Russian cement producers have limited access to the Belarusian market

The reduction in the number of available export markets due to sanctions is forcing Russian producers to more actively fight for the remaining ones. Thus, Cemros asks the Federal Antimonopoly Service (FAS) to intervene in the conflict with the Belarusian authorities, who allow the bulk of purchases of general construction cement only from local producers. This approach can reduce the workload of the company’s enterprise in the Bryansk region by 20%. Lawyers doubt that the Russian regulator will provide real support to business in this situation, recalling that its powers end at the country’s borders.

Kommersant has obtained a letter from Tsemros to the head of the Federal Antimonopoly Service of the Russian Federation, Maxim Shaskolsky, which talks about restricting access to the Belarusian market for Russian cement producers. As the company writes, since last fall, a norm has been in force in the republic obliging government agencies to purchase at least 90% of Belarusian-produced Portland cement. This excludes the possibility for Russian manufacturers to participate in government procurement on an equal basis with Belarusian ones, they write in Tsemros. They indicate that the share of the public sector in the structure of cement consumption in Belarus remains prevalent – 85–90%.

Cemros also draws attention to the fact that one of the clauses of the standard agreement of the Belarusian state enterprise “BCC Management Company” provides for restrictions on buyers working with alternative suppliers. This, as Tsemros notes, contradicts the norms of the EAEU Treaty. In this regard, the company asks the Federal Antimonopoly Service of the Russian Federation to “conduct an inspection of the circumstances, initiating, if violations are detected, actions aimed at ensuring fair competition.” The FAS RF, BCC, and the Ministry of Antimonopoly Regulation and Trade of Belarus did not respond to Kommersant’s request.

Managing partner of SMPRO Vladimir Guz says that Portland cement, as a general construction cement, accounts for almost the entire export volume. According to him, in 2023, Russian companies exported 1 million tons of products abroad, of which 0.4 million tons were sent to Belarus. Year on year, the figure has doubled, the expert adds, specifying that Tsemros accounts for 97% of cement supplies to this republic, the remaining volumes are mainly formed by Cementum. Cementum declined to comment.

Denis Usoltsev, head of the marketing and strategic analysis department at Tsemros, explained that the group’s enterprise, Maltsovsky Portland Cement, located in the Bryansk region, was initially focused on supplies to Belarus. According to him, the restrictions could lead to the shutdown and mothballing of lines. “The plant has already reduced its production from 3.6 million tons in 2013 to 2.1 million tons, the loss of the market by another 0.4 million tons will correspondingly reduce the load by 20%,” says Mr. Usoltsev. Kommersant’s interlocutor on the cement market notes that for manufacturers, being tied to the sales region remains key: transporting products to other regions is often unprofitable.

According to Mr. Usoltsev, the company views the appeal to the FAS as an opportunity to convey its position to Russian government agencies. “Belarusian producers operate on the Russian market according to market rules, without any restrictions,” he asserts. The expert notes that in 2023, companies from Belarus supplied 2.3 million tons to Russia. Vadim Kuzmin, head of antitrust regulation practice at Tomashevskaya and Partners, notes that Russian legislation also contains norms that do not allow the purchase of foreign goods, but an exception is made for products from EAEU countries.

Lawyer of the Regionservice Collegium Natalya Baradanchenkova notes that the control powers of the FAS RF “end at the country’s border and cannot extend to the Belarusian market.” In her opinion, with a high degree of probability the service will redirect the applicant to the authorized body of Belarus or the department of antimonopoly regulation of the EEC. The head of the antimonopoly practice of Rustam Kurmaev and Partners, Elena Kuznetsova, notes that an appeal to the EEC to cancel the act can be sent by the government of a member state of the commission.

Exports form a small volume of the Russian cement market, or 1.6% of total production, according to Soyuzcement. But the number of available markets for Russian manufacturers is limited: in 2022, as part of EU sanctions, the import of these products from the Russian Federation was banned. As a result, in 2023, the total volume of supplies abroad decreased by 27.3%. In addition to Belarus, cement workers, according to Mr. Usoltsev, are now working with the markets of South Ossetia, Abkhazia and Kazakhstan.

Alexandra Mertsalova