November 2024

South Africa: A South African court ruled on 2 December 2011 that the Public Investment Corporation (PIC) can convert AfriSam's debt of US$580m into equity. PIC, which manages US$120bn in South African state pensions, will now gain control of the South African producer. This will enable it to restructure the company's debt which threatens to bankrupt the company.

AfriSam's two largest shareholders, empowerment venture Bunker Hills Investments and Holcim, previously applied to block the conversion of preference shares into ordinary shares, but this was dismissed by Judge Eberhard Bertelsmann in the North Gauteng High Court.

AfriSam CEO Stephan Olivier said, "Our focus... remains on the day-to-day operations of the company and ensuring maximum operational and financial efficiency." AfriSam had earlier said Bunker Hills and Holcim had a contractual obligation in respect of the conversion.

Holcim created AfriSam in 2006 by selling 37% of its South African business to investors led by Bunker Hills, and retaining a 15% stake. Bunker Hills had earlier said these shareholdings would be diluted to 'almost nothing' after the PIC preference share conversion.

In his ruling Judge Bertelsmann said, "There can be no suggestion that there is any illegal threat to the applicant's rights." He also said AfriSam's board must approve the conversion of the PIC's preference shares into equity within 20 days.

"Owing to the limits of confidentiality we are not in a position to provide all details. This is purely to avoid jeopardising the current stakeholder's engagements," the PIC CEO Elias Masilela said after the judgement.

Ukraine/Ireland: Ukraine's Antimonopoly Committee (AMKU) has allowed Jura-Cement Fabriken AG, a subsidiary of Ireland's Cement Roadstone Holding (CRH), to acquire control of LLC Cement in Odessa. The AMKU committee said that this decision allows Jura-Cement-Fabriken to hold over 50% of the votes in the Odessa plant's management body.

The Odessa Cement Plant started operations in 1965 and its capacity is currently 550,000t/yr. The plant was acquired in May 2005 by the Portuguese company Cimento e Produtos Associados S.A., which is owned by Cimpor, Teixeira Duarte and Engenharia e Construcoes, amongst others. LLC Cement's general director, Miguel Machado, has stated that Euro40m has been invested in the Odessa plant since 1996. CRH currently owns OJSC Podolsk Cement and LLC Lviv Concrete in Ukraine.

Indonesia/Chile: Loesche Automation has been awarded contracts for building cement mills in Indonesia and Chile.

In Indonesia PT Semen Baturaja (Persero), Palembang have placed an order for an LM46.2+2 C/S vertical mill and awarded Loesche Automation the contract for the electronic and automation engineering. The company is to deliver virtually all the equipment, from the automotive engineering to the software engineering and visualisation.

The medium voltage switching system and main drives have been supplied, as have the MCCs and low voltage main distribution. The order also covers the necessary I/O cabinets and the instrumentation and process control circuits based on Loesche Automation Basic and Detail Engineering.

In Chile Hormigones Transex Ltda, Santiago awarded the contract for a LM46.2+2C/S cement mill in Puente Alto to Loesche GmbH. Loesche Automation has been charged with providing the electronic and automation engineering for this mill.

The contract covers the delivery of the mid-voltage switching system and main drives, the low-voltage main distribution with MCCs and the supply of automation components with software engineering and visualisation. The project also included the basic and detailed engineering, the necessary I/O cabinets and the instrumentation of the process control circuits.

For both projects the software engineering is specially tailored to the requirements of the plant using Loesche solutions. In order to ensure that all of the processes run smoothly, Loesche Automation is responsible for project management, commissioning and monitoring. At the same time, Loesche Automation will carry out training services. The components are due to be delivered in May 2012 and commissioning is scheduled for March 2013.

Venezuela: The Venezuelan government has agreed to pay US$600 million to settle a claim from Cemex over the 2008 nationalization of Venezuela's cement sector. The case is one of many which the Hugo Chavez administration is facing after nearly 13 years of sweeping socialist reforms, including widespread nationalisations across the South American OPEC member's economy.

A Venezuelan government statement said the amount corresponded to 76% of the shares in the expropriated local unit but it was less than half the US$1.3bn Cemex had originally sought. "We've reached a favourable deal between both parties," Industry Minister Ricardo Menendez said in the statement. The government will pay US$240m initially, followed by four annual payments of US$90m, he said.

"We are convinced the agreement has been positive for everyone," the Venezuelan Information Ministry statement quoted Jaime Elizondo, Cemex's president for South America and the Caribbean, as saying.

The Chavez government announced the takeover of the cement sector in April 2008, targeting Cemex, Holcim and Lafarge. Lafarge and Holcim agreed to stay on as minority partners. Cemex disputed the case at the World Bank's International Center for Settlement on Investment Disputes. In late 2010, the court recognised Cemex's right to sue for the loss of its assets.

Algeria: Lafarge has agreed to undertake a project inherited from an acquisition of an Egyptian firm in 2007 according to an Algerian minister of state.

Responding to a parliamentary question in mid-November 2011, the Algerian Industry and Investment Promotion Minister, Mohammed Benmeradi, said that Lafarge had agreed to undertake the project as a minority partner, owning 49%, in accordance with a foreign ownership law passed in 2009. Lafarge originally inherited the project as part of its acquisition of the global cement interests of Egypt's Orascom Construction Industries (OCI). OCI had secured licences for a new plant at Oum El Bouaghi, in the east of the country, shortly before the Lafarge takeover was announced.

Benmeradi said that the Oum El Bouaghi project would cost US$500m and would take 12-16 months to complete. He said that Algeria is currently self-sufficient in cement, producing 17Mt/yr, of which 5.5Mt/yr comes from privately owned plants. The government has a huge capital spending programme, which points to a steady increase in demand for cement. Most of the state-owned plants are in a poor state of repair.

India: Reliance Cement Company Limited is planning to start production in Bengal. The company wants to set up a 3Mt/yr plant at Raghunathpur in the Purulia district.

Reliance Cement plans to invest US$100m in the project and has submitted its letter of intent to the Bengal state government. The government is likely to highlight the project as it prepares its 200-day performance report to be unveiled in December 2011.

The Bengal unit will be the third plant from Reliance Cement as the company embarks on a capacity expansion plan to take production to 50Mt/yr. Projects with a capacity of 5 Mt/yr were announced in 2010 for Madhya Pradesh and Maharashtra. In 2008, the company secured limestone-mining licences at Satna in Madhya Pradesh.

China: China aims to make its top ten cement manufacturers hold at least 35% of the domestic cement market by 2015 according to its 12th Five-year Plan. Currently China's top ten cement manufacturers hold less than 25% of the domestic market.

China's Ministry of Industry and Information Technology (MIIT) has released the 12th Five-year Plan (2011-2015) for the country's building materials industry and five sub-plans for five building materials sectors including cement and plate glass. From 2011 to 2015, the development of the industry will mainly focus on eliminating outdated production capacity and promoting mergers and acquisitions.

According to the plan, cement companies above a designated size will expand at an average rate of above 10% from 2011 to 2015. 250Mt of outdated production capacity will be eliminated. Cement producers are expected to cut emissions of nitrogen oxides and sulfur dioxide by 10% and 8% respectively. Emissions of carbon dioxide per unit of industrial added value will be reduced by 17%.

It forecasts the domestic market demand for cement to rise by 3%-4% annually on average to reach 2.2Bt in 2015, a slower pace than the current level as the country increases efforts to make its economy less reliant on fix-asset investment and more on technologies and consumption.

Paraguay: Paraguayan officials have asked for Iranian assistance in building a cement plant. The issue was raised during a meeting between Paraguayan Parliament Speaker Victor Bogado and Iran's envoy to the country's capital Asuncion, Hojjatollah Soltani.

At the meeting Bogado noted that although a private sector Paraguayan company owns the Calicia mines, which are sufficient for producing cement for two centuries, his country required Iran's expertise to build a cement production plant. He reminded fellow attendees that at present Paraguay owns several small and medium-size cement production plants, but that it still imports cement from abroad.

Iran has in recent years expanded friendly ties with Latin America. Since taking office in 2005, Iranian President Mahmoud Ahmadinejad has expanded Iran's cooperation with many Latin American states, including Venezuela, Bolivia and Cuba. Ahmadinejad voiced Tehran's readiness to expand all-out ties and cooperation with Asuncion to his Paraguayan counterpart Fernando Lugo Mendez in March 2011.

UK: Hanson UK has announced that it is preparing for a 'tough' 2012. Jon Morrish, managing director, said "We informed employees two weeks ago that we were carrying out a detailed review of the cement business to prepare us for what we expect to be a very tough market in 2012 and beyond."

Morrish's comments arose is the wake of rumours that jobs may be cut at the company's Castle Cement plant in Lancashire. The site currently meets 25% of the UK demand for cement and employs around 300 people. Hanson, a subsidiary of the HeidelbergCement Group, currently runs three plants in the UK including plants in Lincolnshire and Wales, with a workforce of over 1000.

Morrish added, "This review, which includes an assessment of recent changes to the European carbon trading rules, encompasses all three of our cement plants and covers all functions from production and sales to technical and distribution. The three plants are all vitally important to the long term future of the business and there is no intention to close any of them."

"However, it is likely that production levels will change, which will have an impact on jobs. We plan to table outline proposals to employee representatives and recognised trade unions early next week and begin a proper and effective consultation process."

US: Lafarge has reiterated that its expansion and modernisation plan at its Ravena plant in New York State is on track, hitting back at rumours from recently laid-off employees that the company had slowed down or even scrapped its plans to expand the site. 

During a press tour of the site, Lafarge's environmental manager for North America, John Reagan, provided evidence that the project had moved to a pre-construction stage. The US$300m modernisation project underwent nearly three years of permitting with the Final Environmental Impact Statement granted in the summer of 2011. Contractors are dismantling structures at the adjacent Callanan Industry site, so that Lafarge has the room for expansion.

Reagan said that the final design and procurement of materials is ongoing with the construction phase planned from late 2011 to 2014, with start-up planned for mid-2014 and full operation planned for 2015. “2015 seems like a long time from now,” Reagan said, “But it’s not much time to complete all the work that has to be done.” Additionally, the senior project manager, John Light, spoke of the upcoming procurement of heavy equipment including new vertical roller mills.

Over the past few weeks several former Lafarge employees, some of whom were among the 39 laid off on 27 October 2011, have accused the company of everything from not intending to build the new plant to mismanagement. One has accused the company of doing just the bare minimum required to keep the permits valid before closing the plant when the permits expire. 

Lafarge said that it plans to stay in Ravena and that the layoffs and the cut in production were related to the ailing US economy. The plant will soon go to a one-kiln operation, a 50% reduction in capacity. “Demand for cement will determine what capacity we run at,” said Reagan. “We anticipate, based on industry forecasts, that demand will not change much during the next two years."