Sep 2008 Financial News

Hostage to a bridge - Haynes looks to the sea

Sep 09, 2008

Last week's collapse of the Hope River bridge - a significant link between Kingston and eastern Jamaica - has reduced access by the island's sole cement manufacturer to critical raw materials and could speed up plans by Carib Cement Company to acquire a barge to transport inputs.

"Our source of supply is cut off," Anthony Haynes, the general manager of the cement company, told the Financial Gleaner.

Carib Cement, a subsidiary of Trinidad Cement Limited (TCL), operates a near million-tonne-a-year plant at Rockfort, at the eastern end of the Jamaican capital, on the Kingston harbour.

Rockfort last year sold just over 800,000 tonnes to the market. This year, it's already done 394,000 tonnes up to June, and is projecting another 470,000 tonnes.

Relative Proximity

The plant's location puts it in relative proximity to most of its required raw materials, including limestone from surrounding hills, and gypsum and shale, mined further to the east in the parish of St Thomas.

But last week, when Hurricane Gustav whipped heavy winds and dumped several inches of rain on Jamaica, among the casualties was the Hope River bridge, at Harbour View, about two miles east of the cement plant.

One consequence of the absence of the bridge is the loss of easy access to gypsum quarries in St Thomas, and even to some sources of limestone.

The alternative route would be a significant cross-island trek to reach east coast quarries from the north shore.

That would increase transportation time and cost.

With several weeks' raw material stockpiled at its plant, the company will not immediately have to fall back on this option, and Haynes doesn't expect that it will have to. Or, at least, he hopes not.

Significant Inventories

"Even though we are cut off, one (good thing) is that we have significant inventories now, so it is not affecting operations," said Haynes.

The government had built a Bailey bridge across the Hope River, but heavy vehicles, like the big trucks that would haul Carib Cement's raw material, have been banned from the temporary structure. And construction minister, Mike Henry has said that it would take up to 24 months to design and build a new bridge.

However, the Government is contemplating creating a ford upstream from where the decades-old bridge once stood, and Henry is discussing the idea with major businesses which depend on it for access to eastern Jamaica, especially along the south coast.

Building the Ford can happen quickly, so Haynes is expecting that "we will resume hauling products by next week".

But transportation by road is not the only option being considered by Carib Cement, aware as it is that heavy rains at any time could cause a flooding by the Hope, making the ford impassable, if nor damaging it.

"We are looking at a barge option," said Haynes. "So our operations are not expected to be impacted in any way."

He did not say whether Carib Cement had already identified a barge to do the job and if it would buy such a boat outright.

Not Unique

Barging products would not be new or unique for Carib Cement, much of whose finished products reach the north-western city of Montego Bay for overland distribution to other western region towns.

Haynes said it was too early to say how the effects of Gustav would impact on the company's overall business. However, post-hurricane recovery, would, on the face of it, be positive for a company that produces a key construction material.

For the six months to June, Carib Cement reported net profit of $272 million or 32 cents a share, an eight per cent improvement on the net profit of $251.79 million for the corresponding period last year.


Source:
The Financial Gleaner
Dionne Rose - Financial Gleaner Reporter
dionne.rose@gleanerjm.com
http://www.jamaica-gleaner.com/gleaner/efg/20080905/localnews/local1.html