[Planning] ⑤ New Town Development and the Shadow of Boom

History of the Cement Industry in Korea

View of the Ilsan New Town under construction.
[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 over 60 million tons. In terms of cement technology, it has been recognized as an advanced cement nation since the 1980s, exporting production technology overseas. However, the public is not fully aware of the status of Korea's 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 articles will re-examine the history of Korea's cement industry, which is transforming from an ugly duckling into a swan, over 10 installments.[Editor's note]

The cement industry enjoyed an unprecedented boom until the end of 1997 despite a year-round supply shortage and overheated market conditions since 1990. The boom continued with facility investments and housing increases due to the economic boom, finishing construction related to the Olympics, and the full-scale development of new towns with large apartment complexes.

In 1991, domestic demand reached 45.42 million tons, with per capita cement consumption reaching 1 ton. By 1995, per capita cement consumption was an impressive 1,267 kg, about twice that of advanced countries such as those in Europe.

During this period, Ssangyong Cement achieved the remarkable feat of selling over 1 trillion won worth of cement and related products. Dongyang Cement (now Sampyo Cement) also surpassed a cumulative total production of 100 million tons. One hundred million tons of cement was enough to build 100 apartment complexes in Bundang, and if packaged in 40kg bags, it could circle the Earth 31 times?a tremendous amount.

At the end of 1997, when the International Monetary Fund (IMF) foreign exchange crisis began, per capita consumption peaked at 1.5 tons. The cement industry was at its peak, ranking 5th in the world by production volume after China, the United States, Russia, and Japan.

On November 25, 1990, Dongyang Cement opened the era of 8 million tons annual production. The photo shows the completion ceremony of 8 million tons at the Samcheok plant.
[Photo by Korea Cement Association]

Since the second half of 1987, domestic cement demand showed explosive growth, and the situation became even more urgent by the end of 1989 after the Olympics. Large-scale projects such as facility investments and housing increases due to the ongoing economic boom, finishing construction related to the Olympics, and large apartment complex construction continued, with demand in 1989 increasing by 7.7% year-on-year to 28.2 million tons.

In response, the cement industry entered an emergency production system in 1990, maximizing operating rates and shortening winter facility maintenance periods to prepare for the anticipated surge in demand. However, the increasing demand could not be met, and the government eventually approved the construction of new kilns (cement production facilities).

Domestic cement demand, which had increased by 8-10% annually from 25 million tons in 1988, peaked at 35 million tons in 1992-1993. Adding exports of 5 million tons, total demand was estimated at around 40 million tons. Demand was expected to gradually decline thereafter.

Considering that per capita cement consumption in the United States and Japan peaked at 740 kg and then gradually decreased, the industry generally believed that domestic demand would also peak at around 35 million tons. However, by 1992, when expansion projects were completed, production capacity had already exceeded 50 million tons.

During this period, the cement industry continuously promoted the upgrading and diversification of secondary cement products such as special cement, high-strength concrete piles, and dry mortar. Full-scale production of slag cement, a type of special cement, also began.

Early 1990s cement export handling scene.
[Photo by Korea Cement Association]

As the market for high value-added secondary products expanded significantly, competition for developing new special-function cement products intensified. Through such active business diversification efforts, Korea's cement industry overcame the period of oversupply and was able to maintain a solid footing even during the IMF financial crisis.

An official from the Korea Cement Association stated, "The glory of the cement industry as a core national infrastructure industry during the economic growth period lasted until 1997," adding, "Until the mid-1990s, the domestic cement industry had grown to rank 7th in the world in production capacity and 6th in exports, with demand exceeding supply. However, the unforeseen IMF foreign exchange crisis pushed the cement industry to the brink of collapse."