Caribbean Cement Company Limited (CCC) is coming under fire due to a shortage of cement in the market, a situation which has slowed down projects, contractors, hardware stores, and other players in the multibillion-dollar construction industry.

The situation is now so dire hardwares are starting to ration supplies. A photograph shared with the Jamaica Observer shows a St Andrew-based hardware has been limiting customers to only 10 bags of cement for each purchase. Others have indicated to the Business Observer that those in need of the construction material for their projects have been resorting to creative ways of getting what they want to keep their projects on track.

“Caribbean Cement Company Limited has successfully completed the scheduled annual maintenance of its kiln, and we are aware that some customers are experiencing delays in obtaining cement. Prior to the maintenance, the company held sufficient inventories to meet market needs. However, the passage of Hurricane Beryl and the company’s subsequent response to ongoing relief efforts resulted in faster consumption of these initial inventories,” the company said in a statement to the public last week acknowledging the shortage of the cement.

CCC is Jamaica’s sole cement manufacturer and has been working on a US$40-million expansion project to increase its production capacity by 30 per cent by 2025. The company has benefited tremendously from Jamaica’s construction boom over the last decade, with the company’s cement production jumping from 758,800 tonnes in 2019 to 962,600 tonnes in 2023. It’s also pushing to increase exports to other Caribbean markets ahead of the completion of its current expansion programme.

When the Jamaica Observer reached out to CCC for an update we were told there was nothing else that could be said at the moment as they move to quickly return to normal production levels.

“Notwithstanding these challenges, the company continued to deliver products to the market. We recognise the importance of our operations to the construction industry and are working diligently to replenish inventories as quickly as possible for our valued customers. We anticipate a return to normal inventory levels during the coming days. We apologise for any inconvenience and appreciate your patience and understanding during this time,” the prior CCC release added.

Chris Bicknell, chairman and CEO of Tank-Weld group, confirmed that there is a cement shortage, and he’s heard the complaints.

Norman Horne, executive chairman of Arc Manufacturing Limited, said, “Cement is a key driver in selling all other building materials. As you can imagine that if you don’t have cement, you don’t have construction. If you don’t have construction, then the hardware store sales slow and the distributive trade follows. The contractor’s site will come to a halt and workers, as a result, will be out of work. [The] Cement company has had some issues as it relates to their machinery and equipment, and I believe that they are almost over those issues and the market should return to its buoyancy in a matter of days.”

Adam Hugh, CEO of Island Concrete Company Limited (ICCL), commenting on how the shortage is affecting his operation said, “As a premium supplier of ready-mixed concrete, a consistent supply of cement is essential for ICCL. The recent cement shortage has impacted our ability to serve our valued customers. We have since implemented alternative methods of loading our cements silos and have also purchased from wholesalers. Throughout this challenging time the team at Cemex has maintained a high standard of customer service by being responsive and providing us with timely updates on their production.”

The People’s National Party (PNP) sent out a release on Tuesday calling on the Government to address the cement shortage. Anthony Hylton, Opposition spokesperson on investment, industry and global logistics, said the Government and CCC should find “immediate solutions to the problems” affecting supply to the general market and the more than 150,000 people employed in the construction industry.

“We are faced with yet another crisis in the cement industry which threatens the growth of our fragile economy, the several jobs that rely on the housing, hardware, and construction industry and the stoking of inflation as a result of domestic shortages,” Hylton added.

Although the shortage is expected to be temporary, the protection that CCC is afforded has been brought into question again by different market players. As it currently stands, there is a 15-40 per cent tariff on imported cement and importation is also limited to those who have an import permit to do so. Apart from CCC, the only other company that’s allowed to import cement is Buying House Cement Limited (BHC), whose import quota is capped at 120,000 tonnes per year. WT Limited, which trades under the name Growth Tech Special Projects, was granted an import permit in October 2021 to bring in 50,000 metric tonnes of Ordinary Portland Cement (OPC) from Türkiye. There’s been no update on WT since then.

As a cement manufacturer, CCC has relative flexibility in importing the required cement into Jamaica to satisfy the market during periods of maintenance to prevent major market disruption. BHC’s import cap adjustment is subject to approval from the respective ministry.

When the Business Observer contacted Mark Hart, executive chairman of Cargo Handlers Limited (CHL), on whether the company sought a waiver to increase its import cap, he noted that he couldn’t provide a comment on the waiver but highlighted that some mega construction projects in western Jamaica have been stalled for the last two months, as certain steps cannot be completed without certain quantities of cement. CHL owns 30 per cent of BHC.

Previous CCC Managing Director Yago Castro in an August 2021 interview rebuffed the discussions for more imports when the company’s production was shut down for three weeks back, its longest shutdown then, causing discontent in the construction sector.

However, Deanall Barnes, managing director of Atlantic Hardware & Plumbing Company Limited, believes that a third importer is needed so as to not leave the country severely exposed to any gap CCC can’t fill during its annual shutdowns. Barnes thinks an import permit for 60,000 tonnes would likely satisfy the general public and ensure that there is some protection for the market. This comes as the public has been turning to Atlantic to seek cement even though the company specialises in PVC, nails, bathroom faucets, and other products.

“We as a company that’s been in the hardware business for almost three decades have the requisite competency to do even short-term importation or to be granted a licence and be directed on how the importation is done. We are also cognisant of the investment that Carib has made in terms of improving their own efficiencies. So it is not a function whereby we just want to profit from it. It’s a function where cement is such an important product that we have to ensure that there’s consistent supply. Consistent supply means that you have at least, in my view, a minimum of three supply sources,” Barnes explained about the shortage which has had a deleterious impact over the last six weeks.

The Jamaican Government last reduced the import duty in March 2006 for three months when CCC had to cut production due to a quality control problem at the plant. Phillip Paulwell, then minister of the Ministry of Commerce, Science and Technology, approved the reduction when it became evident that CCC would be unable to supply the market with the volume of cement demanded by the construction industry.

The construction industry, which boomed in 2021 and 2022, saw a 3.7 per cent reduction for the 2023/2024 fiscal year ending March 2024, according to the Statistical Institute of Jamaica (Statin).

CCC’s six months revenue went up seven per cent to $15.28 billion with operating profit before other income and expenses increasing 68 per cent to $6.04 billion. Net profit also jumped 75 per cent to $4.28 billion, which isn’t far from 2023’s net profit of $5.58 billion.

Its asset base is also 20 per cent to $39.60 billion, with $9.46 billion in cash and cash equivalents of which $8.7 billion (US$56 million) sits in a deposit investment account of CEMEX Innovation Holding Limited. CCC’s liabilities are up 24 per cent to $11.21 billion, with the company remaining debt free. Shareholders equity was up 18 per cent to $28.39 billion with the company paying a $1.67-billion dividend on September 3, with Trinidad Cement Limited (TCL) and Cemex collecting $1.32 billion as the largest shareholders.

CCC’s stock price is still trading at half of its October 2021 highs, which was prior to the Cemex royalty announcement and subsequent approval through poll at its annual general meeting. Cemex collectively receives a two per cent royalty on CCC’s consolidated revenues through its subsidiaries each year which is separate from other fees paid annually. Mayberry Jamaican Equities Limited, which was the largest Jamaican shareholder at the time, has since cut its stake from 13.45 million shares or 1.58 per cent in September 2021 to 4.27 million shares or 0.50 per cent as of June 2024.

Cemex SAB de CV collectively owns 79.04 per cent of CCC, with TCL directly owning 74.08 per cent of the business. The Government of Jamaica sold its 43 per cent stake in CCC to TCL for US$29.8 million in 1999 during a privatisation programme, according to a filing with the United States Securities and Exchange Commission (SEC).

CCC’s third quarter report should be released by October 28, which is the same day Cemex will have its earnings call.