Cemex halts investment projects

Cemex halts investment projects
Published: 17 October 2008

Within hours of announcing its 3Q results, Cemex has brought out a statement that saying that almost US$500m of annual savings were to be implemented before the end of this year.  The capital expenditure programme is being cut to the extent that only projects far enough advanced to be completed by early in 2009 will continue and all other investments in new capacity will be halted.

In Mexico, a 1.8Mta increase in capacity at the Yaqui works should to come on stream later this year, but the massive 4.4Mta of extension to the at Tepeaca works, taking the annual capacity there to 7.6Mt in 2009, at a cost of US$460m, may be delayed.

Whether the 1.1Mt of additional capacity under development in Texas will be completed as planned is uncertain and the 1.7Mta greenfield plant in Arizona, that had been planned for 2012 at a cost of US$400m will certainly be postponed.  The closure of older US capacity cannot be ruled out in the current environment, as Cemex is currently exporting cement out of the USA rather than importing, as has been the norm.

In the UK, a new grinding station at Tilbury with an annual capacity of 1.2Mta should be completed this year.   This will certainly be accompanied by the closure of the existing grinding plant near Rochester, and the wet process integrated works at Barrington may be closed as well.

In Latvia, with a new 1.0Mta cement plant under construction for completion early in 2009 this will almost certainly be completed.  The Latvian works is well suited to supply the 16 marine terminals in the Nordic area and can supply these far more cheaply than the Rüdersdorf works in Germany.

In Panama, Cemento Bayano has an integrated works with a 0.5Mt capacity of and is supposed to be completing an additional production line next year. In the United Arab Emirates, there is a 1.6Mta grinding plant coming on-stream later this year.

With the continuing deterioration in the global economy, cement demand is set to decline and it is likely that Lafarge, Holcim and HeidelbergCement will also announce postponements of capital investments already started being deferred, as will be the case from a number of mid-sized producers who have planned various plant expansions worldwide.