Huge investment programme by Golden Bay

Press, 30 April 1981, Page 19

Huge investment programme by Golden Bay

PA Wellington The Golden Bay Cement Company, Ltd. which is undergoing a substantial redevelopment programme, expects a commensurate rise in profits when its Portland plant comes on a stream in 1982, the chairman (Mr A. S. Paterson) told the annual meeting yesterday. The next two years would see substantial sums being spent on new assets. In the interim, he forecast that the Erofits of the two companies eing welded into one group would continue at no less than the present level. Mr Paterson said the most significant event of the year was the decision to combine Golden Bay and Wilsons’ cement companies. To bring this about reconciliation of the interests of Winstones and Blue Circle Industries and of the New Zealand shareholders had to be finalised. The new group structure was one which could fund the major expenditure at Portland and which should serve the future needs of the group. He said that good progress was being made on the work at Portland. The main contract for the design, supply and plant installation was in the hands of Gatx-Fuller of the United States, and a New Zealand company, Wilkins and Davies, Ltd, was carrying out the civil works. “It is important that the contract should be completed within the time allowed,” he said. There would be a period when the kiln was taken out of production and steps were in hand to build to stockpile clinker, the intermediate product in cement manufacture, before this happened. Mr Paterson said the heart of the new process was the suspension preheater. “To give some indication of the size of this structure, I ’mention that the tower, supporting the cyclones is 55 metres in heigh — or the equivalent of an 18 storey building.”

Ancillary items to the preheater include facilities for preparing the raw meal, blending silas, a conditioning tower, aprecipitator and an electricity substantion. Increased cooler capacity was needed to take care of the faster production of clinker.

He said that the funding programme was nearing finality. The final call on the new shares is due by June 30 and the major portion of offshore borrowings would come from EFIC — Export Finance Insurance Company of Australia.

“This loan is on favourable terms, and is part of the plant package from our Australian contractors. Our bankers say the other necessary funds were assured. They will comprise a syndicate mix of local and offshore facilities. Every possible step was being taken to minimise the off-shore component. “The market for cement has declined progressively since its peak in 1974. However the company would halve the energy requirment at Portland and its new ship carries more cement in one load than the previous two vessels carried together.” Such developments were helping to cushion rising costs.

"When the market improves, as indeed it must, we will be in a position to meet the new demand at fully competitive selling prices,” he said.

Answering shareholders’ questions, Mr Paterson acknowledged there would be a big depreciation charge against the Portland works. However, the directors believed that the expenditure was fully justified. He told another questioner that firm pricing arrangements had been made with the pricing authorities which would assure the group of an acceptable return on the fqnds invested.