September 2024
Indian power company NTPC seeks partners to build cement plants 16 February 2017
India: NTPC is looking for cement producers to help it build cement plants to take advantage of its fly ash and electricity. The power generation company is asking cement producers to submit expressions of interest for partnerships to build 1Mt/yr cement plants near its power stations, according to the Times of India. Partners will have to source their fly ash from NTPC but will be responsible for marketing their own products. NTPC has previously tried to enter the cement market since 2008 with both partners including the Cement Corporation of India and on its own. It produces 65Mt/yr of fly ash.
Belgium: Cembureau has issued it support for the decision by the European Parliament to amend the Emissions Trading Scheme (ETS). The European cement association has welcomed the decision that its says does not ‘deliberately discriminate between sectors and to apply a fact-based approach to policymaking.’ It added that the changes would make European industry more CO2 efficient, while maintaining its competitiveness.
Particular parts of the decision it welcomes include the inclusion of dynamic allocation, a benchmark with a minimum reduction of 0.25%, the introduction of a 5% flexible reserve in relation to the allowances available for free and those designated for auctioning and the impetus given to funding for carbon capture and use. It added that it was pleased to see that the amendments for an importer inclusion scheme, which it viewed were targeted at the cement sector, were not accepted. Finally, it reinforced its call for a ‘sector-neutral’ policy that does not differentiate between industries.
Uzbekistan: Russia’s Eurocement has signed an agreement with Uzqurilishmateriallari to build a 2.4Mt/yr cement plant. It is scheduled for completion by 2020. The new plant will be Eurocement’s second plant in the country and it will increase its total cement production capacity to over 4Mt/yr. Eurocement already owns a 84% stake in Uzbekistan’s second largest cement producer Akhangaracement after purchasing a 76% stake in it from Switzerland’s Zeromax in 2006.
PPC and AfriSam merger talks back on 15 February 2017
The merger between South Africa’s larger cement producers, PPC and AfriSam, is back on this week. PPC issued a statement advising its shareholders that the board of directors of both companies were about to enter formal talks to thrash out a potential deal. Issues such as the merger ratio, black economic empowerment and local competition concerns are all on the agenda.
The resumption of merger talks follows the cancellation of the previous round in mid-2015. No reason for the breakdown was publicly released but possible factors may have included the fallout at PPC from the resignation of its chief executive officer (CEO) Ketso Gordhan and competition concerns. Given the investigations by the South African Competition Commission from around 2008 to 2012 these may have been very real concerns. At this time the two companies held about a 60% share of the country’s cement production capacity.
Events have changed since then with the opening and ramp-up of Sephaku Cement’s cement plant at Aganang and its grinding plant at Delmas since late 2014. Today, PPC and AfriSam control just under 50% of the cement production capacity in South Africa and PPC’s current CEO Daryll Castle remains in post since early 2014. What a difference a year or so can make.
PPC moved its financial year end from September to March in 2016 making it hard to compare like with like. However, its revenue appears to have grown by 10% year-on-year to US$396m for the six months to 30 September 2016. Its earnings before interest, taxation, depreciation and amortisation (EBITDA), a measure of operating performance, fell by 7.5% to US$80m at the same time. Since then PPC notified markets with a trading statement saying that its sales volumes in South Africa had risen by 4% in the nine months to the end of December 2016 but that its prices had fallen by 4%. It also noted that its local cement sales volumes declined marginally when compared to the same quarter in the previous year, with the exception of the Western Cape region.
PPC also has various projects underway in sub-Saharan Africa, including plant builds in Democratic Republic of Congo (DRC) and Ethiopia. Of note to any potential merger with AfriSam are its plans to build a new 3000t/day production line at its Slurry plant in Lichtenburg. The project was reported 54% complete in early February 2017 with first clinker production scheduled for the first half of 2018. CBMI Construction, a subsidiary of China’s Sinoma, is the main contractor for the upgrade project. Once complete the new line will add about 1Mt/yr to the plant’s cement production capacity. One implication of this project is that it will push PPC and AfriSam’s market share over 50% that may have consequences with the local competition body.
For its part AfriSam appears to be suffering financial problems according to local press. The Public Investment Corporation (PIC), a government investment body, revealed in late 2016 that it had invested over US$100m in the cement producer since 2008. The PIC holds a controlling share of AfriSam with a 66% stake in the group. Other than this, solid facts about the state of AfriSam’s business are thin on the ground. However, competition in South Africa’s cement sector has certainly increased in recent years both within and without, from the import market.
As this column has said a few times merger and acquisitions seem to be the way to go for cement producers in weak markets. However, as annual results from Cementir and HeidelbergCement show this week, the initial boost from new asset and business purchases may not be so rosy when viewed in a pro-forma basis or when taking into account new units’ past performance. A lot here rides on these companies being able to take advantage of synergy effects and to make crucial savings. The big example of this in the global cement sector is LafargeHolcim. It will announce its financial results for 2016 on 2 March 2017. It also operates a cement plant in South Africa and the results may have implications for the PPC and AfriSam merger.
In other news, the European Union parliament has voted today, on 15 February 2017, to amend its Emissions Trading Scheme (ETS) in line with a proposal made by the European Commission. This is unlikely to impress the environmental lobby or users of secondary cementitious materials in cement production, amongst other parties. More on this topic next week.
Siwertell receives order for road-mobile ship unloader 15 February 2017
Sweden: Siwertell, part of Cargotec, has received an order for a road-mobile ship unloader for an undisclosed client. The 10 000 S trailer-based, diesel-powered unit will be used to unload cement at a rated capacity of 300t/hr. It will join the customer's existing Siwertell 10 000 S road-mobile unloader, which it has been operating since 2015.
The new unit will be equipped with a dust filter and a double-bellows system, allowing uninterrupted discharge when changing between trucks or rail wagons. It will be constructed at Siwertell's premises in Bjuv, Sweden, with delivery scheduled for March 2017. The customer has also signed a Siwertell Service Contract for both units to cover servicing and support.
Fairport Engineering reports work on filters at Ketton cement plant 15 February 2017
UK: Fairport Engineering has reported work on its replacement of two electrostatic (ESP) filters at Hanson’s Ketton cement plant in Rutland. Following discussion in early 2016 Fairport was contracted to replace ESP filters at the plants Mills 9 and 10. Both mills were shut down for planned three-week periods each to remove the old filters and install the new ones. The new system on Mill 9 also required the installation of new screw conveyors, rotary airlocks and the reconfiguration of existing control panels, plus the installation of new 160KW central exhaust fans and associated clean gas ducting. Fairport reports that, to date, the daily averages on both filters are well below the target emission level.
Six companies join bid for Hyundai Cement 15 February 2017
South Korea: Six companies have made bids for Hyundai Cement. Ssangyong Cement Industrial, Halla Cement, IMM Private Equity, LK Investment Partners, Hyundai Sungwoo Holdings and PineStreet Group have submitted terms to acquire a 84.6% stake in Hyundai Cement, according to the Maeil Business Newspaper. Creditors and sales advisors of the cement producer intend to choose a preferred bidder before the end of February 2017. The sale is expected to raise up to US$525m.
Australia: Boral’s revenue from its cement business fell by 4% year-on-year to US$118m in the first half of its financial year, which ended on 31 December 2016. Total cement sales volumes rose by 3%. The building materials producer blamed the fall in sales revenue on low wholesale clinker volumes due to higher direct sales volumes of cement. Its sales prices for cement grew by 1% for bulk cement and 3% for packaged products. It added that, although competition pressure and energy costs are rising, its cost improvement plans are helping.
Overall, Boral’s sales revenue fell by 5% to US$1.6bn from US$1.68bn. However, its profit after tax rose by 9% to US$114m from US$105m. It attributed this to a ‘solid’ performance in Australia combined with good earnings from Boral USA and USG Boral.
European Parliament votes to reduce carbon credits for Emissions Trading Scheme by 2.2% each year 15 February 2017
France: The European Parliament has voted to approve a proposal by the European Commission to reduce carbon credits by 2.2%/yr from 2021 in its Emissions Trading Scheme (ETS). This is an increase from the 1.74% reduction specified in existing legislation. It will also double the capacity of the 2019 market stability reserve (MSR) to absorb the excess of credits or allowances on the market.
Members of the European Parliament (MEP) want to review the so-called ‘linear reduction factor’ with the intention to raising it to 2.4% by 2024 at the earliest. In addition MEPs want to double the MSR’s capacity to mop up the excess of credits on the market. When triggered, it would absorb up to 24% of the excess of credits in each auctioning year, for the first four years. They have agreed that 800 million allowances should be removed from the MSR as of 1 January 2021. Two funds will also be set up and financed by auctioning ETS allowances. A modernisation fund will help to upgrade energy systems in lower-income member states and an innovation fund will provide financial support for renewable energy, carbon capture and storage and low-carbon innovation projects.
The draft measures were approved by 379 votes to 263, with 57 abstentions. MEPs will now enter into negotiations with the Maltese Presidency of the European Council in order to reach an agreement on the final shape of the legislation, which will then come back to Parliament.
Environmental campaign group Sandbag has complained that the new proposal fails to hold to the European Union’s (EU) emissions reduction targets by 2030 that were signed as part of the Paris Agreement in 2016.
“Unless the Council intervenes to substantially strengthen the System, the EU ETS will now become simply an accounting mechanism, leaving meaningful climate action to happen elsewhere. The fact that the carbon price is unchanged as a result of the vote, still at a paltry Euro5, speaks volumes. Without being realigned with real emissions levels in 2020, the EU ETS may well end up existing for 25 years by 2030 without giving the any substantial impetus to decarbonisation,” said Rachel Solomon Williams, Managing Director at Sandbag.
Maximus Crushing & Screening appoints Iain Herity as sales director for southern England 15 February 2017
UK: Maximus Crushing & Screening has appointed Iain Herity as Sales Director for the South England Market. Herity previously worked for Extec in England, where he expanded the brand locally. Maximus Crushing & Screening manufactures crushing and screening equipment for a range of applications as well as providing spare parts. It was founded in 2004 and is headquartered in Coalisland, Northern Ireland, UK.