BOI seeks more cement investments as infra projects lifting demand

The Board of Investments (BOI) is seeking more cement investments as it expects demand to double to 40 million metric tons (MMT) by 2020 when government’s huge infrastructure projects peak around that year.

DTI Undersecretary for industry promotions group Ceferino S. Rodolfo said this as he confirmed two firms are investing in an integrated or clinkerbased greenfield cement manufacturing facility in the country.

He said these two projects are in the process of getting their permits, including environment clearance certificate.

Asked if one of the two proposed cement plants is the country’s leading construction and engineering firm DMCI, Rodolfo said it is a natural expansion for the Connsunji-owned company given its huge exposure in the construction sector, either government infrastructure or private property construction ventures.

Rodolfo did not divulge the production capacities of these new cement projects, but said that even at the normal demand growth of 7 percent the new capacities will still be short of the needed requirements for the Duterte administration’s “Build, Build, Build” program.

The huge infrastructure program of the government with estimated capital outlay of R7.2 trillion over the six-year period is expected to boost growth of cement consumption to 12 percent.

This is the reason the BOI has included again cement projects under the “manufacturing” list in the new Investment Priorities Plan (IPP) for tax incentive purposes to encourage local manufacturing of cement. Per line in cement manufacturing can cost $250 million, he said.

Rodolfo further said that a new cement plant will have a two-year construction period so any new additional capacities will have to wait until 2019 at the earliest.

If there are no new plants aside from the two being proposed now, there will still be more room for cement importation.

Based on the Cement Market Report, which was quoted in the Eagle Cement Corp. proPresident

spectus, as of December 2016, the local cement industry has an estimated annual clinker and cement capacity of 20.6 and 28.63 million tons, respectively.

Cement demand in 2016 was placed at 25.961 MMT of which 14.371 MMT were local produce and 1.590 MMT were imported cement.

The Report also estimated that the Philippine cement industry would need an additional 11.55 million tons of cement capacity to address cement consump- tion requirements until 2025.

It is to be noted that even with an additional capacity of 11.55 million tons of cement by 2025, there is still a deficit of 12.4 million tons of cement for a lowgrowth scenario , 25 million tons of cement for a medium-growth scenario and 37 million tons of cement for a highgrowth scenario.