Sand and gravel prices set to rise by up to 60%

A quarry operator has warned that the price of delivered sand and gravel may rise by as much as 60% to cover the cost of operational and regulatory pressures and, as in the steel market, these increases will be more frequent.

Anxiety is growing as reserves continue to fall and fewer permits are being granted for new sites. There is also concern that the proposals set out in the Planning White Paper will substantially increase the cost of applications.

Todd Hannigan, UK commercial director at Hanson, told CJ: "We have sent a letter to customers warning them that there will be significant increases in January.

"Aggregates currently sell for £12 to £14-a-tonne delivered, but this needs to be taken up to £20 a tonne."

Hannigan said the market is undervaluing aggregates and that producers will be forced to increase prices further to cover the cost of planning and environmental pressures.

"Prices are not high enough to cover the cost of opening a new mine," he said. "Nowadays we can only get sites leasehold and we need to spend a considerable amount gaining permits and satisfying environmental demands."

He predicted that in the South East, where reserves are rapidly declining, prices will increase rapidly, while more stable areas such as north Scotland will be less affected. These increases, combined with the higher cost of cement, will have a knock-on effect on ready-mix concrete.

"The price of ready-mix hasn't moved forward a great deal in the past five years eventually this has to turn," Hannigan continued.

"Contractors will have to get used to regular increases in aggregates, ready-mix and asphalt - like they have with steel - and make similar allowances."

Jerry McLaughlan, director of public affairs and market information at the Quarry Products Association, commented: "There is no doubt cost pressures are coming through. It is entirely reasonable to suggest that because of some underlying cost, prices will increase."