September 2024
Philippines: The Philippine Cement Importers Association (PICA) has supported the Department of Trade and Industry’s measures to regulate cement imports. The association has also proposed that imported cement be tested upon entry, according to the Manila Standard newspaper.
“The PCIA is categorically against importation of sub-standard cement. In fact, the PCIA has proposed to take an active part in monitoring and enforcement against sub-standard cement whether imported or locally manufactured,” said PICA’s executive director Dani Enriquez. He added that sub-standard cement would be bad for business and the country’s infrastructure program.
South Africa: PPC estimates that cement demand improved in South Africa during the first half of 2017 following a poor first quarter to the calendar year. It has also predicted that production capacity utilisation rates for the industry as a whole are growing and that they could reach full capacity in 2020. On an adjusted like-for-like basis its cement sales volumes grew by 0.5% year-on-year in the most recent quarter due to good performance in its Coastal and Inland areas. However, imports have continued to decline, by 27%. Outside of South Africa the company has overseen growth particularly in Rwanda, and, in Zimbabwe, the Democratic Republic of Congo and in Ethiopia as well. The company made the announcement as part of an operational update for its first financial quarter that ended on 30 June 2017.
”Our focus is firmly on delivering improved profitability and liquidity in the shorter term while our longer term strategy remains unchanged. More specifically, we will focus our management effort on the new operations in the DRC and Ethiopia, ensuring that they deliver to expectations, while further optimising efficiency in our other businesses,” said interim chief executive officer (CEO) Johan Claassen.
Aunde orders four mills from Loesche 21 August 2017
Turkey: Germany’s Aunde has ordered four vertical roller mills from Loesche for a new cement plant being built in Soma. The order includes one 350t/hr raw material mill, one 30t/hr coal or 27t/hr petcoke mill and two 150t/hr clinker or granulated blast furnace slag mills. The scope of delivery also includes additional components such as water injection, cyclones, slide gates and rotary feeders as well as a spare parts package for the next two years.
Ohorongo Cement opens terminal at Ondangwa 21 August 2017
Namibia: Ohorongo Cement has opened a US$0.3m terminal at Ondangwa in the north of the country. Clemens H Kashuupulwa, the governor of Oshana Region, officiated at the event. The depot is intended to target the four northern regions in Namibia as well as export cement to southern Angola. The site follows a Private Public Partnership agreement with TransNamib to lease land at Ondangwa railway station, and is part of the Northern Railway Extension project that extends from Tsumeb to Oshikango. It will distribute various cement types, including CEM II 42.5 N, CEM I 42.5 R, CEM II 32.5 N B-LL for the local market. It will also ship CEM II 42.5 N with Portuguese labelling for Angola.
Australia: Adelaide Brighton has announced a 10.9% year-on-year fall in net profit for the six months to June to US$54.4m, while revenues rose by 4.7% to US$569.2m. For the full year it expects underlying net profit to be in the range of US$148 - 157m. The company added that a surging property market and a healthy pipeline of infrastructure projects means that it is on the lookout for acquisitions in a bid to keep pace with demand and grow its market share. The company has already spent US$67.7m on bolt-on acquisitions so far in 2017.
“From a demand point of view on the east coast, it’s hard to be pessimistic,” said chief executive Martin Brydon to The Australian newspaper. Brydon said the company was pragmatic about the residential property market eventually cooling off, but any slowdown would not immediately affect the business. “Even if there was a significant drop in approvals or applications for housing, the pipeline is still there for the next 18 months,” he added.
The company also said it was likely to raise cement prices for a second time later in 2017 amid the robust conditions on the east coast, but declined to confirm the likely amount of the price rise. The price rise has been partly precipitated by strong demand but also by rising electricity prices, which remain a major preoccupation for the company. It is expected to spend an extra US$6.3m on electricity within 2017 than it budgeted for, due to unexpectedly high prices.
Dangote talks up investments in Europe and North America 18 August 2017
Nigeria: Aliko Dangote, chief executive officer (CEO) of Dangote Group and Dangote Cement, plans to invest an incredible US$20 - 50bn in the US and Europe by 2025, in industries including renewable energy and petrochemicals. Speaking in a wide-ranging interview with Bloomberg, Dangote said that the group’s cement activities account for 80% of Dangote’s overall wealth. The new investments would more likely come in renewable energy and agriculture, rather than cement, with an aim to conduct 60% of all investments outside of Africa by 2020.
Mawlamyine plant may not have proper power plant permission 18 August 2017
Myanmar: A controversial 0.5Mt/yr cement plant in Mon State's Kyaikmayaw Township has apparently not sought permission from the Ministry of Electricity and Energy in order to generate power, according to the ministry itself. This has rekindled demands from local residents that the plant cease production. The US$400m plant, run by Mawlamyine Cement Limited (MCL), is a joint venture between Thailand’s Siam Cement and Pacific Link Cement Industries. It is powered by a 49MW coal-fired power plant.
The committee for the assessment of financial, planning and economic matters in the Mon State Parliament asked the Ministry of Electricity and Energy in a letter on 7 August 2017 about the coal-fired power facilities at the cement factory. The ministry replied on 14 August 2017 that MCL had not sought permission to run the power plant.
"From the ministry's reply, we can confirm that MCL didn't follow the electricity law. It did discuss with the ministry the installation of two 20MW but it didn't get any permission," said U Aung Kyaw Thu, speaking to local press. This was contradicted by MCL’s U Zaw Lwin Oo, who said, “The industry ministry gave its approval for the production of 20MW on 19 March 2017.” He said that MCL has two 20MW turbines and a 9MW spare turbine, but the industry ministry has only given approval for 20MW. There may be ambiguity as to whether the plant uses more than its permitted 20MW at any one time. According to the 2008 Constitution, heavy-scale electricity production-classified as 30MW and above-needs the approval of the government.
Dr Aung Naing Oo, deputy speaker of the Mon State Parliament, said that he welcomed the MCL's investment in the state, but that its procedures are less transparent than he would like them to be. "We should welcome investment but, at the same time, we need to see if those investments are legal and serve the stated purposes. In any case, if there is no permission under the electricity law, the factory should not operate," he told The Irrawaddy newspaper.
The factory started commercial operations in April 2017 despite local opposition. On 18 February, around 7000 locals from seven villages near the factory staged a protest against the coal-fired power plant. In April 2016, locals sent a petition with 3780 signatures to the President's Office, demanding the termination of the project.
Residents oppose Brookfield tyre plan 17 August 2017
Canada: A group of residents close to the Lafarge Canada Brookfield plant has launched a court challenge arguing the Nova Scotia government's approval of a plan to burn tyres as an alternative fuel at the plant violated the Environment Act.
In his application for a judicial review, lawyer William Mahody wrote that Environment Minister Iain Rankin didn't properly assess the impact of emissions from the Lafarge plant in Brookfield on surrounding areas, stating that was a ‘strong potential for adverse effects’ on surface water, human health and wildlife from the project. The plan has run into criticism from environmental groups, municipal councils and area residents, who prevented a similar proposal a decade ago.
Nova Scotia’s waste diversion agency has shifted a supply of at least 280,000 tyres per year to Lafarge and recently approved the company's environmental application for a one-year pilot project to incinerate the tyres as fuel.
Lafarge says it can't comment on the judicial review. However, Robert Cumming, the environmental director at Lafarge, says research conducted off-site by a Dalhousie University engineer suggests the use of scrap tyres will lower the plant's CO2 emissions. "Our pilot project seeks to validate this evidence gathered from scientific reports and in Dalhousie University laboratories. The research team and Lafarge have committed to sharing the results with the community."
LafargeHolcim sells up in North Korea 17 August 2017
North Korea: LafargeHolcim has sold its 36% stake in Sangwon Cement Company. The company had held the stake in the plant since 2008, having entered the North Korean market via its Euro8.8bn acquisition of Egypt’s Orascom. Orascom acquired the stake a year earlier. LafargeHolcim did not have managerial control or significant influence over Sangwon Cement.
Chinese ripples on the Pacific Rim 16 August 2017
After a couple of weeks looking at the capacity-rich cement markets of Angola and Vietnam, we turn our attention this week to some of those countries on the receiving end of overcapacity.
Costa Rica is an unlikely place to start but it came to our attention this week due to a short but significant news item. In summary, the amount of cement imported into Costa Rica increased by a factor of 10 between 2014 and 2016, from around 10,000t to over 100,000t. This is around 5% of its 2Mt/yr domesitic capacity, so the change is already fairly big news. The fact that an incredible 97% of this came from just one country, China, makes the story far more interesting as it shows the effects that Chinese overcapacity can have on smaller markets.
But when we look at how the value of the cement imports has changed over time, we see an even more dynamic shift. While the amount of cement imported into the country increased by nearly 10-fold, the value of the same imports only increased by around half as much between 2014 and 2016. If these figures can be taken at face value, the implication is stark. Taking the very low base as effectively ‘zero,’ each tonne of cement imported must cost around half as much as it used to.
Digging a little deeper and the picture gets more complicated. While they have fallen, Costa Rican cement prices have not fallen by 50% and why the sudden deluge of imports anyway? In 2015 the country changed its rules on cement imports to facilitate more flexible imports and lower prices for consumers. It did this by changing a regulation relating to how long cement can be stored, previously set at just 45 days, with the aim of allowing cement to come from further afield and, crucially, in bulk rather than bags.
The effects on price were immediate. Previously as high as US$13/bag (50kg) in December 2014, fairly high by global standards, Sinocem, the first Chinese importer, immediately sold its first shipment at US$10/bag. This effect of lower prices has now forced the average sales prices down to around US$10/bag across the country by 2017. This is good for consumers but not necessarily the local plants.
Back in 2015, the two local integrated plants operated by Cemex and Holcim warned that cement quality would suffer if cement bags were not used within 45 days. This apparently self-serving ‘warning’ went unheeded by the Ministry of Economy, Industry and Trade (MEIC), which pointed out that other countries in South America, as well as the European Union and United States, had no analogous short use-by dates for cement bags.
The rule remains in place, although discontent rumbles on. Indeed LafargeHolcim noted in its third quarter results for 2016 that ‘Costa Rica was adversely affected by increased foreign imports.’ This may well be a little bit of posturing and it doesn’t square with the fact that Costa Rica exported three times more cement that it imported in 2016. Of total exports of 0.34Mt, over 95% went to neighbouring Nicaragua, which has a single 0.6Mt/yr wet process plant owned by Cemex. It seems that the two Costa Rican plants have found a way to keep a little bit of the Chinese producers’ margin for themselves.
Of course, Chinese cement overcapacity doesn’t only affect the Central American market. It has been rippling all around the Pacific Rim. In July 2017, this column looked at the decision by Cementos Bío Bío to stop making clinker at its Talcahuano plant in Chile. It now favours grinding imported clinker from Asia. Before that, Holcim New Zealand closed its Westport cement plant in 2016, finally admitting that domestic clinker was not viable.
In the grand scheme of things, this all makes sense. The market has forced those operating on thin margins to adjust. Ultimately, the end consumer is likely to benefit from lower prices, at least for as long as reliable low-cost imports can be secured. What happens, however, if China actually gets round to curtailing its rampant cement capacity, or simply decides to charge more for its cement? Flexible imports, the main aim of the Costa Rican rule change, may then prove vital, as long as there is more than one international supplier of cement.