 and the $3.3 billion Kuwait International Airport (KIA) terminal which is expected to open in September 2016, the KFH report stated.
Kuwait also plans to invest around $6.2 billion in a series of motorway construction projects with an approximate length of 550km by 2015.
At the same time, the other major developments include $2.6 billion Subiya causeway, a 37.5km bridge crossing Kuwait Bay, linking Kuwait City, Subiya peninsula and Boubyan Island.
Also, Kuwait has over $5 billion university building projects either in planning stage or under construction.
With such robust infrastructure spending plans, demand for cement is expected to pick up in near future, it said.
The Saudi cement industry is one of the established sectors in the Kingdom.
The industry is benefiting from massive investments currently underway in the Kingdom as the country bids to channel its oil revenues to build its infrastructure and strengthen the nonoil sector.
As a consequence, the government has initiated plans to execute projects, worth around $700 billion, across the Kingdom over the next 20 years.
Nearly half of the government investments are set aside for real estate and housing schemes in order to facilitate improved living standards for its citizens, the report said.