GCC countries guard against materials shortages
Contractors and suppliers in the infrastructure-focused GCC will have to rethink their supply chain to avoid material shortages
Saudi Arabia’s construction industry – far more sizeable than those of its GCC neighbours – never ceases to amaze. Early in July 2015, Construction Week reported that firms with ongoing or upcoming Mecca projects in their pipelines have procured Italian quarries to ‘exclusively secure’ the quantities of marble required for construction in the holy city.
Donal O’Leary, director at Faithful+Gould, says the Saudi market has intelligently invested its resources to guard against potential delays on Mecca developments – especially mosque projects – caused by a dearth of marble.
In August 2014, it was reported that one of Saudi BinLadin Group’s (SBG) units purchased a 50% stake in Italian marble manufacturer, Marmi di Carrara, in a deal worth $61m.
O’Leary says that this strategy is particularly significant given the rate of construction and development in Mecca.
Highlighting the knock-on effect marble shortages would have on other sectors in Mecca and the wider Kingdom, O’Leary tells Construction Week: “A large component of, [say], big malls, is materials for the floor; the front-of-house flooring.
“Obviously, different developers use different materials, but marble tends to be a fairly common choice for the same.
“It was recently found that some Italian quarries are being secured exclusively by some of the big developers and contractors in Saudi with upcoming projects in Mecca [in their pipelines],” O’Leary continues.
But high-quality marble quantities to meet such demand may not be possible, he adds.
“The large infrastructure growth in Mecca means contractors and developers know there might be a shortage in high-quality European marble,” O’Leary explains.
Neighbouring Qatar has tried to emulate Saudi Arabia’s strategy. Reports in March 2015 stated Qatar Primary Materials Company (QMPC) was set to acquire quarries in the UAE and Oman. The firm is also eyeing barges to create an efficient water transport system for goods around the peninsula, in an effort to reduce reliance on road transport.
“Qatar’s long-term demand for aggregates is projected to 30-million tonnes per year,” Navjot Singh, QPMC’s director of operations, said at the time.
“The demand for primary materials is set to pick up in the coming years. We are in the process of acquiring both gabbro and limestone quarries in the UAE and Oman.”
Sure enough, Qatar’s Public Works Authority, Ashghal, and QPMC signed an agreement in July 2015, aimed at supplying the infrastructure authority with more than 100-million tonnes of building materials within a span of five years.
The deal includes 51-million tonnes of gabbro and 41-million tonnes of limestone, as part of ongoing efforts to ensure the availability of construction materials for Ashghal’s planned infrastructure development projects.
“The agreement confirms that QPMC has become the trusted arm in Qatar and the region. It can be relied on to provide primary materials of gabbro and limestone, as well as fine and washed sand within the required quantities for the implementation of major projects in Qatar,” said QPMC chairman, Abdulaziz bin Abdullah al-Ansari. “We consider Ashghal as QPMC’s strategic partner, and this co-operation will surely enhance projects in the pipeline.”
QPMC’s Singh added: “Material availability, consistent logical pricing, and efficient supply chain management is the key to [facing material shortages].
“This can only be achieved through creating state-owned assets across the supply chain for 40% of the country’s long term need for materials. We are creating a strategic materials stockpile,” he explained.
Concerns that materials shortages in Qatar will hamper ongoing projects have loomed large since the country’s government rolled out its slew of developments for the 2022 FIFA World Cup. Experts warned in February 2015 that increased pressure on Qatar’s mammoth construction projects ahead of the World Cup and the country’s National Vision 2030 deadline could cause a shortage in materials supply and skills, creating bottlenecks and delays on key projects.
John Kristian Wallgren, business development manager at Al Hamad Engineering, says competition is high in Qatar, with the immovable timeframe around 2022 and 2030 resulting in constraints on companies. “It’s a huge undertaking and the contracts are fairly tough, so you have to carry some risks if you want to meet the schedule, more so in Qatar with all the delays. Delivery is severely hampered by red tape.”
Wallgren adds: “You have to have strong procurement in place to prevent materials delays or shortages; you have to look ahead and plan, also, bearing in mind that everything has to be imported into Qatar.”
The situation is bleak for contractors facing material shortages, but the industry refuses to give up. Glenn Platt, managing director of KEO International Consultants’ infrastructure division tells Construction Week that materials shortages provide the industry with “an opportunity to look at alternatives”.
“I don’t think shortages are specifically holding people up in terms of their programme,” Platt says.
“The expertise of the contracting firm comes into play here because it knows what the long-lead items are, and it has to plan accordingly for that. Contractors have to order products which are not manufactured locally, and in that sense, the design process starts sooner.”
Platt concedes base material shortages could hurt projects, but claims the undersupply of materials could be the industry’s launch pad towards sustainable building replacements.
“In terms of [shortages in] quarries and base materials – from my point of view, it provides us the opportunity to look at alternatives. For instance, we don’t do much with recycled concrete yet, but we could use it as a base product for roadways.
“Of course, you have to be mindful about the salinity of the groundwater, which does not go well with the cement in the aggregate, but it is possible to modify the concrete with additives.
“We’re in a very unique region here, where you have high temperatures combined with dust and humidity. As a contractor, you have to ensure that the materials you import, or manufacture locally, suit the conditions they will be used in,” Platt warns.