September 2024
Environmental group challenges permit for Lafarge 14 February 2014
Slovenia: A local environmental non-government organisation (NGO), Eko Krog, which has been fighting Lafarge in the city of Trbovlje for years, has launched a challenge to the environmental permit issued to Lafarge in January 2014.
Eko Krog stated that that the basis for issuing the environmental permit for the operations of the cement factory was flawed and that the permit will result in new pollution in the Trbovlje valley. It has appealed to the Ministry of Agriculture and the Environment, which will now have to review the Environment Agency's (ARSO) decision to issue the permit.
ARSO said that the permit for unlimited cement production at the plant meets EU rules. However, Eko Krog has branded the decision was flawed, as key potential emissions were omitted, including those generated at the nearby quarry. Eko Krog also claimed that the documentation for the permit contains other flaws, including the failure to respect all of the recommendations of internationally-adopted standards for use of the best technology in the cement industry.
It is unclear how long the review of the permit by the relevant ministry will take, but Eko Krog has already once succeeded in having Lafarge stripped of the permit. Lafarge first received the permit in 2009, at which time it had invested Euro33m in upgrades, but its plans to use alternative fuels in its kiln subsequently prompted anger among locals and led to the successful challenge of the permit by Eko Krog in 2011. As a result, the plant had to scale down operations, making the January 2014 decision by the Environment Agency a major victory for Lafarge.
The plant responded to the decision by labelling it a first step in restarting cement production and obtaining a permit for the use of alternative fuels, which would be crucial for Lafarge's sustainability in Slovenia.
Canada: Quebec's US$350m investment in a new cement plant from Bombardier's founding family in the job-starved Gaspé region is a 'terrible deal' that could end up being a 'financial sinkhole' for taxpayers, according to the Province's Coalition Avenir Québec (CAQ) opposition party.
CAQ has called on Quebec to renegotiate the agreement with McInnis Cement, which is owned by the Bombardier-Beaudoin family. The party said that it saw a copy of the confidential agreement and that private investors, notably the family, are only putting in US$62m of money to gain majority control of the project, while Quebec will contribute several times that amount but will only get a minority stake.
In January 2014 McInnis announced plans for a US$1bn cement plant in Port-Daniel-Gascons that would produce 2.2Mt/yr of cement, largely for export by ship to the US. The project was being billed as a saviour for the chronically under-employed Gaspé region because it will support 1500 construction jobs and provide work for 200 permanent plant employees.
CAQ said that Pauline Marois's Parti Québécois government had by-passed Investissement Québec, the province's investment arm and ordered that the money be disbursed without analysis by Investissement's board. Quebec confirmed that it would provide McInnis with an interest-bearing loan of US$250m and take a US$100m equity stake in the company.
The federal government also contributed US$100m to the project through split participation by Export Development Canada and the Business Development Bank of Canada. This is senior-ranking debt, to be repaid first in the event of a default, and part of a larger banking group that included National Bank.
"The federal government decided that it couldn't risk taking equity or subordinate debt like Quebec did," said CAQ economy and external trade critic Stéphane Le Bouyonnec. "The reason is simple; the industry is already in a situation of overcapacity. We predict that this transaction could become a financial sinkhole, a disaster for the government of Quebec."
A December 2013 study on the cement market by independent economist Colin Sutherland concluded that adding McInnis's capacity to the mix could delay the return of a healthy supply-demand balance in north-eastern North America well beyond the expected date of 2021. At the moment, Quebec has about 1.2Mt/yr of unused capacity while eastern Pennsylvania and New York have about 0.6Mt/yr, meaning many plants are operating well below maximum volume.
"The rationale for this deal is not sound," said Michael McSweeney, president of the Cement Association of Canada. "When this project goes ahead, it will just shift jobs from other parts of Quebec to the Gaspé."
Quebec Premier Pauline Marois defended the agreement, calling it a 'good project' in which the government is demanding a higher interest rate than normal because it understands the risk.
The McInnis Cement announcement of 31 January 2014 can be found here.
European cement production in 2013 – Problems head east 12 February 2014
Recovery in the European cement markets arrived slowly in 2013. Balance sheets at HeidelbergCement, Cemex, Italcementi, Vicat and Buzzi Unicem appear to have stalled into something less than the recovery that everybody wants. The picture is more stable in Western Europe but declining revenues have headed east.
The European Commission's Autumn 2013 Economic Forecast has summed it up well, predicting that the European Union's (EU) gross domestic product (GDP) would remain static in 2013. On the strength of the results seen so far that feels about right. The cement industry in Europe hasn't continued to decline but the 'recovery' is slow. Yet a recovery is happening on the strength of these financial results so far. Compared to some of the sales declines seen in 2012 this is good news.
With results from the big European-based cement producers Lafarge and Holcim due later in February 2014, here is a summary of the European situation.
HeidelbergCement's revenue has remained flat in 2013 at Euro13.9bn although its cement, clinker and ground-granulated blast-furnace slag (GGBS) sales volumes have risen by 2.6% to 91.3Mt. Compare this with the 8.7% bounce in revenue from 2011 to 2012. By region, the problem areas have now shifted from losses in Western and Northern Europe to losses in Eastern Europe and Central Asia. Market pickup in the UK has driven this turnaround, despite diminished sales volumes in Germany.
Similarly, Cemex's sales have also remained flat at US$15.2bn. Both of its European areas have improved their sales, with sales losses only reported for the Northern Europe region. Again, sales in the UK drove overall business with France starting to improve too.
Italcementi had it tougher in 2013 with its sixth consecutive drop in revenue since 2008. Just like HeidelbergCement, the problem regions for Italcementi have shifted east in 2013 from Western Europe to the group's Emerging Europe, North Africa and Middle East area. However Italcementi is losing revenue in Western Europe faster than HeidelbergCement, mainly due to the poor Italian market.
Elsewhere, Vicat reported that its consolidated cement sales fell by 4% to Euro1.11bn. Sales decline lessened in France and the rest of Europe even saw sales rise by 4% to Euro427m. Buzzi Unicem saw its cement sales volumes remain static in 2013 at 27.4Mt.
Overall it may not feel great but it's better than the cement industry news for Europe we've been used to in recent years. With the European Commission Economic Forecast suggesting a 1.4% rise in GDP in 2014, the next 12 months look more promising.
Lay appointed chairman of East Africa Portland Cement Company 12 February 2014
Kenya: The Kenyan government has appointed William Lay as the new chairman of the East Africa Portland Cement Company (EAPCC), replacing Mark ole Karbolo. Making the announcement, Industrialisation and Enterprise Development Principal Secretary Wilson Songa said that the move would streamline operations at the company and mark a strategic shift in the operations of the cement manufacturer.
The move follows on-going shareholder conflict over the EAPCC between the Kenyan government and French multinational cement producer Lafarge.
Boral reports 73% jump in half year profit 12 February 2014
Australia: Boral has reported that its half year underlying net profit jumped by 73% on the back of improved housing and road construction markets, cost cutting measures and dry weather conditions. The company saw its underlying net profit rise to US$81.5m in the six months to 31 December 2013. However, the company also warned of a slowdown in activity and earnings in the second half of the financial year, which runs until 30 June 2014.
Boral actually recorded a net loss of US$23.6m for the half year but this figure includes US$106m in one-off accounting charges related to its gypsum plasterboard joint venture, due to be completed on 28 February 2014, which it says will be offset by gains in the second half.
Chief executive Mike Kane highlighted a US$20.8m turnaround in the Australian building products division and a 6% lift in its largest division, building materials and cement.
"The rise was driven by strong project activity, very dry weather conditions in New South Wales and Queensland and the benefit of restructuring and overhead cost reduction initiatives," said Kane. "Despite expected underlying performance improvements, there will be a skew of earnings to the first half compared to the second half due to higher major project volumes, dry weather conditions in the first half and the impact of the gypsum joint venture."
The company achieved US$54.7m in cost savings, much of which came from cutting 1000 jobs. Boral plans to use much of a US$453m payment from its gypsum partner USG to reduce its US$1.26bn net debt.
Lafarge ordered to halt coke use in Egypt 12 February 2014
Egypt: Lafarge has been ordered by the Ministry of State for Environmental Affairs (MSEA) to halt its preparations to build storage units for petcoke, according to a statement by the ministry. The MSEA expects the French cement manufacturer in Egypt to wait for a final decision on the use of petcoke as fuel in industrial operations.
France-based multinational cement producer Lafarge submitted a study to MSEA on the environmental impact of petcoke in May 2013 and awaits a government decision on its use. The MSEA does not allow cement factories to import coal, citing hazards to the environment and the economy. The cement industry consumes 9% of the total amount of natural gas produced in Egypt, after the electricity and fertiliser sectors. The switch to coal was first suggested as an alternative to gas when the government announced plans to gradually remove gas subsidies.
Ciments Français revenue down 3.6% to Euro3.59bn in 2013 12 February 2014
France: Ciments Français has reported that its total revenue fell by 3.6% year-on-year to Euro3.59bn in 2013 from Euro3.73bn in 2012. Like its parent company Italcementi, It blamed the drop on continued disruption in demand for building materials in Western Europe, with problems in Egypt and an uneven recovery in North America.
Overall sales volumes for cement and clinker fell by 3.8% to 37.9Mt. Sales revenue for cement and clinker fell by 4.8% to Euro2.39bn. By region, Western Europe and Emerging Europe, North Africa and the Middle East saw sales volumes decrease in 2013 and North America and Asia saw sales volumes increase. However sales revenues fell in all regions except Asia in 2013. In particular Ciments Français' revenue report mentioned Egypt's role in reducing sales volumes in 2013 in the Emerging Europe, North Africa & Middle East region due to fuel shortages.
ACC net income drops to US$1.75bn in 2013 12 February 2014
India: ACC's net income has fallen slightly to US$1.75bn in 2013. However its net profit rose by 3% to US$174m. By business segment, cement sales fell slightly to US$1.71bn in 2013. The Indian cement producer made the announcement in a statement of consolidated audited financial results. In its statement ACC made no provision for a US$180m fine imposed on it by the Competition Commission of India for alleged cartel-like behaviour as it believes it can successfully appeal the penalty.
Italcementi revenue down 5.4% to Euro4.24bn in 2013 12 February 2014
Italy: Italcementi has reported that its revenue fell by 5.4% year-on-year to Euro4.24bn in 2013 from Euro4.48bn in 2012. It blamed the drop on a continued fall in demand for building materials in Europe, a patchy recovery in North America and limited energy availability in Egypt that has decreased cement production capacity.
Sales volumes of cement and clinker fell by 6% year-on-year to 43.1Mt in 2013. Revenue for the company's cement and clinker segment fell by 6.4% to Euro2.72bn from Euro2.91bn. By region sales volumes fell by 9.3% to 14.5Mt in Central Western Europe and by 11.7% to 13.2Mt in Emerging Europe, North Africa and the Middle East. Its North America and Asia regions remained buoyant in terms of sales volumes in 2013 but North America saw its revenue fall by 2.5% to Euro429m.
Buzzi reports flat cement sales in 2013 12 February 2014
Italy: Buzzi Unicem saw its cement sales remain flat at 27.4Mt in 2013. Overall net sales dropped slightly by 2.1% year-on-year to Euro2.75bn. In a preliminary results statement, the company reported growth in the US and Russia, recovery in central Europe in the second half of 2013 and continued market problems in Mexico, Italy and parts of eastern Europe.