Retaking vital cement industry from outsiders

The largest Filipino conglomerate San Miguel Corp. has acquired the largest foreign-owned cement maker Holcim Philippines. The move is strategic in two ways. Supply is assured for SMC’s expanding construction business. And Philippine infrastructure and housing is shielded from outside corporate and market shakeups.

SMC bought 85.7 percent of Holcim from Switzerland’s giant Lafarge Ltd. It beat contenders Anhui Cement Corp. of China, Taiheyo Co. of Japan, and Siam City Cement of Thailand. The acquisition is by SMC’s wholly owned First Stronghold Cement Industries Inc. Price tag: $2.15 billion.

Lafarge is retreating from what it called “a hypercompetitive arena in Southeast Asia.” With Dutch-controlled Republic Cement and Mexican-owned Cemex, Lafarge’s Holcim dominated 70 percent of the Philippine market. Outsiders gobbled up Philippine cement making during the Asian financial crisis of 1997-1999. SMC’s buyout of Holcim is seen as a retaking of the vital industry. Previously SMC held only 35 percent of Philippine player Northern Cement Corp.

Given its sizeable investment, SMC is expected to upgrade Holcim Philippines and boost production. Holcim makes and distributes cement along with dry-mix mortar, clinker, and aggregates. Factories are in La Union, Bulacan, Batangas, Misamis, and Davao.

The Philippines is dependent not only on foreign cement makers but on imports as well. It is the third biggest cement importer in the world, next only to America and Bangladesh. In 2016 it bought 6.4 million tons, about 25 percent of local demand. That swelled to 8.4 million tons in 2018. More than half of the imports came from Vietnam. In contrast, despite construction booms, the four other bigger ASEAN economies imported less: Singapore only 5.1 million tons, and Malaysia 1.5 million tons.

Though a bane on Philippine cement making, the imports reflect rising construction and housing works. SMC president-CEO Ramon S. Ang sees the acquisition of Holcim to boost its stakes in infrastructures. SMC broke this decade into the business large scale with the projects Tarlac-Pangasinan-La Union Expressway and NAIA Expressway. It is presently building the Metro Rail Transit-7 from Quezon City to Bulacan, the Southern Luzon Expressway extension to Quezon, and Metro Skyways 3 and 4. An ambitious plan is for a New Manila International Airport on 2,500 hectares in Bulacan.

Assuring adequate domestic cement and related products also ensures public constructions and housing. The government is halfway into a P6-trillion infrastructure program. It is to build 75 air and seaports, bridges, roads, railways, and hospitals. The works spell jobs and brisk economic activity. Risks must be minimized for continuity. SMC’s raising of Holcim’s output will lessen dependence on foreign cement makers and importers. Basic “malasakit,” (concern) President Ang calls it.

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Let the imported garbage from Canada be the last such indignity. Sixty-nine cargo containers of household waste have been festering at the Manila port since 2013. Twenty-six more had been dumped as landfill in Tarlac. Ties with Ottawa have been strained, as well as between domestic agencies that accepted and must send back the trash. Environment, trade, and tax laws were broken. Leniency with the officials and privateers who profited from the wrong will only embolden repeats.

Heed the lesson of China. For years poor villages like Guiyu in Guangdong province took in electronic waste from rich countries. Millions of busted and discarded cellular phones, computers, laptops, printers, chargers, batteries, faxes, photocopiers, microwaves, and radios were dumped for recycling. By hand and hammer residents tore them apart for the copper, lead, and other re-useable components. Soon the soil blackened and creeks turned acidic. Stench filled the air. Toxins and fumes sickened the rural folk. Children and aged died of mercury poisoning. Costs of health and environmental rehab far outweighed the import and household earnings. China banned any more waste imports last year.

Somalia is another lesson. Starting in the 1980s the government accepted toxic and nuclear trash from Europe for inland dumping. During the subsequent civil strife warlords demanded weapons from waste contrabandists, who took to dumping in Somali seas. The 2004 Indian Ocean tsunami unleashed unidentified goo from sunken vessels and cylinders. The shores were poisoned and people dropped dead of unknown reasons.

The Philippines can turn into a similar wasteland through loose law enforcement.

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