Executive Director of SOYUZCEMENT Darya Martynkina and Gennady Rasskazov, member of the Board of Directors and First Vice-President of Siberian Cement Holding took part in the round table discussion “Cement Industry of SFD in construction season 2022: problems and solutions in new economic conditions”.
The event was organized by Siberian Cement company and took place on May 17 in Novosibirsk State University of Architecture and Civil Engineering. It was attended by Ivan Goncharov, Head of Investment Policy and Territorial Development Department of the Office of the Plenipotentiary Representative of the Russian President in the Siberian Federal District, State Duma Deputy Alexander Aksenenko, Deputy Secretary of the Public Chamber Vladislav Grib, Vice-President of the Russian National Construction, Industry and Construction Organization Anton Moroz, Deputy Director of Metallurgy and Material Industry Department Roman Kuprin, Deputy Director of Pricing and Resource Maintenance of the Russian Ministry of Construction Yevgeny Mukhin, Deputy Director of the Department of Energy of the Ministry of Industry and Trade of the Russian Federation and others.
Darya Martynkina opened her presentation by stressing that the situation at Siberian enterprises should be regarded with due regard for the trends of the whole Russian market. Today in Russia there are 59 complete cycle cement plants and 9 grinding plants. Their total capacity (according to the Federal State Statistics Service at the beginning of 2021) is 101.4 million tons per year.
“Over the past 15 years, cement production in the country has increased by only 9.6%, from 54.8 million tons in 2006 to 60.1 million tons in 2021. The result in 2014, when about 68.9 million tons were produced, can be considered exceptional. Production volumes in the cement industry always decline sharply in times of crisis and the decline continues for several years. Recovery also takes a long time, growth is slow and gradual. This indicates the inertia of the cement industry due to the high capital intensity of production, repair and investment programs. Given the slowdown of the cement industry, which began in 2018, periods of coronavirus recession in 2020-2021, heavy consequences for the economy from the sanctions, we can assume that it will take a few more years before the industry reaches the next extreme,” – said Daria Yurievna.
A significant increase in production costs was reported by Gennady Rasskazov, a member of the Board of SOYUZCEMENT, the first vice president of Siberian Cement. “According to the calculations of economists of the holding, the total cost of cement in 2022 will increase by 30% against the level of 2021. And this is understandable. In the conditions of sanctions we will spend 66% more on repairs and maintenance of equipment than a year ago. Coal has gone up in price by 76-86%, inventories by 55%, diesel fuel by 30%, oils and lubricants by 83%, transportation and logistics costs by 14-24%. In addition, the wage fund increased by 30%: understanding its responsibility to its employees and their families, the company indexed wages. In 2022, the cement price went up by only 8-9%, against the background of falling production volumes,” said Gennady Konstantinovich.
However, the cost of the basic building material significantly lags behind the prices of other goods and services. If we take the price of cement in 2008 as a reference point, taking into consideration the delivery and VAT, we see that by 2021 it increased by 9%. At the same time the price of electricity increased by 120%, the railway tariff – by 136%, the cost of gas for industrial enterprises has risen fourfold. Apartments on the primary market became more expensive by 88%. “Popularization of the myth about the increasing influence of the cost of cement on the price of housing allows to distract public attention from other components of the price of real estate – said Gennady Rasskazov. – In fact, we see the opposite process: according to the estimates of SM PRO analysts, the share of cement in the volume of work in the type of activity “Construction” decreased from 4% in 2014 to 2.5% in 2021.
Many participants of the round table noted that the cement industry in Russia, which is strategically important for the state, is now facing a huge array of problems and challenges. To solve them, it is necessary to develop a set of measures of state support.
“First of all it is necessary to approve the Program of Cement Industry Development in Russia up to 2035 and synchronize it with other state programs”, – Darya Martynkina is convinced. – Besides, we need to extend the statutory timeframes for environmental efficiency programs, retain the institution of obligatory cement certification. It is important to develop domestic production of equipment, materials and components which are critical for plants, develop Russian technologies”.
Darya Martynkina also stated that manufacturers must have well-grounded forecasts for cement consumption for 3, 5, 7 years, taking into account the high capital and energy intensity, inertia of the industry and considerable depreciation of fixed assets. Cement manufacturers need to understand how much their products are needed for the construction of housing, industrial enterprises, roads and other facilities.
According to the general opinion of the participants, measures to support the industry must be taken in the near future. Cement is a basic building material and its deficit may hinder the development of the country and put into question the implementation of the key national projects and federal programs.