Continuing Saga of the Mary Nour in Mexico

Continuing Saga of the Mary Nour in Mexico
22 December 2004

The Wall Street Journal, New York carried a detailed report on the Mary Nour last week. Below is a shortened summary.

In the five months since Captain Steinar Dahl steered his vessel, the Mary Nour, into Mexican waters, he has received a rude welcome. His ship was denied entry into one port only to have its load impounded at a second. The ruddy Norwegian has endured five onboard inspections, a blood test and a police interrogation amid accusations he may be smuggling guns, drugs or illegal immigrants. The former head of Mexico’s powerful spy agency has even interceded. Jorge Tello, who is now a senior executive at the world’s third-largest cement maker, Cemex SA, alternated between pleading and making what a port official called "veiled threats" to keep the ship out of the port during a May 25 meeting, according to the port official’s written summary of the meeting.  Cemex confirms a
meeting took place, but calls the summary "an inaccurate and imprecise account  by one person."

Now, the ship and its cargo sit in a restricted berth in the Gulf Coast port of  Altamira, immobilized by Mexican customs. What’s especially striking about Captain Dahl’s continuing nightmare is the mundane nature of his cargo: 26,000t of cement. Cement, however, is serious business in Mexico. Two giants, Cemex SA and Holcim Apasco, the local unit of Zurich-based Holcim Ltd., dominate the market, where a metric ton of bagged cement often sells for more than in the US, and twice the price in China. As the saga of the Mary Nour shows, Mexico doesn’t exactly roll out the red carpet when a rival steps on the turf of one of its most powerful firms.

Over the years, Monterrey-based Cemex has benefited from high prices at home to help fund an acquisition spree that turned a provincial producer into the biggest single cement maker in the U.S. Cemex recently agreed to pay $4.1 billion to buy the world’s biggest concrete maker, Britain’s RMC PLC. Cemex is also aggressively seeking to export abroad. In the US, Cemex mustpay steep "dumping" charges because domestic producers have persuaded the US government that Cemex sells at below-market prices.

For Capt. Dahl, the Mary Nour’s journey has provided a painful lesson about Latin America’s biggest economy. Despite Mexico’s many free-trade agreements, a chaotic legal system and weak institutions pose informal barriers to competition in key industries. Take telecommunications: Despite six years of deregulation, Mexico’s Telefonos de Mexico SA still controls 95% of domestic phone lines and charges more per call than counterparts in the U.S. and Brazil. Two Mexican brewers control 98% of the domestic beer market.

Cement-industry officials say they are within their rights to use legal means to protect their industry from what they consider to be unlawful competitors. They deny using any means other than legal to protect their business. "I have to use all the legal means available to defend our rights," Cemex Chief Executive Lorenzo Zambrano said in a telephone interview.

The Mary Nour’s troubled voyage began after CTI Group, a cement-trading company based in Amman, Jordan, paired up with former Cemex employees in Spain and Mexico to buy cheap cement and sell it in Mexico. From the beginning, the group ran into trouble. The Mary Nour spent the first weeks of May meandering in the South China Sea as Indonesian and Taiwanese cement suppliers pulled out of deals to sell cement. Then, the Swiss cement broker that CTI had contracted to supply the ship with cement backed out, complaining of Cemex influence.

"We have been clearly advised" that the root cause for the refusal of suppliers in Indonesia and Taiwan to load the ship is "the intervention of Cemex," Transclear SA, the broker, informed CTI in a May 19 memo. Transclear officials confirmed the authenticity of the memo but declined to comment further.  Cemex denies exerting influence to block the sales.

Meanwhile CTI’s Mexican partners encountered roadblocks at home. In February, the Mexican cement producers’ association -- dominated by Cemex and Holcim-Apasco -- refused to endorse their application for a cement importation license. So the group paid $90,000 to buy a small trucking company in northern Mexico that had such a license.

In late May, Mr. Tello, who is responsible for gathering information on international markets at Cemex, interrupted a routine meeting with Tampico port director Rafael Meseguer. He told the port director that his "personal prestige" would be damaged if the cement cargo discharged in Mexico, according to a summary of the meeting that Mr. Meseguer prepared the next day. Mr. Tello also suggested that Cemex’s efforts to improve the traffic at the port would be curtailed if port officials allowed the boat to unload, according to the summary, which was prepared as a routine matter and addressed to senior Mexican maritime officials.

Mr. Meseguer said in an interview that he insisted that he couldn’t legally impede the arrival of the cement ship. He was later fired, a move he blames on Cemex. Port officials say Mr. Meseguer was fired because of poor operating results in Tampico.

Shortly after that meeting, in early June, an anonymous call was made to authorities in Tampico, accusing CTI’s Mexican partners of being a front for illegal narcotics, arms and immigrant traffickers. Tampico police arrested two of the investors. They were released after filing sworn affidavits that they aren’t smugglers. No charges were filed.

In July as the Mary Nour sailed toward Mexico flush with Russian cement, Cemex obtained an injunction barring it from the port of Tampico. The judge granted the injunction even as senior port officials, including Mr. Meseguer, said the Cemex claims that the ship would block other ships at the port or cause an environmental hazard were unfounded. Months later, a higher court overturned the Cemex injunction, but by then the Mary Nour was long gone and battling a new wave of new legal attacks. Denied a berth in Tampico, Capt. Dahl invoked a 1920s international maritime treaty granting ships the right to enter ports to replenish fresh food and water. Harbormaster Marco Antonio Vinaza denied that request. Mr. Vinaza didn’t respond to interview requests.

Stranded outside Tampico and short of water, the crew stopped showering and washing their clothes. Finally, port officials down the coast in Altamira offered the Mary Nour a berthing on July 25, the ship’s log shows. The cement association reacted by filing a complaint charging that the cement was being illegally imported. The ship’s owners are awaiting a hearing date in the matter, which could be as soon as January.

Mexican customs officials in Altamira, meantime, have immobilized the Mary Nour, preventing it from selling
its cargo, charging that the ship improperly entered a port that isn’t authorized to unload cement. As the ship has waited for nearly five months, Capt. Dahl has complained that the delivery of water, food and services to the ship have been delayed. The crew has been able to secure only three-day shore passes, not the usual monthlong passes he says other crews receive. At one point, the ship’s mainly Philippine sailors were required to undergo blood tests to prove they didn’t have SARS, or special acute respiratory syndrome, a disease that swept parts of Asia last year.

In September several crew members were robbed by six uniformed Altamira police officers while on shore leave, according to a criminal complaint filed with local authorities. No charges have been filed in the case. The ship’s owners say the lawsuits and harassment are part of a larger strategy to create a long-enough delay that the cement will begin to decay, losing the binding properties that make it a valuable building material and rendering the
cargo worthless.

The head of customs at Altamira port says that there are no obstacles which would impede the delivery of supplies to the ship, and that the customs department is simply upholding the law. The clock is ticking for the owners of the Mary Nour. The binding properties of the ship’s cement cargo start to decay after about six months. They say they are in too deep to turn back, and are fighting it out.

Published under Cement News