As Caribbean Cement Company reaffirms its commitment to the Jamaican economy by investing $4.6 billion in a plant upgrade, the latest issuance of a licence to Growth Tech Special Projects to import 50,000 tonnes of cement from Turkey is sending mixed signals.
Growth Tech, which is now the second company to be granted a cement import licence, joins Buying House, which holds a licence to import 120,000 tonnes per year.
While the circumstances surrounding the decision-making process for issuing the import licence is unknown, the cement shortage on the supply side is widely publicised. Put simply, the local market demand for cement is 1.2 million tonnes per year; however, Carib Cement only produces one million tonnes while importers Buying House and Growth Tech brings in a combined 170, 000 tonnes. The cumulative supply, therefore, amounts to 1.17 million tonnes, which leaves a gap of 0.03 million tonnes.
To that end, the issuance of licences to import cement may be reasonably rationalised through the explanation of filling the gap. But Carib Cement has also announced a multi-billion-dollar investment plan to upgrade its plant and remedy the local supply problem in the process. The upgrade will expand cement production by 30 per cent when completed, thereby allowing Carib Cement to move from producing one million tonnes to close to 1.4 million metric tonnes a year to properly support the strong local demand.
Still, that upgrade won’t be completed until the latter part of 2022. In the interim the demand for cement continues to grow, driven by both Government-initiated infrastructure projects and private development initiatives.
In an interview with Caribbean Business Report, Carib Cement’s General Manager Yago Castro indicated that he is against the idea of cement importation and urged investors to focus on building the capacity of local manufacturers instead.
“They’re trying to get more cement to sell and make a better profit without investing any money in the country. We always believe it’s better to have the long-term profitability so we can create investment, jobs and building Jamaica rather than importing cement for short-term profit. We believe the right way is to invest in local manufacturing and make it bigger, solid and more powerful,” said Castro.
That’s part of the reason Carib Cement didn’t export any cement to Caricom last year. The company said it is fully focused on meeting the local demand before exporting.
Carib Cement’s only export last year was to North America, accounting for 1,575 tonnes or $23.53 million in sales. In 2020, the company sold 973,433 tonnes of cement to the local market valued at $19.84 billion. Overall, the company produced a record 940,000 tonnes of cement in 2020 and hit a new milestone of 100,000 tonnes for the month of March.
Castro said the company is looking to resume export on a larger scale after the upgrade is completed.
“We’ll be fully able to supply the Jamaican market, but also generate 20 per cent more or less of spare capacity. Those 200,000 tonnes of cement could be allocated to some export markets. We already have the markets to export, with 25 different options. The endgame is to export more than what is imported,” said Castro.
Carib Cement is reporting an 18 per cent growth in revenue for the nine months ending September 30, 2021, when compared to the corresponding nine-month period in 2020. Revenue for the period came in at $17.8 billion.