Cement industry insight: Latin America

It is well known that Germany is one of the world’s top exporters, but with its biggest trading partner – the euro area – struggling to pull itself out of recession, the country continues to push for openings in many other parts of the world. Immediately, one thinks of the emerging markets, as these offer attractive opportunities for importing engineering technology and investment. Readers of this magazine will appreciate that the export of cement plant equipment and knowhow is important business for Germany’s specialist manufacturers, and especially these days as the developing countries beckon. It was therefore significant that the association of construction equipment and building material machinery, part of the VDMA, organised, together with the cooperation of the local German Chambers of Commerce, a road show called ‘Cement+Minerals’ that visited Peru, Chile and Brazil early in May of this year. Seven companies, including ThyssenKrupp, Haver & Boecker, Loesche, Christian Pfeiffer, Claudius Peters, Toni Technik and FLSmidth Pfister, together with Prof. Dr Holger Lieberwirth of the Technical University of Freiberg, invited South American cement manufacturers and mine operators to familiarise themselves with high tech solutions involving most parts of the manufacturing processes. The aim, obviously, was to win new clients and to consolidate existing business contacts.

The visit by the German experts was timely, as it has been estimated that cement demand in Latin America has grown by about 6% over the past few years. For example, in 2012, backed by the booming real estate sector, cement production in Peru reached 9.85 million t. At the beginning of 2013 the country’s construction industry expanded by 18.4% while the economy continued to grow at 6.2%, confirming that Peru is one of South America’s fastest growing economies. The average growth rate in the construction industry in Chile, based on residential demand and infrastructure projects, is expected to maintain at 5.2% between 2013 and 2022, with single digit increases in cement volumes.

Last November, Colombia, Latin America’s fourth largest economy, announced plans to invest US$55 billion in infrastructure projects up to 2021. Included in the plans is a four-fold increase in the country’s four-lane highways by 2018. There are also plans to upgrade Colombia’s largest airports. Holcim also announced that it was investing US$600 million in a new 2 million tpa plant to be located either in Bolivar or Antioquia. Other major cement players could well be looking for similar opportunities. The news from Ecuador is that the expansion of Holcim’s Guayaquil plant is underway. When completed in 2015, clinker capacity will have increased by 1.5 million tpa.

A consensus among analysts suggests that GDP growth in Brazil will be 3.5% this year. A construction backlog should bolster growth, while infrastructure work in connection with the 2014 World Cup and the 2016 Rio Olympics is good news for the cement industry. There is a desperate need for electrical power for the country’s expanding industries and urban development. Over the next decade it is said that some 168 dams will be constructed in the Amazon. Even now, work on the controversial giant Jirau hydroelectric dam complex that will eventually stretch 5 miles across the Madeira River has begun. A civil engineer on the project has reported that it will hold enough concrete to build 47 towers the size of the Empire State Building, and that of course will require huge volumes of cement. There is talk that the cement market could increase by over 5% pa.

Written by Paul Maxwell-Cook. This is an abridged version of the full article, which appeared in the July 2013 issue of World Cement. Subscribers can view the full article by logging in.

Read the article online at: https://www.worldcement.com/the-americas/03072013/latin_america_cement_industry_overview_17/