In 2014, Peru's GDP growth rate was 2.25%, falling below 3% for the first time since 2002 (except for the impact of the international financial crisis in 2009). The growth rate of domestic cement demand was the lowest since 2001. The annual consumption of cement was 11.329 million tons, an increase of 1.7% over the previous year. Can industry maintain sustained growth in the future?
In January this year, Jidong Development Group, a Chinese company, planned to acquire Peru's Cementos Interoceanicos Cement Company. Jidong's plant and mining rights acquisition plan was proposed in 2008. The initial construction budget of the 1.6 million tons cement plant was 250 million US dollars. The plant was started in 2009 and put into operation in 2011. At present, the project is still in the development stage. At the same time, local producers in Peru are actively becoming industry leaders through their own development. In December 2014, Union Andina de Cementos (Unacem) completed the acquisition of Lafarge assets in Ecuador. The $517 million deal includes a 1.4 million ton cement plant in Otavalo. Subsequently, Gloria's subsidiary Holding Cementero del Peru paid $300 million for a 98.4% stake in Sociedad Boliviana de Cemento, Bolivia's largest cement producer. Media analysts predict that Cementos Pacasmayo will also expand internationally after completing its domestic projects.
Within the country, each of the major Peruvian cement producers has its own project. Unacem 2014-2018 will invest US $374 million in its Atocongo and Condorcocha plants, focusing on cement mills, the development of the Carpapata III hydroelectric project and the construction of packaging facilities in Condorcocha. Cementos Yura invested US $50 million in machinery and equipment at the Yura plant near Arequipa. The new cement plant at Cementos Pacasmayo is expected to start production in the second half of 2015, with an investment of US $385 million and a cement capacity of 1.6 million tons and a clinker capacity of 1 million tons.
In 2012, Peru's cement output was 9.847 million tons, an increase of 15.9% over the same period last year, the highest growth rate since 2000. Since then, the growth rate has declined year by year, and in 2014 it has declined to 1.4%. In 2015, the Peruvian Cement Association predicts that cement production and sales will recover, with annual output growth of about 3.5% and demand growth of about 3%.
Figure: Cement Output and Growth Rate from 2001 to 2014
Source: Peruvian Cement Association
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