Page 32 - Uzbekistan rising bne IntelliNews special report

32 I Special Report: Uzbekistan Rising bne December 2021
Uzbekistan’s cement giant Qizilqumsement on a roll
line – the first significant investment
in the plant since 1989 – that is slated to come online in December. The new line will add 2.2mn tpy of cement to
its output, bringing the total output to 5.8mn tpy – a bit less than a third of Uzbekistan’s entire cement production.
“The contractors are Russian,
Turkish and Chinese, although most
of the equipment is German,” says Abduqahhor Salomov, the general director of Qizilqumsement sitting in his modest office drinking tea. “We have mostly financed it from our own funds and the return on investment should take about seven years. There is huge domestic demand. We can’t even meet that. Even with the new capacity there won’t be enough of a surplus to do any exports. Maybe next year.”
The centre of the grounds where the new silo and processing plant is going up is a hive of activity. The ground
is littered with metal components, material and equipment and the new silo tower soars overhead, cloaked
in scaffolding and cranes and busy with men working on the structure.
It is already more than three-quarters completed and looks oddly out of place with its slick coat of paint and obvious shinny newness compared to the surrounding buildings that have been battered by desert weather for decades.
The ebullient director proudly tells bne IntelliNews that the company is funding 81% of the investment from its retained earnings and the rest has been taken as commercial loans from Uzbek banks.
“In 1994 we had to close down one of the three lines, as there was no demand,” says Salomov. “Today we can’t produce enough and even after the new line goes into action we will be working at full capacity. You can feel the difference in the country.”
Qizilqumsement business has been freed and transformed. Once a key part of the command economy, its status was little changed during the administration of Islam Karimov, Uzbekistan’s first president, who maintained a more or less centrally controlled economy.
Ben Aris in Navoi
Qizilqumsement (QZSM) is of Soviet vintage, set up in 1977, and is the biggest cement maker in Central Asia. If construction is one of the main drivers of economy growth, then the frenetic activity at the cement plant is perhaps the best indicator of the boom that is sweeping the country.
Located outside of the city limits
of the industrial town of Navoi and surrounded by flat rocky desert entering the plant’s grounds is a step back in time for anyone that has spent time in the Former Soviet Union (FSU).
At the gate is a wall with the photos of the previous directors, all of them with sour po-faced poses that are the hallmark of Soviet-era official portraits. Another section has pictures of the best employees of the month with equally serious faces.
Driving into the plant there are three huge beaten silos of the original
www.bne.eu
production standing at the back of the territory that continue to churn out 3.2mn tonnes per year (tpy) of cement entirely for the domestic market. Domestic demand is currently outstripping domestic supply by 6mn tonnes, forcing Uzbekistan to import cement, and the Qizilqumsement plant is working flat out to get
cement out to its customers.
In the first eight months of this year Uzbek companies bought a total of 8mn tonnes of cement, up 18.2% year on year and driving the prices up by 2.4% as a construction boom gathered momentum in the same period. But thanks to the production deficit the country had to import 550,000 tonnes of cement from
its neighbours in that period.
Qizilqumsement is hoping to do something about that. Earlier this year the company launched a $112mn investment to add a fourth production