Israeli Cement Reform Advances as Monopoly Vows Price Cut

Ora Coren
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A Nesher cement factory in Beit Shemesh, January 2014.Credit: Gil Cohen-Magen
Ora Coren

Nesher, the Israeli cement monopoly, has committed to reducing its prices by 2% immediately and make them available to the public, a move that will significantly speed up the government’s plan to open the market to competition, the finance and economy ministries said on Wednesday.

Cutting price is the first part of a plan that requires Nesher to sell its Har Tuv facility, thereby creating domestic competition in cement for the first time. That means competition will begin as early as 2015, five years earlier than originally planned.

“Opening the cement market to competition marks another step in dealing with the housing market and is part of our comprehensive plan we are leading to lower home prices in Israel,’ said Finance Minister Yair Lapid. “We are breaking up a long-standing monopoly. Cement is a basic infrastructure product and lowering its price will make a significant contribution to the economy.”

Nesher, which is owned by closely held Clal Industries and Ireland’s CHR, operates three plants in Ramle and Haifa as well as Har Tuv near Beit Shemesh. Because of the high costs of shipping, little cement is imported.

The cost-of-living cabinet approved the competition policy last year based on recommendations of a government committee chaired by Gal Hershkovitz, a former treasury budget director. It was part of a series of socio-economic reforms proposed by the Trajtenberg committee, set up in the wake of the 2011 social-justice protests.

The final terms of the cement competition program were designed by the two ministries in coordination with the Antitrust Authority.

Sources in the cement market said on Wednesday that despite Lapid’s comments, the cost of cement doesn’t figure in a big way into home-construction costs and won’t affect housing prices. However, it will save costs for big infrastructure projects like bridges and roads.

Lapid has made housing pr Economy Minister Naftali Bennett noted that cement prices had not changed in seven years but said he now expected prices to come down further than the 2% Nesher promised. “Effective competition in the cement sector will lower the price of a basic product for infrastructure construction, including schools and hospitals,” he said.

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