The Cement Industry in Bolivia

A Significant Series of Investments Could Increase Installed Cement Capacity in Bolivia.

By Mauro Nogarin

In recent years, both the government and private companies have carried out a significant series of investments for the modernization and expansion of their plants with the aim of increasing installed cement capacity in Bolivia.

Investments fulfilled two different purposes: the first, to accompany the growing construction sector; and the second, within the framework of a state policy, to reduce the import of asphalt for road construction.

Supreme Decree

At the end of March of last year, Supreme Decree 3845 was approved, which ordered the use of portland or pozzolanic cement for the execution of road infrastructure works that are part of the Fundamental Road Network.

While this measure will increase the supply of cement, according to some experts, in the medium term it could also affect the export of other Bolivian products to neighboring countries. This is taking into account the imminent entry of Bolivia into Mercosur as a full member.

Although the current political situation has been affected in relation to the alleged electoral fraud of Oct. 20, according to the IMF’s latest report, economic growth continues with a positive trend, with a reduced forecast from 4.5% to 3.9%.

Bolivia’s economy in the last five years (2014 – 2018) registered an average annual growth of 4.39%, mainly driven by the increase in domestic demand through the investment of social housing programs, public infrastructure works and from the private sector, with the construction of buildings and urbanizations in the three main cities of the country, Santa Cruz, Cochabamba and La Paz.

Cement production increased considerably in the last 13 years, from 1.4 million tons in 2005 to 3.8 million tons in 2018, 2.6 times the volume produced in 2005. Sales also showed a similar dynamic, registering an increase of 1.4 million tons to 3.7 million tons.

Between January and April 2019, cement production reached 1.19 million metric tons, 5.7% higher than the volume produced in a similar period of 2018. By region, the contribution of the cement production of La Paz and Santa Cruz, with respective increases of 26.0% and 32.1%, is notable.

Cement Sales

In relation to cement sales in the country, these totaled 1.20 million metric tons, meaning an increase of 12.9% compared to the one accumulated in April of the previous year. By regions, there was a greater dynamism of sales in Santa Cruz where they grew by 26.8%, followed by La Paz with an increase of 20.8%. It also highlighted the rise in sales in the departments of Oruro, Tarija and Cochabamba, where they rose by 19.8%, 17.1% and 8%, respectively.

However, it is also important to note that the aforementioned years were accompanied by a significant increase in cement imports where in 2008 the total value imported was $8 million, in 2015 it reached a maximum of $46.6 million.

Currently the cement industry is made up of four companies that operate nationwide. The cement company SOBOCE, thanks to a change of management that originated from the change of its shareholder composition, has allowed a greater development of its business, while ITACAMBA has entered the market with a new plant in the eastern region of the country.

These changes as a whole have reflected an important effect on the national cement market that is evidenced by a significant increase in supply.

Leadership

The SOBOCE company maintains leadership in the sector, taking into account that until June 2019 its total sales in terms of volume reached 41.65% of the total national production, above Fancesa S.A.’s 23.09%. Itacamba maintains 16.58% and the rest is distributed among the other companies.

According to the latest statistical report prepared by the Bolivian Institute of Foreign Trade (IBCE), as mentioned before, exports registered a marked decrease from 162,176 Mt from 2017 to 80,580 from 2018 to 38,589 Mt until June 2019. The destinations of these exports were Paraguay with 95% and Argentina with 5%.

Regarding imports, they also registered a sudden drop, from 268,405 Mt in 2017 to 189,014 Mt in 2017 to 23,655 Mt in mid-2019. The main countries of origin were Peru (90%), Brazil (4%), Mexico (3%) and the rest (3%).

As for the industrial projects that stood out in this sector during the course of 2019, without a doubt, there is the inauguration of the new Oruro Ecebol plant in August, with an investment of $290 million. It has an installed capacity of 1.3 million Mtpy.

As expected, with the start-up of the new plant, the prices of a 50-kg bag of cement dropped considerably. Prices in the city of Oruro dropped by 14% and dropped by 11% in the city of La Paz, while in other cities in the country the impact was virtually null due to the distance. 

Mauro Nogarin is Cement Americas’ Latin American contributor. From 1997 to 2001 he was a reporter for the Italian news agency ASCA from Germany to follow the economic events of ECOFIN. At the same time, he began a strong partnership with the Italian magazine Focus with issues related to European scientific research. Back in Italy after six years of residence in the city of Heidelberg (Germany), he worked from Italy for the weekly Stern and Bild Zeitung. Since 2005, he has lived in South America (Bolivia) and worked with the Italian geopolitics review Limes, the Italian gas and oil journal Staffetta Quotidiana, the Colombian oil magazine Petroleo Internacional, the German RE Sun and Energy, the U.S. magazine Renewable Energy World (Pennwell), the World Energy Project (Università di Bologna), Pan Americana Construction magazine and Worldoil magazine. He can be reached at [email protected].