HeidelbergCement reduces activity in Georgia

Due to recent developments, HeidelbergCement's management has been forced to lay off close to 200 workers in Georgia and run the company at about 50 per cent capacity, because it can no longer compete with underpriced cement being sold on the Georgian market.

HeidelbergCement currently employs more than 1300 people in Georgia and the lay-offs will impact on local families, says the company.

Michael Hampel, general director of HeidelbergCement Georgia, has expressed regret to Versatile KS that: "It is very unfortunate we are forced to cut down our operations by half because of the unfair game players we have had to navigate through for the past couple of years. It breaks my heart that by 1 August four out of seven kilns we own shall be shut down; and out of our total production capacity of 154,000tpm, the company will be running at only 78,000tpm instead."

He added that the impact quickly spirals up if we consider the aligning industries as well: "our operation gives work to more than 10,000 families all over Georgia if you look at cement, coal, carriers, and suppliers altogether."

The general director said that even the company's US$100m Kaspi production line, expected to be operational by the end of this year, will not be able to compete against the low prices.

"Even the best cost performance production facility in the world will not be able to fairly compete against such a scenario where some players, in this case from Iran, just want to capitalise on and generate cash in US dollars, ie a tradeable currency outside their country, disregarding basic economic principles of business and not caring about actually generating profits," he explained.

With a market size of just over 2Mta of cement, Georgia has seen imports increase in the first half of this year. Iran increased cement imports from 696t in 2017 to 1755t in the 1H18, while Iranian clinker imports rose from zero in 2015-16 to 273t in 2017 and further to 11,953t in 1H18.

Paul Rodzianko, chairman and CEO of Kavkaz Cement, said: "It is rather important to have thriving Georgian quality cement producers at price levels that are sustainable for the long-term along with strong anti-dumping protection.”