Majed A. Al-Osailan has extensive hands-on experience spanning over 19 years, working for large Financial Institutions (FIs), different manufacturing industries, oil and gas, clean and sustainable energy, and service industries. He accumulated experience through work and board membership in several joint-stock companies. He holds an MBA from the UK and is a certified global executive by INSEAD.

 

How are the projects promoted by Vision 2030 impacting your business cycle?

Our business cycle is growing rapidly and we have reached maturity. Things declined somewhat when the government revised its spending back in 2015 for greater precision. The industry will pick up in light of the numerous giga projects and potential demand and solid budgets that are already allocated. Yet, the trends of this industry are cyclical and secular too. And so we need to ensure the future sustainability of our company and its growth.

How do you apply the concept of innovation in your daily activities?

The cement industry is well integrated, especially in Saudi Arabia. We may be slightly different from the world since the cement company has a fully integrated business from upstream downwards. Usually, most companies here undertake quarrying at their own quarries. Mining is a different path than processing or treating cement. Regarding energy, most industries here have their power plants capable of generating electricity or thermal energy. It comes to the downstream end of the equation and the supply chain. The cement industry value chain is huge. There is an innovative dimension that enables you to complement other industries. If you are an intensive energy consumer, energy can be generated from different fuel types. One of the challenges today is dealing with different waste streams. The nature of the cement industry lends itself to three different types. Cement can complement certain other industries, such as waste management. Then it brings the linear economy to a circular one, creating a diverse range of jobs, improving the entire value chain, with all of the added value that it can bring to various aspects of the company.

How do you use technology to improve the efficiency of your operations?

Technology depends on the inventive capacity of individuals. Our real asset is the people we employ. City Cement applies a concept of value creation. We consider corporate social responsibility and the shareholder, with an awareness of the stakeholder in the broadest sense. We understand the level of urgency when it comes to the environment and the energy component forms a major part of your core structure. It is well aligned with the government’s vision. City Cement has been the leader in alternative fuels or clean energy sources. We managed to substitute high rates of our conventional fossil fuel. We start generating clean energy from different sources. We have a waste heat recovery (WHR) concept, where we capture the heat from all kilns and the cement process. Then, we transfer the heat to clean electricity, which will address the energy needs. We treat different types of alternative fuels. We use different solid and liquid fuels from various industrial concerns, municipalities, or agricultural waste to treat and generate energy. This all contributes to reducing the carbon footprint. The recent announcement of the Crown Prince was a call to achieve this objective. It was clear that there will be projects to lower the overall footprint, and the way to achieve this depends largely on renewables, reducing hydrocarbon and fossil fuel, and then landfill diversion. Most of those solid or liquid industrial or municipal wastes will be directed to landfills, which harm the environment. The level of methane and unwanted gases impact greenhouse gases in general. Cement can treat such waste thereby reducing the quantity of waste going to the landfill to end the improper habit of landfilling. It is a waste of energy concept. We started this in 2015 because with a vision of holding responsibility for the environment. We still enjoy fully-subsidized energy from the government. But we believe that environmentally friendly practice is our responsibility, even if it may impact our bottom line, as it represents an investment for the future. This will enable us to produce a cleaner product, and ranks among the many innovations that we will undertake.

How do you shape your advantages in a market characterized by fierce competition?

Cement is a commodity, and in light of the installed capacity and current competitive landscape, it soon becomes clear that this is a cutthroat business. But we believe that the strategy of striving to have a future competitive advantage is more crucial than allowing your competitor to mimic your offering. That is why we tackle the energy component, although it may not look immediately feasible. The cement industry is accused of accounting for around 8% of the global carbon footprint. If our green initiatives work out in advance that competitive advantage will allow us to produce greener cement sooner. Meanwhile, the so-called Giga projects need to explain their material specifications to confirm the preference for green materials. Indeed, this is the market trend. We are keen to differentiate our product. And from a corporate-level perspective, we are looking into potential integration, having comfortably integrated vertically into energy. We have established a specialized company in energy and waste management treatment, which is part of the vertical integration drive. We will also pursue diversification to meet our needs as they arise. One industrial limitation concerns economies of scale, whereby you need to go full blast to produce in order to reduce your cost. But I believe that economies of scope are even more crucial in that they can deliver sustainability. This will only come with the leadership at the various layers of the sector. We engage those layers, and I am proud to have achieved a factor called TSR; the thermal substitution rate. This rate refers to how much you can substitute fossil fuel with alternatives. In advanced countries, they acknowledge companies that achieve a 2% or 3% higher rate than where you were. Meanwhile, today City Cement has a TSR rate of above 20%, which is internationally significant, not least given the prevailing sector challenges. There is a massive learning curve attached to this journey in a process that runs from top to bottom.

What are the short-term priorities and targets of your 2022/2023 agenda?

We want to continue addressing market needs and empowering leadership in the company to maximize company profits and shareholder returns because this is crucial to achieving our goals. Beyond that, there lie the objectives of diversification to advance our business.

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