September 2024
Dangote linked to PPC bid 11 September 2017
South Africa: Dangote Cement is considering making a bid for PPC. The interest of the Nigerian company could start a bidding contest for the South African cement producer, according to sources quoted by the Cape Times newspaper. Canada’s Fairfax Financial Holdings with AfriSam made an offer for PPC in early September 2017. However, PPC said that the offer was ‘undervalued.’ It also reported to shareholders that it had received two other offers. It is expected to present any offers it has received to shareholders in early October 2017.
Holcim US proposes solar unit for Hagerstown cement plant 11 September 2017
US: Holcim US has proposed a 10MW solar unit for its Hagerstown cement plant in Maryland. NRG Solar Hagerstown, a subsidiary of NRG Energy, will build the array and lease the site for 35 years, according to Herald-Mail Media. The solar unit could meet up to 20% of the plant’s annual power requirements and the project is expected to last for at least 20 years. Construction is scheduled to start in the second quarter of 2018 and it is planned to last up to five months. No value for the project has been disclosed.
RHI and Magnesita make sales ahead of merger 11 September 2017
Europe: RHI and Magnesita have announced divestment agreements ahead of their proposed merger. RHI has signed a contract with a European refractories supplier for an undisclosed sum regarding the sale of its dolomite business in the European Economic Area. The sale consists of the production sites at Marone in Italy and Lugones in Spain. Magnesita has entered into a definitive agreement with Intocast to divest its business related to the production and supply of magnesia carbon bricks produced at the company's Oberhausen plant in Germany for Euro20.3m. Both sales were required by the European Commission as part of the merger process.
“With the sale of the two sites, the combination of RHI with Magnesita is also still right on schedule,” said RHI’s chief executive officer Stefan Borgas with regards to his company’s divestments “We expect the confirmation by the European Commission in the near future.”
RHI signed a contract in August 2017 to sell its production sites at San Vito in Italy and Sherbinska in Russia that produce fused cast refractories for the glass industry. Production at the company’s plant at Aken in Germany was stopped in the first half of 2017 for an indefinite period. RHI plans to sell or close the plant to maintain its production utilisation rate across the business.
Long Son opens second production line at cement plant 08 September 2017
Vietnam: Long Son has started operating its second production line at its Long Son cement plant in Thanh Hoa province. Following the upgrade the unit has increased its cement production capacity to 5Mt/yr from 2.5Mt/yr, according to the Viet Nam News newspaper. Following the opening of the new line the site has become one of the largest cement plants in the country.
Mozambique government announces new cement plant for Niassa 08 September 2017
Mozambique: President Filipe Nyusi has announced that work on building a new cement plant in Niassa province will start later in 2017. The unit is expected to source many of its raw materials locally, such as limestone and clay, according to the Mozambique News Agency. Once operational the plant is expected to create over 500 jobs. The project follows the reopening of the Cuamba to Lichinga railway in late 2016.
McInnis releases distribution plan for Atlantic provinces of Canada 08 September 2017
Canada: McInnis, formerly McInnis Cement, has released details about its distribution plan for the Atlantic provinces. The company has acquired two CRH Canada-owned terminals allowing it to access markets in New Brunswick, Nova Scotia and Prince Edward Island. McInnis says it will honour the orders of the clients supplied through those terminals and integrate their current employees. In addition, McInnis has entered into an agreement with CRH Canada and will supply cement for its terminals at Long Pond, Argentia and Corner Brook in Newfoundland directly from McInnis plant in Port-Daniel – Gascons. Deliveries to Newfoundland will begin in the autumn of 2017.
“With the addition of these terminals to our network, we are now able to secure a solid position in this market” said Hervé Mallet, president and chief executive officer (CEO) of McInnis Cement.
The McInnis distribution network includes several facilities: marine terminals in Providence, Rhode Island and Sainte-Catherine, Québec were the first to be built and commissioned. The Oshawa terminal in Ontario has started operation in September 2017. A railway transshipment station in New Richmond, Québec is also operational, and the Bronx marine terminal in New York will join the network in 2018.
Loma Negra files for US$100m initial public offering 07 September 2017
Argentina/US: Loma Negra has filed for a US$100m initial public offering (IPO) on the New York Stock Exchange. The subsidiary of Brazil’s InterCement wants to sell shares of Loma Negra in Argentina and New York to raise cash and cut debt, according to sources quoted by Reuters. Proceeds from the offering will be used to reduce debts at InterCement’s parent company Camargo Correa. The Brazilian company originally purchased Loma Negra in 2005 for US$1bn.
West Bank case against CRH dismissed by court 07 September 2017
Israel: A US$34bn lawsuit by Palestinian activists against a group of businesses including CRH has been dismissed by a court in Washington DC. The activists had tried to sue various groups with connections to Israel for allegedly ‘profiteering’ from the building of Jewish settlements in the West Bank, according to the Irish Independent newspaper. CRH was targeted due to its former co-ownership of Nesher, which produced cement used by the Israeli government in the West Bank. Before it sold its 25% stake in the Israeli cement producer in late 2015 CRH had received protests at its annual general meeting.
Update on Kenya – September 2017 06 September 2017
ARM Cement’s declining fortunes this week may signal the end of the current growth cycle in the Kenyan cement industry. The cement producer posted a 20% year-on-year drop in its sales revenue to US$52m for the first half of 2017. Its financial returns have been turbulent since 2015. However, inward investment from the UK’s CDC Group in 2016 had appeared to help the company enabling it to pay of debts and even consider an upgrade project to the grinding capacity at its Athi River plant.
Graph 1: Cement production in Kenya for first half of year, 2013 - 2017. Source: Kenya National Bureau of Statistics.
Graph 2: Cement consumption in Kenya for first five months of year, 2013 - 2017. Source: Kenya National Bureau of Statistics.
Unfortunately it now appears that the Kenyan cement market may have peaked in 2016. As can be seen from Kenya National Bureau of Statistics figures in Graph 1 and 2, production hit a high of 3.31Mt in the first half of 2016 and it has fallen to 3.18Mt for the same period in 2017. Consumption too has fallen, to 2.5Mt for the first five months of 2017. At the same time the value of building plans approved by the Nairobi City Council dropped by 12% to US$1.02bn for the first five months of 2017 with falls in both residential and non-residential applications although the decline in residential was more pronounced. One of the country’s larger infrastructure projects, the Standard Gauge Railway from Mombasa to Nairobi entered its final stage of construction towards the end of 2016 with the completion of track laying.
Bamburi Cement has also reported falling revenue and profit so far in 2017. Its turnover fell by 8% to US$170 and its profit decreased by 36% to US$18m for the half year. Bamburi blamed it on a contracting market, low private sector investment leading to residential sector issues, delays in some infrastructure projects and droughts. The drought also hit the company’s operating profit via higher energy costs. On the plus side though Bamburi’s subsidiary in neighbouring Uganda did record a good performance.
It’s likely that the general election in Kenya in early August 2017 has slowed down the construction industry through uncertainty about infrastructure investment and general fears about political unrest. Thankfully these latter concerns have appeared unfounded so far but the memory of the disorder following the poll in 2007, where over 1000 people died, remains acute. And of course the 2017 election is not over yet following the intervention of the Supreme Court to nullify the result of the first ballot and call for a second. A longer election period with the impending rerun will further add to the pressure on the construction and cement industries.
An industry report on East Africa in February 2017 by the Dyer & Blair Investment Bank fleshes out much of the situation in the region. One particular point it makes though is that, as it stands at present, building materials may be too expensive to grow the market fully. Dyer & Blair suggest that lower construction costs and more affordable home ownership methods might be the key to driving low end housing demands and in turn this might grow cement consumption.
With lots of new production capacity coming online both locally and in neighbouring countries such as Uganda and Ethiopia, the Kenyan cement market faces the dilemma of trying to balance the medium to long-term demographics with the picture on the ground. Low per capita cement consumption suggests growing markets but if the demand isn’t present in the short term then the impetus for cement producers to expand shrivels especially with aggressive imports, rising energy costs and growing local competition. Once the election period finishes the picture will be clearer but the boom times may have abated for now.
Vicem appoints Bui Hong Minh as general director 06 September 2017
Vietnam: The Vietnam Cement Industry Corporation (Vicem) has appointed Bui Hong Minh as its general director. He was previously the deputy general director of the company, according to the Viet Nam News newspaper. He replaces Tran Viet Thang who has been relieved from the role following allegations of business malpractice.
Minh, aged 46 years, has held the position of deputy general director at Vicem since 2013. Prior to that, he worked at the But Son and Ha Tien cement companies.