Cement firm bids a disgruntled farewell to Costa Rica

A cement producer that spent five years wrapped in red tape has called it quits.

The firm, Comercializadora de Concretos y Asfaltos S.A., took out full page ads in Spanish-language newspapers Monday to say that Costa Rica does not have a favorable climate for investment.

The firm operated here as Cementos David.

The company closed down its operations in San Rafael de Alajuela and is moving its machinery to Panamá, it said.

The dramatic decision by company officials is certain to give Costa Rica a black eye for international investments.

In its paid advertisement, the company said that it was founded in 2007 and needed 18 months to obtain required permits even though it rigorously respected Costa Rican laws. The firm said that its effort to obtain permits was aggravated by what it called persecution that included illegal closures and rejection of requests without reasons. The firm said that the Sala IV constitutional court finally ratified its operation but that there was a delay of 10 months in beginning business.

The company said that it also faced problems in importing the materials it needed and that government officials declined to correct this problem.

During the 18 months it was operating, the firm said it sold 4 million sacks of cement all over the country. The price of cement fell during this period. The cement supply is tightly controlled in Costa Rica by just two other firms.

The firm in its farewell ad said that it set up in an industrial zone and adopted the highest health and environmental standards.

The action that appears to have triggered the company’s exit was by the Tribunal Contencioso Administrativo which ordered that the company’s construction permits be voided and that the operation be closed. As a result of the decision the company, would have been obligated to begin more years of a judicial process that would generate high costs in an already competitive cement market, it said. Consequently, it said the judicial insecurity and the uncertainty forces the closing of the company.

The ad was signed by Alexandre Chueri Neto, company president.

The Tribunal Contencioso Administrativo is the same judicial body that voided the concession held by Industrias Infinito S.A., the subsidiary of a Canadian company, that is seeking to operate an open pit gold mine in north Costa Rica. The Tribunal’s role is to oversee the actions of government.

Spanish-language newspapers have repeatedly pointed out that a foe of the cement firm was Joyce Zürcher, who was mayor of Alajuela when Cementos David was seeking a business license. The newspapers noted that a close relative of the mayor works for Holcim, a competitor of Cementos David.

During its court appearances, Cementos David claimed to be battling what it called a duopoly. The other major cement marketer is Cemex. The Cementos firm acquired $20 million in startup capital. It’s sales efforts also were hurt by the decline in construction here as a result of the worldwide recession.

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