What is the importance of having a national cement company?
The cement business is a monopolistic business by nature. This is typically because there are very few producers for a lot of consumers. In Ecuador, we have four plants and three companies for 15 million consumers. Locally, there was a lack of cement from 20 years ago up until 2012. In 2007, the government started to improve things, such as infrastructure, roads, health, and education. To achieve these goals, we needed cement as one of the main building materials, and up until 2012 the government asked us to increase production because the private producers could not supply the market. In most countries, except Ecuador and Paraguay, the entire market belongs to the private sector. In this case, we have two main private producers, which are also the two biggest producers in the world. One is Holcim, which is Swiss, and the other is Lafarge, from France. Now, these two companies have merged and have more or less an 80% market share. We made many investments, especially in recent years, and increased our production three fold. We needed a public cement company, but now the supply has met the market demand and we can leave this business to private producers.
What is the significance of the restructuring within the public cement sector?
The government has two companies. One of them is Cemento Chimborazo, and the other is Industrias Guapan. Previously, they were owned by different parts of the government, but we have now merged them together into the Unión Cementera Nacional UCEM Compañía de Economia Mixta, where 95% of shares belong to Empresa Publica Cementera del Ecuador (EPCE). This was because Cemento Chimborazo had a 5% market share and Guapan had a 7% market share; therefore, we decided to bring them together to make the company stronger. We performed this merger in November 2013, and right now we are looking to make this company stronger with an investment of around $230 million to put in a brand new clinker line. Clinker is one of the steps in making cement. The cement is produced from limestone and clay. From limestone and clay, we produce clinker, and with clinker and the addition of gypsum we produce cement. Therefore, we need a kiln and a lot of equipment, such as a crusher. Right now, the country imports a lot of clinker, close to 1 million tons per year; however, the government is working to reduce imports, which is why we need to increase domestic clinker production. To do that we have to invest huge amounts of money, and the government has decided to transfer the responsibility to the private sector.
Would you say the cement industry can play an important role in the transformation of the productive matrix?
Definitely, because it is a strong industry. The cement industry is a nice one because we start with geological materials, with mine quarries, and limestone, and then we have to transform this material, meaning we need the mechanical-electrical industry. We also have to transform materials with heat, making it a chemical industry. Then, we have to sell the product, meaning it is a market industry. We also need electronics and software. The cement industry uses combustible fuels, meaning we have to move away from the use of fossil fuel or oil to other products. In Europe, for example, they can substitute 50% of these combustibles, such as coal, oil, and gas, by using waste, such as plastics and tires. In Ecuador, the use of such fuels is now zero, meaning we can use the cement industry to initiate this change. The cement industry could be, in a few years, the friend of humanity because we can utilize all of the waste, instead of burning it. We can reach two goals simultaneously by helping the environment while using this material to produce cement.