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Management Mini Cases Series The Global Cement Industry Cement is a basic ingredient for the construction industry. Cement is made out of limestone, shell, clay mined out of a quarry close to the plant. The raw material is crushed, and then heated at temperature in excess of 1000 co in rotating kiln to become clinker. Clinker is then mixed with gypsum and ground to a fine powder to produce final grade of cement. The technology is a continuous process and is highly energy intensive. Cost of cement is 29% energy, 27% raw materials, 32% labor and 12% depreciation. The weight/to price ratio make transportation cost very high.

The competitive radius of a typical cement plant for most common types of cement extends no more than 300 kilometers. However, cement can be shipped economically by sea and inland waterway over great distances, extending greatly the competitive radius of cement plants with access to waterborne shipping lanes. Thus, the location of a cement plant and the cost to transport the cement it produces through its distribution terminals bear significantly on the plant’s competitive position and the prices it may charge. The minimum efficient size for a cement plant is around 1 million ton

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As a consequence of a relatively low minimum efficient plant and transportation costs cement production is highly fragmented. It is estimated that there are around 1500 integrated cement production plants in the world. Although the industry has seen the emergence of strong global players such a Leafage or CHEM., the share of the four largest firms account only for 23% of the overall demand. Cement is distributed in bags or is delivered to construction sites through readmit lorries. The major segments of the industries are: Aggregates: quarries and crushing minerals to be mixed with cement to make concrete Cement production

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