On the home front: Focus on boosting locally produced materials and integrating the supply chain to meet growing demand


With manufacturing identified as one of the priority sectors under Oman’s Industrial Strategy 2040, the government is seeking to reduce reliance on imports by increasing domestic production of construction materials such as cement, steel and aluminium. To this end, the National Programme for Enhancing Economic Diversification, or Tanfeedh, is supporting the establishment of cement and steel manufacturing centres in the Duqm Special Economic Zone (SEZ), Sohar Port and Freezone, and Raysut Industrial City.


Domestic cement production remains limited and dominated by few players, among them Oman Cement Company (OCC) and Raysut Cement. OCC and Raysut Cement each run an integrated cement plant, with facilities taking raw materials, creating clinker and grinding it into a final product. Oman is also home to grinding plants, located mostly in Sohar and Madinah, which use imported clinker to grind before manufacturing the final product.

Currently, around half of Oman’s annual cement demand of 9m tonnes is supplied by local production. “With the availability of raw material in Oman for making clinker, there is great potential to create more integrated cement facilities in addition to cement- grinding plants,” Salem Abdullah Al Hajri, CEO of OCC, told OBG. “Currently, there are only two integrated cement plants in the country, hence there is an opportunity for additional clinker production lines to cater for local demand, as well as for export.”

Several new plants are under development, including OCC’s $212m integrated cement plant in the Duqm SEZ, which will have a daily production capacity of 5000 tonnes upon completion in 2020. Securing financing for such projects has been key. In August 2019 Bank Nizwa, an Oman-based sharia-compliant lender, signed a OR19.5m ($50.6m) agreement with Raysut Cement that included a OR4.5m ($11.7m) loan for the construction and expansion of its factory in Sohar Port and Freezone.

Driven by growing construction activity in both the private and public sector, Oman’s cement consumption is forecast to increase to almost 11m tonnes by 2023, according to industry publication CemWeek. Despite pressure from imports, prices are competitive, with average cement prices ranging between $62 and $66 per tonne since 2015.


Oman is looking to boost not only the production of cement, but steel as well. The government has invested heavily in the domestic steel industry in recent years, setting aside $5bn for development projects, in line with aims to lead steel production in the GCC. In the medium term two steel mills are expected to come on-line in the Sohar and Raysut industrial zones. Moon Iron and Steel Company’s steel billet and rebar manufacturing plant in Sohar is set to start operations at the end of 2019, and will have an annual capacity of 1.2m tonnes of billets and a rolling capacity of 1.1m tonnes. What is more, in April 2019 Shumookh Investment, the investment arm of government-owned Public Establishment for Industrial Estates, announced in April 2019 that it would develop a $400m steel project through a joint venture in the coming years in either Sohar or Sur.


The aluminium segment is also undergoing major expansion. The National Aluminium Products Company (NAPCO) is one of the leading extruders of aluminium profiles in the GCC and produces numerous products for the local construction industry. It also recently started manufacturing niche products for high-tech projects, such as the $600m Miraah solar plant. NAPCO imports most of its aluminium billets from Qatar, India and the UAE, but is looking to link up with local aluminium smelter company Sohar Aluminium to shift its supply chain home. By buying locally produced billets, the company will increase the local content of its building materials while reducing its own inventory costs – a win-win scenario for construction sector suppliers.