Cement Industry Invests 130 Billion Won in Eco-Friendly Facilities

Photo by Hanil Cement

[Asia Economy Reporter Kim Jong-hwa] The cement industry plans to invest 300 billion KRW in facility investments this year, with more than 40% of that amount, 132 billion KRW, allocated to eco-friendly facilities such as environmental protection and pollution prevention. Despite the challenging situation of declining domestic sales since 2017 due to the construction market downturn, investments in eco-friendly facilities have actually increased.

According to the cement industry on the 2nd, the sector plans to invest 305.7 billion KRW in facilities this year. This represents a 25.6% increase compared to last year's investment performance (242.9 billion KRW). The largest portion of investment is in rationalization facilities, accounting for 69.0% (263.2 billion KRW) of the total investment. The expansion of rationalization facility investments is in response to recently strengthened environmental regulations (pollution, environment, and safety). Additionally, these investments are used for facility automation, energy savings to reduce costs, and maintenance and regular repairs of equipment.

Notably, about half of this amount, 132 billion KRW, will be invested in the environmental sector. Approximately 43% of the cement industry's average rationalization facility investments over the past five years were environmental investments, and this year it has increased to 49.5%. Considering that about 50% of the costs are spent on maintaining and repairing basic facilities, most of the remaining new investments are directed toward environmental facilities.

The cement industry has been steadily increasing its environmental investments. Over the past five years, the scale of facility investments including environmental investments in the cement industry averaged 312.2 billion KRW annually. Among non-metallic mineral industries (such as cement, lime, and glass), the cement industry's share of facility investments was the highest at an average of 21.2% per year.

The increase in eco-friendly facility investments in the cement industry is due to strengthened related regulations. Industry insiders stated, "The ongoing internal and external crisis caused by the novel coronavirus disease (COVID-19) has led to reduced demand for cement and decreased sales," adding, "On top of that, the government’s stricter environmental regulations have increased costs, ultimately forcing us to accept a decrease in net profit."

A representative from the Korea Cement Association said, "To secure growth engines, urgent government policy support such as easing environmental regulations is necessary," and added, "Given the current difficult economic situation, flexible policy considerations from the government are needed to prevent the deterioration of corporate management."

Meanwhile, domestic supply in the cement industry peaked at 56.7 million tons in 2017, then decreased to 51.2 million tons in 2018 and 49.45 million tons last year. The industry expects domestic supply to decline by about 8.0% to 45.5 million tons this year compared to last year.

This content was produced with the assistance of AI translation services.