Cement company to spend US$12 million to boost production capacityMonday, March 08, 2021
Caribbean Cement Company Limited (CCCL) is preparing to spend US$12 million (approximately $1.8 billion) this year to increase its production capacity to meet an expected spike in demand when the Government rolls out its ambitious housing construction plan.
The Andrew Holness Administration has indicated that it would construct between 70,000 and 100,000 houses over the next five years, and general manager of CCCL Yago Castro says the company is moving to ensure that a shortage of cement is never an issue.
“We will also be investing approximately US$10 million every year in the next five years. We want to reach 1.3 million tonnes and will be able to provide cement for the Government's ambitious project,” Castro told the Jamaica Observer late last week.
“We are in a growth trend right now. In 2020 we produced a total of 950,000 metric tonnes of cement. That is a new record of cement produced in Jamaica. This year we are going to produce more than one million tonnes if needed.
“But we are not comfortable with that number. We want to expand our production capacity 25 per cent more in the coming two or three years. That is why we are allocating that big amount of capital expenditure for investment,” added Castro.
He said the indication CCCL has received is that the Holness Administration wants to construct at least 70,000 low-cost houses of about 400 square metres each, made from concrete — and that will increase the demand for cement.
“I think it is a very interesting project and I think an important segment of the population will benefit from these houses. I don't know a lot, but what I heard is that the type of houses being considered is the type of units we have seen in other countries, with very good results,” said Castro.
He added: “It is low-income house but the quality is good and the durability is good, and I think it makes sense and covers a need that is there for an important segment of the population.”
The CCCL boss said, with the company being a part of the TCL Group, which has operations in a number of countries, if there is an increase in demand that it cannot meet from local production, it will be in a position to secure stock from overseas to ensure that Jamaica has a proper supply of cement.
Castro scoffed at claims that the price of cement could drive up the cost of the houses as he argued that CCCL is prepared to support the Government with special prices if needed.
“Let me tell you something, because this is something I don't think everybody knows. That type of unit that is being considered of 400 square metres is valued in the market at more or less $8 million and the total amount of cement that is used to build that type of house is $140,000.
“So the total cost of cement in a single unit like that is 2.5 per cent,” said Castro as he pointed out that in 2015 the price of a housing unit as proposed by the Administration would be $6 million but this has moved to $8 million in the past five years.
“This has increased the price of such a unit by 33 per cent, but at that same time the price of cement has not increased, and remains at 2.5 per cent. So this increase is not us. It happens in every country where everybody thinks that the price of cement is a super big contributor to the total cost of the unit — but it is not,” declared Castro.
He told the Observer that, in addition to any price concession that might be considered, CCCL is also prepared to help from an advisory position.
“We are not a construction company, but we have participated in enough projects like this in many countries. We want to help from an advisory point of view, even to bring in technicians from other countries to support the Government of Jamaica or the entities which are going to do the project at no cost. We are not thinking about a profit but we want to contribute from an integrated point of view.
“We are super excited; we think it's good for the country and we want to contribute.and if some special price for the cement is needed we are willing to contribute, but it will not make a difference. It is negligible,” said Castro.
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