Saudi Readymix Concrete Co.
Current status of Major Infrastructure Projects in Saudi Arabia A Future Outlook For Cement & Concrete Demand A Glimpse of the 2009 Saudi Market?
• The largest market in the GCC, consuming around 37 million tons of cement. • Growth concentrated in major cities • Demand for concrete products has increased significantly, over 23 % yoy. • Public sector has been the main driver of construction growth • Most projects are institutional and infrastructural • In spite of growth, competition became more fierce • Several private sector projects are on-hold or have been delayed • However, the oil price recovery may drive growth further well into 2010 Is Domestic Growth Sustainable?
• Global financial meltdown • Project finance • Steady oil revenues • The role of private sector • Investor confidence • Project feasibilities • Delays in payments Genuine Demand
• Saudi is the largest concrete products market in the GCC • Saudi has the largest population in the GCC • The Saudi economy is by far the largest of the Arab Countries • Saudi has a genuine demand for – Residential units (1 million units in 5 years) – Hospitals & clinics – Power & water – Infrastructure – Universities and schools • Saudi has set strategies to diversify its economy and develop several sectors such as the industrial, aviation, tourism, health, etc., sectors The Ready-Mixed Concrete Industry Saudi Arabia
• Readymix concrete market in 2009 is estimated to be 50 million m3 per year • We estimate that there are more than 350 players all over the Kingdom • A very fragmented industry and highly competitive industry • The larger part of the market demand is low quality non-spec concrete • Lack of national readymix standards • Unregulated industry • Major projects with a multitude of specs and requirements • But, major and megaprojects have very strict quality requirements Saudi Projects Tender Index Saudi Projects Award Index Megaprojects The Construction Sector
• Many new megaprojects have been announced during the past year in spite of the downturn. • Their value exceeded USD 700 billion. The total value may exceed one trillion dollars soon. • These projects have a construction period ranging from 2 years to over 20 years. • The government is the major developer, include MOE, MOH, Saudi ARAMCO (and partners), SABIC, SAGIA, Royal Commission, SEC, SWCC, PPA, GOSI and many private (local and foreign) investors • Various sectors: Infrastructure, industry, mining, oil & gas, petrochemicals, real estate, etc. 192Mega Projects (As of November 2009)
• Time frame 2010 – 2014 (excluding economic cities, which have a span of 10 to 20 years) • Investment to exceed USD 706 billion • Average project value is over USD 3.8 billion • Total concrete requirements are estimated to exceed 190 million m3 • Average cement demand for these megaprojects only is estimated to exceed 10 million tons annually during the next 5 years. • Average annual concrete demand is estimated to exceed 80 million cubic meters in the next 5 years. Megaprojects in all sectors Economic Cities
• King Abdullah Economic City • PABMEC • Knowledge Economic City • Jizan Economic City • Tabuk Economic City • Eastern Province ?
• Attract US$ 300 billion in investments • Contribute US$ 150 billion to the GDP King Abdullah Economic City
• USD 27 billion investment • 168 million m2 of land • 1.5 million residents • 6 zones
• Construction started Reference: www.kingabdullahcity.com Jizan Economic City • 250,000 residents • USD 26.7 billion investments • Land area: 100 million m2 • 4 zones : primary industries, secondary industries, industrial port, mixed development • Some construction started
Reference: www.jizaneconomiccity.com Prince Abdulaziz bin Mousaed Economic City (PABMEC)
• USD 8 billion investments in Hail • 140,000 residents • 300,000 employment opportunities • 15,000 residential units • Land area: 156 million m2 • Largest transportation and logistics hub in ME Knowledge Economic City
• USD 6.7 billion investment • Located in Madina • 20,000 employment opportunities • Land area: 4.8 million m2
Reference: www.knowledgecityksa.com King Abdullah Financial District
www.kingabdullahfinancialdistrict.com • Located North of Riyadh • Owner: Public Pension Agency • Land area: 1.6 million m2 • Home to Tadawul/CMA King Abdullah University of Science & Technology
• Located in Thuwal, 80 km north of Jeddah • Graduate-level research university • Saudi Aramco is managing the project • Total land area: 36 million m2
Reference: www.kaust.edu.sa Al Wasl - Riyadh
• US$ 12 billion investment; North of Riyadh • 55,000 homes/townhouses/villas, 200,000 residents • 1 million m2 office space & 2000 hotel rooms • Seven shopping centers 270,000 m2 • Total land area: 14.1 million m2
Reference: www.limitless.ae Kingdom Holding Co. - Jeddah & Riyadh
• North of Jeddah • USD 13 billion • Mixed use commercial, residential & resort • Colossal skyscraper • Total 5.3 million m2
Reference: www.kingdom.com.sa
• East of Riyadh • USD 7 billion • 13,500 residential units • Mixed use commercial, residential & resort • Total 16.5 million m2 Princess Noura Bint Abdulrahman University
• Located in Riyadh • Administration building, 13 faculties, 700 bed hospital, lab, research centers and residential area • Project duration 3 years • Total land area: 8 million m2 • Total building area: 3 million m2 King Abdullah International Gardens - Riyadh
Owner: Riyadh Council Designer: Nick Sweet, Partner at Barton Willmore and Buro Happold in joint venture Budget: Estimated $800 million The project: A 24 acres pleasure dome incorporating 400 million years history of plants, trees and flowers. Plants from botanical epochs will be grown and displayed in seven sections inside two interlocking crescent- shaped enclosures. The theme park will utilize renewable power mainly solar and wind and minimal water and will be built near Jeddah highway in Riyadh. Jeddah Corniche Seafront Apartments - Jeddah
Owner: Keppel Land of Singapore and Saudi Economic and Development Co. Designer: Saudi Diyar Budget: Estimated $801 million The project: A residential community along the Corniche Waterfront in Jeddah. The development will cover an area of 36,000 square meters and will include two high-rise residential towers with 82 stories (300 meter high) and with a total of 1,000 seafront apartments and will be undertaken in phases. Al-Marina - Khobar
Owner: INJAZ Development Company Budget: Estimated $3,000 million Project: The multi-purpose development will be located between Khobar and Dammam and will stretch four kilometers along the coast. Qasr Khuzam - Jeddah
Owner: Khuzam Real Estate Development Co. Budget: $13,000 million The project: Qasr Khuzam will occupy a four million square meters area and will include the construction of residential units, commercial districts, hospitals, schools, and related facilities. Khobar Lakes- Khobar
Owner: Emaar Middle East Budget: $1500 million The project: The development will cover an area of 4,300 million square meters and will be developed in phases. The development will encompass the construction of 2,000 private villas in a series of nine villages. The first phase of the project which covers an area of 2,600 million square meters will feature mosques, educational complexes, shopping centre, community centers, restaurants and various other amenities. Lamar Towers - Jeddah
Owner: Zahran Real Estate/ Cayan Investment & Development Company Budget: $533 million The project: A mixed-use complex on a 34,000 square meters site. The development will have a built-up area of about 224000 sqm and will encompass the construction of two residential towers (72 and 69 storey) , a three-storey shopping centre and car park. Jabal Omar - Makkah
Owner: Jabal Omar Development Company Budget: $2700 million The project: A mega development near Al Haram. The project will be built over 1 million square metres and involve the construction of six five-star hotels, seven 35-storey residential towers, a four-level retail concourse and a car park for 12,000 vehicles. Upon completion, the development will accommodate 30,000-40,000 residents. Al-Shamiyah Makkah Development - Mecca
Owner: Al-Shamiyah Urban Development Company Budget: $9300 million The project: A development on a 7.4 square kilometers area to create housing for about 134,000 people located north of Makkah. The project will include villas, hotels, residential apartments, commercial centers, markets, car parks, schools, police stations and medical facilities. Railway projects
• 3 Railway projects – North South (Ongoing) – East-West (Landbridge) – Makkah-Madinah (MMRL) • Additional 3,600 km tracks • Future plans to link other areas • GCC Rail – USD 25 billion
Reference: www.saudirailways.org Megaprojects by Value Concrete Investment Ratio
• What’s a megaproject in terms of cement or concrete? • Concrete Investment Ratio =
Cubic meters of concrete per USD 1,000,000 investment value
Low Medium High Concrete Investment Ratio By Sector
Institutions Bridges Real Estate Ports Electricity Airports Petrochemical Water / Pipelines Oil & Gas Low Medium High Concrete Investment Ratio By US$ Value Concrete Investment Ratio Cubic meters Megaprojects by Sector Megaprojects by Sector Megaprojects by Region Megaprojects by Region Megaprojects by Region The Construction Landscape Value of projects - November 2007
More than USD 30 billion
USD 10 to 30 billion
Less than
USD 10 billion The Construction Landscape Value of Projects USD - November 2008
More than USD 50 billion
USD 30- 50 billion
USD 10 to 30 billion
Less than USD 10 billion The Construction Landscape Value of Projects USD - November 2009
More than USD 50 billion
USD 30- 50 billion
USD 10 to 30 billion
Less than USD 10 billion Raw Materials Supply Cement and Aggregates The Cement Industry Timeline Saudi Arabia
2007 2008 2009
- 8 cement companies -12 cement companies -1 new cement plant started - 10 cement plants -15 cement plants operations. - 27 m tons production capacity -Production capacity to reach -Production capacity to reach - 27 new cement licenses 40 m tons 50 m tons - 5 new quarry licenses only -6 new licenses will be -Export ban lifted for3 - Very tight supply situation auctioned before year end companies only -Export banned in July 2008 -Cement is in surplus Cement Plants Saudi Arabia
Q4 2009
Q1 2010 Diameter indicates relative size
Existing Plant
New Plant Q4 2007 Local Cement Deliveries Cement Export Cement Deliveries and Exports Cement & Clinker Production Clinker Inventory Saudi Arabia Cement supply/demand projections Consumption Per Capita Cement Industry in Saudi Future Trends & Opportunities
• Surplus may exceed15 million tons in 2009 and 2010 but unless the market overcomes the current situation, the gap will remain large.
• Consequently:
– Possible closure of small old inefficient kilns at existing plants that may reduce the annual cement surplus to 8 million tons – more manageable.
– Drive to export cement to Europe and neighboring countries. This may prove to be difficult as other surrounding countries (in addition to China and India) are facing a huge surplus too.
– More types of cement on offer. • Cement Type II (moderate sulphate resisting Portland cement) • Cement Type IV (low heat of hydration) needed for mass pours • Other special cements – pre-blended
– Special services (inventory, low temperature, special blends, special specifications, technical support, etc.)
– Vertical integration plans by some companies may change
– Possible mergers and acquisitions in the industry? Aggregate Industry
• An extremely fragmented industry with hundreds of players due to the low barriers of entry • Very localized industry • Supply is tight in some areas but is expected to loosen up in most areas during the year • Challenging for long term investments • Unregulated • New environmental requirements Aggregate and Cement Price Indices Construction Opportunities & Challenges in Saudi
Opportunities Challenges
Drop in cost of construction Large projects Financing High rise buildings Fierce competition Higher specifications Human resources Reliability of supply Re-bids and delayed starts Health and safety requirements More bidders Green construction Longer project durations Longer payment periods Thank You