Tabuk Cement gets second production line, but halts production on fuel shortage

Tabuk Cement Co. completed all technical requirements to launch its second production line on Wednesday, but is forced to halt production due to fuel shortages, the company said in a statement to Tadawul on Thursday.

The company won’t be able to run both lines at the same time due to lack of fuel resources.

Financial impact cannot be estimated for the time being due to low demand for cement in the Kingdom. But, an inactive second production line will raise expenses, and cause depreciation.

According to data compiled by Argaam, trial operations on the second line had started on May 28, 2015. The second line has an annual capacity of 1.6 million tons and it cost a total of SAR 735.9 million.

Cement demand in the Kingdom has been suffering due to a lack of infrastructure projects amid low oil prices. The government has tightented its spending on projects across the country.

Cement demand is expected to fall 8.6 percent year-on-year (YoY) this year, ahead of rising by 2.5 percent YoY next year, Bahrain-based SICO investment bank said in a recent report.