September 2024
First cement plant project for McNally Bharat 19 December 2012
India: McNally Bharat Engineering Company Ltd (MBEL), a Williamson Magor group company, has booked an engineering, procurement and construction (EPC) contract worth US$133.5m from ACC Ltd to set up a 9000t/day (~2.9Mt/yr) brownfield cement facility at its existing plant at Jamul, Chhattisgarh. The deal was announced by Deepak Khaitan, chairman of MBEL, at a press conference in the city on 17 December 2012. The plant will be set up with technology from Germany's KHD Humboldt Wedag.
"This order is a major milestone for us as it flags off MBEL's entry into the cement plant construction business," said Khaitan. "This will open up opportunities for MBEL as an EPC contractor for the Indian cement industry."
The company has also opened offices in South Africa to carry out engineering contracts in Africa. "Our emphasis will be to expand our footprint globally," said Khaitan.
Suez Cement production threatened by fuel price hike 19 December 2012
Egypt: Suez Cement has announced that it may have to halt production at two of its production lines due to an increase in the price of mazut, a heavy, low-quality fuel oil. The Egyptian government has raised the price of the fuel by 130% to US$372/t, effective 15 December 2012. Both of the threatened lines use mazut as their main energy source. The group has a domestic market share of around 20%.
Civil unrest in Assam delays Bhutan plant 19 December 2012
Bhutan/India: On-going civil unrest in the Indian state of Assam is delaying the construction of a US$173m plant being built in Chengkari in south-east Bhutan. The project is facing delays partly due to disorder in Assam that has impacted upon its supply channels.
In addition, a severe shortage of Indian rupees in Bhutan, due to a rise in aggregate demand for the currency and limited supply, has had an impact on the project as most of the materials for the projects are sourced from India. The Indian government is providing US$54.6m towards the project in financial support. The project is expected to commence operation in May 2013, which if met, would represent a delay of nearly 15 months. Clinker production is expected to commence soon.
The project is being implemented by Dungsam Cement Corporation Limited, which is a wholly-owned subsidiary of Druk Holding and Investments, an investment arm of the Royal Government of Bhutan. The plant will have production capacity of 1Mt/yr for clinker and 1.36Mt/yr for cement.
Spanish cement consumption drops by a third in 2012 18 December 2012
Spain: Cement consumption in Spain will close 2012 with a drop of 33% year-on-year, the fifth double-digit decline in a row, according to data from the country's association of cement producers Oficemen.
Oficemen expects that the demand will also shrink by 20% in 2013, until it reaches the levels similar to those in Morocco and Ecuador. Spanish cement consumption was at a 48-year low after the first half of 2012.
Meanwhile, the Spanish cement and building materials producer Sociedad de Cementos y Materiales de Construccion de Andalucia, controlled by Portuguese cement group Cimpor, is negotiating the lay-off of 35 staff with its employees and trade unions. The proposed move will affect 25 staff at its plant in Cordoba and 10 employees at a factory in Niebla.
Holcim slashes European management to save Euro99m 17 December 2012
Switzerland: As part of its on-going 'Leadership Journey' Swiss multinational cement producer Holcim has announced that it will be reducing its management structure in Europe to cope with lower levels of construction activity in the region. The group says that proposed measures evaluated and existing ones will lead to annual cost savings of at least Euro99m, a better utilisation rate of capacity and a more efficient allocation of capital expenditure.
The additional cash costs for restructuring in the fourth quarter of 2012 will amount to approximately Euro83.8m including site restoration costs. Write-offs of property, plant and equipment will total Euro339m and will be charged in the fourth quarter of 2012. Consultation procedures with regards to impact on personnel have been initiated in some group companies.
The restructuring accelerates the implementation of the Holcim Leadership Journey. The major part of the anticipated cash costs of Euro166m to realise the Holcim Leadership Journey will be incurred in 2012. The group's payout potential for the 2012 financial year (pre-write-offs) remains. The board of directors will propose the level of the payout at the end of February 2013, as part of the year-end financial statement to be submitted to the annual general meeting.
Italcementi announces lay-off schemes for 26% of Italian staff 14 December 2012
Italy: The Italian cement maker Italcementi has prepared a plan to reorganise its activities in Italy, to be implemented in 2013 and 2014. It envisages layoff schemes for up to 665 employees.
At present the company employs 2500 staff, of whom two-thirds are employed at its production sites. The remainder work at the company's headquarters in Bergamo.
The plan, dubbed 'Project 2015,' aims to rationalise the industrial and distribution structure of the group and reorganise the central structures and commercial network. The plan targets to reduce costs by around Euro40m/yr.
PPC expands into Rwanda with Cimerwa deal 13 December 2012
Rwanda/South Africa: The major South African cement producer PPC (Pretoria Portland Cement) has purchased a 51% stake in the Rwandan firm Cimerwa for US$69.4m in cash. The deal is in line with PPC's vision of making 50% of its revenue outside South Africa itself in the coming years. The deal comes after a similar deal between PPC and Ethiopia's Habesha Cement, of which it has bought a 27% stake.
"This transaction is a further step in our commitment to invest in sub-Saharan Africa and we are very confident about Rwanda," said PPC's CEO Paul Stuiver. "The Cimerwa plant is located in a challenging but very strategic region in East Africa, which currently lacks significant cement production capacity."
Cimerwa, in south-west Rwanda, has been the only cement producer in the country for 28 years. It has the capacity to make 0.1Mt/yr of cement but is currently undergoing a 0.6Mt/yr expansion project that is due to be commissioned in 2014.
Cement demand in Rwanda is estimated at 0.35Mt/yr but, based on the region's positive economic outlook, regional cement demand is projected to increase to 1Mt/yr in the next decade. "Combined with our recent investment in Ethiopia, the Cimerwa transaction will increase PPC's revenue outside of South Africa to more than 30% by 2015-16," added Stuiver.
"Rwanda looks like an attractive market to build capacity, with robust gross domestic product growth expectations, a large supply deficit in the cement market and challenging logistics for importing cement," said Ross Heyns, an equity analyst at Kagiso Asset Management. However, Heyns said that it appeared that PPC had paid a fairly hefty price for the asset. "After raising the additional US$104m of debt and expanding the plant's capacity to 0.7Mt/yr, the US$69.4m that they are paying for 51% of Cimerwa implies a total valuation for the business (including debt) of US$400/t of cement capacity," he said.
PPC's desire to expand to more locations outside of South Africa is in part due to the current overcapacity in that market. The country has a capacity of 16Mt/yr but is only likely to produce 11Mt in 2012. This overcapacity will not be helped when the 2.6Mt/yr Sephaku Cement plant, backed by Nigeria's Dangote Group, comes online in 2013.
Cement from a land down under? 12 December 2012
As 2012 draws to a close the challenges posed by the Australian carbon tax to the Australian cement industry are starting to show. First, Holcim Australia announced it was to lay off 150 staff. Then Boral released the news that it was planning to cut 90 jobs at its Waurn Ponds cement plant.
Following years of debate the Gillard government introduced the Clean Energy Act in July 2012. Heavy polluters were initially charged US$23/t of CO2 emitted, more than twice the cost of similar schemes in Europe where it is US$10/t. A key criticism of the scheme was that it would damage the Australian domestic cement industry with cheap imports. However the Australian government cushioned the move with compensation packages for major polluters, including cement producers, currently set to last five years.
Although the Australian cement industry hasn't totally collapsed, with the loss of 1800 jobs as the Australian Federal Opposition warned of in 2011, imports have been favoured in recent months. Boral's suspension of clinker production at Waurn Ponds will increase imports. The change will result in 25-30% of Boral's clinker being imported. It's worth noting that Boral pointed out in its press release that this was 'in-line' with the Australian industry.
Adelaide Brighton, the country's third biggest producer after Holcim and Boral, may not have laid anybody off but it has secured a 10-year supply of foreign clinker. On 5 December 2012 the building materials producer announced that it was going to a buy a 30% stake in Malaysian white clinker and white cement producer, Aalborg Portland Malaysia. In the accompanying press statement the company's chief financial officer explicitly blamed the carbon tax as one of the reasons for the acquisition.
Whether the job losses at Boral and Holcim can be totally blamed on the carbon tax remains to be seen. Boral's second-half profit for the year ending 30 June 2012 suffered a fall of 59% to US$35.7m. Holcim noted weaker demand outside of mining regions for the third quarter of 2012. By contrast, Adelaide Brighton reported steady gains in its half-year report for 2012 although cement sales only increased 'marginally'. Elsewhere in its report Adelaide Brighton stated that it would cope with the impact of the carbon tax by reducing reliance on domestic manufacturing. These can hardly be comforting words for the Australian cement industry.
New board member for Monarch Cement 12 December 2012
US: On 7 December 2012, The Monarch Cement Company elected Steve Sloan to serve on the board effective immediately to fill the unexpired term of independent director Richard N Nixon, whose resignation was effective 31 October 2012.
Sloan, aged 51, moves to the board of the cement firm with 17 of years experience in the aggregate and ready-mixed concrete industry. He has served for many years as the President and CEO of Midwest Minerals, Inc, headquartered in Pittsburg, Kansas. His current responsibilities include oversight of the financial, production, sales and regulatory affairs of Midwest Minerals' ready-mixed concrete plant and 19 aggregate quarry operations.
Monarch said that Sloan has the experience and skills to provide exceptional insight and judgment relative to corporate governance, corporate strategy, budgeting, banking, financial reporting, administrative functions and risk management.
Sloan will be a non-employee member of the board and will participate in the board's compensation policy and practices for non-employee directors. His term as an independent Class I Director will expire at the Annual Meeting of Shareholders on 9 April 2014.
Lafarge to sell South Korean unit 12 December 2012
South Korea: French cement maker Lafarge is looking to sell its controlling stake in its South Korean subsidiary Lafarge Halla Cement Co, according to South Korean online media Edaily. The French company, which controls about 90% of its Seoul-based unit, expects to raise around US$651m in proceeds from the divestment, for which it has picked Lazard and HSBC's South Korean arm.
Lafarge, which has been offloading non-strategic assets in a drive to push its debt below US$13bn from US$16bn, has not commented on the report. The move follows the announcement in November 2012 that Lafarge and Anglo American would sell a portfolio of its UK operations to Mittal Investments for US$439m, and the sale of two of Lafarge's cement plants in North America to Eagle Materials for US$446m in September 2012.