Displaying items by tag: Cemex
UK Competition Commission talks tough
09 October 2013Well, it seems like they were serious.
The UK Competition Commission has provisionally decided that Lafarge Tarmac should sell off one of its cement plants in the Midlands. The Commission also wants the sale to exclude buyers from any pre-existing UK cement producer. The door is open from Holcim or CRH downwards to enter the UK market. Although if the enforced Lafarge sale of Hope to Mittal Investments in 2012 is indicative, it may well be to an industry outsider.
If the move goes ahead it will open up the Midlands and north of England from four cement producers - Hope Cement, Lafarge Tarmac, Hanson and Cemex - to five. Lafarge Tarmac's cement production capacity lead of nearly 4Mt/yr will be knocked down to nearer 3Mt/yr, putting it level with Hanson Cement's production capacity.
Unsurprisingly Lafarge Tarmac is not best pleased, putting out the following in response to the commission's announcement. "The Commission's assumptions and reasoning have serious flaws and the biggest loser in this process will be the customer. There is strong evidence to demonstrate there is effective competition in the sector – with new players having recently entered the marketplace."
The Commission also wants to increase competition in the supply chain for ground granulated blast furnace slag (GGBS). According to the Commission findings Hanson dominates the UK GGBS market and Lafarge Tarmac controls the market for its precursor, granulated blast furnace slag (GBS). So production facilities may need to be sold by both Hanson and Lafarge Tarmac.
As an aside it's worth noting that the Belgian Competition Council recently imposed fines due to anti-competitive practices also related to GGBS. Also, elsewhere in the news this week Irish GGBS cement producer Ecocem is aligning itself with the EU carbon roadmap to 2050, partly at least because its product produces less CO2 per tonne of cement. Whoever or whatever controls the supply of GGBS in the UK has implications for how emissions are lowered in the cement sector.
Other suggested measures from the Commission such as restricting the publication of UK cement market data seem problematic. Although it may make it more difficult for UK cement producers to collude it will also make it harder for related businesses (including press and industry analysts like Global Cement) to understand what is happening at any given time.
Finally, we have to ask what the effects of the Commission's suggestions might be at the start of an uncertain recovery in the UK construction market might be. According to the Minerals Production Association cement production fell from 8.5Mt in 2011 to 8Mt in 2012, the first decrease since 2009. 2013 seems set for modest growth on 2012. The implications of Commission's plans - if they happen – could be huge.
PCA stands by brighter US cement future
18 September 2013US cement consumption may have disappointed some in the first quarter of 2013 but solid growth lies ahead, according to the Portland Cement Association (PCA). Just how solid that growth will be remains open to interpretation.
PCA chief economist Ed Sullivan forecast 8% growth in cement consumption at the start of 2013. Now's its been halved to just 4%. Yet he's standing by the hint of good news ahead, upping the growth from 2014 to 9.7%.
Figures from the major US cement producers present a mixed picture. The major multinational cement producers mostly suffered from the weather in early 2013. Lafarge saw its cement sales in North America drop by 23% year-on-year for the first half of 2013 to 4.4Mt from 5.7Mt in the same period of 2012. Cemex's cement sales in the US rose by 3% but no specific figures were released. Holcim's cement sales in North America fell by 7% to 5Mt from 5.4Mt. HeidelbergCement's cement sales in the North America grew by 5% to 5.7Mt from 5.4Mt.
Of the rest, Texas Industries reported a rise in cement shipments of 29% to 2.23Mt from 1.73Mt for the six months to the 31 May 2013. Titan saw sales in the US rise by 10% to US$258m.
Preliminary United States Geological Survey data for June 2013 suggests that the increase in portland and blended cement shipments in the US slowed in the first half of 2013. In 2011 32.1Mt were shipped, in 2012 37.0Mt were shipped and in 2013 37.2Mt were shipped.
Meanwhile the construction figures US Department of Commerce mostly suggested growth but not without the odd jitter. Construction spending fell slightly in June 2013. Total construction spending adjusted seasonally fell by 0.4% to US$869bn due to a fall in non-residential construction. Since then though the July 2013 figure hit US$901bn, the highest since June 2009.
Accordingly, in his forecast Sullivan pins his hopes on the residential sector in the near term. It has seen consistent growth since October 2012. However other industry commentators, like the American Institue of Architects, have focused on poor growth in non-residential construction.
Let's hope Sullivan's got it right.
Czech-mate for Cemex?
04 September 2013Cemex's decision to head deeper into eastern Europe as part of the Cemex-Holcim asset swap announced this week suggests some nerve. Cement production levels started to fall in the region from 2012, according to Cembureau figures, with continued problems reported so far by the multinational cement producers in 2013. Cemex seems likely to lose money from the start with its new assets in the Czech Republic.
In more detail, Cemex will acquire all of Holcim's assets in the Czech Republic, which include a 1.1Mt/yr cement plant, four aggregates quarries and 17 ready-mix plants. In return Holcim will give Cemex Euro70m and Cemex will give Holcim its assets in western Germany including one cement plant and two grinding mills that encompass a total capacity of 2.5Mt/yr, one slag granulator, 22 aggregates quarries and 79 ready-mix plants.
Cemex must believe that it can wait out the recovery of the construction sector in eastern Europe or make savings from having a more easterly spread of assets. Certainly Cemex said in its press release on the asset swap that its earnings before interest, tax, depreciation and amortisation (EBITDA) would start to rise from US$20m to US$30m from 2014.
The question for the buyers at Cemex who considered this deal is whether the construction market has bottomed out in the Czech Republic yet. According to World Bank figures, following the 2008 financial crisis Czech Gross Domestic Product (GDP) fell to a low of US$197bn in 2009, rose again until 2011 but then fell to US$196bn in 2012. Currently the Czech National Bank is anticipating a further fall in growth in 2013. Meanwhile, data from a third quarter 2013 Czech construction sector analysis by CEEC Research reported that a drop of at least 4.7% was expected in 2013 with a follow-on decline of 2.7% in 2014.
Possibly one deal-maker for Cemex was the prospect of combined operations with Holcim in Spain across cement, aggregates and ready-mix. Similar to the Lafarge-Tarmac joint-venture in the UK, the move offers reduced risk in a declining western European market. How the Spanish competition authorities will respond remains to be seen. Elsewhere on the continent this week the decision by the Belgian Competition Council to fine the Belgian cement sector shows an example of behaviour the Spanish authorities will want to avoid.
Holcim and Cemex to swap assets in Europe
29 August 2013Europe: Mexican cement producer Cemex and Swiss multinational cement maker Holcim have announced that they have reached an agreement to conduct a series of transactions in Europe. The transactions will are expected to be complete in the final quarter of 2013, subject to regulatory approval.
Cemex will acquire all of Holcim's assets in the Czech Republic, which include a 1.1Mt/yr cement plant, four aggregates quarries and 17 ready-mix plants.
Cemex will sell its assets in the western part of Germany to Holcim, which include one cement plant and two grinding mills that encompass a total capacity of 2.5Mt/yr, one slag granulator, 22 aggregates quarries and 79 ready-mix plants. Cemex will retain its interests in other parts of the country.
In Spain, Cemex and Holcim will combine all their cement, ready-mix and aggregates operations. Cemex will have a 75% controlling interest over the combined operational assets and Holcim will control 25%.
As part of these transactions, Holcim will pay Cemex Euro70m in cash. Additionally, the transactions are expected to generate synergies that will result in a recurring improvement in Cemex's EBITDA (earnings before interest, tax, depreciation and amortisation) of US$20-30m, which will begin to be realised in 2014.
"When finalised, this will be an important strategic step that should allow Cemex to improve its footprint in Europe and it will consolidate our portfolio in the continent," said Lorenzo H Zambrano, Chairman and CEO of Cemex.
"This transaction will significantly strengthen our presence in Germany while at the same time giving us the necessary flexibility in Spain," said Holcim CEO Bernard Fontana. "Overall, our footprint in Europe will be considerably strengthened."
Mexico: Cemex has reported that consolidated net sales reached US$4.0bn during the second quarter of 2013, an increase of 4% compared to the comparable period of 2012.
Operating earnings before interest, tax, depreciation and amortisation (EBITDA) also increased by 4% year-on-year during the quarter to US$730m. Adjusting for the higher number of business days in its operations during the quarter, consolidated net sales improved by 2% and operating EBITDA increased by 2% year-on-year. Operating earnings before other expenses, net, during the second quarter increased by 24% to US$451m. Cemex said that an increase in consolidated net sales was mainly due to higher prices in local currency terms and higher volumes in most of its regions. However, controlling interest net income was a loss of US$152m, an improvement over a loss of US$187m during the same period of 2012.
Fernando A González, executive vice president of finance and administration, said, "We are pleased to report that this is the eighth consecutive quarter with year-over-year improvement in EBITDA. We also saw an increase in our consolidated prices in local-currency terms for cement, ready mix and aggregates during the quarter. On the cost side, our alternative fuel substitution initiatives remain a very high priority. On a consolidated basis, our alternative fuel utilisation reached 28% during the quarter. In addition, we are implementing targeted cost-reduction initiatives in Mexico and northern Europe, which we expect will result in savings of about US$100m during the second half of 2013."
Net sales in Cemex's Mexican operations increased by 2% year-on-year in the second quarter of 2013 to US$847m. Operating EBITDA decreased by 17% to US$250m. In the United States, Cemex reported net sales of US$868m for the quarter, up by 9% year-on-year compared to the 2012 quarter. Operating EBITDA increased to US$80m in the quarter, compared to US$27m in the same quarter of 2012. Cemex's operations in South, Central America and the Caribbean reported net sales of US$561m during the second quarter of 2013, representing an increase of 6% over the same period of 2012. Operating EBITDA increased by 12% to US$211m in the second quarter of 2013, from US$189m in the 2012 quarter.
In Cemex's Northern Europe region, net sales for the second quarter of 2013 decreased by 1% to US$1.09bn, compared with US$1.1bn in the second quarter of 2012. Operating EBITDA was US$108m, 11% down year-on-year. Second-quarter net sales in the Mediterranean region were US$400m, 4% higher compared with the US$384m taken during the second quarter of 2012. Operating EBITDA in this region decreased by 2% to US$94m.
Operations in Asia reported a 14% increase in net sales for the second quarter of 2013 at US$162m. Operating EBITDA for the quarter was US$38m, up by 29% from the same period in 2012.
China: Hebei Jintaicheng Building Materials Shareholding Co. has ordered a Loesche vertical roller mill from Loesche Mills (Shanghai) to grind granulated blast furnace slag.
Hebei Jintaicheng has ordered a LM 4600CS2 that will produce up to 90t/hr with 4500 Blaine. The mill drive will have a capacity of 3150kW. The contract was signed in December 2011, the components have been delivered and the mill is currently being installed.
Hebei Jintaicheng, a building materials processing private enterprise founded in 2009, is located in the industrial area of Baita County, Shahe City. The company produces and sells ground granulated blast furnace slag. The project has a planned output of 500,000t/yr of ground granulated blast furnace slag.
It's been a cold and rainy 'summer' so far in 2013 in the UK. So much so that crowds at the Glastonbury Music Festival watching the Rolling Stones this weekend were lucky they didn't get drenched during 'Jumpin' Jack Flash.' However, cement producers around the world are increasingly tackling the opposite problem as they concentrate on water conservation measures.
As we see this week, the Cement Manufacturers' Association of the Philippines (CeMAP) has started advocating the use of rainwater for cement production. According to figures put out by CeMAP, an average dry-process cement plant uses 100-200L of water per tonne of clinker produced. The Philippines uses around 3.2BnL/yr of water for its cement production capacity of 21Mt/yr, which operated at an 85% capacity utilisation rate in 2012. A simple calculation reveals a water usage rate of 179L/t of cement produced in the Philippines. Though close to the top of CeMAP's dry-process water use range, it is actually less than some of the multinational cement producers (see below).
Water conservation among multinational cement producers has become increasingly high-profile in recent years. In January 2013 Cemex announced that it had developed a methodology to standardise water measurement and management across all of the company's operations. This followed a three year partnership between Cemex and the International Union for Conservation of Nature (IUCN). In its 2012 Sustainability Report Cemex reported that 12% of its cement operations were in water-scarce or water-stressed locations. Its water consumption for cement was 305L/t. This compares to Holcim's water consumption for cement of 260L/t in 2012.
Other multinational cement producers have put into place similar measures. Lafarge started to assess its 'water risk' in 2011. It found that 25% of its cement production sites were located in areas of water scarcity or high water scarcity, based on 2025 projections of annual renewable water supplies per person. A follow-up with the WWF Water Risk Filter (WRF) continued the assessment, identifying 15 Lafarge cement sites as being located in 'high-risk' basins, with 10 particular sites identified in Pakistan, India, Algeria, Mexico, Jordan, China, South Africa, Iraq and Uganda.
It is worth noting here that most of these countries are currently growth areas for cement demand and so producers with plans to expand in these regions need to tread a careful line. Cement makers that use vast amounts of water in water-scarce regions will be less desirable neighbours for local populations than those that use less water. This, like consumer and regulatory pressures in developed markets, could turn into a major driving factor for improved environmental performance in developing regions. Investing in water conservation measures therefore appears to make sense socially, environmentally and (ultimately) economically.
Cemex launches Cemex Global Solutions
03 July 2013Mexico: Cemex has launched Cemex Global Solutions, a service that the company says 'leverages over a century of industry-leading expertise' to provide customers with the best value proposition in a full range of technical services for the cement, ready-mix concrete and aggregates industries.
Cemex Global Solutions is available around the world, with ongoing projects in several countries. By using the best practices and innovations from the company's Research and Development Centre in Switzerland and extracting value from its expertise as a top cement, ready-mix concrete and aggregates company, Cemex Global Solutions is expected to provide state-of-the-art technological support across the entire building materials manufacturing process, from plant design and conceptualisation to expanding capacity and upgrading equipment. This service reinforces Cemex's commitment to suiting its customers' needs by providing them with reliable and cost-efficient solutions.
"We have an unparalleled team of experts with experience throughout the building materials value chain strengthened by our cutting-edge research and development centre," said Hugo Bolio, Cemex Vice-President of Global Technology and Safety. "From feasibility studies to plant management and optimisation, we believe that by offering integrated solutions, we can provide our customers with more reliable and higher quality services."
Dominican Republic: The Dominican Association of Cement Producers (Adocem) swore in Carlos Gonzalez as its president for 2013 – 2014. Gonzalez, who is also president of Cemex in the country, joins Gabriel Ballestas of Cementos Argos as treasurer and Jose Caceres of Cementos Cibao as secretary.
Philippines: Cemex Philippines has announced that it will undertake a US$60m expansion at its APO Cement Plant in Cebu to increase its production capacity by 1.5Mt/yr. The plant currently has a production capacity of 2.9Mt/yr. It wants to keep pace with the rapid growth of the Philippines market. It is also expanding its Antipolo plant, which currently has a mixture of dry and wet process kilns.
Cemex Philippines has supplied cement to numerous road paving projects in the country, which is rapidly developing. Its president Pedro Palomino said, "All industries, all sectors of an economy, rely on a country's infrastructure to support their economic activities. Factors such as reliable transportation and communication networks ensure smooth business operations, that products and services are delivered efficiently, on time and at competitive costs."