Mexico cement industry blocks unloading of Russian cement

Mexico cement industry blocks unloading of Russian cement
Published: 23 September 2004

The ship Mary Nour and her 41-member crew have been stuck at Mexican ports for more than two months, barred from unloading Russian cement after local producers, including Mexican cement giant Cemex, used safety concerns and technicalities to keep them out of what some call an overpriced market. (reports Dow Jones Newswires)

The saga of the Panamanian-flagged ship, whose crew went without fresh water for a week and whose operators stand to lose around $30,000 per day, has touched a raw nerve in a country that touts free trade, but where just one or two big companies control everything from airlines to building materials.

"They are protecting their market," said Nader Dajani, head of the Amman, Jordan-based CTI Group, which operates the Mary Nour. "But I believe that since they are allowed to trade freely around the world, so we should be allowed to trade freely in Mexico."

Cemex, the world’s third-largest cement company, acknowledges Mexican prices are high compared to many other markets, and only slightly cheaper than in the United States. But company officials blame expensive energy, labor, transport, distribution and regulatory costs in Mexico, and the absence of government subsidies given to many foreign producers.

But Manuel Rivera, spokesman for Monterrey-based CDM, which is trying to import the Russian cement, said that even with the costs of bringing the cement halfway around the world, the Russian product is cheaper. He says they bought the 27,000 tons of Russian cement in the Black Sea at international prices of $42 per ton and shipped it to Mexico at a cost of about $30 per ton -well below Mexico’s average price of $115 per ton for bulk cement.

Cemex doubts that figure, estimating that taxes and port charges would boost the imported cement’s price to $105.

"If it were as cheap as they say, why wouldn’t Cemex be importing? Why would it produce anything at all in Mexico?" said Cemex spokesman Gerardo de la Torre. "The company’s not stupid."

The Mary Nour’s crew, which includes Philippine, Croatian and British citizens, was denied water at Tampico for about a week, and has now moved on to Altamira, a nearby port. The crew has allegedly been harassed by police, and the ship’s cargo has been embargoed by customs authorities.

"It was uncomfortable, because the men had to wash the old-fashioned way, in salt water," said the Mary Nour’s Norwegian Captain, Steinar Dahl. "It is the first time in my 40 years at sea I have felt a bit afraid."

Cemex says it obtained a court order to block the ship from tying up as a floating distribution center for cement shipments, fearing it would endanger shipping in the Gulf coast port of Tampico, where Cemex has a harborside plant.

The 186-yard Mary Nour wanted to park at a dock, and have another ship tie up alongside it, keeping it stocked with as many as 500,000 tons of cement annually. "Ships could run aground" while trying to squeeze past the double-docked boats, said de la Torre.

Experts familiar with the port operations at Tampico said there were navigational problems with the scheme. But they also said port authorities have been unwilling to work out the technical problems, which they said could be resolved.

Another technical argument advanced by Mexico’s National Cement Chamber -the largest of whose five members is Cemex -is that CDM lacked registry as an authorized importer because it didn’t have the required land-based warehouse.

Dajani said Cemex has pressured suppliers in Asia not to sell to the consortium working with CDM. The cement chamber, for its part, argues "there is no need to import cement from other countries to meet domestic demand."

That attitude is par for the course in a country whose two dominant airlines still operate under the same holding company, despite a recommendation by federal regulators that they be split up years ago.

Meanwhile, Telmex, a privatized former monopoly, continues to control over 90% of Mexico’s local telephone market. It was condemned earlier this year by a World Trade Organization panel for limiting competition, and reaping billions in improper profits through inflated connection charges for long-distance calls.

Osmin Rendon, spokesman for the cement chamber put it this way; "The only thing we’re doing," Rendon said, "is looking out for the industry’s interests."