Calls for State support for Russian cement industry

Calls for State support for Russian cement industry
Published: 07 November 2008

Russia’s Regional Development Ministry is working on anti-crisis measures for the cement industry. Officials and industry experts have two months to write a new federal targeted programme for cement industry development to 2011.

According to the Ministry’s preliminary estimates, this program could include around 200 billion rubles of state support for cement producers, provided for the purpose of building factory infrastructure and interest rate compensation on loans. But while the volume of state aid is being discussed, the state still wants to buy cement virtually at cost.

Cement producers discussed the proposed federal targeted program (Cement Sector Development in 2009-11) on October 31, 2008 at a meeting with Deputy Regional Development Minister Sergei Kruglik. Vladimir Zharko, deputy director of the new investment projects department at AG Capital, attended the meeting; he told us that a new working group has been given two months to write the program. The group includes representatives from the Federal Anti-Monopoly Service, the relevant ministries, SoyuzCement, EuroCement Group, Inteco, SibCement, Holcim, Heidelberg Cement, and MordovCement.

The working group will determine a range of measures, including "direct and indirect state support for the cement sector." The Regional Development Ministry has already prepared an estimate of investment required by the cement industry. Materials handed out at the meeting indicate that the Ministry wants the state to invest RUB150.363bn in building new cement-making capacities by 2011.

The Regional Development Ministry hopes that RUB123.984bn to build transport and energy infrastructure for cement factories may be allocated from the Investment Fund. It proposes that other federal budget sources should provide RUB23.139bn as compensation for interest rates, RUB40bn to reconstruct existing enterprises, and RUB3.24bn for cement-related research and development.