Holcim Prioritising Cement Supply Options

11 May 2007

Media Release

Holcim (New Zealand) Ltd has announced today that it will focus further investigative work to address demand for cement on one medium term and two long term cement supply options.

In May last year, Holcim New Zealand announced that, while its current Westport plant is running well, it is unable to meet projected demand. The company indicated that the following options were being investigated to meet that demand:

  • Upgrading or replacing the current Westport plant
  • A new plant in the South Waikato / King Country
  • A new plant at Weston, near Oamaru
  • Importing cement, either to supplement the existing Westport plant, or to supply all of Holcim New Zealand's needs.

After twelve months of further investigations, Holcim will now focus future work on fewer options, discarding one option and giving others a lesser priority.

Further work will be completed on continuation of the existing Westport plant, with an appropriate maintenance and capital works programme, in combination with supporting imports on a bulk basis. These imports would be shipped direct to market terminals in contrast to the current method of importing cement in one tonne bags. This is seen as a medium term option.

Two long term options, each involving a new cement plant, will also be the focus of further work.

Holcim New Zealand currently has lodged resource consent applications for a new cement plant at Weston, near Oamaru, and these applications are currently going through the RMA process. Further work will continue on this option, with consenting outcomes being a key factor in the viability of this option.

A second long term option is a full new replacement dry process cement plant at Westport, and this will also be the focus of further investigations.

Announcing the three options still being worked on, Paul Commons, General Manager, Strategy and Development, said: "People have been asking us a lot of questions about how our investigations are progressing and which options are front runners. We still have some work to do before we can narrow these options further, although we hope to be in a position to do so in about three months."

The discarded option is one of the range of alternatives considered for the Westport plant; a significant upgrade to a semi-wet plant, or combination of old and new kilns.

"Westport is currently a wet process technology plant. Modern plants use a dry process technology. A mixture of both technologies just didn't stack up when we looked at the high relative capital costs for the likely benefits, and also the operational complexity of this sort of operation," Paul Commons said.

A number of other options remain viable, but will receive no further work at this point. One of these is a new plant option at South Waikato / King Country which is less attractive due to raw material challenges. A further option also considered less attractive is importing of cement to meet all of Holcim New Zealand's needs.

"The current Westport plant is running well, and is cost competitive compared to imports," Paul Commons said. "New plant options are also viable, so full importing is definitely less attractive."

Holcim New Zealand will now move forward with a programme focused on the three priority options. The work programme for the current Westport plant plus bulk imports option will focus on ongoing plant operational needs, environmental considerations and importing infrastructure. The new plant option at Weston, near Oamaru will focus on processing of resource consents. Further work on the Westport new cement plant option will focus on energy, limestone reserves and port operations.

"We are working towards putting forward two options to our parent company, Holcim Ltd," Paul Commons said. "These will first be considered by the Holcim Ltd Executive Committee, and will subsequently go forward to the Holcim Ltd Board for a decision. We don't expect this decision will be made before 2008."