building a STRONGER foundation - Cemex

Ready-Mix Concrete. Our ready-mix concrete operations represented approximately 21% of net sales for our operations in Spain
before eliminations resulting from consolidation in 2010. Our ready-mix concrete operations in Spain in 2010 purchased almost 91%
of their cement requirements from our cement operations in Spain, and approximately 75% of their aggregates requirements from our
aggregates operations in Spain.
Aggregates. Our aggregates operations represented approximately 8% of net sales for our operations in Spain before
eliminations resulting from consolidation in 2010.
Exports. Exports of cement by our operations in Spain, which represented approximately 31% of net sales for our operations in
Spain before eliminations resulting from consolidation, increased substantially in 2010 compared to 2009, primarily as a result of
strategically increased exports to other countries, especially those located in Africa, to mitigate local volume declines. Export prices
are usually lower than domestic market prices, and costs are usually higher for export sales. Of our total export sales from Spain in
2010, 3% consisted of white cement, 47% of gray cement and 50% of clinker. In 2010, 10% of our exports from Spain were to Europe
and the Middle East, 89% to Africa and 1% to other countries.
Production Costs. We have improved the efficiency of our operations in Spain by introducing technological improvements that
have significantly reduced our energy costs, including the use of alternative fuels, in accordance with our cost reduction efforts. In
2010, we burned organic waste, tires and plastics as fuel, achieving, in 2010, a 33% substitution rate for petcoke in our gray and white
clinker kilns for the year. During 2011, we expect to increase the quantity of these alternative fuels and to reach a substitution level of
around 45%.
Description of Properties, Plants and Equipment. As of December 31, 2010, our operations in Spain included 8 cement plants
located in Spain, with an installed cement capacity of 11 million tons, including 1.1 million tons of white cement. As of that date, we
also owned two cement mills and operated one mill under a lease contract, 23 distribution centers, including eight land and 15 marine
terminals, 106 ready-mix concrete plants, 27 aggregates quarries and 12 mortar plants. As of December 31, 2010, we owned eight
limestone quarries located in close proximity to our cement plants and five clay quarries in our cement operations in Spain. We
estimate that, as of December 31, 2010, the limestone and clay permitted proven and probable reserves of our operations in Spain had
an average remaining life of approximately 41 and 18 years, respectively, assuming 2006-2010 average annual cement production
levels.
As part of our global cost-reduction program we have made temporary capacity adjustments and rationalizations in several
cement plants in Spain. During 2010, four out of our eight cement plants have partially stopped cement production. In addition to
these partial stoppages, our Villanova plant, located in Tarragona, and our Escombreras grinding mill, located in Cartagena, were
closed temporarily during 2009, and will only resume production on a need basis. Moreover, the San Vicente plant, located in
Alicante, and the Muel grinding mill, located in Aragón, have been permanently shutdown. Additionally, approximately 7% of our
ready-mix concrete plants in Spain have been also temporarily closed.
Capital Expenditures. We made capital expenditures of approximately U.S.$177 million in 2008, U.S.$74 million in 2009 and
U.S.$46 million in 2010 in our operations in Spain. We currently expect to make capital expenditures of approximately U.S.$39
million in our operations in Spain during 2011, including those related to the construction of the new cement production facility in
Teruel, described above.
Our Operations in the U.K.
Overview. Our operations in the U.K. represented approximately 8% of our net sales in Peso terms, before eliminations resulting
from consolidation, and approximately 6% of our total assets, for the year ended December 31, 2010.
As of December 31, 2010, we held 100% of CEMEX Investments Limited (formerly RMC), the main holding company of our
operating subsidiaries in the United Kingdom. We are a leading provider of building materials in the U.K. with vertically integrated
cement, ready-mix concrete, aggregates and asphalt operations. We are also an important provider of concrete and precast materials
solutions such as concrete blocks, concrete block paving, roof tiles, flooring systems and sleepers for rail infrastructure.
The Construction Industry in the U.K. According to the U.K.’s Office for National Statistics, the level of GDP in 2010 as a
whole in the U.K. was 1.4% higher than in 2009. Total construction output rose 5% in 2010, as compared to a 11% decline in 2009
over the preceding year. Both private and public sector housing grew, as did the rest of the public construction sector and
infrastructure construction. According to the British Cement Association, domestic cement demand increased approximately 3% in
2010 compared to 2009. However, activity in the industrial sector was subdued, and commercial construction activity and repair and
maintenance activity both experienced a decline.
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