September 2024
South Africa: The Public Investment Corporation (PIC) has been steadily increasing its shareholding in cement producer PPC. It now owns a 25.1% stake. In March 2017, the PIC increased its shareholding in PPC to 15.1% and subsequently increased it further to 21.2% in October 2017.
Vietnam has nearly 1.5 times as much cement as it needs 06 November 2017
Vietnam: Vietnam sold 64.6Mt of cement in the first 10 months of 2017, a rise of 4% year-on-year compared to the same period of 2016, according to the Ministry of Construction. Of the sum, 49.3Mt was sold domestically, a 2% year-on-year rise, while 15.3Mt was exported, a rise of 2%.
In October 2017, local firms sold 6.2Mt of cement, including 4.7Mt of domestic sales, and 1.5Mt of exports. As of October 2017, Vietnam had 3.3Mt of cement and clinker inventory, mostly clinker.
At present, Vietnam’s cement output has reached 86Mt/yr, while domestic demand is estimated at only 60Mt. The country is thus predicted to face a surplus of 26Mt of cement overall in 2017, according to the Vietnam Cement Association (VNCA).
Beijing Triumph International Engineering to build US$160m cement plant in Uzbekistan 03 November 2017
Uzbekistan: Beijing Triumph International Engineering, a subsidiary of China National Building Material’s (CNBM), has signed a US$160m deal with Eurocement’s subsidiary Akhangarancement to build a new 3Mt/yr cement plant. The contract was signed during Russian Prime Minister Dmitry Medvedev's official visit to the Central Asian country, according to InterFax. The project will be completed by 2020. Eurocement chairman Filaret Galchev and Uzstroymaterialy chief executive officer (CEO) Botir Zaripov signed the agreement on project implementation during Medvedev's visit.
Akhangarancement operates a 2.2Mt/yr cement plant. It holds a 30% share of the Uzbek market. The plant also exports to Kazakhstan, Kyrgyzstan and Turkmenistan. Eurocement purchased a 75.5% stake of Akhangarancement in August 2006 and bought the remaining share in 2013. It originally signed a US$128m contract with China CAMC Engineering, a division of Sinomach, in 2014 for construction of a plant that was supposed to open in 2016. However, construction was subsequently cancelled.
Tanga Cement warns of profit drop in first half of 2017 03 November 2017
Tanzania: Tanga Cement has issued a profit warning for the first half of 2017. It expects its operating profit before interest and tax for the six months that ended on 30 June 2017 to be 125 - 135% lower than that achieved in the same period in 2016. The cement producer blamed the competitive local market leading to lower prices. It also attributed the profit loss to new competitors using imported clinker.
Workers launch global union network at HeidelbergCement 03 November 2017
Germany: Union delegates representing workers at HeidelbergCement have created a trade union network. Forty delegates from Europe, Middle East and North Africa, North America, Asia-Pacific and South Asia met in early November 2017 in Bremen. The meeting was organized by IndustriALL Global Union with support of the Friedrich Ebert Foundation, also involving IndustriALL‘s sister organisation Building and Wood Workers’ International.
“With the creation of the HeidelbergCement union network, we open the door to social dialogue if management is willing, and we hope union activists will contribute seriously to the promotion of workers’ rights and interests in the company. To this end, the steering committee will be in close interaction with the national unions. Finally, we strongly believe that HeidelbergCement will only win through workers’ active participation and engagement,” said Matthias Hartwich, director for materials industry at IndustriALL.
The meeting discussed recent developments in the cement sector and sustainability issues. The experience of global and national unions interacting with management at another big cement giant company, LafargeHolcim, was also raised. At the end of the meeting, delegates unanimously adopted a Bremen declaration and elected a steering committee for the network, which will coordinate the work in between its global meetings. No representative of the group’s global management attended the event despite being sent invitations.
Titan benefits from US market so far in 2017 02 November 2017
Greece: Titan Cement’s sales and operating profit have all benefited from growth in the US so far in 2017. The group’s net sales grew by 1.8% year-on-year to Euro1.14bn in the first nine months of 2017 from 1.12bn in the same period in 2016. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 4.6% to Euro215m from Euro205m.
In the US sales grew by 14% to Euro667m in the year to date, despite a poor third quarter due to disruption by hurricanes and other weather events. In the group’s Greece and Western Europe region, sales fell by 3% to Euro190m and earnings fell also. However, sales rose in Southeastern Europe by 10.5% to Euro173m although rising fuels costs dented its earnings. Market conditions remained ‘challenging’ in Egypt with demand for building materials in 2017 estimated to be about 8% below the previous year’s levels and prices still impacted by the low value of the Egyptian Pound. Overall, the group’s Eastern Mediterranean region saw its sales fall by 39% to Euro114m and earnings fell by 66% to Euro11.1m. Further issues were reported in Turkey due to competition but joint venture operations in Brazil saw faint improvements in the third quarter of the year.
Shree Cement wins coal auction in Chhattisgarh 02 November 2017
India: Shree Cement has won a coal linkage auction in Chhattisgarh. The coal will be used at the company's captive power plant at its Raipur cement plant.
Sweden: Denmark’s FLSmidth has completed its acquisition of Sandvik Mining Systems’ projects business except for the transfer of assets in South Africa, which is awaiting merger control clearance. The acquisition includes continuous surface mining and minerals handling technologies and competences that strengthen the group's core minerals business. The purchase is intended to increases FLSmidth’s coverage of the full mining value chain.
"With this acquisition we will be able to increase the productivity of the complete ‘Pit to Plant’ operation by better integrating upstream mining with downstream processing. The acquisition also allows us to digitalise the full value chain and enables a better utilisation of existing leading technologies by obtaining direct access to all key processes and equipment," said Manfred Schaffer, Group Executive Vice President, Minerals Division of FLSmidth.
The acquisition includes the part of Sandvik Mining Systems that is closest to the mine, which excludes Sandvik's conveyor component and its Finland based businesses. It includes all products for continuous surface mining, inpit crushing and minerals handling technologies and related intellectual property, including reference lists, drawings and data for installed base. The deal includes the transfer of over 200 employees from Sandvik. FLSmidth will also provide project management services to Sandvik on the majority of ongoing projects to be delivered during 2017 - 2019 period and parts and services for the installed equipment.
The closing of the acquisition in South Africa is expected to occur in early 2018.
Africa: FLSmidth says that a contract for a cement plant valued at more than Euro100m in an unspecified location in North Africa is now effective. The change in the project’s status follows the completion of carious conditions, including the receipt of a down payment for the work.
The order is in part a result of the partnership between FLSmidth and Beijing Triumph International Engineering Company, a company under the China National Building Material Group Corporation (CNBM Group), which will be responsible for the construction of the cement plant. The plant will mainly supply cement to the North African market. Once completed, the cement plant will have a capacity of 12,000t/day. The includes engineering, equipment supply, construction supervision, commissioning and training.
Jenisch hits the reboot button at LafargeHolcim 01 November 2017
Lots to mull over in LafargeHolcim’s third quarter results this week. Not least that the new guy is now in charge. Former Sika boss Jan Jenisch took over officially in September 2017. In his first financial statement, he said that the results did not represent the company’s ‘full potential.’ He then said that he had hit the reboot button to reset the group’s expectations to reflect the current market.
The group’s forecast for cement demand globally remains at an increase by 1 – 3% on average for 2017. This is no change from LafargeHolcim’s forecast in mid-2017. What has changed though is the anticipated growth in operating earnings in 2017 revised down to 5 – 7% year-on-year from 10% or higher. Expected measures of earnings per share and leverage have also been reduced. Underpinning this is a change to some of the volume and pricing assumptions for 2018. The group also said it was conducting a business review, including country strategies and a focus on simplification, cost discipline and performance management.
As any IT manager will tell you, when you have a problem with a computer you reboot the machine in the first instance as an easy fix. Jenisch’s version of this strategy will hopefully buy him some time to try and take charge of the company.
Previous chief executive officer (CEO) Eric Olsen was doing similar things since the formation of LafargeHolcim in 2015 to downsize the company into profitability whilst coping with too much cement production capacity worldwide. However, the on going Syria legal investigation forced the company to publicly accept some level of wrongdoing and it cost Olsen his job despite him having zero involvement or even knowledge of the affair. Meanwhile, rumours of continued boardroom clashes between major shareholders that have existed since even before the formation of the company resurfaced with the announcement in mid-October 2017 that chief financial officer (CFO) Ron Wirahadiraksa was leaving after less than two years in the role. As this column noted in May 2017 Jenisch might be exactly the right man for this particular job given his battles at Sika with that company’s controlling family’s wish to sell its stake and majority voting rights to Saint-Gobain.
Moving on, the group’s cement market outlook makes for sobering reading with growth above 2% only expected for Latin America and Asia Pacific regions in 2017. Even North America, the great white hope of cement industry growth in recent years, only has a forecast of 0 - 2%. Actual cement sales volumes in this region fell by 1.6% to 5.9Mt on a like-for-like basis so far in 2017 due to hurricanes and other bad weather events, with ‘cautious’ private and public investment giving an effect too. Incidentally, the Portland Cement Association (PCA) downgraded its assessment of US growth this week too in its latest forecast. Worse still the Middle East Africa region is expected to drop by 2 – 4% due to poor economies in various local markets, notably in Algeria and Egypt. All of this pretty much fits the like-for-like growth of cement sales of 1.8% to 156Mt in the first nine months of 2017 that LafargeHolcim has reported. The surprise though is that Latin America is growing despite on-going problems in Brazil.
This then leaves the surprise message on the same day as the third quarter results release that LafargeHolcim is in talks with the board of South Africa’s PPC. Buying a major African cement producer like PPC doesn’t quite sit with the image of a company whittling itself down into profitability. Instead, it gives the impression that LafargeHolcim wants to dominate the African market ahead of the anticipated demographic cement consumption wave. PPC for its part, after flirtations with other bidders such as Dangote Cement, may simply be trying to raise its price in a bidding war.
Boardroom battles, sluggish global cement consumption, the Syrian legal probe, potential expansion plans in Sub-Saharan Africa and efficiency drives. And these are just the issues we know about! Jan Jenisch has a lot on his plate whatever happens next. Let’s just hope that when the reboot process finishes he doesn’t find himself looking at the construction company version of the ‘blue screen of death.’