By Lavern Clarke, Staff Reporter
Caribbean Cement Company in Rockfort, Kingston.
CARIBBEAN CEMENT Company (CCC), the only local producer of cement and the dominant domestic market supplier, has officially asked the Government for protection from growing foreign competition.
In a case filed with the Anti-Dumping and Subsidies Commission on September 1 the first to test the new Safeguard Act the cement producer is asking that the Government shield the domestic industry for three years by erecting barriers to imports. The company has been fighting to stave off imports over the past four years.
TIME TO MODERNISE
Carib Cement wants to use the time to modernise its Rockfort, east Kingston plant, which Kelvin Mahabir, general manager, International Business and Marketing for Trinidad Cement Limited, says will be done under a US$80 million-$100 million plan. Without the safeguards, that size investment will not take place, he told The Sunday Gleaner in an interview attended by the company's legal trade consultants.
Vasheist Kokoram, a trade attorney from Port-of-Spain who helped the Kingston producer argue two anti-dumping cases against cement from Thailand and Indonesia, says the company is going after safeguard protection "for breathing room to put its house in order."
"Carib Cement is spending to make the industry competitive, to meet all players," Mr. Mahabir said. "Government needs to say we will give you these three years you ask for."
Rockfort already has the capacity to produce one million metric tonnes of cement annually, but it needs to improve capacity for the production of clinker, which is the intermediate product for cement. The amount of clinker produced, therefore, determines how much cement CCC can churn out. Clinker production peaked last year at 532,140 tonnes.
Though initially indicating that the company was also prepared to reconsider whether it had a future in Jamaica without protection, Mr. Mahabir quickly backtracked when pressed, noting that TCL Group which owns a majority 74 per cent of Carib Cement was "not looking to exit" Jamaica now or in the future.
With the safeguards, Jamaica is guaranteed cheaper cement after the three years, he said, later adding that improved efficiencies over the past few years have already seen "cement price reduced in real terms by 15 per cent as of (September 19)."
But the price of local cement has come in for strong criticism, most recently from Kingsley Thomas, chairman of the National Housing Trust, who charged that Carib Cement's prices were 300 per cent higher than prices outside the region.
THE ANSWER
On Friday, Mr. Mahabir insisted that the answer was not to open up the market to the imports which, he said, while sourced at a much cheaper cost was reaching the end user at only two per cent less than Carib Cement's price.
Last year, Carib Cement produced 614,000 tonnes of cement, imported an added 12,000 and sold a total 620,000 tonnes earning $3.7 billion from sales and making $374.8 million in net profits in the process, $80 million more than the year prior. It also produced 532,000 tonnes of clinker and imported over 53,000 tonnes.
But the company, in its case before the Anti-Dumping Commission is contending that there has been "serious injury" to the domestic sector as more and more imports flow into the market. At present, there are two known importers. Mainland has said it imported 120,000 tonnes of cement last year alone, while Arc has similarly brought in thousands of tonnes from Egypt.
Carib Cement and its legal advisors have opted not to reveal too much details of the case it has filed, so as not to prejudice the Commission's initial review of the case, they said Friday, but Mahabir indicated that part of the claim cites a threat on profits and profitability.
The company has set for itself a minimum return of 18 per cent, or 18 cents per dollar invested, but is currently performing at 13 per cent, he said. Trade attorney, Marc Hebert an international consultant and advisor on trade said the claim "looks at relevant economic indicators", determined in consultation with economists out of Washington D.C.
CONFIDENTIALITY
In line with its policy of strict confidentiality, the Anti-Dumping Commission's Andrea Brown said they would make no comment about the case or even whether one has been filed.
The commission which is the 'Investigative Authority' defined under the safeguard law, has 30 days to decide whether to initiate an investigation or throw out a case brought before it, and if it opts for the former, it then has six to nine months to conduct its probe.
Once it completes its investigations which includes opportunities for the initiating company and the public to make submissions before it, the Authority then recommends to the Minister of Commerce, in this case whether a case has been made and recommends the trade remedy to apply.
Mr. Hebert, an American who has also worked closely with Carib Cement on its anti-dumping cases, says remedies include duties, tariffs, and import quotas. The Minister is not bound by the Commission's recommendation, and may take action other than that suggested.
