Almost 15 percent of Ukrainian producers of building materials suffered as a result of Russia’s aggression, but the sector is capable of providing up to 90 percent of the materials needed to rebuild the country, the USAID press service said.
These are the results of a study conducted by specialists from the public organization Institute for International Economic Research and the state enterprise Ukrpromvneshekspertiza with the assistance of the USAID Economic Support for Ukraine Project (USAID Project).
As reported, in 2022 the USAID project supported a study of the Kyiv School of Economics to assess the extent and cost of damage to infrastructure and residential buildings in Ukraine. According to data as of November 2022, destroyed facilities needed construction materials and equipment worth about $62.8 billion.
“Experts from Ukrpromvneshekspertiza and the Institute for International Economic Research studied the state of production capacity of Ukrainian construction material factories during wartime. They learned that about 15% of these plants were damaged or destroyed, but this sector retains high production capacity for a wide range of building materials and can provide up to 90% of the materials needed,” said USAID Deputy Project Director Brian Milakowski.
In addition, local production of building materials would save about 100,000 jobs, generate $5.6 billion in wages and $4.4 billion in tax revenue.
The results of the study show that the production of sheet glass or electrical switchboard equipment has been virtually eliminated. These materials are imported from EU countries, which affects their cost. At the same time, the construction of factories, including the production of glass, aerated concrete, dry construction mixtures, continues.
Among the problems named in the study were power outages due to damaged energy facilities, difficulties in accessing finance for working capital and capital investment. Some manufacturers pointed to accounts receivable from builders and the potential loss of key engineering personnel due to conscription into the Armed Forces.
For investment activities, the main barriers are recognized high military risks, the inability to obtain loans, the lack of understanding of the market in the long term, the high cost of connecting to the power grid. At the same time, investment activities continue. This concerns the construction of new facilities for the production of glass, gas concrete, dry mixes, cement, mineral wool.
“Ukraine and its partners can be confident in the ability of the domestic construction materials sector to meet most of the needs of the country’s post-war reconstruction. Donors and lenders to Ukraine can focus on this domestic production potential when planning their assistance,” Volodymyr Vlasyuk, director of Ukrpromvneshexpertiza SE, was quoted in the release.
The survey results also highlight opportunities for technical assistance and improved access to financing to overcome specific limitations for further recovery and growth of the sector. For the international community, the construction materials sector can be viewed as a priority for investment and assistance to the war-torn economy.
The USAID Ukraine Economic Support Project (USAID Project) was created to strengthen Ukraine’s economy affected by the Russian invasion.
Swiss construction materials manufacturer Holcim is buying US roofing systems supplier Duro-Last for $1.293 billion.
According to a Holcim press release, the acquisition of Duro-Last will complement and strengthen the Swiss company’s operations in the roofing materials industry. The expected synergistic effect of the deal is $60 million per year.
The purchase of Duro-Last will bring Holcim’s roofing business annual sales above the $4 billion mark faster than previously expected.
Duro-Last is the market leader in commercial roofing systems in the U.S., with annual sales of about $540 million, Holcim noted.
The deal requires U.S. regulatory approval, and the parties plan to close by the second quarter of 2023.
Concrete market in 2022 fell in 5 times, reinforced concrete – three times, the general director of Kovalskaya PSG Sergei Pilipenko said in an exclusive interview with Interfax-Ukraine.
“The concrete market has fallen almost five times, reinforced concrete – three times. A lot of production space has been lost due to military operations. Many of the (existing) producers may not survive the year,” – said Pilipenko.
At the same time the CEO of the group noted that the construction of new housing showed the lowest dynamics, and 2022 market lived mainly at the expense of commercial construction and infrastructure
Kovalska Construction Group has been working on the construction market of Ukraine since 1956. It unites more than 20 enterprises in the sphere of extraction of raw materials, production and construction. The production is presented by brands “Concrete from Kowalska”, “Avenue”, Siltek and others. The enterprises of Kowalska operate in Kyiv, Zhytomyr, Lviv, Kherson and Chernihiv regions.
In addition, the group includes Kovalska Real Estate, which is engaged in construction of residential buildings in Kiev. Its portfolio includes 20 completed residential projects.
In case of prolonged and unpredictable power outages, construction materials producers will be forced to stop their enterprises completely, the president of the All-Ukrainian Union of Construction Materials Manufacturers Konstantin Salii said.
“If there is no light for more than 12 hours a day, and connections will be out of the predicted schedules, the enterprises will stop: no one will dare to lose expensive equipment. Commodity concrete 3-4 hours in tanks will not survive – this is a terrible loss, “- said Salii in a comment to the agency” Interfax-Ukraine “.
According to him, there are practically no alternative sources of energy for enterprises of building materials production with energy capacity over 1 MW.
According to the president of UBC, the decline of production and consumption of building materials in Ukraine, which began with the start of a full-scale war, will continue until the start of the construction season in 2023. At the same time, he noted that despite the sufficient supply of raw materials from producers, financial resources are almost exhausted.
“Financial resources are almost exhausted – a wave of plant closings and sales for debt could begin in the spring of 2023,” Salii pointed out.
