Caribbean Cement limits its risk of rising fuel consumption

Caribbean Cement Company Ltd is now hedging its fuel bill to stabilise its costs. The company started to invest in hedges in the second quarter, amid rising sales and profit at the Rockfort-based operation and has spent US$70.76m on the hedges so far this year.

Caribbean Cement entered into forward contracts through its ultimate parent company, Cemex of Mexico, to hedge the price of estimated fuel consumption. The cement producer's fuel and electricity bill remains its main production cost and continues to rise. Its energy costs rose to US$2.22bn YtD, compared to US$1.87bn in the same period in 2016.

"By means of these contracts, the market price of a portion of the fuel component was fixed based on estimated consumption," said Caribbean Cement.

In July Caribbean Cement announced plans to invest US$24.7m over the next 12 months to complete a coal mill and kiln, and implement green energy programmes. It aims to push cement production from 910,000t to 1.2Mta by 2019.