Displaying items by tag: Expansion

Uzbekistan: By the end of 2024, Uzbekistan will commission new cement production capacity of 8Mt/yr, according to the Uzsanoatkurilishmateriallari Association. This expansion will raise the country’s total capacity to 40.8Mt/yr.

Currently, there are 38 cement companies in Uzbekistan, contributing to an existing capacity of 35.3Mt/yr. From January to April 2024, the country produced 4.8Mt of cement, marking a 19% increase from the previous year, Uzbekistan Daily reports. The projected cement production for 2024 is 16.7Mt, closely aligning with last year's demand of 16.8Mt.

India: Dalmia Bharat has launched a new mill at its Ariyalur manufacturing unit in Tamil Nadu. The new 1Mt/yr cement unit increases the company's total manufacturing capacity to 45.6Mt/yr. This brownfield expansion is valued at US$24.5m and aligns with the company’s aim to increase its capacity to 110-130Mt/yr by 2031.

Managing director & CEO Puneet Dalmia said "Driven by robust infrastructure development, housing and investments, we anticipate cement demand to rise. This increased capacity will facilitate the growing demand in the southern region."

US: Eagle Materials will modernise and expand its Laramie, Wyoming cement plant, increasing its capacity by 50% to approximately 1.2Mt/yr. The expansion includes a new cement distribution facility in northern Colorado. This project aims to cut manufacturing costs by about 25%, generated by the replacement of traditional fuels with lower cost alternative fuels and natural gas, as well as improved operating efficiency. This upgrade will also reduce CO₂ intensity by nearly 20%, according to the company. The US$430m investment also includes upgrading the existing plant, which became operational in 1927 and currently has a capacity of 800,000t/yr. Construction is set to begin immediately, with completion expected in the second half of 2026.

Kenya: East African Portland Cement (EAPCC) has recommenced operations at its Athi River cement plant after a one-month shutdown for renovations and maintenance. The plant has undergone a US$3m upgrade to expand its capacity in order to meet the increasing regional demand for cement, anticipating an annual production of 1Mt/yr within the next two years. Before the upgrade, the plant’s capacity was 310,000t/yr.

Board chairperson Richard Mbithi said critical components used in cement production processes such as filter bags and refractory bricks were replaced during the upgrade. EAPCC also refurbished its grate cooler system, enabling the company to increase its production targets.

Mbithi said “With the finalisation of the plant refurbishment and the resultant improved production and efficiency, we are confident that the company will accomplish the production and revenue targets.”

The company undertook the first phase of maintenance two years ago and it involved the replacement of the kiln shell which was completed in September 2022. This led to improved clinker and cement production and resulted in a 38% increase in revenues, according to the Star Kenya.

Philippines: Phinma Corp is set to expand its cement business with new facilities in Mindanao, according to a spokesperson for the company. The producer will establish a cement plant in Davao, valued at US$34.7m, which will bring the company’s total capacity to 5Mt/yr once completed. The plant is currently awaiting its environmental clearance certificate.

Additionally, the Petra plant in Zamboanga del Norte has started operations, with a cement grinding capacity of 500,000t/yr.

Cemex announced this week that it is preparing to sells its operations in the Philippines to a consortium comprising Dacon, DMCI Holdings and Semirara Mining & Power. Rumours of the divestment first started to appear in the media in February 2024.

The main part of the deal covers Cemex’s cement subsidiaries, APO Cement and Solid Cement, which have been valued at an enterprise value of US$660m. However, this becomes confusing because the actual selling price is the enterprise value minus the net debt and adjusted for the minority shareholding of one of the parent companies, Cement Holdings Philippines (CHP). The deal also includes the sale of a 40% stake in APO Land & Quarry and Island Quarry and Aggregates. Based on a press release issued by CHP to the Philippine Stock Exchange, the actual cost of the divestment appears to be around US$305m. It is hoped that the divestment will complete by the end of 2024 subject to regulatory approval from the Philippines Competition Commission and other bodies.

Cemex entered the market in 1997 when it acquired a minority stake in Rizal Cement. It then built the business up to a cement production capacity of 5.7Mt/yr from its two main integrated plants, the Solid Cement plant in Antipolo City, Rizal and the APO Cement plant in Naga, Cebu. However, CHP has endured a hard time of late, with falling annual operating earnings before interest, taxation, depreciation and amortisation (EBITDA) since 2019 and falling net sales in 2022 and 2020. The bad news continued into 2023, with net sales falling by 17% year-on-year to US$300m in 2023 from US$356m in 2022. It reported a loss of US$35m in 2023, double that of 2022. The company blamed the fall in sales on lower volumes. It noted that prices were also down and energy costs had grown.

The three companies buying CHP are all controlled by the Consunji family so effectively DMCI Holdings is acquiring Cemex’s operations in the Philippines. The group focuses on construction, real state, energy, mining and water distribution. It previously announced in the late 2010s plans to build one integrated cement plant on Semirara and three cement grinding plants at Batangas, Iloilo and Zamboanga but these plans didn’t seem to go anywhere. Later it was linked to the proposed Holcim Philippines sale in 2019, although the subsidiary of Holcim eventually gave up on the idea.

This latest attempt to enter the cement business underlines DMCI Holdings’ intent and the group has immediately started saying what it plans to do next. In a statement chair and president Isidro A Consunji admitted that cement demand in the country was ‘soft’ but that it is expected to rebound due to the Build Better More national infrastructure program and an anticipated fall in internet rates. Consunji added, “We recognise CHP's operational and financial issues, but we are positive that we can turn it around by 2025 because of its ongoing capacity expansion and the clear synergies it brings to our group.” He was also keen to play up that CHP is currently building a new 1.5Mt/yr production line at its Solid Cement plant with commissioning scheduled by September 2024. DMCI plans to reduce CHP’s costs through various synergies including supplying it coal, electricity and fly ash from Semirara Mining & Power.

The acquisition of CHP by DMCI Holdings is the biggest shake-up in the local cement sector in a while. DMCI has long harboured ambitions in heavy building materials and now it’s close to becoming a reality. As evidenced by its statements following the official announcement of the deal it is already thinking ahead publicly to soothe shareholder concerns. What will be interesting to watch here is whether it can actually pull it off and whether it will face trouble from imports. Readers may recall that the Philippines cement sector has long battled overseas imports, particularly from Vietnam. Despite anti-dumping tariffs though the Cement Manufacturers Association of the Philippines (CEMAP) warned in January 2024 that workers could be laid off due to continued competition from imports. Good luck to DMCI.

India: JK Cement has inaugurated a US$341m new line at its Panna cement plant in Madhya Pradesh. The new line doubles the plant's capacity from 3.3Mt/yr to 6.6Mt/yr. Press Trust of India News has reported that the line is equipped with optimised kiln systems, energy-saving technologies and a waste heat recovery plant. The expanded Panna plant will help serve ‘growing demand’ in Central India, Uttar Pradesh and Bihar.

Managing director Raghavpat Singhania said "Our new Panna plant production line is a key pillar in our comprehensive business expansion plan, propelling us towards our vision of becoming a leading player in the cement industry. This strategic expansion allows us to meet the rising demand for high-quality cement, ultimately enhancing our ability to serve our customers.”

Changes are underway in South Asia’s second largest cement sector, with two legal developments that affect the industry set in motion in the past week. At a national level, the Competition Commission of Pakistan recommended that the government require cement producers to include production and expiry dates on the labels of bagged cement. Meanwhile, in Pakistan’s largest province, Punjab, a new law tightened procedures around the establishment and expansion of cement plants. At the same time, the country’s cement producers began to publish their financial results for the first nine months of the 2024 financial year (FY2024).

During the nine-month period up to 31 March 2024, the Pakistani cement industry sold 34.5Mt of cement, up by 3% year-on-year. Producers have responded to the growth with capacity expansions, including the launch of the new 1.3Mt/yr Line 3 of Attock Cement’s Hub cement plant in Balochistan on 17 April 2023. China-based contractor Hefei Cement Research & Design executed the project, including installation of a Loesche LM 56.3+3 CS vertical roller mill, giving the Hub plant a new, expanded capacity of 3Mt/yr.

Pressure has eased on the operating costs of Pakistani cement production, as inflation slowed and the country received a new government in March 2024, following political unrest in 2022 and 2023. Coal prices also settled back to 2019 levels, after prolonged agitation. Pakistan Today News reported the value of future coal supply contracts as US$93/t for June 2024, down by 2% over six months from US$95/t for January 2024.

Nonetheless, cost optimisation remained a ‘strong focus’ in the growth strategy of Fauji Cement, which switched to using local and Afghan coal at its plants during the past nine months. Its reliance on captive power rose to 60% of consumption, thanks to its commissioning of new waste heat recovery and solar power capacity. During the first nine months of FY2024, the company’s year-on-year sales growth of 14% narrowly offset cost growth of 13%, leaving it with net profit growth of 1%.

Looking more closely, the latest sales data from the All Pakistan Cement Manufacturers Association (APCMA) shows a stark divergence within cement producers’ markets. While exports recorded 68% year-on-year growth to 5.1Mt, domestic sales fell, by 4% to 29.4Mt. The association further breaks down Pakistani cement sales data into South Pakistan (Balochistan and Sindh) and North Pakistan (all other regions). Domestic sales dropped most sharply in South Pakistan, by 6% to 5.16Mt. In the North, they dropped by 3% to 24.2Mt. Part of the reason was a high base of comparison, following flooding-related reconstruction work nationally during the 2023 financial year. Meanwhile, the government finished rolling out track-and-trace on all cement despatches during the opening months of the current financial year, and commenced the implementation of axle load requirements for cement trucks. APCMA flagged both policies as potentially disruptive to its members’ domestic deliveries, amid a strong infrastructure project pipeline.

Pakistani producers suffer from overcapacity, but have established themselves as an important force in the global export market. They continue to locate new markets, including the UK in January 2024. Lucky Cement was among leading exporters overall, with a large share of its orders originating from Africa.

On 17 April 2024, the government of Punjab province set up a committee to assess new proposed cement projects, with the ultimate goal of conserving water. Falling water tables are considered a significant economic threat in agricultural Punjab. Besides completing an inspection by the new committee, proposed projects must also secure clearance from six different provincial government departments and the local government. While acknowledging the necessity of the cement industry, the government insisted that it will take legal action against any cement plant that exceeds water allowances.

Pakistan’s cement plants have grown in anticipation of a local market boom. Without this strong core of sales, underutilisation will remain troublesome, especially in North Pakistan where exposure is highest. At the same time, APCMA has given expression to the perceived lack of support affecting production and distribution. For an industry with expansionist aims, new restrictions on its growth and operations can feel like an existential menace.

India: Star Cement has launched a new clinker line at its Lumshnong, Meghalaya, cement plant. Capital Market News has reported that the line has a capacity of 3.3Mt/yr.

India: UltraTech Cement has concluded an agreement to acquire The India Cements’ 1.1Mt/yr Parli grinding unit in Maharashtra for US$37.8m. The plant will subsequently figure in a US$60.5m growth drive by the group, aimed at adding 3Mt/yr in new cement capacity in Maharashtra. Current on-going expansions and acquisitions are set to raise the Aditya Birla subsidiary’s capacity to 198Mt/yr.