NEWS

Despite High Production Costs, The World's Cheapest Cement Is In Turkey

29 Aralık 2020

The third of the “Anatolian Meetings” organized by TÜRKÇİMENTO in order to discuss the regional dynamics of the cement sector that build the economy of Turkey and its impacts on the economy of the country took place as held by its Ankara office on Friday, December 25. In the online meeting held in collaboration with Dünya News, the current situation of the sector and the 2021 expectations along with its problems were addressed.

Dr. Tamer Saka, Chairman of the Board of Directors of TÜRKÇİMENTO; Nurettin Özdebir, President of Ankara Chamber of Industry; Nihat Özdemir, Founding Chairman of Limak Çimento San. ve Tic. A.Ş.; Ali Pastonoğlu, Country President of OYAK Çimento San. ve Tic. A.Ş.; Hatim Ben Moussa, CEO of Votorantim Çimento San. ve Tic. A.Ş.; Burak Akın, General Manager of Baştaş & Konya Çimento San. ve Tic. A.Ş.; Hakan Güldağ, Chairman of the Board of Directors of NBE; and Vahap Munyar, General Coordinator of Dünya News, attended the third online meeting held in cooperation with Dünya News as speakers.

Dr. Tamer Saka, Chairman of the Board of Directors of TÜRKÇİMENTO, who disclosed its new vision that they realized through the brand transformation recently, described its brand philosophy as follows:

“We embarked on a new journey of vision to point out sustainable and innovative activities and implementations that bear the banner in the development of our sector and are sensitive to society, to spearhead for more and better, and to increase the awareness of our activities across all our stakeholders. With the brand of TÜRKÇİMENTO, we will ensure the continuity of this vision, as a sector that creates added value, that is sensitive to society, that ensures corporate confidence, that makes investments in humans, and that leads the way in digitalization, technology, and innovation. This change is an endeavor that we have started to adapt ourselves to the changing conditions of the present times and plan the future of our sector by safeguarding our values that have carried us from the past to the present. When starting this journey, we said, “We are at the foundation of this country,” in view of the vision of “Complete independence can only happen through economic independence” as expressed by Mustafa Kemal Atatürk. We will also be in the future of this country through our activities and implementations we will put into practice.” 

The Cement Sector Is Shown As A Target Unfairly
In the meeting where the issues related to the sector were also taken into account, Dr. Tamer Saka made the following assessment in regards to cement costs: 
“As Turkey’s cement sector, we have the world's cheapest cement in spite of elevated production costs. Our industry made an investment of 2,5 billion dollars in the last 10 years. We are exporting our high quality products to over 70 countries. In our country, no increase in cement prices even as much as inflation takes place and prices are at a level that is almost similar to the previous year. 

On the other hand, there appears to be a 27% increase in housing prices, which is 15 points above inflation, as per the nine-month data of the Central Bank in 2020, year-on-year. The index for costs of housing construction materials announced by TÜIK in the same period also increased by 16.5% only. If consider the a little earlier period, we see that housing prices have increased by 54% as of today compared to January 2017. In the same period, no increase in cement prices, even as much as inflation, is in question. In addition, the share of cement in construction costs is only between 2% and 4%. If the land plot costs are considered, this share drops to much lower levels. Regardless of these, it is not reasonable to hold the cement sector responsible for the increases in housing prices and it is an unfair treatment to the sector. Through the habitual approach of years, the cement industry is once again being shown as a target to masses unfairly.”

Giving a speech at the meeting, Nurettin Özdebir, President of Ankara Chamber of Industry (ASO), expressed that he believes 2021 will be a year when the hardships experienced will be dispelled and made the following assessment: 

“Construction is the first of the sectors mostly affected by the interest-currency equation. It is rapidly affected by macro variables because of its sensitivity to interests. The sectors that provide input to the construction industry could not remain outside of this picture. This backward progress kept on with the advent of the pandemic. The interest rate cut in June animated the construction sector a little. Nevertheless, the fact that the construction sector has contracted for eight quarters in a row attracts attention. 

Following such a negative process, the construction sector’s position remaining below the general growth of the economy, with a growth rate of 6.4%, must be read well. High interest rates will reduce the interest in housing. 

Inflation is our biggest setback. This decision of the Central Bank to ensure confidence in the TL is appropriate. Interest is like a drug; it provides benefits if you administer it with a sufficient dose and in a timely manner. I believe that a decline in inflation will probably take place in the second and third quarters and interest rates will return.”

Expressing that the far distance of the plants in Ankara to ports poses a disadvantage in exports, Nurettin Özdebir said, “The industrialists in Ankara need some support for exports. We have been saying it for years. As the industrialists of Ankara, we must be able to use the railroad. We have railcars but no locomotives. The public locomotives are quite costly as well. “We can access the export ports more easily with our own locomotives and railcars.”

No Need For New Investment In The Cement Sector
Nihat Özdemir, Founding Chairman of Limak Çimento San. ve Tic. A.Ş., expressed that he hoped 2021 would be better than 2020 and said:  “In March, numerous plants suspended production due to the setbacks experienced in Turkey and in the world upon the outbreak of the pandemic. We steered our hopes abroad as we predicted that there would be no animation on the domestic market. This year, we, as the sector, achieved a record-breaking one billion-dollar export. The sector started to reanimate upon the banks’ cut of loan interests. The increase in interest rates is bringing the construction sector to negative levels. We have been accustomed to exports and we have new markets and undertakings. In my opinion, we will not export less than 2020 in 2021. In the course of progressing to the 2023 targets, all plants keep on producing clinker, estimating that there would be a recovery in the construction sector.”  

Stating that there is no need for a new cement investment in Turkey, Nihat Özdemir said, “Turkey has a clinker production capacity of 100 million tons as of today. Nevertheless, we are able to find a balance by means of exports. I do not believe that it would be right to make a new investment by relying on exports. I certainly support the cement industry’s expansion abroad. I consider it substantially beneficial for cement producers to expand abroad through new investments and purchases, particularly in the developing countries and African countries.”

Ali Pastonoğlu, Country President of OYAK Çimento San. ve Tic. A.Ş., invited attention to the fact that a process of change that needs to be managed apart from the existing problems of the sector and said, “The issues that we must focus on are the carbon and environmental emissions, imposition of carbon taxes at borders in some locations where we export, the fact that alternative fuels that are our primary fuel are brought to our country, and the adaptation of high technology to our sector.” Ali Pastonoğlu specified that there is no need for a new investment in cement in Turkey for a long time. “New investments can be made in existing plants in view of efficiency and reducing energy costs. However, as Turkish cement producers, we need to expand our portfolio. There are areas that present opportunities for Turkish cement,” he added. 

Hatim Ben Moussa, CEO of Votorantim Çimento San. ve Tic. A.Ş., said, “We see that the consumption of 900 kg per capita in 2018 in Turkey has dropped to 400 kg as of today. We have current capacity that we were not able to consume. “There has been an increase in our costs by 40 percent in the last 2 years, but our prices are at the same level as two years ago.” 

Burak Akın, General Manager of Baştaş & Konya Çimento San. ve Tic. A.Ş., reminded that the Turkish cement sector imports the fuel it uses for production, and said:  “As the Turkish cement sector, we are a serious exporter but we are at the same time a serious importer. We are importing the fuel that we use for production. We have a possibility not to import it. We can produce clinker and cement through alternative waste. We are able to use alternative waste at about the level of 50 percent. An environment must be prepared for the use of such waste as fuel by means of a public-private partnership. We, as the industry, can make use of that waste much more efficiently. We must be able to manage our energy costs to unblock the way ahead. As the industry, the fuels that we can add to the economy are mainly industrial waste and waste of commercial enterprises.”  

Hakan Güldağ, Manager of the Dünya News, expressed that he thinks no new interest rate increase will take place in the first half of 2021 and said, “There is an expectation that there will be a decline in interest rates on the markets even if it will not be fast. Interest rate increases have arrived but this is a process of balancing. In my opinion, this process will be reflected positively into 2021.”

Vahap Munyar, General Coordinator of the Dünya News, predicted that the first half of 2021 would take place with setbacks and made the following assessment: “Naci Ağbal, President of the Central Bank, once said that 2021 would be a difficult exam year. Looking with hope yields morale but we might have drawbacks in the first half. I guess that a recovery will start from the second half only. Re-normalization started through the change in the administration of the economy. Let us not make those mistakes again by asking the questions of why we made those mistakes as of mid-2018, why we melted down our reserves, why are we talking about negative reserves?”

Leadership In Hard Times Event 

Dr. Tamer Saka, our Chairman of the Board of Directors, made the inauguration speech of the “Leadership in Hard Times” Event organized by Fast Company Magazine on 11 December 2020. In the event moderated by Rauf Ateş, the founder of the magazine, the subject of Earthquake Readiness Roadmap that is an important step taken jointly with leading NGOs particularly following the Izmir Earthquake was discussed. Saka said, “We have seen that no action could be taken fast enough so far particularly in view of the Marmara Earthquake that is our talk of the town and expected to take place. We met with Turkey's leading NGOs here, with the view that the responsibility must not be charged upon a single entity, and started working together with our project partners. Our target is to present the steps that can be taken concerning earthquakes in the short, medium, and long term and identify their actions. It is, most importantly, to keep the awareness about earthquakes at a high level before the public eye. We consider this issue as a national security issue.”

“In our sector, where occupational health and workers’ safety are considered as the most important issue, we have gone through this pandemic process in a much better way than most sectors, particularly because of the fact we took the health of employees into account as a priority. During this period, our most important subject was our employees and their health, as at all times, “Saka continued.

Pointing out the fact that technological infrastructure became important upon the changes in the way of doing business, which emerged with the outbreak of the pandemic, Saka said, “When the hardships regarding working environments where experienced, we could adapt our employees and ourselves to the process fast thanks to the importance we attach to technological infrastructure. Owing to it, although our understandings of working in shifts vary, a productive working environment took place at a speed that was beyond my predictions."