TCL wants waiver dropped for cement plant
Stabroek News
April 23, 2004
Trinidad Cement Limited (TCL), the investor in the US$4M cement plant has been told that the duty waiver on cement imports will expire in six months and it hopes to be bagging cement by then.
"We do not expect the waiver to continue beyond six months," Kelvin Mohabir, TCL's General Manager, International Business and Marketing, told Stabroek Business this week. He notes that the waiver is a response to the current shortage of cement in Guyana and TCL was told that the waiver would be reviewed at the end of six months. The government has not given a commitment not to seek a further waiver.
"It is critical that assurance be obtained that the waiver will be discontinued at least three months prior to the start-up of the terminal," the project profile for the investment says.
Mohabir says TCL has been meeting its 128,000-tonne commitment to the Guyana market but has been told that cement imports last year were in the vicinity of 160,000 tonnes. This, he indicated, would have been through normal channels and brings into question the data at TCL's disposal, which suggests TCL had 100% of Guyana's market for cement.
TCL is now being notified of government projects coming on stream to adjust its production targets accordingly.
The cement shortage became more pronounced in recent months and comes at a time when the world market price for cement is also rising as a result of the increased demand by China for cement and construction materials. China consumes between 37-50% of the world's cement production. Mohabir says cement is not available in Venezuela for export and Columbia's production is land-locked.
The solution for Guyana, Mohabir says, is the cement terminal at the GNIC wharf, which should be up and running before the year is out, offering a continuous supply of cement and stability in prices.
The price of cement has skyrocketed in recent months, moving from just over $800 a sack to as much as $1800 a sack. At these prices, the cost of construction would have also jumped. It is not sure how various public sector investment projects, which form the bulk of the 2004 budget, are being affected by the shortage and higher prices.
The cost of shipping, which has gone up by 50%, has had a 10% effect on TCL's prices and Mohabir says TCL is working to keep its costs under control and to make efficiency gains. However, in anticipation of the International Shipping and Port Facility code coming into effect from July 1, shipping rates are going to be further affected, as shipping companies upgrade facilities or companies get out of shipping because of tighter security measures. Mohabir says TCL is working with its shippers to ensure costs are under control.
TCL recently signed a memorandum with the Guyana National Industrial Company (GNIC) to sub-lease space in the GNIC complex for the cement plant and to sign on GNIC as the shippers for its bulk cement from Trinidad to Guyana and Suriname.
The company expects any day now to sign an agreement with GNIC and Vikab Engineering Services for the supply of silos (US$900,000) and construction management services (US$158,000). The terminal is expected to have a capacity to bag 150,000 tonnes of cement per month, to be enlarged once the demand is there. There will be three silos and two warehouses initially and it is expected that two shipments would be made each month, initially, to service the needs of the new plant. TCL had projected the local market to grow by at least 5,000 metric tonnes annually.
Initially, the plant will distribute palletised bagged product in 42.4 kg paper sacks and semi-bulk jumbo bags. But provisions have been made for future bulk truck loading. The cement will be supplied to outlying areas by GNIC by barges to lower transportation costs.
TCL sales (Free on Board) to Guyana are currently US$64M and there is a lobby underway for a bound rate for Caricom to protect cement manufacturers from foreign threats.
The company, in its project profile, says it intends to secure its market dominance in Guyana by ensuring a reliable supply of its product; institute a more competitive pricing structure and to increase market coverage and service throughout Guyana.
TCL sees the only source of pollution from the project as "minimal discharge of fugitive cement dust" or minute solid particles in the atmosphere. The project, it says, has been designed to conform to rigid US Environmental Standards and hence the company, in meeting the requirements of the Environmental Protection Agency, foresees no problems. The EPA in December 2002 had issued a provisional environmental permit for the project. An environmental management plan has been developed including a detailed environmental monitoring programme geared to establish baseline data prior to the commencement of construction. A scope of work was prepared and the Caribbean Industrial Research Institute (CARIRI) was retained for the environmental monitoring programme, which will start this month.