Cement deficit to threat Russia in several years

Due to lack of production capacities in cement industry, in 2006-2007 Russia may face cement deficit of 2Mt a year, and up to 5-10Mt by 2010.

This was stated at the third international conference "Petrocem-2004". The general sponsor of the conference was Eurocement. According to the Russian Federal State Statistics Service, current cement production capacity is 71m tonnes a year, but due to lack of investment resources and extreme wear of basic equipment (70 per cent), the actual production capacity is some 60-65m tonnes.

According to the Eurocement holding company president Mikhail Skorokhod, to double cement production by 2010, a number of problems have to be solved. The plants must be transferred to dry production technology. At present, only 15% of Russian cement is produced using this technology, while 85 per cent of the world cement production is done using dry method. According to Eurocement, $10bn have to be invested in the Russian cement industry with return period of more than 10 years.

Cement industry suffers from natural monopoly tariff hikes (natural monopolies account for 60 per cent of cement production costs), resulting in cement prices growth. Experts estimate cement prices in Russia will increase 120 per cent by 2010 and to be be equal to European level of $85-$90 per tonne.

Railway carriages quality worsens and there is a possibility of rolling-stock deficit in the nearest future, while 70% of produced cement is transported by railways.

The conference was attended by the heads of leading international cement companies (HeidelbergCement, Lafarge, Dyckerhoff), Russian companies (Eurocement and Inteko) and other producers from Russia and CIS countries. The representatives of 160 cement and equipment producing companies from 29 countries took part in the conference.