Votorantim to build new cement plant

- Tuesday, July 13, 2004

Votorantim to build new cement plant

Brazilian cement company Votorantim is analyzing the possibility of building a cement plant in the eponymously named capital of Bolivia's Santa Cruz department, Correo del Sur reported.

Votorantim subsidiary Itacamba Cemento is undertaking studies to build a 350,000t/y plant costing US$15mn. The new plant would produce the firm's Camba brand product, Wilson Dos Santos, president of Itacamba told BNamericas.

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The new cement plant would seek to take advantage of a boom in the Bolivian cement market and would be located in the heart of a region benefiting from highway construction projects. Itacamba's existing plant is in Puerto Suárez close to the Brazilian frontier.

"The cement industry had a big fall between 1999 and 2002 but in 2003 it started to recuperate and grew at 12%, which is continuing this year. In the first months of 2004 the market has grown 12-14%" Dos Santos said.

Dos Santos, also president of the Bolivian cement institute, says the institute has worked with the government to encourage the use of cement-based rigid paving for highway projects.

The new plant would be well positioned to supply projects such as the Tarija-Potosí highway that will have a rigid surface and that are financed by Brazilian development bank BNDES. Projects financed by BNDES specify the use of Brazilian materials where possible.

Itacamba is 51% owned by Votorantim, 16% by another Brazilian company, and 33% by Bolivian Grupo Tumpa.

"We have management and a position that is very solid, we have no debt, no finance costs and we have the opportunity to take advantage of the solid financial and technological position of [Votorantim], Dos Santos told BNamericas.

A final decision on the project will be made in September once studies have been completed. Construction would start in January 2005 with development taking 18-24 months, according to Dos Santos.

Development of the new plant would be a direct threat to Fancesa in the south of the country. Neither Fancesa nor Bolivian market leader (and partial Fancesa owner) Soboce could be reached for comment.

Rocío Gómez, an analyst at PCR Ratings Corp. said that the threat to Fancesa would depend upon the size of the plant. "In general, when a company as big [as Votorantim] buys into or enters the market it is a big threat," she told BNamericas.

"In Tarija there is market growth because of the public works but there are transport problems so a lot depends upon the location of the new plant," she said.

Votorantim is the largest cement company in Latin America and the eighth largest in the world.

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