Latin Finance - March/April 2011 - 82

Andean peru cement

Pablo Nano, a sector analyst in the economic research unit Foreigners Move In of the Peruvian branch of Canada’s Scotiabank, says the cement Cárdenas says he is not surprised that other companies are sector should expand by double digits in 2011. The bank’s beginning to make a move into the Peruvian market. In midresearch unit is forecasting expansion by 12% in the first quarter November, Cementos Portland, which was formed three years of 2011, slower than in the corresponding period of 2010. ago but is still not producing locally or importing, reached a deal The slight decline is due primarily to a slowdown in through which Chile’s Cementos Bío Bío and Brazil’s Votorantim government investment in infrastructure projects as president Cimentos would each take 29.5%. Bío Bío reported in November Alan García’s five-year term winds down. García, who is not 2010 that it and Votorantim would each invest $61.1 million for allowed to seek immediate re-election, leaves office in July. shares in the planned cement plant. General elections are scheduled for April, with a presidential The outstanding 41% will remain with the original partners, runoff likely in June. Peru’s IPSA and Spain’s Peru’s construction sector World Cement Group, which expanded 18% through will each hold 20.5% in the November, according to new corporate structure. the INEI, while overall GDP Cementos Portland plans boomed by 8.8%. Growth a $150 million plant for in construction locally is the outskirts of Lima. It is measured using secondary scheduled to produce up to sources, primarily cement, 900,000 MT annually starting whose consumption makes up in 2013. 93% of the calculation. Cemex has imported Peru’s cement companies cement and clinker, the raw are operating at full material for making cement, capacity and all the major since initiating operations in players are growing with Peru in 2007. Total imports new or expanded plants, in 2010 were close to 1.0 reports Asocem. It claims million MT. Cemex imports that investment in new or come from China and are expanded plants will top $1 imported tariff-free thanks to billion over the next 12-18 Peru’s free-trade agreement months. with that country. Cemex, which has been Cemex will also be in the local market for three able to import from other years, plans additional countries tax free thanks to a imports in 2011. Cemex, government decree from midtogether with Cementos January 2011 eliminating Lima, have both announced tariffs on cement. The tariff investments of around $225 had been 12%. million. Cemex is not a The tariff elimination, member of Asocem. which is protested by “There is dynamic growth local producers, has been [in the cement market] embraced by Capeco and Dynamic growth: Peru beats Colombia on cement consumption with rates well above 10% other business associations. annually,” says Juan Carlos Cárdenas, general manager of “The elimination of tariffs on cement is positive for the country Mexico’s Cemex in Peru. “Expansion above 10% translates into an and competition, because it will lead to a drop in prices,” says additional one million MT annually, which is the equivalent of a Espinosa. new plant being built each year,” he adds. Imports, however, will not be an issue for Cemex in the near Per capita cement consumption soared in the second half future as it ramps up plans to build its own plant in Peru, about of the last decade, rising to 249 kilograms in 2009 from 163 60 miles south of Lima, to serve the country’s central region. The kilograms in 2005, according to Asocem. Per capita consumption plant will be financed by Luxemburg-based Blue Rock Cement has surpassed Colombia and it nearing that of Chile, which is 290 Holdings, created last year to invest in emerging and high-growth kilograms, it adds. markets. “The [cement] industry is operating at full capacity and Cárdenas says Blue Rock was in charge of designing the [cement] imports are increasing,” says Enrique Espinosa, a financial architecture for the $225 million plant, while Cemex will Capeco board member. “This trend should continue for the deal with the physical logistics. The plant will initially produce foreseeable future.” 1.0 million MT annually staring in 2013, says Cárdenas.

82 LatinFinance

March/April 2011

Latin Finance - March/April 2011

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