Concrete progress
THE LOCAL CEMENT industry, on the back of a robust Philippine economy, has been experiencing a boom.
In 2014, the sales of the industry went up by 9.6% to 21.3 metric tons, according to the Cement Manufacturers’ Association of the Philippines (CeMAP). The upsurge in the number of construction projects across the archipelago had been, for the most part, responsible for this growth.
According to the Philippine Statistics Authority (PSA), in the fourth quarter of 2014, for instance, the total number of construction projects authorized by business permits amounted to 29,443, up by 18.7% from the 24,796 construction projects recorded during the same period in 2013.
In particular, residential constructions rose by 21.5% to 21,155. “The increase in number was attributed to the three-digit growth in the construction of duplex/quadruplex-type houses (678.8%) and two-digit growth in residential condominiums (53.3%), apartment/accessoria buildings (25.7%) and single-type houses (10.1%),” PSA said. Non-residential constructions, meanwhile, grew by 14.5% to 3,520. “This was brought about by the increases in the construction of agricultural (86.0%), institutional (55.8%), industrial (22.0%) and commercial (7.0%) buildings,” PSA said.
The total value of construction projects in the fourth quarter of 2014 alone reached P72.4 billion, up by 35.6% from 2013’s construction value of P53.4 billion. The value of residential construction and non-residential construction increased to P29.6 billion and P36.2 billion respectively.
The upswing in the construction projects must have been encouraged by the initiatives of the government and the private sector. “We’re looking at the government’s Public-Private Partnership Program, or PPP, and the private sector’s aggressive development ventures in commercial, industrial and residential construction as some of the key sectors in demand for quality building materials and solutions,” Lafarge Republic, Inc. told Business World.
According to a report by Oxford Business Group (OBG), a global publishing and consultancy firm, the local cement demand is expected to hit 27 million tons by 2017. Since a number of firms have already announced new investments and their plans to expand, OBG said, the total capacity is set to reach more than 38 million tons by 2017. “If capacity outstrips demand, there could even be an opportunity to export the surplus,” the firm said.
Lafarge Republic said: “This sustained growth is driving local players to expand their capacity to meet demand, on the one hand, and, on the other, to provide quality products and building materials solutions that address the needs of the construction industry.”
Despite these promising developments, there are obstacles along the industry’s way toward progress. Lafarge Republic cited energy as an example. “Energy is inextricably linked to the cement industry, and ensuring a stable, competitively priced supply of electricity is crucial to our operations,” the company said.
High electricity costs, not to mention the looming energy crisis threatening the country are among the key energy challenges the industry is facing. Cement companies, such as Lafarge Republic, are adapting by developing their own power-generating capacities within their plants. Lafarge Republic is pushing the envelope further by adopting sustainable manufacturing processes. In 2010, the company invested in a Waste Heat Recovery (WHR) system in its plant in Teresa, Rizal. The system draws excess heat from various stages in cement production to produce steam, which drives steam-powered generation sets. The WHR generates 4.5 megawatts of electricity daily, supplying around 30% of the plant’s energy requirements.
OBG, on the other hand, took note of the worries of a cement shortage. The firm remarked that last year, Rep. Rodolfo Albano III, House deputy minority leader, said that government regulatory agencies needed to act to avert any crisis in cement supply to ensure the smooth implementation of vital infrastructure projects.
But the firm pointed out that agencies such as CeMAP have assuaged some fears. “While some regions may experience shortages, there is currently a comfortable buffer at the national level to accommodate the increase in demand, at least in the short term with the industry operating at just 69% capacity in 2013,” OBG noted.
As the ASEAN Integration nears, meanwhile, there have been apprehensions about how it is going to affect the cement industry. But some views, including Lafarge Republic’s, are optimistic.
“We believe that the ASEAN integration will strengthen the industry as a whole, not only through competition, but through collaboration and synergies that will enable cement manufacturers across the region to share best practices on sustainable operations,” Lafarge said. “Ahead of the integration, what is more crucial is ensuring that local demand for supply is met. The country’s robust growth has ramped up construction projects, and this provides an opportunity for local manufacturers to leverage on strong local demand.”