Yasser Zayed

What is your assessment of the sector currently?

In 2020, despite the pandemic the market reacted in a positive way in terms of volumes and even prices. Regarding prices, some of the major issues we are facing in the market, not only in the western region but across the whole Kingdom, is the fact that free market prices have not yet been achieved, the overcapacity of some plants, pressure from the clinker stock on ground, and despite the fact that it had significantly depleted by end of 2019, now it is almost 30% less than that. However, the price is still high in terms of quantities, which represent additional pressure on the prices. Some companies are seeking more cash and are sacrificing some of their revenues and cutting prices to earn more and appease their shareholders. This has been a tendency in this industry since the beginning, especially for companies listed on the stock market. The market reacted positively in 2020 until the end, and in 2021 again prices started to fall, which will be unable to match free market prices in the future.

What was the impact on your supply chains with regards to the cement sector?

In the beginning, it was hard on us, having to bring in important raw materials like bauxite, for instance, from the eastern province and fuel from Aramco. It took us some time to adapt to the new regulations of those big companies to take back our resources. After a month, our team, contractors, and drivers learned to do whatever is necessary in order to load our materials such that we can operate smoothly afterward. March and April 2020 were the hardest times for us. We also had the support of the government in terms of providing special industrial permissions for our people to travel between places and make the plant operational. Our plant is operational 24/7, and the government provided significant support here. The projects promoted by the Ministry of Housing have a huge impact on demand for cement as well as other building materials. That was one of the big levers that pushed the market to a normal consumption. 

What are your priorities in expanding export markets across Africa, the MENA region, and Asia, and what markets are you looking at?

Al Safwa reached markets that have never been reached before by any other Saudi company, like the US. We went to Latin America as well. The typical market here is East Africa, but we have also expanded to West Africa to Cameroon and Ivory Coast. We have a competitive advantage in this area due to not only the price but also quality. We have a special pack of cement that we can sell in different areas. With the export market, we were fortunate enough in this year and previous year because of the lack of clinker worldwide. Turkey, Spain, and North Africa have been experiencing a fall in supply of cement, and that positively affected our export volumes to areas that had never been reached before in 2020.

How has digitalization impacted the Kingdom, Al Safwa, and the cement industry in general?

Al Safwa has been digitalizing its process, which was one of main strategies. Our main strategy is to focus on customer centricity. We have strong partners like Oracle and Microsoft, and we are using their capabilities to serve our customers in a better way. We now have self-ordering machines in the plant to avoid contact between drivers and our employees. Drivers can now load the cement and go out without meeting our people. We have a digital customer platform where customers can order, pay, and communicate through our website without meeting anyone from Al Safwa. It will be the first year that we will have a full B2B cycle implemented through our system. We have three parties here: the customer, Al Safwa, and banks. We had this strategy before the pandemic, as one of our main goals was to make the entire process digital. We started this in 2018 by focusing on our customer needs. Al Safwa has the largest portfolio in the Kingdom in terms of number of products; we have six products, and the seventh, white cement, will be launched in early 2022. You will not find this variety in any other place because we directly asked our customers what they need.

What are your expectations and priorities for the rest of this year and 2022?
We are focusing on reaching our targets though we will focus on gray cement because we have a new technique producing white cement through FLS. This project started a year ago and will be finalized early 2022. This has forced us to focus more on the local market in 2021 to fulfil all the gaps here, satisfy our local customers, and continue to supply our other products. We have six products in the market and need to continue to supply them all. In 2022, hopefully with the white cement in place, our strategy will change slightly, though our main priority will still be the local market. With country ambition to reach net zero carbon by 2060, we are fully aligned with this amazing initiative and proven our pioneer position in the heavy industries with three alternative fuel investments (recycling carbon ash since 2016, recycling waste tires since 2019 and Waste oil recycling facility will start in 2022) in addition to utilizing industrial waste as an alternative raw material proven the Safwa position to play a critical role in the carbon circular economy.