Caribbean Cement looks to Venezuela contract to revive sales
Caribbean Cement Company Ltd (CCCL) is hoping a new supply agreement with Venezuela will revive sales but fears elections will impede the deal, according to reports in the Jamaican Gleaner.
The cement supply deal is being negotiated under the crude for commodities component of the PetroCaribe agreement between Jamaica and Venezuela, which allows for part-payment of oil with goods. In June, Caribbean Cement's chairman Brian Young disclosed to shareholders that the Kingston plant hoped to begin supplying cement to Venezuela in early 2013.
However, finalising the contract was first delayed by Hugo Chávez's illness and now it faces the uncertainty of elections and a potential change of government in national elections this Sunday. Chávez is considered to be leading narrowly in opinion polls with his challenger, Henrique Capriles, at his heels. It is widely expected that a new Venezuelan administration would, at the very least, seek to reshape the PetroCaribe agreement struck with individual oil-import dependent Caricom nations, which, in turn, would delay or jeopardise its side deals.
The cement deal aims to leverage that area of the agreement, known as the Trade Compensation Mechanism. The cement producer disclosed the arrangement in its 2011 annual report. General Manager Anthony Haynes has not responded to requests for comment on the structure of the arrangement and how big a contract Rockfort is negotiating.
However, the company's second-quarter financials released in August vaguely refers to continuing negotiations for a three-year supply contract with an unnamed party - as have previous quarterly reports - which, it said, is expected to "make a significant contribution to the group's forecasted turnover and net cash flow over the contract period." If agreed, it will be the first such crude-for-commodities arrangement for Jamaica.
CCL is struggling with accumulated losses of more than J$5bn an has been expanding aggressively into export markets including Haiti, Eastern Caribbean and Dominican Republic to offset shrinking domestic cement sales.