[Planning] ④ Exploding Demand, Establishing National Prestige

History of the Cement Industry in Korea

The cement industry, which was struggling due to the oil crisis, regained momentum as large-scale construction projects for infrastructure development began with international events such as the 1988 Seoul Olympics.
[Photo by Korea Cement Association]

[Asia Economy Reporter Kim Jong-hwa]South Korea is the 12th largest cement-producing country in the world, with an annual production scale of about 60 million tons. In terms of cement technology, it has been recognized as an advanced cement nation, exporting production technology overseas since the 1980s. However, the public is not fully aware of the status of the Korean cement industry. Although it played a key role as a national infrastructure industry during the economic development period of the 1960s and 1970s, it became stigmatized as a polluting industry damaging the environment in the 2000s, causing it to fall out of public interest. Recently, the cement industry is undergoing a transition to an eco-friendly industry. This series of 10 articles reexamines the history of the Korean cement industry, which is transforming from an ugly duckling into a swan.[Editor's note]

The development of the cement industry, which gained momentum from the Saemaeul Undong (New Village Movement), faced a crisis during the first and second oil shocks. The first oil shock in 1973 and the continuous rise in oil prices from 1978 to 1981 during the second oil shock caused the cement industry to struggle with increasing costs and remain sluggish.

As the crisis worsened in the 1980s due to the oil shocks, the industry was pushed into a severe situation, even resorting to replacing fuel with bituminous coal. Like the aviation and shipping industries, the cement industry was a heavy consumer of petroleum, making it inevitable to suffer from rising oil prices.

After the Arab oil-producing countries raised oil prices to over $20 per barrel, the cement industry faced a crisis so severe that it was on the brink of collapse due to enormous fuel costs and deteriorating conditions.

At that time, bunker C oil required by the cement industry accounted for 12% of South Korea's total consumption. Excluding power generation, it was about 24%, indicating a high dependence on petroleum. The annual fuel cost was 80 billion won, with an additional burden increasing by 48 billion won, and electricity costs also incurred 55.2 billion won in charges. Despite the ongoing crisis, cement shipments remained sluggish.

Ultimately, the oil shocks were overcome as the process of replacing fuel from bunker C oil to bituminous coal was completed. With the fuel replaced by bituminous coal, the cement industry saved a staggering 492 billion won in energy costs over five years until 1984, revitalizing the industry.

The substitution of bituminous coal fuel brought about cost reductions and management rationalization through process automation. An unexpected success during this period was the successful operation of Seohan Industrial. Established in 1976 as a joint sales company to overcome the recession, Seohan Industrial played a significant role in overcoming the crisis through appropriate management during difficult times.

A notable demand-side development during this period was the cement concrete pavement of highways. In October 1981, the 88 Olympic Highway between Daegu and Gwangju was constructed with a 17.51 cm full-depth cement concrete pavement along the entire route, successfully completed in just 2 years and 8 months. Following this, the government decided to pave future highways and new roads with cement concrete whenever possible.

In the mid-1980s, the cement industry encountered another turning point. It played a pivotal role in building infrastructure for the successful hosting of international sporting events. From the early 1980s, apartment-centered housing construction, urban redevelopment projects in preparation for the 1986 Asian Games and the 1988 Seoul Olympics, construction of various stadiums, and expansion of subway construction and other social overhead capital (SOC) projects were actively promoted.

To meet the cement demand for these projects, the domestic cement industry in the mid-1980s undertook a project to convert old kilns to the new NSP-type kiln firing method. This aimed to maximize thermal efficiency and overcome recession and hardship.

The main fuel was replaced from bunker C oil to bituminous coal due to the oil crisis.
[Photo by Korea Cement Association]

This innovative change in production facilities was not a simple repair of broken equipment but a massive overhaul of the entire process from mining to shipment, requiring substantial funds and advanced technology, making it a major gamble for the industry.

However, the gamble paid off handsomely. This period also marked the dawn of the cement industry's heyday. The mid to late 1980s saw the greatest boom since cement production began domestically. Cement companies operated production facilities 24 hours a day as demand surged due to early commencement of various construction projects such as local roadworks in preparation for the 88 Olympics.

Major exporters like Ssangyong Cement and Dongyang Cement only shipped quantities with confirmed vessel schedules and prioritized supply to the domestic market, leading to a situation where cement was so scarce that it was said to be unavailable even if money was available.

An official from the Korea Cement Association explained, "Due to the Olympic boom, there was an enormous 15.1% increase in 1988, and the situation where we had to sweat to meet domestic supply rather than exports shows how prosperous the cement industry was at the time. The cement shock was so severe that the domestic cement industry, which was the world's second-largest cement exporter, even faced the possibility of having to import the shortfall."