Cement firms in Lebanon rake in profits with state cover

(Lebanon)  —  The cement makers in Lebanon are benefiting from government regulation of imports which has effectively been a ban since import licenses were last granted in 2001.

The Lebanon cement market is controlled by Holcim, Sibline and Cimenterie Nationale.

The government protection and the lack of local competition have led to the three firms being the main beneficiaries of construction booms in Lebanon over the past two decades.

According to a 2010 report on Holcim by BLOM Investment Bank, Lebanon’s cement market grew by 10.3
percent annually between 2000 and 2010.

Each firm’s share of local sales over the past decade has remained relatively stable.

“One thing the government considers … is that the production capacity in Lebanon is very close to 6.5 million tons annually and consumption is a little bit higher than 5 million tons so there is excess capacity in Lebanon,” Sibline’s acting general manager and CEO Talaat al-Lahham said. “Since we are supplying more than what’s needed in the market why should there be importation to Lebanon? … The three plants have invested huge money in Lebanon.”

However, many local cement manufacturers allege that the three cement manufacturers collaborate to fix prices to keep the cost of the product artificially high and to restrict customers from switching from one company to another.

Industry Minister Vrej Sabounjian said that he saw no basis to price fixing allegations and insisted the existing system was fair to both cement buyers and sellers.

He also said the Industry Ministry had not received a single import license application in the two years since he was appointed.

Under a 1999 agreement with the nation’s cement producers, the ministry is responsible for controlling the price on the local market, he said.

“We look at the local market conditions, the prices in neighboring countries, the costs of production,” Sabounjian said.

“The production in Lebanon is overcapacity,” he said of whether the import ban should be lifted. “I think they are producing enough for the country. I am more interested in them exporting to new markets. Maybe Syria will be a good market in the future.”

By Rashmi Kalia (ARI-C NEWS)

 

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