Consumers of quarry products are alleging that Israel?s
quarrying industry is in the thrall of a relatively small number of companies.
The fear is that this is enabling them to hike their prices.
Shapir Engineering acquired the Roichman quarries in
2005 and Readimix bought a full interest in Lime & Stone in 2008. As a
result, three companies – Hanson, Shapir and Readimix – not only control 17 of
the country’s quarries, but also supply 65.6 per cent of their production.
Between 2006 and 2012, the price of materials produced at the
quarries soared by nearly 70 per cent. The increased cost bumped up the cost of
building and road construction.
The accusations were made in a number of position papers
submitted to a panel reviewing government policy on the exploitation of
the country’s natural resources. Professor Eytan Sheshinski, who also chaired a
panel that explored government policy on oil and natural gas royalties, headed
the committee.
However, the Manufacturers Association that lists the quarry
owners among its members said that 18 companies operate 36 gravel mines.
before the committee out of concern that it will embrace a proposal to hike
the government royalties the quarries pay.
They say the government fee that goes
into a fund for the rehabilitation of the quarries constitutes 14 per cent of
the price they get for the final product and the price barely exceeds the
cost of production. The association aims to lower the royalty component to
four per cent of the average price to the end user.
The Sheshinski committee is due to recommend government
royalty policy for the extraction and sale by the private sector of the
country’s natural resources more generally, including quarry production.
For its part, the Manufacturers Association claims an
increase in state royalties would only strengthen economic concentration
in the sector into the hands of a smaller number of players and further increase
prices pushing up construction costs.
Over the past 20 years, only five government tenders were
issued for new gravel and chalk mines, and none of those are still in operation
today. At the same time, the sector has undergone consolidation.
The prices that mines have been getting for quarry material
have been particularly volatile over the past 15 years. Compared with 1998
prices, they have actually declined somewhat but between 2006 and 2012 shot up
by almost 70 per cent.
Source: Aggregate Research