Jordan: New Cement factories allowed on condition of no local sales


Updated Mon, 25 Apr 2011 00:00:00 GMT

The Cabinet has recently approved a decision to grant licences to new cement factories under a condition that the products be for export purposes only.

Minister of Industry and Trade Hani Mulki told The Jordan Times that new factories which wish to invest in the country should provide the government with guarantees not to sell their products in the local market.

"Currently local production of cement covers over threefold of the market needs," he said, adding the conditions imposed on new factories were meant to protect investors.

"It is the duty of the government to offer guidance and advice to investors and when we tell them that their production should be directed to markets abroad it means that the government is basically protecting them and also protecting local manufacturers," Mulki remarked.

However, the official noted that the new decision will be reconsidered at the beginning of 2012 after studying the local market needs.

If construction activities pick up and the government finds there is a need to provide the local market with cement, these new factories will be allowed to do so, he explained.

On November 7, 2010, the Cabinet decided not to issue licences for establishing new cement factories and not to allow expansion at already operating plants.

The cement industry in the Kingdom has witnessed some controversy over the past two years, when certain local factories complained about "unfair competition".

Jordan Lafarge Cement Factories Company lost JD953,000 in 2010 compared to net profits of JD45.7 million generated in 2009, with the company blaming "unfair" competition in the cement industry in Jordan for the losses.

The company attributed the decline in sales to the fact that new companies which had entered the local market were importing clinker, the basic ingredient in the industry, from countries that subsidise the material.

Early this year, the company called on the government to impose tariffs on imported cement and clinker.

In a memo sent to the Ministry of Industry and Trade, Lafarge explained that the Kingdom's imports of the clinker substance, manufactured in countries that subsidise fuel for cement factories, influence competition in the local market and threaten the future of the cement industry in the country.