CEO says Cementos Lima is ready for more competition

CEO says Cementos Lima is ready for more competition
Published: 17 December 2010

The chief executive of Cementos Lima said the company, the largest cement producer in Peru, is ready to meet increased competition from the entry of foreign cement producers.

Chief Executive Carlos Ugas also said that the company’s plant under construction in the U.S. should move into a testing phase by year-end and start production in the first quarter.

Ugas’s comments were contained in a company filing to the Peruvian securities regulatory agency.
Ugas pointed to reports Cementos Portland and Mexico’s Cemex (could build cement plants in Peru but added it would be reasonable to expect at least a three-year delay in setting up any new production plants, due in part to the need for environmental-impact studies.

"Can someone do an environmental impact study, organize financing, construct and operate a plant in two years? Could be, but perhaps it would be a small plant. I think that a more reasonable time frame is three years," he said.

Cement production has expanded rapidly in Peru alongside robust economic growth.

Peru’s total cement production reached 7.5Mt in the January to November period, up 16% from a year earlier, according to the private-sector cement producers group, Asocem.

That demand has gone hand in hand with growth of about 17% in the construction sector of the gross domestic product indicator in the January to October period, compared with a year earlier.

Ugas said that cement demand should continue to grow in Peru for at least the next three years but at a slower pace than at present.

He said uncertainty about economic growth and weaker investments related to the 2011 general election could hurt demand for cement, especially from small-scale buyers, who make up about 70% of the market."Growth isn’t infinite," he said.

Cementos Lima’s cement production rose 5.1% in the third quarter to 858,954t.

Ugas said the company has projects under way to increase production, "which will allow us to easily supply the market for the next five years."