![](/templates/proglobalmedia-main/images/globe-blue-whitebg.gif)
Analysis
Search Cement News
Between a wet and a dry kiln
Written by Global Cement staff
29 February 2012
A US environmental pressure group is reportedly claiming that Ash Grove has started the process to close two of its wet kilns in Midlothian, Texas. Ash Grove has retorted that the decision is not final yet.
The move fits with a new emissions timetable imposed by the Environmental Protection Agency (EPA) due to come into effect in 2013. Yet Ash Grove's response also suggests that it is keeping an eye on the impending Cement Sector Relief Act. Approved by the US House of Representatives in October 2011 with strong Republican support, if this bill makes it to law then the EPA will be forced to recind some of its existing rules concerning emissions from cement plants. This situation could help Ash Grove to manage its kiln investment. Either way, it's no wonder that Ash Grove hasn't committed yet.
All this democratic uncertainty contrasts rather nicely with the last missive from the Chinese Ministry of Information and Technology announcing more cement industry targets as part of the latest Five-year Plan. China's cement industry will source 65% of its electrical needs from waste materials by 2015. Simple! China is currently dealing with wet kilns in a similar fashion. They are being 'eliminated.'
Before we become too fixated on supposed Western decline, our third kiln-related story this week follows a test run at the Lafarge-Strabag plant in Hungary. Billed as one of the most environmentally friendly plants in Europe, the 1Mt/yr facility is due to be finished by 2015. Just in time for China's next Five-Year Plan.
Lafarge's lament
Written by Global Cement staff
22 February 2012
Lafarge's annual report summed up the European malaise this week: too much debt; too little growth.
The world's biggest cement company posted a Euro3m loss for the fourth quarter of 2011 compared to a Euro62m profit for the same quarter in 2010. Overall for the full year in 2011 its income fell by 28%. Yet all of this occurred in the same year that the group sold the bulk of its gypsum assets for over a quarter of a billion Euros! All of which went into the group's debt reduction of Euro2bn.
Compare this to 2010 when Lafarge recorded a 12% increase in net profit for the year and the group was expecting an increase in cement demand of 6%. Chief Executive Bruno Lafont's words were, "The steps we have taken in 2010, ranging from structural cost savings to strategic investments in growing markets such as Brazil will provide the foundation for further improvement and growth as we enter 2011."
6% growth did happen in 2011 but only in the emerging markets in the Middle East and Africa, Central and Eastern Europe, Latin America and Asia. Overall sales growth remained at 3%, dragged down by sales decreases in North America and western Europe. Understandably Lafarge's outlook for 2012 remains muted.
All this gloom was compounded by the UK Competition Commission raising its concerns about the joint-venture between Anglo-American and Lafarge. With Lafarge expecting 'higher pricing' for 2012 any move with even a whiff of anti-competitive behaviour will draw in the watchdogs. With western European sales down by 2% in 2011 the challenge remains for the group, and for all cement producers, to somehow find profit once more in the mature markets.
Playing the BIG game
Written by Global Cement staff
15 February 2012
It's official: Dangote Cement intends to build the 'biggest cement plant in the world' at Obajana, Nigeria by 2014! What exactly does this mean?
The news emerged at the opening of the company's new Ibese plant on Thursday 9 February 2012. Itself no minnow, the Ibese plant has a capacity of 6Mt/yr, boosting Dangote's production by 40% in Nigeria. Yet within the next two years Dangote plans to increase Obajana's capacity from 10Mt/yr to 15Mt/yr, making it the largest by installed capacity, according to company chairman Aliko Dangote.
Unfortunately Obajana's mighty ambition to meet 15Mt/yr looks miniscule compared to the total capacity of Anhui Conch Cement in China with its gargantuan 70Mt/yr from 36 dry kilns. Flicking through the Global Cement Directory 2012 reveals at least five plants with capacities over 15Mt/yr in Japan and China. Dangote likely meant 'capacity per kiln' but the comment reveals the variety of ways that scale in a cement plant can be determined.
Regardless, there is no question that Dangote's cement is needed. In January 2012 Global Cement Weekly reported Nigerian price rises of 25%. Around the same time of the Ibese opening Nigeria's National Bureau of Statistics reported that 60.9% of Nigerians in 2010 were living in 'absolute poverty', a rise from 54.7% in 2004. From national infrastructure improvements to jobs (as mentioned in our other Dangote news story this week from Zambia) 6Mt/yr of extra cement is sure to be welcome, especially if the extra capacity brings prices down to affordable levels.
Levelling the playing field?
Written by Global Cement staff
08 February 2012
The news that China is considering more stringent NOx emission regulations for cement plants is encouraging – and not just for the environment. Other cement industries, such as those in western Europe, have been subject to the most stringent environmental regulations on the planet for many decades now. Elsewhere, the US cement industry is currently locked in battle with the Environmental Protection Agency over stringent new emissions targets. Now it looks like China, with a cement capacity of ~2000Mt/yr and the highest share of CO2 emissions in the world, might be accelerating its progress down the 'green' route.
The new Chinese NOx regulations could reportedly see a third wiped off the cement industry's massive net profits by 2015 and cause 'huge pressure' for the industry according to the Chinese Vice Minister of Environment Protection. With most industries in China currently operating outside meaningful environmental limits, the move towards lower emissions in China is likely to be unpleasantly costly. Indeed China has already said that it is committed to closing the least efficient 33% of its cement capacity by 2015.
If new regulations go ahead and are effectively enforced, they will prompt Chinese producers to act locally while they close or improve their plants, diverting attention away from exports and expansion overseas. In the short to medium term, this will dampen the competitiveness of the Chinese industry and allow neighbouring countries some respite against Chinese exports. The move to clean up China's cement industry (and industries in general) will also require environmental know-how, something that established European and US-based companies are well placed to provide.
Another notable story this week comes from the US, where a concrete producer has recently been given the go-ahead to set up a captive cement plant. Ozinga Bros. Inc. says that if and when concrete demand returns to the US, it wants to be able to secure its own cement supplies. In the last boom it had to import cement from the Far East to fulfil its contracts, with crippling transport costs. Company owner Martin Ozinga IV described the plans as 'a survival move' – perhaps going against the grain is the only way for the company to survive.
Gunpoint negotiation
Written by Global Cement staff
01 February 2012
Spare a thought for your fellow cement workers this week as reports emerge of plant employees being forced back to work at gunpoint in Kenya and Chinese workers being kidnapped in Egypt.
The news that workers have been coerced with bullets is just one horror story from the ongoing soap opera that is the East African Portland Cement Company. Since the Kenyan government dismissed the directors in December 2011, over allegations of alleged mismanagement, progressively more murky disclosures have emerged. Although the latest reports suggest that all the 1200 permanent employees have now returned to work, the situation remains volatile. Anyone who thought that a judge could simply order the plant back to work because he said so has underestimated the situation.
On one side sit the directors who have already been sacked and reinstated by the government following accusations of non-competitive tenders and rampant expenses claims in December 2011. Running scared of their own employees, they now have to face the Maasai elders who supporting the directors by ordering the closure of the gypsum, limestone and pozzolana mines. On the other side is the Kenyan government which was legally forced to return the directors they dismissed. In the middle remain the workers, at work for now but for who knows how much longer.
By contrast the 25 mostly Chinese cement factory workers who have been kidnapped in Egypt's Sinai Peninsula may have had the best management in the world. Yet working internationally can bring risks such as political instability that are hard to predict.
Elsewhere in this issue of Global Cement Weekly, you can read about new plant plans in Indonesia, rampant overcapacity in Vietnam, soaring profits in Saudi Arabia and the news that Italcementi is likely to have to sack 7.5% of its workforce.