building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
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Our Trading Operations<br />
In 2010, we traded approximately 8.7 million tons of cementitious materials, including 7.9 million tons of cement and clinker.<br />
Approximately 82% of the cement and clinker trading volume in 2010 consisted of exports from our operations in Colombia, Costa<br />
Rica, Croatia, the Dominican Republic, Germany, Guatemala, Latvia, Mexico, Philippines, Poland, Puerto Rico, Spain and the U.S.<br />
The remaining approximately 18% was purchased from third parties in countries such as Belgium, China, Colombia, Croatia, Greece,<br />
Lithuania, Pakistan, Slovakia, South Korea, Taiwan, Thailand and Turkey. As of December 31, 2010, we had trading activities in 101<br />
countries. In 2010, we traded approximately 0.8 million metric tons of granulated blast furnace slag, a non-clinker cementitious<br />
material.<br />
Our trading network enables us to maximize the capacity utilization of our facilities worldwide while reducing our exposure to<br />
the inherent cyclicality of the cement industry. We are able to distribute excess capacity to regions around the world where there is<br />
demand. In addition, our worldwide network of strategically located marine terminals allows us to coordinate maritime logistics on a<br />
global basis and minimize transportation expenses. Our trading operations also enable us to explore new markets without significant<br />
initial capital expenditure.<br />
Freight rates, which account for a large share of the total import supply cost, have been subject to significant volatility in recent<br />
years. Our trading operations, however, have obtained significant savings by contracting maritime transportation in due time and by<br />
using our own and chartered fleet, which transported approximately 18% of our cement and clinker import volume during 2010.<br />
In addition, based on our spare fleet capacity, we provide freight service to third parties, thus providing us with valuable<br />
shipping market information and generating additional revenues.<br />
Regulatory Matters and Legal Proceedings<br />
A description of material regulatory and legal matters affecting us is provided below.<br />
Anti-Dumping<br />
Jamaica Anti-dumping Investigation. On September 9, 2010, Jamaica’s Anti-Dumping and Subsidies Commission (the “Jamaica<br />
Commission”) issued a preliminary affirmative anti-dumping determination in its investigation of cement from the Dominican<br />
Republic. The Jamaica Commission based its determination on a preliminary finding of a “threat” of material injury to the sole<br />
domestic cement company (Caribbean Cement Company Limited, or CCCL). A majority of the Jamaica Commission preliminarily<br />
found that the case concerning present material injury was “inconclusive.” Significantly, the Jamaica Commission was “not<br />
persuaded” that “provisional tariffs” were necessary to prevent material injury to CCCL during the period between the preliminary<br />
determination and the final determination. Therefore, even though the Jamaica Commission preliminarily calculated an anti-dumping<br />
margin of 84.69% against the Dominican Republic, no duties were imposed. On December 8, 2010, the Jamaica Commission issued a<br />
negative ruling in the case brought by CCCL against imports of cement from the Dominican Republic. The Jamaica Commission<br />
found no evidence of material injury to the domestic industry and has closed the investigation. However, CCCL may file an appeal to<br />
this ruling.<br />
As of April 30, 2011, there was no accrued liability for dumping duties. All liabilities accrued for past anti-dumping duties have<br />
been eliminated.<br />
Antitrust Proceedings<br />
Polish Antitrust Investigation. Between May 31, 2006 and June 2, 2006, officers of the Polish Competition and Consumer<br />
Protection Office, or the Protection Office, assisted by police officers, conducted a search of the Warsaw office of CEMEX Polska,<br />
one of our indirect subsidiaries in Poland, and of the offices of other cement producers in Poland. These searches took place as a part<br />
of the exploratory investigation that the head of the Protection Office started on April 26, 2006. On January 2, 2007, CEMEX Polska<br />
received a notification from the Protection Office informing it of the formal initiation of an antitrust proceeding against all cement<br />
producers in Poland, including CEMEX Polska and another of our indirect subsidiaries in Poland. The notification alleged that there<br />
was an agreement between all cement producers in Poland regarding prices and other sales conditions of cement, an agreed division of<br />
the market with respect to the sale and production of cement, and the exchange of confidential information, all of which limited<br />
competition in the Polish market with respect to the production and sale of cement. On December 9, 2009, the Protection Office<br />
delivered to CEMEX Polska its decision against Polish cement producers related to an investigation which covered a period from<br />
1998 to 2006. The decision imposes fines on a number of Polish cement producers, including CEMEX Polska. The fine imposed on<br />
CEMEX Polska is approximately Polish Zloty 115.56 million (approximately U.S.$43.51 million as of April 30, 2011, based on an<br />
exchange rate of Polish Zloty 2.6559 to U.S.$1.00), which is approximately 10% of CEMEX Polska’s total revenue in 2008. CEMEX<br />
Polska disagrees with the decision, denies that it committed the practices alleged by the Protection Office and filed an appeal before<br />
the Polish Court of Competition and Consumer Protection on December 23, 2009. The Polish Court of Competition and Consumer<br />
Protection confirmed that CEMEX Polska’s appeal met preliminary formal requirements and that it would conduct the case. On<br />
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