Could you please give us some information about the Turkish cement sector? What is our production and export capacity? How many countries do we export to? What are our export figures for the last ten years? What was the percentage of the increase each year? What are the latest figures of the cement sector? What is the amount of the annual turnover? What is the employment figure that the sector has reached?
The journey, which the cement sector commenced with only 20,000 metric tons of capacity in 1911, has now reached to over 80 million metric tons of clinker production capacity. This amounts to nearly 100 million metric tons when it comes to cement production. In the first 60-70 years of the sector, governments of the republic established cement factories all over Turkey as a way to achieve development. The factories were first established using public resources and then they became widespread in the country with investments coming entirely from the private sector following the privatization. Our current capacity is 82.1 million metric tons. With the new plants that will be commissioned by 2019, the additional capacity will reach 5.7 million metric tons and the total capacity will reach 88 million metric tons of clinker. This translates into about 105 million metric tons of cement capacity.
The cement sector has rapidly developed in Turkey to reach its current size. Ranking first in Europe and among top four countries in the world, the Turkish cement sector is among the top five countries in the world export and contributes nearly USD 500 million to the Turkish economy with a cement and clinker export amounting to nearly 12 million metric tons. When we take a look at the overall situation, we see that we export to a number of countries in the Far East, the U.S., Africa, and the Middle East. The number of countries we export to is close to 100. The figures of the last ten years show that the total exported clinker and cement amount was 191.2 million metric tons, of which 145.5 million metric tons were cement.
The cement we produce is highly competitive in global markets in terms of quality and pricing.
In 2016, the sector’s realized annual turnover was estimated as USD 2.8 billion in the domestic market. This figure is USD 495 million for export.
The cement sector extensively contributes to employment with its more than 18,000 direct employees. If we take indirect employees such as supporting sectors and logistics operations into consideration, we can say that the contribution provided by the sector to the national economy is 2.5-3 times more.
Could you please give us some information about the investments of cement companies in foreign countries? Which countries did we export to? What are our turnover and production capacity figures?
Some of the Turkish cement companies continue their investments in foreign countries, in particular, in the African continent. While the investments are made in the shape of a milling plant in the African continent, they are in the form of a terminal investment in Europe. We also have companies which invest in the U.S. It will not surprise us if more companies will take part in foreign markets in the upcoming period.
There are also companies which establish grinding plants, concrete and crushing – screening plants in the African market, in Mozambique and the Ivory Coast. One of our cement groups established a plant with 700,000 metric tons of capacity in Mozambique and is currently establishing a plant with 1.2 million metric tons of capacity in the Ivory Coast. Another Turkish company also made a batch plant and an aggregate plant investment in the Ivory Coast. We also have companies, which have terminals in various European and American countries. The Turkish cement sector is looking for opportunities and aims to make investments in every part of the world. In addition, another of our member with grinding plants in Cameroon and Tunisia boasts a grinding capacity of 1 million metric tons/year in total. And the investment value is USD 65 million. We also have a member who has investments in Spain, Italy, Germany, TRNC, Romania, and Russia. Such investments can be in the form of new plants or acquisitions depending on the country of investment.
What do you think about the cement production which has lately been maintaining an increasing trend in the developing countries?
The most important reason for the increase in cement consumption in developing countries is the continued infrastructure investments in such countries. Since developed countries have completed such investments they generally use cement for activities such as maintenance, repair and refurbishment. Therefore, consumption per individual decreases in developed countries.
The fact that infrastructure and housing demands are on increase in developing countries increases the cement consumption consequently. In some developed countries, particularly in the European Union countries, climate change restrictions and carbon dioxide emission restrictions also bring significant limitations to the cement sector in such countries.
“Turnover, production capacities and investments are not taken as data in the export of our member plants. We obtain the total figure of our export from TÜİK (Turkish Statistical Institute).
What are the most significant obstacles concerning sustainability in the Turkish cement sector?
Today, every country and every sector attempts to place its economic development on the basis of “sustainability principles.” In this respect, the Turkish Cement Manufacturers’ Association (TÇMB) provides contribution and guidance at a technical level in various applications and projects when it comes to our sector’s substitute raw material and fuel consumption, blended cement production, electricity generation from waste heat, renewable energy investments, increasing energy efficiency with an understanding of energy efficiency, resource efficiency, and sustainable production. It also organizes training sessions, works with the public on energy supply safety and raw material license safety, and performs studies at every level for the solution of the problems.
TÇMB organizes training sessions, seminars, workshops, and congresses for member organizations in a wide range of areas including cement production and recent production technologies and compiles statistical data in compliance with the competition law and other rules of law and offers such data to its members and to the public opinion. Our sector not only continues its economic growth but it also assumes a leading role in the dissemination of sustainable growth by being aware of its environmental responsibilities.
Issues regarding climate change are of importance in all energy intensive sectors. Decisions made in the climate change conferences held in Paris and Marrakech and the limitations or taxes to be imposed for carbon dioxide releases in the upcoming years will also affect the cement sector. We pay a great attention to this as the sector and we have undertaken serious efforts in terms of sustainability. We are using the state-of-the-art technologies to improve energy efficiency, we have corporations which establish their own wind power plants for the use of renewable energy, we are far ahead of Europe in generating energy from waste heat, we are in a great progress and cooperation in terms of using wastes as fuel.
The world is now discussing cyclical economy concept. We are talking about a world where there is no waste and the waste produced by a production process is utilized as raw material or additive in another process. The cement sector contributes to the environment and provides positive value to our national climate change commitments by making use of blast furnace slag, steel slag and fly ash – which are produced by various sectors and normally require extensive storage areas in order to eliminate municipal and industrial wastes.
After 2010 the sector met another increasingly important issue, which is the overcapacity and its increasingly ongoing trend. In the recent years, there has been a significant construction thrust in Turkey, and housings, infrastructure investment, extensive mega projects can help cover some of the current capacity. However, stagnation in export and new plant investments will take the overcapacity problems to a more significant level. Overcapacity varies depending on the regions. Therefore, I think that the incentive practices should be considered on the basis of regional necessities and the inefficient use of capital should be avoided.
People say that the construction sector is slowing down and the market has saturated. How does this affect the cement sector? What are your estimates for the upcoming years?
If you talk with people you see that there is such a perception, however, the figures do not confirm this.
In terms of a sector evaluation, the construction sector has achieved a growth rate of 3.7 percent in the first quarter of 2017 according to growth data, although this is lower than the general economy. I think that this rate represents a significant growth despite the fact that weather conditions were below the season normality in the first quarter of 2017.
According to the latest data announced by TÜİK, the number of domiciles sold in Turkey in the first half of 2017 reached 654,000 with an increase of 3.7 percent. Initial domicile sales which are significant indicators for new domicile constructions achieved an increase of 1.4 percent in the same period.
This increase in domicile constructions and ongoing extensive public investments have a positive impact on our sector. It is anticipated that urban transformation process will continue to support the growth acceleration of the construction sector along with the public investments by the end of 2017. On the other hand, market conditions are important for the continuation of infrastructure projects which have high finance requirements. Contractions in global liquidity conditions, the increasing trend in geopolitical risks, the volatility of foreign exchange rates and their further increase, as well as developments in interests influence the decisions on construction investments and increase the risk aspects. However, we think the most significant driving force for the cement sector in the following period will be infrastructure investments, extensive projects, and urban transformations. As infrastructure investments continue they will be less affected by the fluctuation in domicile constructions. Reconstruction in the southeast region and a possible reconciliation process with Syria will lead to a significant vitalization of the cement demand in the region.
If we evaluate the entire year; although severe weather conditions negatively affected the cement sales in the first quarter of the year this gap was compensated in the following months, and now we anticipate a growth rate of nearly -5 percent by the end of the year compared to 2016.
Could you please tell us about the purpose of the technical seminars organized every two years since 1987?
These seminars are of great importance for us. Our technical seminars, which have become a brand in the sector and at international platforms, bring the world leading companies, brand representatives, and specialists together with the players leading our sector. Our purpose is to communicate what is experienced in the global cement sector to the representatives here through presentations. As I have just mentioned, sustainability is very important for us. We hold our technical seminars with an eco-friendly motto every year. Organized under the main theme “Sustainable Environment & Energy” last year, our seminar will be organized for the 14th time at Kaya Palazzo Golf Resort, Belek in Antalya under the theme “Frugal Innovation” from October 10-13, 2017.
We know that the Frugal Innovation which is the theme of the 14th TÇMB Technical Seminar and Exhibition is important to you. Could you please share with our readers this very subject including its subheadings?
I would first like to address the concept of frugal innovation. Frugal innovation means to obtain the better and the more by consuming less, in other words, it is the optimization of the available resources through the right use. Within the scope of the optimization efforts in various areas, we decided our theme to be Frugal Innovation this year as it is a term frequently used in today’s world. Under this main theme, subjects of Substitute Fuel and Raw Material Usage, Energy Optimization, and Renewable Energy will be mentioned as subheadings this year at TÇMB’s International Technical Seminar and Exhibition, and presentations will be made at our event on various subjects which concern the sector in this respect. Our main purpose is to share the developments which will support the protection of the environment globally.
Would you like to share any other things with our readers?
The Turkish cement sector has adopted the principle of sustainable production and growth as its vision by updating its previous production- and quality-focused vision. Having proven itself in production and quality by exporting different types of cement nearly to 100 countries, the Turkish cement sector aims to maintain and improve the reputation of the sector at home and abroad and to contribute to sustainable growth by considering the benefits of the society. In line with this goal, TÇMB continues its efforts by adopting the values of creativity, transparency, righteousness, and reliability. We are directing our efforts in line with the new realities and dynamics of this changing world, and we make efforts in a close dialogue with our stakeholders to prepare our sector to the future.
If incentives will be given to the cement industry, we want them to be regional incentives rather than being general incentives. That is because one of the biggest problems of the sector is the overcapacity. Regional incentives can help us use our capital efficiently. If you are going to make an investment you need to make it in the most efficient field for the national economy. Currently there is a production capacity that can meet the needs of Turkey for the next couple of years.
