Hart to develop US$8m cement distribution centre in MoBay

Montego Bay Cold Storage Limited, a company controlled by businessman Mark Hart, will be developing a cement distribution centre at the Montego Bay cargo port to keep pace with the building boom in the western end of Jamaica.

Hart said in an interview with the Financial Gleaner that US$8 million ($1.2 billion) would be poured into the build out of the cement operation, which would be part financed by two years of upfront lease payments by Buying House Cement Limited, which would operate the hub.

He expects construction of the cement facility to begin next year.

“We have already done the design,” he said, but the environmental impact assessment is pending.

The centre would span just over one acre or about 50,000 square feet on lands contiguous to Cargo Handlers’ current location at the port in Montego Bay. It would allow for larger ships to dock with cement. Cargo Handlers Limited, which is another of Hart’s companies, is part owner of Buying House. The latter company entered the cement trade some 15 years ago when Caribbean Cement was facing fallout from faulty cement it released on the market.

The facility would serve to more than double storage capacity to allow for ships with 20,000 tonnes of cement to offload, compared to the current 8,000 tonnes, Hart told the Financial Gleaner.

“We plan to do a modern distribution centre which would facilitate growth going forward. It’s a meaningful investment, right on the port. It can play an important role in development,” he said.

“We would build a 50,000-square foot facility, which would give us better economies of scale and would allow us to bring in larger ships, and continue to add value to the users of the cement on this side of the island.”

Jamaica has two main suppliers of cement, domestically, namely Caribbean Cement Company which manufactures the commodity from its base in Kingston and dominates the market; and Buying House, which imports cement from the Dominican Republic and distributes it from its base in Montego Bay. Cargo Handler paid $100 million for a 30 per cent stake in Buying House Cement Limited in December 2020. Parent company Domicem, which is based in the Dominican Republic, continues to hold 70 per cent interest in Buying House.

Caribbean Cement is itself in the process of developing new capacity at its plant in Kingston through a US$40-million investment.

Hart was critical of the project, saying that while Caribbean Cement should invest in modernising its plant, its addition of new capacity at the same time would deny room in the market to alternative suppliers that are held to quotas.

Under its quota, Buying House supplies around 120,000 tonnes of cement or 10 per cent of the market.

The company ultimately wants to manufacture cement in Jamaica but said that the current limitation on clinker imports makes it unfeasible. Such an operation would see 35 per cent of inputs being sourced locally, while the other 65 per cent would be imports, including clinker, which is a mix of limestone and minerals that is transformed by heat in a kiln.

“But the government is reluctant to allow the importation of clinker. At this moment they have taken the position to protect the local industry,” Hart said.

Cargo Handlers, which is listed on the junior stock exchange, made a profit of $267.5 million for the year ending September, up from $159.6 million a year earlier, its newly released preliminary results show. The company benefited from increased business with revenue at $473.3 million compared to $337.3 million a year earlier.

The cement division earned $57 million in profit for the year, Hart said.

Cargo Handlers traditionally operates three business segments, including stevedoring, which involves the loading and unloading of cargo; leasing activities, in particular the leasing of trailers; and management services. Its major customers are Seaboard Freight & Shipping Jamaica Limited, Lannaman & Morris (Shipping) Limited, Bulk Liquid Carriers Petroleum Transport Limited, and CMA CGM Jamaica Limited.

During the financial year, the company said it kept a tight rein on prices.

“Having successfully navigated our way through the pandemic and the post-lockdown challenges in the shipping industry, and in consideration of our clientele, Cargo Handlers has not made any adjustment to our handling rates,” Hart in the preface to financials.

“We are mindful that the recovery of the global supply chain is still being impeded by geopolitical uncertainties, particularly as a consequence of the ongoing conflict in between Russia and Ukraine. We are nevertheless heartened by the improving cargo numbers that are being driven by activities within the country’s construction industry as well as the tourism and hospitality sectors. We expect this trend will continue through ensuing quarters,” he said.

steven.jackson@gleanerjm.com