Rock and a Hard Place

Cynthia Barnett | 9/1/2007

Supply side

With future domestic supply uncertain, the multinationals, including Votorantim, Athens, Greece-based Titan America and Cemento Andino in the Dominican Republic, are moving in to fill the gap. The three companies have signed long-term lease contracts with the Tampa Port Authority to ship aggregates into Florida, with each investing at least $10 million to ramp up operations at the port. Rinker Materials (the Australian company is being acquired by Mexico-based Cemex) is negotiating an even larger deal with the port, where it will build on 36 acres.

Ananth Prasad, chief engineer at the state Department of Transportation, predicts the strain on supply could result in higher road-building costs to taxpayers. Some projects will be delayed. [Photo: Ray Stanyard]

Other companies have been working to increase production at facilities in Florida outside the Lake Belt. Rinker plans to increase production by 900,000 tons at the Brooksville facility it acquired from Florida Crushed Stone for $350 million six years ago. Florida Rock, meanwhile, is doubling capacity at its mine in Newberry. And American Cement soon will come online with a 1.2-million-ton operation in Sumter County.

In the short term, the issue posed by closing the Lake Belt to mining will be cost. Ananth Prasad, chief engineer at the DOT, says the ruling “cuts out 30% to 40% of just our statewide supply” of limestone. He predicts the strain on supply could result in not only higher road-building costs to taxpayers but some projects being delayed.

The cost of new homes is likely to rise as well. Sullivan is among many economists who believe Florida’s housing industry — and with it, the building-materials industry — will turn upward again sometime in 2009. “When that happens, you’re still going to need a foundation for your house, and you’re going to get it,” he says. “But I can’t tell you how much it’s going to cost.”

Over the long haul, the very survival of resource industries such as mining is at stake in Florida. The state will face more Lake Belt-type issues, Herbert says, as population growth and development “are overrunning the lands where limestone and sand deposits are found.”

“Anywhere water and rock merge,” he says, “you’ll see these issues morphing.”

Links: The Portland Cement Association
Florida DOT study on importance of aggregates material (PDF)
U.S. District Judge William Hoeveler's ruling (PDF)
For more articles this month with extra links, go to the Links page.

Tags: North Central, Housing/Construction