Displaying items by tag: HeidelbergCement
Georgia: HeidelbergCement Caucasus (HCC) and the Georgian Building Group (GBG), a subsidiary of Kavkaz Cement, have formed the Georgian Cement Association. The association intends to focus on the quality of cement sold in the country and to create a publicly-recognisable seal of quality.
Domestically produced cement will be sampled in blind tests from product purchased from the open market. Testing shall be conducted primarily by an independent and neutral laboratory, such as the Georgian Technical University, and reconfirmed by parallel testing. Additionally, the Chamber of Commerce and industry of Georgia will supervise the process. The goal of the association is to create a respected and well-recognised ‘Good Quality Seal’ that only members will be able to use on packaging and in advertising.
Other aims of the association include working with the government and appropriate official bodies to tackle industry relevant issues and to promote the industry generally through the creation of jobs and economic growth.
UK: Hanson is spending Euro29m on upgrades at its Ribblesdale cement plant in a seven-year project to improve production efficiency and emissions. In the first six months nearly Euro13m will be spent on improvements and maintenance to enable the plant to meet new dust emission regulations. This is the biggest investment programme at the site since the 1990s and includes a Euro2m replacement of the filters on two cement mills.
“The permitted dust level is being reduced by 66% in April 2017, from 30mg/m2 to 10 - the new equipment will perform better than this,” said plant manager Terry Reynolds. He added that the filters will run well below the new maximum dust emission levels after the installation
The plant will spend Euro7.5m, its largest investment, towards replacing its wet gas scrubber in March 2017. In addition, 75m of ducts have been replaced at a cost of Euro440,000 during a shutdown in January 2017 as part of a five-year improvement plan for the site’s exhaust gas handling system.
Ribblesdale employs 116 people and is supplied by two on-site quarries worked by an 11-person team and a team of contractors managing the loading and hauling of quarry materials. The cement plant has produced cement for projects including the Manchester International Airport, Heysham nuclear power station, Manchester United football stadium, Liverpool’s Roman Catholic cathedral and also now for Hinkley Point C nuclear power station.
Georgia: Gebr Pfeiffer has received an order to supply a mill for HeidelbergCement Group’s Kaspi plant. The vertical roller mill will be used in a new 3000t/day kiln line at the site. The order was placed through the China’s Sinoma Chengdu in November 2016.
The type MPS 4000 B mill, equipped with a SLS 3750 B type classifier, has been designed for a capacity of 270t/hr of raw meal. The mill will be delivered with an enlarged housing to allow the raw material with a moisture of up to 10% to be dried almost exclusively with the available preheater gases.
Commissioning of the plant is scheduled for 2018.
HeidelbergCement buys Italcementi
Undeniably the big story of the year, HeidelbergCement has gradually acquired Italcementi throughout 2016. Notably, unlike the merger of Lafarge and Holcim, the cement producer has not held a party to mark the occasion. Instead each major step of the process has been reported upon incrementally in press releases and other sources throughout the year. The enlarged HeidelbergCement appears to be in a better market position than LafargeHolcim but it will be watched carefully in 2017 for signs of weakness.
LafargeHolcim faces accusations over conduct in Syria
The general theme for LafargeHolcim in 2016 has been one of divestments to shore up its balance sheet. However, one news story could potentially sum up its decline for the wider public. In June 2016 French newspaper Le Monde alleged that Lafarge had struck deals with armed groups in Syria, including so-called Islamic State (IS), to protect its assets in 2013 and 2014. LafargeHolcim didn’t deny the claims directly in June. Then in response to a legal challenge on the issue mounted in November 2016 its language tightened to statements condoning terrorism whilst still allowing some wriggle room. As almost all of the international groups in Syria are opposed to IS, should these allegations prove to be true it will not look good for the world’s largest cement producer.
China and India balance sector restructuring with production growth
Both China and India seem to have turned a corner in 2016 with growing cement production and a generally more upbeat feeling for the industries. Both have also seen some high profile consolidations or mergers underway which will hopefully cut inefficiencies. China’s focus on its ‘One Belt, One Road’ appears to be delivering foreign contracts as CBMI’s recent flurry of orders in Africa attests although Sinoma’s equipment arm was losing money in the first half of 2016. Meanwhile, India may have damaged its own growth in the short term through its demonetisation policy to take high value Indian rupee currency notes out of circulation. In November 2016 cement demand was believed to have dropped by up to half as the real estate sector struggled to adapt. The pain is anticipated to carry on until the end of March 2017.
US industry growth stuck in the slow lane
The US cement industry has failed to take off yet again in 2016 with growth lagging below 5%. The United States Geological Survey (USGS) has reported that clinker production has risen by 1% in the first ten months of 2016 and that it fell in the third quarter of the year. In response, the Portland Cement Association (PCA) lowered its forecasts for both 2016 and 2017. One unknown here has been the election of President-elect Donald Trump and the uncertainty over what his policies might bring. If he ‘goes large,’ as he said he wants to, on infrastructure then the cement industry will benefit. Yet, knock-on effects from other potential policies like restricting migrant labour might have unpredictable consequences upon the general construction industry.
African expansion follows the money
International cement producers have prospered at the expense of local ones in 2016. The big shock this year was when Nigeria’s Dangote announced that it was scaling back its expansion plans in response to problems in Nigeria principally with the devaluation of the Naira. Since then it has also faced local problems in Ghana, Ethiopia and Tanzania. Its sub-Saharan competitor PPC has also had problems too. By contrast, foreign investors from outside the continent, led by China, have scented opportunity and opened their wallets.
Changes in store for the European Union Emissions Trading Scheme
A late entry to this roundup is the proposed amendment to the European Union (EU) Emissions Trading Scheme (ETS). This may entail the introduction of a Border Adjustment Measure (BAM) with the loss of free allowances for the cement sector in Phase IV. Cembureau, the European Cement Association, has slammed the changes as ‘discriminatory’ and raised concerns over how this would affect competitiveness. In opposition the environmental campaign group Sandbag has defended the changes as ones that could put a stop to the ‘cement sector’s windfall profits from the ETS.’
High growth shifts to Philippines and other territories
Indonesia may be lurching towards production overcapacity, but fear not, the Philippines have arrived on the scene to provide high double-digit growth on the back of the Duterte Infrastructure Plan. The Cement Manufacturers Association of the Philippines (CEMAP) has said that cement sales have risen by 10.1% year-on-year to 20.1Mt in the first three quarters of 2016 and lots of new plants and upgrade projects are underway. The other place drawing attention in the second half of the year has been Pakistan with cement sales jumping in response to projects being built by the China-Pakistan Economic Corridor.
Global Cement Weekly will return on 4 January 2016
US: HeidelbergCement has completed the sale of its Martinsburg, West Virginia cement plant and eight related terminals to Cementos Argos. With the finalisation of the sale the group has now met all the obligations with regards to its acquisition of Italcementi.
“With the disposal of the US assets we fulfil the obligation of the Federal Trade Commission and improve the net financial position of HeidelbergCement after the acquisition of Italcementi,” said Bernd Scheifele, chief executive officer of HeidelbergCement.
HeidelbergCement and Cementos Argos announced the sale in August 2016. The transaction purchase price was US$660m on a cash and debt-free basis. The FTC approved the agreement in November 2016.
Morocco’s Directorate of Financial Studies and Forecasting has reported that cement sales rose by 8.4% year-on-year in October 2016. It's good news for a local cement industry that saw its sales fall from 16.1Mt in 2011 to a low of 14.1Mt in 2014. Sales picked up slightly in 2015 and it looks like the same is going to happen again in 2016. Data from the Moroccan Cement Association (APC) support this with consumption of cement very slightly higher for the first nine month for 2016. Good sales figures in October can only help.
Graph 1: Cement consumption for the first nine months of the year, 2013 – 2016. Source: L’Association Professionnelle des Cimentiers du Maroc.
2016 has also been an interesting time for the Moroccan cement industry due to consequences of the merger and acquisition activity by the multinational producers that operate there. In March 2016, amidst a slew of divestments, LafargeHolcim made a point of announcing that it was holding on to its cement businesses under Lafarge Maroc and Holcim Maroc and enlarging them with its local partner SNI to form LaafrgeHolcim Maroc. The deconsolidation of Holcim Maroc picked up a net gain before taxes of Euro219m for a total consideration of Euro463m, which should considerably add to the group’s cash proceeds.
It managed to avoid being forced to sell off assets by the local competition body when it merged in 2014 due to its relatively low stakes in its companies. Today it has a production capacity of 13.2Mt/yr from seven integrated cement plants or over half the country’s production capacity. In its annual report for 2015 LafargeHolcim said that its cement business saw its results improve, mitigating problems in its aggregate and ready-mix concrete markets. This was followed by good results in the first half of 2016. New projects in the pipeline include plans to build a cement plant in Agadir and a grinding plant in Laâyoune in Western Sahara.
2016 has also seen the acquisition of Morocco’s second largest cement producer, Ciments du Maroc, by HeidelbergCement as part of its purchase of Italcementi. It’s too soon for HeidelbergCement to have reported upon the territory in its first integrated quarterly financial report following the takeover but it did describe Morocco as a having a ‘high growth potential.’ How these assets fit into the wide portfolio of HeidelbergCement’s new production base will be interesting. Ciments de l’Atlas’ (CIMAT), the country’s third largest and local producer, saw its sales fall slightly to Euro124m in the first half of 2016. However, its net profit rose by 13% year-on-year to Euro30m.
The other story of note in recent months in Morocco has been the public outcry against a shipment of refuse-derived fuel (RDF) from Italy in June 2016 destined for a cement plant in Casablanca. The subsequent protests saw waste imports to be suspended, leading Hakima al-Haiti, the government minister at the heart of the affair, to describe the furore as causing damage to the country’s economy in the aftermath. However her opponents rallied under the phrase “Nous ne sommes pas une poubelle” or ‘We are not a trash can.’ Despite this setback for the secondary fuels market, LafargeHolcim highlighted the work its Ecoval waste processing subsidiary has been conducting producing RDF at its Oum Azza site ahead of the Climate Change Conference of the Parties held in Marrakech in mid-November 2016. Although the key difference here is that Ecoval is generating RDF from local waste streams not importing them.
Perhaps as a sign of the growth potential Morocco may hold, this week, a non-cement producer was revealed to be planning to build a cement plant at Tarfaya. Previously the company, Global Oil Shale, had intended to develop shale oil resources at the site but it has switched its plan to constructing a 1.6Mt/yr cement plant instead and hired Luis Verde, a former technical director at Cemex who has also worked for Dangote. Together with the Lafarge project in Laâyoune and the Ciement Sud (CIMSUD) plant also in Western Sahara due to open in mid-2017 it suggest that the investors smell opportunity.
Germany: HC Trading and Interbulk Trading have merged their operations to form HC Trading, following the acquisition of Italcementi by HeidelbergCement. The merger will continue the group’s international trading activities, specialising in cement, clinker, coal and petroleum-coke by expanding the trade network and improving its position in the market. The total turnover of the new trading company will be around US$1.4bn.
“We trust that, by having an enlarged geographic reach as well as an expanded product portfolio, we will be able to further enhance our efficiency to better serve the market and our business partners,” said Emir Adiguzel, the chief executive officer of HC Trading. He added that the group intends to use idle capacity from former Italcementi plants to meet demands from import facilities in Africa, North America and South East Asia.
The other shock news from the US last week was LafargeHolcim’s poor cement sales volumes in North America so far in 2016. HeidelbergCement’s third quarter financial results followed and they give us an opportunity to compare the fortunes of the world’s two largest cement producers either side of a high profile merger.
Graph 1 - Changes in cement sales volumes for LafargeHolcim, HeidelbergCement and selected European multinational producers in the first three quarters of 2016 compared to the same period in 2015 (%). Data labels are the volumes reported in 2016. Source: Company reports.
Graph 1 shows the effect of HeidelbergCement’s completion of its acquisition of Italcementi in mid-October 2016. Now that the purchase is complete its sales volumes have taken a whopping 20% boost to 73Mt. LafargeHolcim by comparison is struggling to hold sales. Although do note the difference in sales volumes between the two largest cement producers in the world. LafargeHolcim has sold nearly 2.5 times the amount of cement as HeidelbergCement so far in 2016.
Graph 2 - Changes in sales revenue for LafargeHolcim, HeidelbergCement and selected European multinational producers in the first three quarters of 2016 compared to the same period in 2015 (%). Data labels are the sales reported in 2016. Source: Company reports.
The point to take away from Graph 2 is the huge difference turbulent currency exchange rates are having on the financial returns of these companies. Like-for-like reporting of sales revenue hasn’t helped LafargeHolcim to grow but it is making a big difference to the sales of Cemex and Vicat.
Focusing on LafargeHolcim, the group has had a tough time of it so far in 2016 with falling cement sales volumes and falling sales revenue year-on-year on both a straight comparison basis and like-for-like one. Like many European cement producers negative currency effects have plagued its financial reporting. However, unlike many of its European-based competitors its like-for-like sales figures have also declined.
Particular problems have been noted in Nigeria as well as Brazil, Indonesia and Malaysia. It has managed to keep its profit indicators such as earnings before interest, taxation, depreciation and amortisation (EBITDA) mostly rising through the first three quarters of 2016 on a like-for-like basis. Yet, to give an idea of the effect fuel supply problems had in Nigeria in the third quarter of 2016 on the group’s entire bottom line, excluding Nigeria from its results would have seen its adjusted operating EBITDA rise significantly. With regard to the rest of the world, cement sales volumes have fallen in every one of the group’s territories so far in 2016 including, worryingly, its North America region. Here, falling cement sales volumes have been blamed on delays to infrastructure projects and bad weather.
By contrast, HeidelbergCement has reported rising sales revenue and profit indicators such as earnings before interest and taxation (EBIT) although its profit has fallen. Most of the good financial cheer has been derived from the new Italcementi assets although most of its territorial cement sales revenues have grown even when the effects of the new purchase have been excluded. The exception has been Africa where the group mentioned problems in Ghana due to local competition and imports.
The comparison between the world’s largest European-based cement producers is stark. LafargeHolcim made a big show of announcing the merger between Lafarge and Holcim in mid-2015. Today it is battening down the hatches as its tries to claw profit from asset sales and synergy savings. HeidelbergCement almost casually announced that it had finalised its acquisition of Italcementi in October 2016 and it has proceeded to rack up the profits at its first subsequent financial report. However, HeidelbergCement may be waiting for the regulators to finish approving parts of the deal before it makes a final announcement. For example, the Federal Trade Commission only approved the sale of various US assets on 15 November 2016. Meanwhile, the credits ratings agencies passed their own judgement when Standard & Poor upgraded its rating of HeidelbergCement earlier this week.
LafargeHolcim remains a much larger company than HeidelbergCement despite the problems it is facing so provided it can keep the investors happy it should be fine as its whittles itself down to a more sustainable shape. To this end the Swiss press has been speculating whether chief executive officer Eric Olsen will announce job cuts and plant closures at an investors meeting on 18 November 2016.
Federal Trade Commission approves request by HeidelbergCement and Italcementi to sell Martinsburg cement plant16 November 2016
US: The Federal Trade Commission (FTC) has approved an application from HeidelbergCement and Italcementi to sell the Essroc cement plant in Martinsburg, West Virginia, eight cement terminals in the mid-Atlantic region and related assets to Argos USA, a subsidiary of Cementos Argos. The divestiture was required by the FTC’s August 2016 final order settling charges that the US$4.2bn merger of HeidelbergCement and Italcementi would be likely to harm competition in five regional markets for cement in the US. The Commission vote to approve the divestiture was 3-0.
Togo/Benin: Bharat Heavy Electricals (BHE) has been awarded an order by Norway’s Scancem International, part of Heidelberg Cement group, to supply motors for Ciments Du Togo and Cimbenin. The motors will be manufactured and supplied by BHE's Bhopal plant.