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Status of the cement industry in Yemen

Date: 11/8/00
Time: 2:33:18 AM
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Status of the cement industry in Yemen Within the framework of the industrial sector

The cement industry had been; since establishment in 1973; favorably supported by the state, whereby the latter obtained the amounts of loans necessary for financing this public sector, which is constituted of three main factories.

The government initially obtained a loan from ex-USSR in order to finance the running operation of the first and second production lines of Bajil's cement factory (total annual production capacity of 250,000 tons). Later, another loan amounting of forty million dollars was given by Japan, on the basis of 7,5% interest rate per annum chargeable upon repayment. This had been injected to finance part of the investment costs estimated to run the annual production capacity of 500,000 (thousand) tons from Amran's cement factory. The latter's production only started in the year 1982.

The third-named Al-Burg cement factory-had also been financed through a Japanese loan granted on the basis of 1,5% per annum interest rate chargeable upon its repayment. Its annual production capacity was estimated 50,0000 tons, while the loan obtained had been of value 22,080 (billion) Yen. The factory started its production in the year 1993.

Thus, on an initially estimated basis, the total annual capacity of the transforming industries stood at 125,00,00 tons of cement; of which to contribute towards satisfying the proportion of 40-70% of the entire local demand.

Table (1) below may show that, upon comparing the value-added revenues achieved from the cement manufacturing in Yemen with other similar products of the transforming natures, the former is accounted higher. This is mainly because most raw materials used for the production process of cement are locally available, and are to be found in abundant quantities.

Table (1)

Year Quantity produced in tones Total value of Revenues (Y.R) Year Quantity Produced in tones Total value of Revenues (Y.R) 1990 835,054 778,818,453 1994 914,952 2,370,388,582 1991 844,812 921,116,570 1995 1,104,868 4,592,626,599 1992 814,406 1,327,506,588 1996 1,020,282 5,842,890,810 1993 1,083,735 1,991,809,118 1997 1,235,790 10,842,890,810

Furthermore, the "Cement Public Corporation" had largely contributed in financing the state budget; thereby alleviating the burden on the balance of payments; related to such annual records of Yemen's economy. In fact, it is considered in the fourth place for its total revenues in local currency, and comes in the levels of importance after those of the oil and gas industries, income taxes, and customs and excise.

The burden alleviation from the trading balance of payment comes from non-importing of cement from the international markets because of the product being locally available, taking the annual quantities produced from 1990-1997, and on the basis of an average chargeable price 60/=U.S. dollars for every ton of imported cement, the estimated savings in the balance of trade could be shown as follows:

Table (2)

S/N The Year Quantities in tones Non-import's Savings in U.S. Dollars 1 1990 835,054 50,103,240 2 1991 846,812 50,808,720 3 1992 814,407 48,846,420 4 1993 1,083,753 65,025,180 5 1994 914,952 54,897,120 6 1995 1,088,638 65,318,280 7 1996 1,041,321 62,479,260 8 1997 1,229,126 73,747,560

However, with such achievements reached by the "Corporation", there were obstacles that have arised to restrict the possibility of its expansion in production capacity. Among such handicaps, were the followings:

a)-Non-implementation of the projects of expansions in the activities in all of the three industrial establishments, though they were approved officially within both the "Third Five-Year Plan 1987-1991" and the "First Five Year Plan 1996-2000". The endorsement came after all necessary geological, economic and technical studies had been processed over these "cement-productivity" projects. However, the scarcity of the financial sources -either available locally or of foreign-origins had been the main reason of non-implementation.

b)-The "Corporation" made several contacts of interested concerns asking its readiness to welcome the opportunities of investing in this sector. Within the new move of the government of Yemen in encouraging investment in our private sector, the "Corporation" is now awaiting the start of some practical steps in implementing these projects of expansions in the sector of cement.

No doubt manufacturing of cement played a decisive role in the economic and social development of Yemen, but it is still in need of supervision and administration by highly-quality of professionals and administrators in order to continue as a successful enterprise. As priorities in continuing the production process and its development, the success of all other objectives of this industry need the continuous follow-up evaluation of performances, as well as, to the extent of its capability on improving the economies of the product.

Such product economics have been taken full care by the "Corporation", through its viewing and implementation of the following objectives:- 1- Increasing the actual quantities produced much more than the ones set-up by the work-plan of cement's industrial production.

2- Working on the basis of reducing the production costs to the lowest possible levels.

3- In order to stand against the local competition of externally imported-cement, considerable improvement of the quantity of the product have been noticed through this period by the dealers and consumers. Under the conditions of free concept of a capitalist market and freedom of importing cement from any country of export, it has so far been the trust-worthiness of the Yemeni consumer that kept the "Corporation" able to stand all the way against foreign competition.

4- Currently, the "Corporation" is engaged in providing self-sustainable sources that would be relied upon for obtaining the required "amount" of energy for the running of the three factories, without stoppage the process of production.

5- It is also taking great importance to other factors, such as:

-improving the standard of maintenance -increasing the habilitation criteria through training of the labor-force, and raising their proficiency in operating the process of cement manufacturing. -Modernizing the sets of equipment and machinery used in some sections of each of the three factories by replacing them with newly-imported ones. ______________________________________ Reference: A concise text; extracted from the working-paper; which was submitted by the "Yemeni Public Corporation For Manufacturing & Marketing of Cement" in May 1998; to the Consultative Council. Source: Published by the "Economic" periodical of Saba News Agency-bi-monthly bulletin number (114) of 16/7/98.

Last changed: September 15, 2002