The countries of South America are at different stages of economic development, with cement industries of varying size and ages. Nine countries, namely Argentina, Bolivia, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela, have integrated cement facilities. These have a combined cement industry that is the same size as that of Brazil, which is not covered in this review.
Above - Figure 2: Map of South America. Coloured by integrated cement capacity according to Global Cement Directory 2013 (click to open full PDF version).
Argentina
GDP | US$755bn |
GDP/capita | US$18,400 |
Population | 42.6m |
Area | 2,780,400km2 |
Above: Summary economic and geographical statistics for Argentina.
Following Spanish colonial occupation and a series of dictatorships, the Argentine Republic's civilian governments have presided over gradual economic advances in the past 30 years (See Figure 1). However, the country experienced a severe economic crisis from 1999 to 2002. This saw it default on its foreign debt with a lost decade of growth, the collapse of the government and widespread riots.
Cement industry
After a number of false starts Argentina's 15 plant strong cement industry has now become the second-largest in South America after Brazil. It is dominated by Loma Negra, which is 100% owned by Brazil's Camargo Corrêa. It has seven integrated plants and a capacity of 7.7Mt/yr. It is investing US$400m in new capacity in the period 2012 - 2014.
Three local producers, Cementos Avellaneda, PCR and Cementos Artigas have a combined capacity of 7.0Mt/yr. The only multinational in Argentina is Holcim, with four plants and a capacity of 3.1Mt/yr.
Although the Argentine cement industry has a capacity of 16.8Mt/yr, the country produced 10.7Mt of cement in 2012. This is lower than in 2011, when it made 11.6Mt and indicates a capacity utilisation rate of 60%. Despite this, production is now higher than before Argentina's crash (See Figure 1).
There have been a number of changes in the Argentinian cement industry in 2012 and so far in 2013. Cementos Avellaneda commissioned its 2.5Mt/yr Olavarria plant in February 2012 and in January 2013, Spain's Cementos Molins sold a 16.1% stake in Cementos Avellaneda to Votorantim Europe.
So far in 2013 the industry is on an upward trend with regards to output, with substantial increases in monthly production relative to 2012. In May 2013, the country produced over 1Mt of cement in a month for the first time since November 2011.
Looking ahead, Argentina is forecast to see economic growth of 4.6% in 2013.1 If the past relationship between cement production and GDP continues, this should see a substantial increase in cement production for the rest of 2013. This should bolster the balance sheets of major producers like Loma Negra, which saw its profit halve year-on-year to US$43.9m in 2012.
Despite the implied likelihood of growth for the cement industry, there is plenty of headroom for higher consumption within the country's existing cement capacity. This trend has been seen for the past 20 years, with capacity utilisation as low as 52% in the early 1990s. There are no further planned or ongoing major expansion projects in Argentina at present other than Loma Negra's investment plans to 2014.
Bolivia
GDP | US$56.1bn |
GDP/capita | US$5,200 |
Population | 10.5m |
Area | 1,098,581km2 |
Above: Summary economic and geographical statistics for Bolivia.
Bolivia fully broke away from Spanish colonial rule in 1825 but then endured ~200 coups and counter-coups until 1982. These prevented significant political, economic or social progress during this period. Bolivia is the least socially- and economically-developed country in mainland South America.
Despite these issues, Bolivia's economy has developed over the past 20 years (See Figure 2), with GDP/capita rising by a factor of over 2.5 in the 20 years between 1991 and 2011. Oil discoveries in the 2000s have the potential to transform the country's prospects but political disputes surrounding the best course of action regarding the oil have hampered development. Many are concerned that policies will widen the gap between rich and poor despite Bolivia already having one of the largest income disparity gaps in the world.
Cement industry
Bolivia has one of the smallest cement industries in South America, with a total capacity of 2.8Mt/yr over six integrated cement plants.
It began with the establishment of the SOBOCE (Sociedad Boliviana de Cemento) Viacha plant in 1928. Initially with a capacity of 65t/day, the plant has since expanded to 0.5Mt/yr. Today SOBOCE has an integrated capacity of 0.7Mt/yr over two plants. The remainder of the industry is split between four cement players, which share 2.0Mt/yr of capacity between them. The USGS reports that Bolivia produced 2.8Mt of cement in 2011 (See Figure 1).
In the coming years FANCESA will set up a plant at Maragua and a new state-owned company Ecebol will set up a 0.7Mt/yr plant in 2014.
Chile
GDP | US$326bn |
GDP/capita | US$18,700 |
Population | 17.2m |
Area | 756,102km2 |
Above: Summary economic and geographical statistics for Chile.
Chile declared independence from colonial Spain in 1810 but was only decisively victorious in 1818. Gradually developing, its 20th Century history saw a mixture of progressive, conservative and socialist governments. Between 1973 and 1990 Chile was ruled by military strongman Augusto Pinochet, who rose to power in a coup-d'etat. He was replaced by a democratically-elected President. This has led to increased stability and economic progress, allowing Chile to take a leading political position in South America.
Cement industry
Chile has seven integrated cement plants with a combined capacity of 5.5Mt/yr. The plants are mainly located in the centre of the country close to the capital Santiago, with one plant in the north. Chile's largest producer is Cementos Bío Bío (CBB), which has 2.4Mt/yr (44% of Chilean capacity) across four sites. CBB was formed in 1957 with a capacity of just 0.12Mt/yr at Talcahuano. CBB expanded in 1978 with the acquisition of the INACESA (National Cement) plant at Antofagasta.
In 1995, CBB constructed a new line at Curico. Also in 1995 the Talcahuano plant reached 0.75Mt/yr. In mid-1998 it launched a 0.5Mt/yr expansion at Antofagasta. The 1Mt/yr Curico plant was completed by the end of the same year.
Elsewhere, Cemento Mélon has been part of
Lafarge since 2000. Mélon has a single cement plant at La Calera, with a total capacity of 0.85Mt/yr. Cementos Polpaico, which is a Holcim subsidiary, operates the largest cement plant in the country, the 1.6Mt/yr facility at Cerro Blanco.
Figure 4 shows that Chilean cement production declined after peaking in 2008 at 4.6Mt. It has since recovered to 4.4Mt in 2011 and 4.7Mt in 2012. In the first six months of 2013, Chile produced 2.36Mt of cement. Averaging cement production of 393,000t/month, Chile is on course to produce 4.72Mt in 2013, a similar amount to 2012. The country's economy is expected to grow by 4.6% in 2013.2 This should enable continued growth in cement demand in the short to medium term.
Colombia
GDP | US$511bn |
GDP/capita | US$11,000 |
Population | 45.7m |
Area | 1,138,910km2 |
Above: Summary economic and geographical statistics for Colombia.
Like Ecuador and Venezuela, the Republic of Colombia emerged from the break-up of Gran Colombia in 1830. The country endured a hard 20th Century, with periods of war, political conflict and intense battles between the government and anti-government guerilla forces, notably the Revolutionary Armed Forces of Colombia (FARC), which has fought to overthrow the government for almost 50 years.
Cement industry
Colombia's 16 cement plants are mainly located in the north and west of the country. As well as being large, (~13.4Mt/yr) the industry is fairly well developed, with Mexican multinational Cemex (4.1Mt/yr) and domestic/regional player
Cementos Argos (6.2Mt/yr) the two main players up the market. Holcim is also present through the 2.1Mt/yr Holcim (Colombia) Nobsa plant. Three other local players share the remaining 0.75Mt/yr of capacity. Cementera San Marcos started operations in Yumbo in the Valle del Cauca region of Colombia in June 2012.
Outsiders Holcim and Cemex entered the Colombian market in 1969 and 1996 respectively, However, Cementos Argos, which operates a number of subsidiaries, is a native Colombian group. It began operations out of Medellín in 1934 and is the leader in cement, ready mix and aggregates in the country. Since 1998, the group has been international, with units in the Dominican Republic, Venezuela, Haiti and Panama. In 2012 it acquired three cement plants in the United States from Lafarge. These foreign plants make it the only non-Brazilian South American cement producer to operate cement plant assets outside its own borders.
The Colombian cement industry is set for expansion in the coming years. In November 2012 Holcim announced that it would build a second, 2.0Mt/yr integrated cement plant at a cost of US$600m somewhere in the country. It expects to cash in on greatly increased government infrastructure spending in the future. Holcim expects cement demand in Colombia to rise from ~10Mt/yr in 2011 to ~17Mt/yr by 2020,3 although demand for cement was down by 7.6% year-on-year in the first quarter of 2013 compared to the same period of 2012.4
Ecuador
GDP | US$156bn |
GDP/capita | US$10,200 |
Population | 15.4m |
Area | 283,561km2 |
Above: Summary economic and geographical statistics for Ecuador.
Emerging from the fracturing Gran Colombia in 1830 the geographically-named Ecuador occupies a small corner of central-western South America that straddles the Equator. The country, like others in the region, has endured a troubled political history. In 30 years of civilian rule there have been 20 new constitutions and political protests that led to the removal of four democratically-elected presidents. The country's economy is dominated by oil reserves, which account for around half of export earnings in recent years.
Cement industry
Ecuador's cement industry (4.1Mt/yr) has three producers that each have one integrated plant: Holcim (3.5Mt/yr), Industrias Guapan (0.35Mt/yr) and Cemento Chimborazo (0.23Mt/yr). Holcim, which entered the Ecuadorean market in 1976, also operates a 0.5Mt/yr cement grinding plant at Latacunga. It dominates the country in terms of cement capacity and supply.
Holcim's integrated plant, located at Guayaquil, is currently undergoing expansion to 5.4Mt/yr at a cost of US$400m. The expansion process, which began in late 2012, is likely to be completed in 2014. As in neighbouring Colombia, Holcim is expanding in order to benefit from future demand from infrastructure and housing projects.
Indeed, in Ecuador in the first quarter of 2013, cement consumption was up by 10.5% year-on-year compared to 2012.4 The country was one of only three on the continent that saw increased cement consumption during the period.
Paraguay
GDP | US$41.6bn |
GDP/capita | US$6,200 |
Population | 6.6m |
Area | 406,752km2 |
Above: Summary economic and geographical statistics for Paraguay.
Paraguay is a land-locked republic in central South America. It gained independence from Spain in 1811. A series of crippling wars with its neighbours took their toll on the country for much of the 19th and 20th century. These caused it to lose ground economically and socially. A 35-year military dictatorship under Alfredo Stroessner was brought to an end in 1989.
Since then Paraguay has held regular democratic Presidential elections that are relatively free and fair. However, the country lags behind many of its South American peers in key economic and social terms. It experiences net emigration.
Cement industry
Paraguay has the capacity to produce 0.7Mt/yr of cement at one production site. This means that it has the smallest cement industry of the countries featured in this review. Figure 7 shows that in 2011 the country produced around 0.65Mt of cement, a capacity utilisation rate of ~93%.
This level has been broadly static since the mid-1990s. A low of 0.47Mt was seen in 2004, which was due to knock-on effects of Argentina's banking crisis.
Paraguay's only integrated cement plant is located at Puerto Vallemi close to the Brazilian border. It is operated by state-owned Industria Nacional del Cemento and has the capacity to produce 0.7Mt/yr.
So far in 2013 the plant has struggled with technical difficulties. A planned 30-day stoppage in March 2013 lasted over 75 days. Compounding this has been a sudden influx of Argentine cement in the south west of the country, which the company's president Carlos Krussel said is being brought into Paraguay without payment of customs duties.5 He said that more expensive cement prices in Paraguay compared to Argentina, were driving the imports and putting the domestic plant at risk.
Elsewhere, Paraguay's second integrated cement plant is under construction at Villa Hayes. An up-to-date 0.4Mt/yr plant will be operated by Yguazú Cementos, itself owned by the Brazilian cement giants Votorantim and Camargo Corrêa as well as Concremix, a Brazilian ready-mix concrete producer. The plant is currently under construction with no known date for completion. When this plant comes online it could cause even more problems for Industria Nacional del Cemento, which is considerably older and less efficient.
Peru
GDP | US$332bn |
GDP/capita | US$10,900 |
Population | 29.8m |
Area | 1,285,216km2 |
Above: Summary economic and geographical statistics for Peru.
Located on the west coast in northern South America, Peru has seen economic and social advances in recent decades despite constant political changes. It has grown strongly in terms of GDP and GDP/capita since 2002, averaging 6.4% growth per year to 2013. It is relatively well-off in the region, with a strong mixed economy backed up by significant mineral wealth.
Cement industry
Peru's cement industry is one of the larger cement industries in South America, with the ability to produce 10.3Mt/yr of cement across five facilities.
The largest producer is Unacem, formed in 2012 from Cementos Lima and Cemento Andino. Today Unacem has two integrated plants and a total capacity of 6.7Mt/yr, around 65% of the Peruvian total. The company, through its history as Cementos Lima (and Peruvian Portland Cement before that), traces its production history back to 1916.
Three other producers, Cemento Yura (2Mt/yr), Cementos Pacasmayo (1.3Mt/yr) and Cemento Sur (0.3Mt/yr) have a plant each. While their combined capacity is currently dwarfed by Unacem, Cementos Pacasmayo more than doubled its income in 2012 on the back of increased sales and public infrastructure works and Yura, owned by Grupo Gloria, is having a new 4500t/day production line installed at a cost of US$217m. A Loesche mill will provide additional grinding capacity for the plant between 2014 and 2016, when the new integrated line is expected to come online. The additional capacity will reportedly be targeted at the south of Peru and neighbouring Bolivia.
These expansions are consistent with a recent trend towards higher domestic cement consumption due to the construction and real-estate sectors. Cement demand was up by 3.7% year-on-year in 2011 and despatches were up by 15% in 2012. Despatches grew again by 11.4% year-on-year in the first half of 2013. The country had one of the fastest-growing economies on the continent in 2012 and is expected to continue growing strongly in 2013 and beyond. This is likely to continue generating higher cement demand in the short to medium term.
Uruguay
GDP | US$54.7bn |
GDP/capita | US$16,200 |
Population | 3.3m |
Area | 176,215km2 |
Above: Summary economic and geographical statistics for Uruguay.
The Oriental Republic of Uruguay was formed around the port location of the country's modern-day capital Montevideo, which was established as a military port by Spain. Its territory was claimed at different times by neighbouring Argentina and Brazil following independence and the country went through political turmoil and a 20th Century dictatorship that only ended in 1985. Since then, however, the country has seen rapid increases in political and social equality and today enjoys some of the best living conditions in South America.
Cement industry
There are currently four integrated cement plants in operation in Uruguay, two of which are operated by Administracíon Nacional de Combustibles Alcohol y Portland (ANCAP) and two of which are operated by Cementos Artigas. ANCAP currently has a combined capacity of just 0.56Mt/yr but is currently expanding with the construction of a new plant. ANCAP is one of three companies that is building the new plant, located in the south of the country. The others are Votorantim of Brazil and Cementos Molins of Spain. The three firms have targeted an expected surge in cement demand from Brazil as it builds up for the 2016 Summer Olympic Games in Rio de Janeiro. ANCAP will contribute 20% of the US$262m construction cost.
The development of the plant in Uruguay specifically to supply markets outside the country represents an interesting strategy. While one of the major drivers of the project is from the expected destination country, it implicitly appears that the other parties expect Uruguay to require more cement in the future.
Elsewhere, Cementos Artigas, which is owned by Cementos Molins and Votorantim Andina of Chile, operates a 0.5Mt/yr cement plant in Verdum in the south west of the country. It has been active since 1997. Cementos Artigas also operates a grinding plant in María Orticochea y Garzón in the Montevideo region.
Venezuela
GDP | US$408bn |
GDP/capita | US$13,800 |
Population | 28.5m |
Area | 912,050km2 |
About: Summary economic and geographical statistics for Venezuela.
Like Ecuador and Colombia, Venezuela emerged from the break-up of Gran Colombia in 1830. As with most of its neighbours, the country experienced significant political disputes in the 19th and 20th centuries although a sense of stability was achieved during a series of relatively benign military dictatorships.
With an economy that is based largely on its well-developed oil sector, Venezuela is currently experiencing a period of renewed socialism (dubbed '21st Century Socialism' by former President Hugo Chavez). This seeks to remove the social problems resulting from socialism while attacking established capitalist conventions. While popular in some domestic quarters, this trend worries external observers. Whatever one's political stance, however, the country remains overly-dependent on its oil sector.
Cement industry
In line with Venezuela's 21st Century Socialism, vast swathes of privately-owned businesses and industrial installations have been expropriated from private companies in recent years. This includes the majority of cement plants, which have been forcibly purchased from domestic and multinational cement producers.
The result of re-nationalisation is that Fábrica Nacional de Cementos (FNC Venezuela) now operates six integrated cement plants that have a combined capacity of 8.2Mt/yr. Another 1.8Mt/yr is under the control of Industria Venezolana de Cemento (Invecem), which is also controlled by the government. The 1Mt/yr Cerro Azul cement plant at El Pinto del Municipio Piar, which is also a state-run operation, began production in late 2012.
Only one cement plant, the 0.75Mt/yr Cementos Catatumbo plant at Rosarito, remains in private hands. This means that 94% of the country's cement capacity is under government control.
Prior to 2008 the cement industry scene in Venezuela was very different, with major stakes for Lafarge, Holcim and Cemex. France's Lafarge owned the Táchira and Ocumare del Tuy plants, while Mexican multinational Cemex owned the Lara, Pertigalete and Maracaibo plants. Holcim's plants at San Sebastian and Cumarebo were taken over by Invecem. Cementos Andino, a domestic producer, also had its Monay plant taken over by FNC Venezuela.
In the cases of Lafarge and Holcim, the multinationals decided to remain a minority stake-holder in the plants but for Cemex the expopriation process was more controversial. The government targeted Cemex's Venezuelan assets for expropriation in April 2008 but Cemex was of the opinion that the US$600m offered by the government significantly undervalued the assets. With Cemex demanding US$1.3bn, the disagreement was finally settled at the value of Venezuela's initial offer in late 2011.
Expansion is currently a key element of the government's cement industry policy. New lines are coming at the FNC Monay plant and the Invecem San Sebastian plant, while the Cerro Azul plant was commissioned recently. In October 2012 it was announced that Iranian investors had begun construction of a new 1Mt/yr cement plant in the country.
While cement capacity is on the increase, Venezuela has seen varying levels of cement output in recent years. Production rose from 6.3Mt in 1991 to a peak of ~11Mt in 2006. It then fell off dramatically to just 8Mt in 2007 and has since stabilised at around 7.5-8.5Mt/yr. With US$600bn earmarked by the government for social, economic and infrastructure projects in the period 2013-2019,6 the demand for cement looks set to rise again. While there is major potential for significant gains, successful implementation will be key to the future of the country and its cement industry.
Notes
Country GDP, population and area: CIA World Factbook website. GDP/capita: World Bank Data Indicators website. Cement production: United States Geological Survey website. Cement plant information: 'Global Cement Directory 2013,' PRo Publications International Ltd., Epsom, UK, 2012;' Cement company information: Company website(s). Company results, projects and expansion news: Back-issues of Global Cement Magazine and Global Cement website.
References
1. MercoPress website, 'Argentine economy forecast to expand 4.6% in 2013,' http://en.mercopress.com/2012/12/26/argentine-economy-forecast-to-expand-4.6-in-2013-but-dollar-clamp-remains, 26 December 2012.
2. Market Watch website, 'Chile sees 4.8% GDP growth in 2013,' http://www.marketwatch.com/story/chile-sees-48-gdp-growth-in-2013-2012-10-02, 2 October 2012.
3. Leu, A. 'Holcim in Latin America,' presentation at Holcim Investor and Analyst Day 2012, http://www.holcim.com/fileadmin/templates/CORP/doc/IR_Presentations/IaAD_2012_LatinAmerica.pdf, 2012.
4. BN Americas website, 'Cement consumption drops in Latin America's largest economies,' http://www.bnamericas.com/content_syndication/extranet2/story.xsql?id_source=&id_noticia=621385&id_sector=5&Tx_idioma=I&id=987770, 5 July 2013.
5. UPI Español website, 'La industria del cemento de Paraguay pasa por una grave crisis,' http://espanol.upi.com/Economia/2013/05/24/La-industria-del-cemento-de-Paraguay-pasa-por-una-grave-crisis/UPI-63751369390500, 24 May 2013; Construcción Latinoamericana website, 'Horno de la Industria Nacional del Cemento del Paraguay lleva tiempo sin funcionar,' http://www.khl.com/magazines/construccion-latinoamericana/detail/item84204/Horno-de-la-Industria-Nacional-del-Cemento-del-Paraguay-lleva-tiempo-sin-funcionar, 5 April 2013.
6. Embassy of the Bolivarian Republic of Venezuela (US) website, 'Venezuela to invest US$600bn in social, economic and infrastructure projects,' 20 June 2012.