September 2024
Rock Hard Cement and Arawak Cement spar in Barbados 18 August 2016
Barbados: Rock Hard Cement, a cement distributor, and local producer Arawak Cement have been arguing publicly over the quality of their respective products. Arawak Cement took out a paid advertisement advised customers in Barbados, Guyana and the Eastern Caribbean that an unnamed rival company’s product was not ‘not of a higher quality, or strength and is not a superior product’ than its own products, according to the Barbados Today newspaper. The cement producer said it has also made a complaint with the Fair Trading Commission regarding alleged misleading claims that Rock Hard Cement has made about its products.
In response Mark Maloney, chief executive of Rock Hard Cement, has accused Arawak Cement of attempting to stop the newcomer entering the local market since November 2015. Since the entry of Rock Hard Cement into the market the price of cement has dropped by 30%. Arawak Cement has attributed this to a restructuring programme and improved plant efficient. Maloney has also accused his rival of trying to register the Rock Hard name outside of Barbados to deter future expansion.
Italy: The Italian Competition Authority (AGCM) has decided to extend its investigation of the Italian Cement Association (AITEC) and cement producers including Italcementi, Colacem and Sacci. The AGCM has been looking into alleged coordinated increased in cement prices over the past six months. The regulator has now extended its inquiries until May 2017 due to ‘suspicious’ behaviour. The inspections have revealed that simultaneous price rises and similar sales prices communicated to customers in advance has been in practice by the companies being investigated and other players in the sector.
Cementos Argos net income rises by 27% to US$96.5m 18 August 2016
Colombia: Cementos Argos’ net income has risen by 27% year-on-year to US$96.5m in the first half of 2016 from US$75.9m in the same period of 2015. Its revenue rose by 26.5% to US$1.51bn from US$1.20bn and its cement sales volumes rose by 2% to 6.98Mt from 6.84Mt. The company’s growth in revenue was driven by growing sales in the US.
“The disciplined execution of our internationalisation strategy has allowed us to continue obtaining good results, especially in markets such as the US, a country that keeps representing opportunities for Argos’s sustainable growth and that, added to our other geographies’ performance, enables us to continue contributing to the development of the countries and territories where we operate, through the construction of roads, bridges, homes and other projects in which the dreams of millions of people are materialized,” said Juan Esteban Calle, the CEO of Cementos Argos.
By region the cement producer reported that sales volumes fell by 14.8% to 2.92Mt in Colombia along with a slight fall in sales revenue. In the US its cement sales volumes grew by 29% to 2Mt and its sales revenue rose by 19.7% to US$700m. In the company’s Caribbean and Central American division its cement sales volumes rose by 6% to 2.52Mt and its sales revenue rose by 3.7% to US$283m.
US: HeidelbergCement, through its subsidiaries Essroc and Lehigh Hanson, has entered into a definitive agreement with Argos USA, a subsidiary of Cementos Argos, to sell its Martinsburg, West Virginia cement plant and eight related terminals. The disposal was required by the Federal Trade Commission (FTC) to address competition concerns arising from its acquisition of Italcementi. The agreement is subject to the approval of the FTC and other customary closing conditions. The transaction purchase price is US$660m on a cash and debt-free basis. HeidelbergCement expects the transaction to close in the fourth quarter of 2016.
“With the disposal of the Martinsburg plant we have successfully finalised our disposal programme in the context of the Italcementi acquisition,” said Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “Together with the disposals of the non-core assets and the Belgium assets of Italcementi we have exceeded our Euro1bn target on disposal proceeds and thereby further improved the net financial position of HeidelbergCement.”
Should McInnis Cement choose a new name? 17 August 2016
The McInnis Cement plant at Port-Daniel-Gascons in Quebec, Canada must be the most famous cement plant that hasn’t been built yet. Every single step of the project’s list has seemed dogged with infamy. Public money it seems comes with public scrutiny. This week, one of the principal investors took control of the plant following allegations of massive budget overruns and the disappearance of the company’s president.
To start with the money, the plant was originally budgeted at US$1bn for a 2.2Mt/yr facility. This has always seemed like an inflated figure given that the general cost of a new or greenfield cement plant is up to US$200/t. The original price tag for McInnis is double this figure. Throw in the need for infrastructure at the site and the requirement of a marine terminal and the cost starts to become a little more realistic with government backing. The importance of the sea links can’t be under stressed given that the plant is targeted at the US market. No port: no cement plant.
This then leads to the quagmire of criticism the project has found itself stuck within. American cement producers took exception to a foreign government-backed plant trying to eat their lunch so they went legal. When the government-subsidised project bypassed the normal environmental clearances Lafarge Canada backed a challenge in 2013. Then in 2014 the provincial opposition in Quebec attacked the local government’s financial involvement in the project describing it as a ‘sinkhole’ in return for a minority stake.
Once these hurdles were overcome, work on building the plant began until the Globe and Mail newspaper revealed in late June 2016 that the project was ‘massively’ over-budget by up to US$350m and that the Quebec government was not prepared to provide any more money. The budget over-run alone is enough to build a cement plant in a more conventional location! Six weeks later and the project has most likely had its chief executive fired and one of the investors has stepped in to run things.
So, some combination of the legal fees, the wrangling over the plant’s unique environmental clearance, the difficulties of the underdeveloped location and potential mismanagement by the company itself have led to the additional costs. This in turn has led to the Caisse de dépôt et placement du Québec, a pension fund firm, taking charge. It, like the previous management, also has no experience in building cement plants. Although it clearly knows how to calm investors. The first thing it did after announcing the new financing was to reassure everybody on the plant’s potential. Best not to consider at this stage what happens if the US bans Canadian cement.
McInnis Cement could be compared to other provincial industrial follies such as the closed Gaspésia paper mill in Quebec that also received over US$350m of government money. Yet if there is a project one might compare it to it is London’s Millennium Dome. Conceived as a national exhibition space to celebrate the start of the new millennium in 2000 the UK government of the time backed the project to much derision from the press as the costs spiralled and the visitors stayed away. However, today the venue has become a popular music and events venue. Flop or triumph: all those investors of McInnis Cement must be wondering what their fate will be. If nothing else perhaps renaming the plant once the dust settles (in an environmentally approved way) might be a good idea. Today, the Millennium dome is known as the 02.
India: The refractories division of Dalmia Bharat Group has signed a memorandum of understanding for a joint venture with Seven Refractories to develop and supply a wide range of monolithic refractories for the Indian market.
“We are committed to bringing the most advanced solutions to our customers across the iron, steel and cement industries. This partnership will combine the strengths of both companies to provide customised solutions with the latest monolithic refractory technology combined with quicker deliveries and localised services,” said Sameer Nagpal, CEO-Refractories, Dalmia Bharat Group.
Cementos Argos to close San Gil plant 17 August 2016
Colombia: Cementos Argos plans to close its oil well cement production plant at San Gil in Santander. The closure follows falling demand for this type of cement caused by falling global oil prices. The National Construction Material Industry Workers' trade union Sutimac has requested that the cement producer transfer its 75 employees at the San Gil plant to other parts of the business, according to the El Colombiano newspaper. The union hopes that Cementos Argos will repeat its recent transfer of workers from the now-closed Sabanagrande, Atlantico factory to its plants in Cartagena, Tolu and Antioquia.
Gloria Group buys Cementos Otorongo from Votorantim 17 August 2016
Peru: Consorcio Cementero del Sur (CCS), a subsidiary of Gloria Group, has signed a contract to buy all of Brazil’s Votorantim’s shares in Cementos Otorongo for US$4m and those of Votorantim’s subsidiary Corporación Noroeste. Cementos Otorongo is planning to build a cement plant in southern Peru for US$125m, according to the Gestión newspaper. Cementos Otorongo submitted an environmental impact study on the project in 2011 for proposed sites in La Joya, Arequipa and Mollendo, Islay. The planned plant will have a production capacity of 0.65Mt/yr.
This story was corrected on 18 August 2016 following clarification from Votorantim.
Republic Cement prepares for infrastructure boom 17 August 2016
Philippines: Republic Cement is expanding its grinding capacity by over 10% in anticipation of a rise in demand prompted by increased government infrastructure spending. Other planned upgrades include an improved dust collection system at the cement producer’s plant in Bulacan. The company is also considering building new cement plants. Company president Renato C Sunico made the comments to local press at a forum on social housing.
The government of the Philippines has cited public infrastructure as one of its general spending priorities, setting aside US$18.5bn, which is equivalent to 5.4% of gross domestic product, in 2017.
India: JK Lakshmi Cement has received environment clearance to expand its limestone mine output in Sirohi, Rajasthan to 13Mt/yr from 8Mt/yr. The expansion will cost US$17.9m and the mined material will supply the cement producer’s Sirohi plant, according to the Press Trust of India.
Crushed limestone will be transported to the plant via a covered conveyor and no local transport infrastructure will be required for the proposed project. Water will be sourced from the West Banas dam. The company has a limestone mine lease area of 390.62 hectare. It is an opencast mine and the lease is valid up to 2030.
The mine expansion will subject to conditions, including acquiring any applicable clearances from the National Board for Wildlife and consent from the State Pollution Control Board. The company has also been asked to conduct hydro-geological study and to obtain the recommendations of Central Ground Water Authority.