Pacasmayo kicks off construction of new plant, Peru

Cementos Pacasmayo has started construction of its new 1.6Mta plant in Piura to meet growing housing and infrastructure requirements in the north of the country.

"We have already started the construction of this plant. We have laid the foundation earlier this month. At the moment we are comfortable with the schedule and we are thinking that in the first half of 2015 should start and cement production,” Humberto Nadal, CEO of Cementos Pacasmayo told El Comercio news.

The new plant will increase Pacasmayo’s cement capacity by 50 per cent and is expected to begin operations in 2015. The company has two production facilities, located in the cities of Pacasmayo and Rioja, with a total installed capacity of 3.1Mta. Expansion of the company's Rijoa plant is also scheduled for completion this year.

A report by Fitch Ratings published earlier this year noted that Pacasmayo is the dominant company in the northern region, which includes 23 per cent of the population and generates 15 per cent of Peru's GDP. The company supplies substantially all the cement consumed in Peru's northern region, as a result of important entry barriers such as transportation costs - with cement imports representing less than 0.5 per cent of total shipments in the northern region. In addition, the company's market position is further supported by its retail distribution network for construction material, known as DINO, which consists of approximately 200 independent retailers with more than 270 hardware stores.

During the last 10 years (2002-2012 period), the company's cement sales volume grew at a compound annual growth rate (CAGR) of around 11 per cent drivent by the rapid expansion of the construction sector.