Increasing Demand of Cement in Iraq
IRAQ CEMENT MARKET
It is currently difficult to estimate the total demand for cement in Iraq; production figures are probably reasonably accurate, however the total import figures since the second Gulf War, the consequent occupation and the rehabilitation of infrastructure are very likely to be inaccurate. The borders of Iraq remain extremely porous, and customs statistics, where these are collected are imperfect. The following paragraphs estimate total current demand from counter trading partners and domestic production and other sources as cited.
ESTIMATES OF DEMAND
Total current demand in Iraq can be estimated, and forecasted on the basis of total current supply, comprising domestic production and imports. However, with the current situation in Iraq forecasts based on these figures are likely to underestimate both the current actual position and significantly more the likely future demand as the country settles down. Orascom Construction Industries, currently operating one, and building a second plant in the Kurdistan region of Iraq report an estimated8 3 million tonnes of production and an import figure of 7 million tonnes, giving a
total current demand figure of 10 million tonnes, or a (nominal) per capita consumption of 385 kg per head. The MIM is reported10 as suggesting that domestic demand could reach 30 million tonnes, i.e., a nominal per capita demand of 1,111 Kg per head, i.e., matching the consumption rate of Kuwait in 1999 and Spain in 2005. Significantly with a rebuilding and reconstruction programme in place, to match that of Qatar, would require another 600 kg per head, and in the light of the massive building and redevelopment programme within the UAE (Dubai in particular) an additional 1,400 kg per head. This would be equivalent to an additional 16.2 and 37.8 million tonnes on top of the 30 million tonnes.
DOMESTIC SUPPLY
Introduction – Cement Industry in Iraq
The main determinant of international competitiveness in cement is the availability of local raw materials. Iraq has an abundance of all of cement’s main ingredients: limestone, gypsum, and oil for fuel.
Limestone, the most important ingredient, is found throughout Iraq, in multiple bands, each running in a northwest to southeast direction. The northeastern most band is in the Kurdish region, and the southwestern most band runs from the western desert to the Persian Gulf in the southeast. Moreover, the limestone is of unusually high quality, meaning a high percentage of calcium carbonate. This means more meal is produced per ton of limestone, and with less waste material, is more energy efficient. The limestone also lies near the surface, making for easy and low-cost quarrying.
With the latest technology, Iraq should have a comparative advantage over most other countries in cement. The transport of cement is expensive and constitutes a natural barrier to trade. Iraq should easily be able to meet domestic demand, and export surplus production, repeating the success of the latter 1980’s, either by road/rail, or by ship in the south.
Present Structure of the Iraqi Industry. Ownership All cement plants, prior to the second Gulf War were part of state owned enterprises, owned by either the national government (through the Ministry of Industry and Minerals, MIM) or the Kurdistan Regional Government (KRG). The plants are grouped into three companies, one each in the north, central and southern regions, namely The Northern Cement State Company, headquartered in Mosul, the Iraqi Cement State Company in Baghdad, and the Southern Cement State Company near Kufa, Al-Najaf.
Current Status
The two sources differ slightly in their respective recognition of production lines and plant. For example for the Iraqi Cement Company, the MIM Guide identifies the four locations of the company as Kubaisa, Kirkuk, Qaim and Fallujah, the separate lines for Fallujah identified in the former are not in the latter.
Since that time in the KRG region a successful private-public relationship has been established and two private greenfield plants are being built,
The cement plants are very evenly distributed throughout Iraq, reflecting the wide availability of raw material. In an efficient and functioning sector this would also ensure a uniform, and consistent low price for cement. However, as is discussed further, the current state of the industry means that much is imported and transport costs add significantly to the price of cement paid.