Homepage || Member News || Investor.ge || Contact Us

 


American Hospital Tbilisi
Corporate A Member




Enka Renewables LLC
Corporate B Member




Clean Place Ltd.
Corporate B Member




Zinc Network LLC
Corporate B Member




PH International
(Project Harmony Inc.)

Non-Profit Organization




Salvation Army
Non-Profit Organization





BP Exploration (Caspian Sea) Ltd.




PricewaterhouseCoopers




KPMG Georgia LLC




TBC Group




UGT






MEMBER NEWS

<<Back

GEORGIAN CEMENT ASSOCIATION INTERVIEW WITH PRESIDENT PAUL RODZIANKO
November 2020

See also:
- Press Release, 15.11.2020, The 9th Blind Testing results of the Georgian cement market
- Report on Cement Blind Test Results, Presented by The Georgian Cement Association, October 2020

Interviewer: Why is cement quality control important in a seismic zone? What is the Georgian Cement Association (GCA) is doing to improve the situation?

Paul Rodzianko: Georgia is indeed located in a seismic zone and we have been having a construction boom for quite a while. In such a scenario, falsified and low-quality construction materials that pose a threat to human well-being is, unfortunately, still a relevant and problematic topic. People who purchase apartments or office space generally exercise a certain degree of caution. They quite accurately believe that accommodations in certain older buildings that have been standing for many years could well be more trustworthy as well as less expensive to buy or rent. However, many buyers prefer the freshness, comfort and quality of new-built buildings and will make their selection based on safety as a consideration as well.

It is the professional opinion of the Georgian Cement Association that the Georgian government, by means of its relevant bodies, must take pro-active measures to protect customers’ rights and safety. Manufacturers of sub-standard products should not dare to play with people’s lives and those of their families with a view to increasing profits illicitly.

The GCA strongly believes that all projects built in Georgia absolutely require an appropriate degree of design strength, depending on their function and purpose. Since Georgia is situated in a seismic zone, the collapse of a structure built with sub-standard cement could well result in injuries and even fatalities. About 63% of the bagged cement products we have blind tested since 2017 contain a lower quality cement than what is advertised on the bag - quite a number of which fail catastrophically.

Interviewer: What does it take to produce quality cement?

Paul Rodzianko: High quality cement is produced from different mineral components but the major and most expensive ingredient is clinker. It is ground together with gypsum, slag or other additives based on an indicated formula in order to produce a specific type of cement. There are no shortcuts to producing quality cement - it is a commodity item. The ingredients and their proportions are well-known as are the standard internationally accepted formulations of each grade. In all of these different cements, it is simply not possible to reduce clinker content significantly without dramatically altering its quality.

However, certain producers decide to produce sub-standard cement with by decreasing its production cost by reducing its clinker content. In the market, such fake cements don’t sell for much less than quality cement products so customers are being cheated in terms of value and safety. These producers can thus afford to pay incentive commission fees to unscrupulous distributors out of their increased manufacturing margin while still retaining a significant incremental illicit profit. All this is happening at your expense and risk. And customers cannot simply tell by the color of the product what is its quality: for that you need to engage in 28-day tests – something most consumers cannot do.

The GCA was formed in 2017 in order to shed light on and help prevent such illegal behavior. We have carried out periodic blind tests of the market for four years. We disseminated the results of the latest test on October 21, 2020.

Interviewer: What has changed during the last 3 years? What is the current situation on the Georgian cement market? What results has the GCA achieved?

Paul Rodzianko: Since January 2017, the GCA has conducted blind tests of 299 bagged cement samples purchased in a number of cities around Georgia. Of these samples, only 37% exceeded EN197-1 & EN413 Standards which means that an alarming 63% of cement samples tested failed to meet the international specifications corresponding to the product description printed on the bag. Nothing has appreciably changed: producers of quality products continue to produce quality products while a significant number of competitors continue to produce all or mostly all fake products. It is also noteworthy to mention that 100% of the failing samples have been manufactured using imported clinker.

There is a most important “take-away” from all of this GCA testing: a buyer must not trust the cement quality indicated on the bag unless they know who produced it. Even today.

Without this specific knowledge, a buyer may, more often than not, be cheated both financially and quality-wise by buying a low-quality “fake” cement at relatively high prices. Still regrettably the case.

The GCA is a private sector initiative. Our member companies suspected that cheating and unfair competition existed in the Georgian cement market but we had to prove it by developing objective evidence. After doing so over a period of time and informing the market and the Georgian government of our results, we have now reached the stage where this problem is well-known and the authorities have taken an interest.

Although the GCA only publishes the names of the GCA member companies whose cement meets all of the stated specifications, various agencies have now requested that we share all of the information and results that we have collected. It will now be possible for these responsible agencies to focus on those companies whose unquestioned cheating has been identified with a view to stopping such egregious behavior.

Another issue that the GCA has been able to highlight has been the issue of unfair international competition. Even though Georgia has some of the lowest cement prices in the region, a number of countries have been engaged in selling clinker into this market at very low price levels. If transportation to the Georgian market were factored in, some of the offered prices had to have benefitted either the subsidization of production or transportation costs in an exercise of predatory pricing. The only way a country can protect its economy, its industries, and the jobs that go with them is to enact anti-dumping legislation for use when necessary.

Interviewer: The GCA has asked the authorities to speed up the adoption of the antidumping legislation with a view to protecting domestic industries and jobs. The law was adopted in July 2020. Has the problem been resolved by or are there any other aspects of this matter that need to be tackled?

Paul Rodzianko: Antidumping legislation is an important protective measure as well as one that is accepted internationally. It will be applicable not only to cement but also to any other products where predatory pricing exists. The law is scheduled to enter into force in June 2021. We sincerely hope that the responsible agency will take effective steps in enforcing this law in the event that dumping situations arise. Though the issue concerning cement appears to have abated at the moment, there may well be other products currently entering the Georgian market that should, at the least, be monitored.

In the case of cement and clinker, these are commodity products with a well-known cost structure. They are found everywhere but generally have to be produced within limited regions because their transportation over long distances is very costly due to their bulk and their weight. Normally, the further away a manufacturer is located from a given market, the less competitive its products will become as compared with local producers. That dynamic will, of course, change if transportation and/or production costs are subsidized. In that eventuality, Georgian producers must be given the opportunity of protecting their market, their employees and their businesses.

After the aforementioned legislation comes into force, everything will depend on its effective enforcement. It is essential that the Government have all of the tools to identify dumping situations and the resolve to use them.

Interviewer: What future plans does Georgian Cement Association have?

Paul Rodzianko: The short answer is that the GCA will continue its testing program and actively inform consumers and the Government as well as all cement producers about the results. Our ultimate goal is to ensure the presence of only quality products on the market as well as fair competition both from domestic and international players. We will also be assessing whether any similar activity would be beneficial in the wholesale cement and concrete markets as well as possibly other building materials.

Interviewer: To conclude, could you please summarize the results of the latest (9th) round of testing that you conducted recently?

Paul Rodzianko: Our latest round of blind testing was carried out by Levan Samkharauli , National Forensics Bureau in August-September. Products were purchased in seven cities: Tbilisi, Rustavi, Marneuli, Gori, Kareli, Batumi and Agara. The test results disclosed that, out of 26 locally produced bagged cements, only twelve (12) products produced by seven (7) companies (only 46%) met the requirements of the European EN197-1 standard advertised on the bag. That meant that fourteen (14) samples from eight (8) manufacturers failed to meet those standards with five (5) showing critically lower results than the specification indicated on the packaging (<20 mpa).

The GCA was formed by HeidelbergCement Georgia and Kavkaz Cement/GBG with a view to protecting customers through informing the public and the Government about the dangers and risks associated with the purchase of “fake” sub-standard cement products. We are hopeful that new members committed to producing quality products and engaging in fair competition will meet the criteria established in our Charter and then join the GCA.

Our goal is to help create a competitive and sustainable cement industry with good jobs in Georgia’s Charter.

Currently there are over 25 active cement companies operating in Georgia but only seven (7) have produced at least one quality cement product. We want your participation and support for the good of the Georgian consumer and market.

Silk Development (Silk Road group) - Life on the Sea Front

(posted on May-12-2021)

Grant Thornton Tax and Legal Alert - Overview of changes in Georgian legislation, April, 2021

(posted on May-11-2021)

Element Construction built a walnut processing plant

(posted on May-4-2021)

Dentons launches 2021 edition of its ‘Investing in renewable energy projects in Europe’ guide

(posted on Apr-26-2021)

Hyundai Glovis Ro-Ro Service

(posted on Apr-22-2021)

EY Newsletter - Mobility: Immigration Tracker / Impact of COVID-19 on Global Immigration, 5 April 2021

(posted on Apr-08-2021)

EY Tax&Law Brief for March 2021

(posted on Apr-08-2021)

Deloitte Academy online training information

(posted on Mar-30-2021)

Deloitte Legal, 24 March 2021

(posted on Mar-24-2021)

EY Newsletter - Mobility: Immigration Tracker / Impact of COVID-19 on Global Immigration

(posted on Mar-23-2021)

EY Tax&Law Brief for February 2021

(posted on Mar-23-2021)

Gebrüder Weiss demonstrates resilience (Gebrüder Weiss press release in Georgian, English and German),

(posted on Mar-19-2021)

EY Law - Return to Office tracker COVID-19: Labor and employment law requirements and considerations

(posted on Mar-11-2021)

Hilton Batumi Team Member Wins Hilton’s Highest Global Recognition Award - Hilton Batumi Press-release dated March 3, 2021

(posted on Mar-09-2021)

Deloitte Academy training on March 25-26 - Comparative analysis of VAT regulations effective as of and before 1 January 2021

(posted on Mar-09-2021)

Element Construction is completing the construction works on Sulkhan-Saba Orbeliani campus

(posted on Mar-01-2021)

EY Law Updates on COVID-19,12th Edition

(posted on Feb-18-2021)

EY: Impact of COVID-19 on Global Immigration

(posted on Feb-18-2021)

Deloitte Legal, 17 February 2021

(posted on Feb-18-2021)

EY Tax&Law Brief, summary of the year 2020

(posted on Feb-08-2021)

Element Construction has completed the construction of the LTB Palitra plant

(posted on Feb-1-2021)

Philip Morris Georgia was named as a Top Employer for the 3rd consecutive year

(posted on Jan-29-2021)

BGI Law Brief, November, December 2020 - January 2021

(posted on Jan-25-2021)

Grant Thornton Tax and Legal Alert - Overview of changes in Georgian legislation, December, 2020

(posted on Jan-15-2021)

EY Tax&Law Brief for November 2020

(posted on Dec-29-2020)

EY Brochure on Global Labor and Employment Law Strategic Topics

(posted on Dec-29-2020)

Dentons supports Catharsis in providing services for the holiday season

(posted on Dec-24-2020)

Grant Thornton network resilient in the face of global market downturn

(posted on Dec-20-2020)

Element Construction is building a multifunctional complex of Impexfarm

(posted on Dec-11-2020)

Element Construction is working on a new hydrotechnical project

(posted on Dec-11-2020)

Grant Thornton Tax and Legal Alert - Overview of changes in Georgian legislation, November, 2020

(posted on Dec-11-2020)

Sheraton Grand Tbilisi Metechi Palace: Announcement of new GM

(posted on Dec-07-2020)

KPMG: Georgian Banking Sector Overview (financial results of the 15 commercial banks of Georgia for the 3rd quarter of 2020)

(posted on Nov-26-2020)

Georgian Cement Association Interview with President Paul Rodzianko, November 2020

(posted on Nov-23-2020)

EY Law Updates on COVID-19, 10th Edition

(posted on Nov-20-2020)

EY Tax&Law Brief for October 2020

(posted on Nov-20-2020)

Grant Thornton Tax and Legal Alert - Overview of changes in Georgian legislation, October, 2020

(posted on Nov-13-2020)

KPMG: Tax Incentives for International Companies (in Georgian and English)

(posted on Nov-3-2020)