building a STRONGER foundation - Cemex

In addition, we are one of the world’s largest suppliers of aggregates, primarily hard rock, sand and gravel, obtained from
quarries, to be used in ready mix concrete and other concrete-based products such as blocks and pipes.
Customers use our aggregates for a wide array of purposes, from a key component in the construction and maintenance of
highways, walkways, and railways to an indispensable ingredient in concrete, asphalt and mortar. Aggregates can be used in their
natural state or crushed into smaller size pieces.
The types of mine mostly used to extract raw materials for aggregates and cement production, are open pit or open cut, which
relate to deposits of economically useful minerals or rocks that are found near the land surface. Open-pit mines that produce raw
material for our industry are commonly referred to as quarries. Open-pit mines are typically enlarged until either the mineral resource
is exhausted, or an increasing ratio of overburden to exploitable material makes further mining uneconomic. In some cases, we also
extract raw materials by dredging underwater deposits.
Aggregates and other raw materials for our own production processes are obtained mainly from our own sources. However, we
may cover our aggregates and other raw material needs through the supply from third-parties. For the year ended December 31, 2010,
approximately 11% of our total raw material needs were supplied by third-parties.
Reserves are considered as proven when all legal and environmental conditions have been met and permits have been granted.
Proven reserves are those for which (i) the quantity is computed from dimensions revealed by drill data, together with other direct and
measurable observations such as outcrops, trenches and quarry faces and (ii) the grade and/or quality are computed from the results of
detailed sampling; and the sampling and measurement data are spaced so closely and the geologic character is so well defined that
size, shape, depth and mineral content of reserves are well-established. Probable reserves are those for which quantity and grade
and/or quality are computed from information similar to that used from proven reserves, but the sites for inspection, sampling, and
measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven
reserves, is high enough to assume continuity between points of observation.
Our reserve estimates are prepared by CEMEX’s engineers and geologists and are subject to annual review by our corporate
staff jointly with the regional technical managers associated to our business units. On specific circumstances we have used the services
of third-party geologists and/or engineers to validate our own estimates. Over the three-year period ended December 31, 2010, we
have employed third-parties (i) to review our cement raw materials reserves estimates in the United Kingdom, Germany, Croatia,
Poland, Latvia, Philippines, Thailand and Puerto Rico, and (ii) to review our aggregates reserves estimates in Spain, Germany, France,
Poland, Latvia, Austria, Czech Republic, Croatia, Hungary, Egypt, Israel, Malaysia, Panama and Nicaragua.
Reserves determination incorporates only materials meeting specific quality requirements. For aggregates used in ready mix
concrete such requirements are based on hardness, shape and size; for cement raw materials (mainly limestone and clay), such
requirements are based on a chemical composition that matches the quality demanded by the production process. In the case of cement
raw materials, since chemical composition varies from production sites and even in the same site, we conduct geostatistical chemical
tests and determine the best blending proportions to meet production quality criteria and to try to maintain an extraction ratio close to
100% of the reported reserves for such materials.
The main equipment utilized in our production sites is as follows:
In our cement facilities: drills, crushers, kilns, coolers, mills, packing/loading machines, pay loaders, excavators, off-road
trucks and other material handling equipment.
In our ready-mix concrete facilities: batch plants, silos and mobile equipment and mixer trucks.
In our aggregates facilities: drills, crushers, screens, belt conveyors, pay loaders, excavators, trucks and other material
handling equipment.
We believe that our facilities are in general good condition, adequate for efficient operations.
During 2010, our total quarry material production was approximately 210 million tons, of which approximately 62% was used
for own consumption to produce cement, ready-mix concrete, and/or other products which are later sold to the public and the
remaining 38% was directly sold to customers.
Our estimates distinguish between owned and leased reserves, the later determined over the term of the lease contract, and
include only those permitted reserves which are proven and probable. As of December 31, 2010, the total surface of property in our
quarries operations (including cement raw materials quarries and aggregates quarries), was approximately 109,380 hectares, of which
approximately 73% was owned by us and approximately 27% was managed through lease contracts.
35