Central Asia. The Cement Industry of Kyrgyzstan
Struggling with its politics and being consumed by corruption, Kyrgyzstan is one of the poorest countries in Central Asia. However, the situation has stabilized recently and the country is seemingly ready to step on the path of progressive development. One of the biggest problems that the country is facing right now is its heavy focus on agriculture and mineral mining. The country is living by cultivating and exporting tobacco and cotton. With the lowest GDP indication in the whole region, the country is definitely in a dire need of reforms. Their GDP per capita was only $3.3 thousand and the growth is abysmal. The country expects less than 4% GDP growth in 2016.
The Cement Industry of Kyrgyzstan
Despite unstable economic situation in the country, Kyrgyzstan has 5 large cement plants that are capable of producing 3.16Mt per year. The country is planning to expand the industry by adding two more facilities in the nearest future.
The country produces roughly 3Mt of cement per year, according to the report by the Ministry of Economy. This volume is enough to completely satisfy the domestic cement demand as of 2014. The production increased by 25% reportedly, but no proves of the growth were published. At the same time, the government recognizes that overall instability is pushing investors away. Many international investors are venturing in Tajikistan instead. The country is struggling to find a proper balance between political parties and this makes it hard for many businessmen to plan their business in the country. Many Chinese entrepreneurs and corporations are opting to work with Tajikistan instead where the political situation is less volatile and the economy is more reliable.
At the same time, the very structure of Kyrgyz government needs more refining. The political system as well as bureaucracy is not inviting enough to make foreign investors comfortable. It is simply too dangerous to start a business in Kyrgyzstan as of right now.
The Future of the Industry in Kyrgyzstan
Despite a fairly unreliable political situation, Kyrgyzstan managed to attract foreign investors who decided to venture into three cement plants.
Firstly, a new facility Zeth Cement was announced in the late summer of 2014 by collaborating companies Zhu Rongjun and Tongling Shangfeng Cement, the latter is a part of a large Chinese company Shangfeng Cement. Two companies will share the property in unequal parts with Zhu Rongjun taking a 42% stake and Tongling Shangfeng – 58%. The capabilities of a new plant are quite impressive. It is estimated to produce over 1Mt per year and start its operations on a budget of $70 million. The facility is situated in Kemin, Chui.
Earlier in 2015, another large Chinese corporation announced their plans to expand their business in Kyrgyzstan by starting a $130 million cement plant in Osh. The main investor is Gansu Qilianshan Cement. The second collaborator is 8th Metallurgical Corp. with 20% of investments. The facility is expected to start working in the beginning of 2017.
Later in 2015, Jinlong Group announced their plans to enter the Kyrgyzstan market and install a cement plant capable of producing 800 thousand tons per year. The company appointed its subsidiary Yatai Cement to manage the business. The company provides $15 million of investments and will gather additional $50 million via external financing. The venture will be operational for at least 30 years and should create over 400 work places during its existence.
Samara Strommachina designs, manufactures, and sells high quality heavy-duty machinery for cement production. With over 70 years of experience, we create equipment exported to all countries in Central Asia including Kyrgyzstan. Our kilns and their efficiency and reliability as well as effective crushing and grinding machinery allow our partners to maintain high standards and be successful. With our ever present assistance and expertise, you will always feel confident in the future of your facility!