Shree Cement overtakes ACC to commission world's largest kiln in UAE

Shree Cement has surpassed ACC Ltd to operationalise the world’s largest cement kiln at Ras Al Khaimah in the UAE.

According to sources, Shree Cement has come up with a kiln capacity of 14,500 tonne per day (tpd) in its plant in the UAE which is 2,000 tpd higher than ACC’s Wadi II Plant in Karnataka.

ACC said one of its lines in its Wadi II plant has the company’s largest kiln with a capacity of 12,500 tpd. Sources suggested that ACC's Wadi-II plant so long had held the distinction of being the largest cement kiln globally which now has been overtaken by Shree Cement, albeit in the UAE.

Against ACC’s total installed capacity of 33.41 mtpa, Shree Cement’s current installed capacity stands at 41.90 mtpa.

Kiln capacity is essentially a plant’s capacity to produce Portland and other types of cement. A kiln is used in the pyro-processing stage of the manufacturing process, where calcium carbonate is made to react with silica-bearing minerals in order to form a mixture of calcium silicates.

Shree Cement, the country's second largest cement manufacturer invited Sheikh Saud Bin Saqr Qasimi, ruler of Ras Al Khaimah and a joint announcement over the new kiln capacity is likely to be made soon.

“I had invited Qasimi to come to Kolkata and he has responded to my request. We will meet over lunch at our home today (Thursday) and discuss about the cement plant in UAE as well as the economy. Some announcement may be made thereafter,” H M Bangur, Managing Director, Shree Cement told Business Standard.

In January 2018, Shree Cement had acquired a 93 per cent stake in the 4 mtpa Union Cement Company, the largest and most profitable cement firm in the UAE, at an enterprise value of $305.24 million.

At the time of acquisition, Bangur had stated that since Union Cement was about 40 years old, two of the kilns has to be completely discarded and another was shut, which left Shree Cement with only one kiln that was put up in 2006. However, the plant is located within 1 km of Saqr Port in UAE which gives it access to key export destinations such as the Gulf Cooperation Council (GCC) countries, Africa and South Asia.

Sources said a feasibility study has also been undertaken on reviving the third closed kiln.

Although analysts remained sceptical about Shree Cement's entry into the UAE, arguing that a low return on equity is expected, the company acquired Union Cement for $76 a tonne, which is lower than $84 a tonne paid by UltraTech Cement in 2010 to acquire the 3.2 mtpa Dubai-based ETA Star Cement for $269 million.

During 2018-19, Union Cement made a net profit of $9.79 million on a turnover of $114.60 million. EBITDA stood at $19.81 million.

Industry officials said the total capacity in the GCC is pegged at around 142 mtpa across 52 facilities, with Saudi Arabia alone accounting for about 51 per cent. UAE has the second-highest installed capacity at 39 mtpa, but consumes only half the production domestically. The rest is exported primarily across GCC and East Africa.