Export ban forces Yamama Cement to look abroad

Saudi Arabia-based Yamama Cement plans to offset the impact of a government export ban on its earnings by investing abroad. The company's top executive said it would take the decision if the year-long blockage lasts any longer. The kingdom's third-largest cement firm is also pressing ahead with cost cuts as the ban slashed seven per cent off its sales since it was slapped in June last year, said Jehad Al Rasheed. "When you have financial capabilities and the investment opportunities at home are locked up, you will seek to maximise returns for shareholders," he said. "There is a possibility for investment opportunities abroad. There are two or three under study, most of them are in the Middle East." Yamama's first-quarter net profit fell 36.2 per cent from a year earlier, tracking a trend across the sector due to the ban. The envisaged direct investments, which could be announced within two years, would not be aimed at building new facilities, said Rasheed, whose firm sold 4.4 million tonnes of cement in 2008. "These are mere investments not expansion projects," he said. The government barred exports after cement prices surged due to a shortage in the second quarter of 2008. The increase, combined with a surge in the prices of other building materials raised concern over the viability of many developments. But massive state infrastructure projects have raised demand by 14 per cent so far this year compared to a year earlier, Rasheed said. This is dampening the impact of the ban and cancellations of several mega developments by the private sector due to the crisis, he said. Last month, the government allowed cement makers to export part of their surplus production provided they sell their product in the local market for SR200 (Dh196) a tonne. But Yamama has opted out as "the conditions put by the (commerce) ministry are not practical for the commodity", said Rasheed. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .