A truckload of bagged cement leaves the Caribbean Cement Company Limited's Rockfort plant in East Kingston recently. - Junior Dowie/Staff Photographer

Caribbean Cement Company, the island's sole manufacturer of Portland cement, is negotiating a supply agreement with Cemex under which a floating Cemex packaging plant would periodically berth at a Jamaican port, to bag and deliver cement to help cover the shortfall in the local market.

"We are still in negotiations, but we have already identified a vessel and the port," Carib Cement's public relations manager, Lystra Sharp, told the Financial Gleaner, in confirming the talks.

Contract details, such as duration, quantities to be delivered and the price at which the cement will be sold, were not immediately available.

Carib Cement's plant at Rockfort, in eastern Kingston, has a rated capacity of a million tonnes of cement annually, but technical and other problems, have caused it to produce below that level at a time when demand for cement has been on the rise.

For instance, last year, when unseasonally heavy rains limited its flow of raw materials, the company's output was 865,000 tonnes. This year its production will probably meet 900,000 tonnes, having been forced in April to recall nearly 20,000 tonnes of the product which did not meet quality standards.

The company has already booked claims of $250 million for compensation from consumers who bought the poor quality cement.

Domestic demand

By Carib Cement's estimate, current domestic demand for Portland cement is about one million tonnes, which, except for its recent difficulties, the company insisted, it could supply.

However, cement importers argue that the real demand for cement is more in the range of 1.3 million tonnes, and balked two years ago when the government, in exchange for Carib Cement's planned investment of US$100 million, to double the size of its plant, gave the company near monopoly protection by tripling the tariff on imported cement to 45 per cent.

That tariff hike was suspended at mid year in the face of CCC's production problems and a shortage of cement in the market that stalled construction projects and slowed economic growth. While the crisis has eased supply problems continue and that, in part is, what Carib Cement wants to attack, while protecting market share.

"Cemex will possibly come in once a month with cement on its floating packaging plant from which it will package the cement for supplying the market while it is berthed," Carib Cement's Sharp said.

Mexico-based Cemex, with plants in Latin America, Asia and Europe, is among the world's largest producers of portland cement. It also has a 20 per cent stake in CCC's parent company, Trinidad Cement Ltd (TCL) as well as 10 per cent holding in the local company.

However, officials stressed that the deal being negotiated was a normal supply transaction between CCC and Cemex rather than an equity partnership project between the two companies.

It was not immediately clear, if and how, this project would impact the importation of cement by firms that have recently moved to take advantage of the tariff relaxation on cement.

Mainland Limited, for instance, has announced plans for a 50,000 grinding and bagging plant, for its facility in St. Catherine, with the intention to double the size of the facility after the first years.

Additionally, Tank-Weld, a construction and steel fabricating concern says that a cement bagging plant would be among the facilities it plans in a $1.2 billion port development at an operating hub it will undertake at Rio Bueno on Jamaica's north coast.

business@gleanerjm.com