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

Shree Cement has surpassed ACC to come up with the world’s largest cement kiln at Ras Al Khaimah in the UAE. “We have operationalised the plant and now it is the world’s largest cement kiln with a capacity to produce 14,500 tonne per day (tpd),” H M Bangur, managing director, Shree Cement told Business Standard. 

It 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. Industry officials noted that ACC’s Wadi II plant had held the distinction of being the largest cement kiln in the world, which now has been overtaken by Shree Cement.

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

Kiln volume is essentially a plant’s capacity to produce portland and other types of cement. A kiln is used for pyroprocessing stage in the manufacturing process where calcium carbonate is reacted with silica-bearing minerals to form a mixture of calcium silicates.

Shree Cement has invited Sheikh Saud Bin Saqr Al Qasimi, ruler of Ras Al Khaimah, to Kolkata as well. 

“I had invited Qasimi to come to Kolkata and he has responded to my request. We met over lunch at our home today (Thursday) and discussed various things including the state of the economy,” Bangur said. 

Strong hold

• Shree Cement acquired Union Cement in 2018 at an enterprise value of $305.24 mn
• Of four, only one kiln line is active in Union Cement
• Union Cement kiln can produce 14,500 tpd, making it the largest kiln in the world
• In 2018-19, Union Cement made a net profit of $9.79 mn, with a turnover of $114.6 mn

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

At the time of acquisition, Bangur had said since Union Cement was 40 years old, two of the kilns were discarded and another kiln was shut that left Shree Cement with only one kiln, which was set up in 2006. However, the plant is located within 1 km of Saqr Port in the UAE that gives it access to key export destinations like Gulf Cooperation Countries, Africa and South Asia.

Sources said feasibility study had also been undertaken to revive the third closed kiln as well. Though analysts remained sceptical about Shree Cement’s foray into the UAE, they argue that a low return on equity is possible. 

The company acquired Union Cement for $76 a tonne, which is lower than $84 a tonne, which UltraTech Cement paid in 2010 while acquiring 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, with a turnover of $114.60 million. The Ebitda stood at $19.81 million. 

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