Enrique Escalante
Grupo Cementos de Chihuahua (GCC)
View from the Top

National Cement Company Competing On Global Scale

Mon, 10/22/2018 - 13:18

Q: What role does Mexico play in the global cement market?
A: Cement is a completely globalized industry. Mexico plays an important role in this industry because of its significant domestic consumption. Although the country exports cement to the US, and GCC is one of the primary exporters, most of the cement produced is destined for national consumption, given the development of the country’s infrastructure. Hence the importance of having a competitive offering. Due to the global nature of the industry, many of the world’s largest cement players are in Mexico, including LafargeHolcim and CEMEX. Its offering is complemented by local players such as Cementos Cruz Azul and Grupo Cementos de Chihuahua.
Grupo Cementos de Chihuahua operates in two markets, in the northern part of Mexico, almost exclusively in the state of Chihuahua except for the sale of new products or special additives that can travel longer distances and are destined mainly for the mining industry. We sell those across the entire country, South America, and in the US. Both the national and international markets are fairly relevant for the company. However, we have experienced our largest growth in the US, which today represents a much larger market than Mexico.
Q: What are GCC’s plans to ensure that the company capitalizes on all the available opportunities?
A: The cement business requires a long-term vision. Fortunately, the company’s largest shareholders have always had this long-term vision and have always made sure that all investments carried out by the company are made with this in mind. This is reflected in the company’s growth and the acquisition of raw material deposits that guarantee this long-term viability.
In 2016, in the US, the company acquired an additional plant in the state of Texas, anticipating industry growth, both in construction cement and in the cements used by the oil industry. In June of this year, GCC acquired another cement plant in the state of Montana. We are also about to finish an expansion project in another plant we have in South Dakota.
The company is also constantly analyzing its plants to determine which ones need an expansion plan. We also look at other growth possibilities, such as acquisitions. We have prepared expansion projects for our plants in Mexico and for some others in the US. As soon as we notice that there is a solid increase in demand, we can expand these plants rapidly. These expansions in the cement industry take a couple of years, but in our case, we have already advanced in the valuation and design of several projects.
Q: What would GCC ask the next presidential administration to prioritize for the mining industry?
A: Both the mining and cement industries are long-term industries. To work in these industries, businesses require certainty. Any person willing to invest and risk capital over the long term wants to make sure that the rules of the game are clear and they are standardized for all the players. For the new administration, I would suggest that it be made very clear that we are a country that applies the rule of law, and that this rule of law provides certainty for any investor regarding private property and the long-term concessions that have been obtained.
Other important elements for the mining industry include fiscal matters. Since it is an industry that competes on a global level, it is important to make sure that the fiscal policy does not distort the competitiveness of the industry. We need to make sure that any project in Mexico can be competitive with similar projects in other parts of the world.
Also, the insecurity levels the country has experienced have made some investors nervous. Federal and local governments need to continue working to improve the country’s security conditions, particularly in those remote locations where mines are normally built.