London Olympics to spur cement investments?

London Olympics to spur cement investments?
Published: 07 July 2005

The rather unexpected news of London’s successful bid for the Olympic bid in 2012 has already has a positive effect on a number of UK construction share prices, but longer-term, this major boost to construction spending in the UK south east may at last galvanise the UK cement industry into some much-needed investments in new capacity.

Castle Cement is fairly well-placed to service the expanding London and UK south east market from its base in Ketton, Lincolnshire, which utilises bulk train deliveries into a north London distribution complex, while Rugby/RMC (now flying the Cemex flag) could invest further in its Rochester facilities, now downgraded to a local grinding operation, which relies on clinker being trucked about 180km from the Rugby cement complex in the UK Midlands.

But all eyes will now be on Lafarge and what it finally intends to do with its proposed new 1.4Mt Medway works, and on the drawing board for the last ten years. With its nearby Northfleet works to close in 2008, Lafarge will have a significant shortfall in regional supplies which it will have to meet either from imported French supplies fed into the Northfleet complex, which would then becomes a waterside distribution terminal or to push ahead with a Euro200m investment at Medway.

Perhaps the Olympic announcement may now give Lafarge planners a push towards the UK greenfield plant option. In either event, Lafarge will be aiming to supply a sizeable proportion of the cement required to build the Euro 6bn complex.

The French may have lost the Olympics but could end up supplying much of the cement needed to complete this massive undertaking. Vive la France!