Could Cemex manoeuvres backfire?

Could Cemex manoeuvres backfire?
Published: 13 August 2004

The Mary Nour saga continues apace although for the crew idling time away in the port of Altamira, it might look as if they will have to wait some further time before they are eventually able to discharge their 26,200t of Russian-sourced cement or asked to leave Mexico for other shores.

Throughout Cemex claims that it is only looking to protect its own terminal facilities in the port of Tampico and emphasises that its position "always has been and will be in favour of the free trade and in no way is it acting against the free import of cement". Its actions would, however, seem to suggest otherwise.

At present the courts seem reluctant to act to resolve this dilemma, but to recap on the judicial proceedings, it would seem that the ship, its crew, agents, receivers are now facing three separate legal challenges.

The first case relates to the Port of Tampico with the injunction placed by Cemex not to allow double-banking in the channel. When the receivers then declared that they did not need double-banking for this particular discharge, Cemex placed another injunction to not allow the berthing of Mary Nour on any berth because they believed that any operation of the ship would affect Cemex terminal operations in Tampico. The local judge then decided to combine both cases and CTI has apparently been asked to provide substantial cash guarantees in favour of Cemex.

The second case relates to the berth in Altamira where the Chamber of Cement Industries went to court stating that TMA, the terminal operator and CDM the receivers are trying to smuggle 26,000t of cement through that terminal because the terminal does not have approval to discharge cement even though CDM have reportedly paid the customs and VAT.  The customs department then confiscated the cargo as being smuggled and is using the ship as custodian of such cargo. TMA and CDM are now appealing and presenting their defence against the accusation.
 
The third case relates to a criminal investigation being carried out against the ship agent, the customs broker, TMA and CDM by claiming that the Mary Nour was carrying empty undeclared cement bags for bagging. Both police officers and customs agent have visited the ship six times but have found nothing. ICR was informed that the ship purposely did not bring any cement bags on board and that the Mary Nour would eventually use locally made bags, should the need arise.

This on-going controversy is now attracting widespread media attention in Mexico, where Cemex claims of not wanting to hinder free competition are coming under increasing scrutiny. Analysts are not surprised that Cemex (and others) want to protect their own market, is one viewpoint, and while Cemex has a 60 per cent market share, plus very high prices, who can blame them for acting as they are doing. Others are saying that the cement shipment is legal and the ship should be allowed to discharge, whereas spokesmen for local consumer groups, clear in the benefits of lower cement prices for Mexican consumers, paint a more pessimistic picture and suggest that Cemex will probably win this particular battle.

However with domestic cement prices sky high and with a market ripe for others to try the import challenge, the barriers to foreign cement might now be irreversibly damaged. As one economic commentator noted this week: This could be just the first chapter of a novel that relates the story of how Cemex lost the market that first enabled it to reach the global number three in cement.