November 2024

UK: The Office of Fair Trading (OFT) has published a market study into cement, ready-mix concrete and aggregates. It proposes to refer these key sectors of the construction industry to the Competition Commission for more detailed investigation.

Key issues that the OFT study covered featured the high barriers to entry in these sectors due to the difficulty of obtaining planning permission and the level of investment required. It was noted that high and increasing concentration dominated the market with five major players accounting for over 90% of the cement market and 68% of ready-mix concrete production.

The study picked up on the effects of vertical integration pointing out that the major firms are integrated across ready-mix concrete and cement. The OFT had also received complaints about vertically integrated firms refusing to supply or discriminating against non-integrated competitors through their pricing. Multiple contacts and information exchanges across the markets were mentioned, with major firms supplying each other with both aggregates and cement and engaging in joint ventures and asset swaps.

Lastly the study noticed an apparent squeeze between rising cement prices and stable or falling ready-mix concrete prices, affecting independents that both buy cement from vertically integrated majors and compete against them in the ready-mix concrete market.

John Fingleton, OFT Chief Executive, said, "We are concerned that competition is not working well in these sectors, with underlying features of the market giving rise to persistent concerns."

Cement, ready-mix concrete and aggregates sectors had a combined turnover in 2009 of up to Euro3.86bn and are vital inputs in the construction sector, which represents 7% of UK GDP. Some 40% of construction expenditure is in the public sector, for schools, hospitals, roads and other physical and social infrastructure, with central government being the biggest customer.

The OFT will consult until 30 September 2011 on its proposal to refer the market to the Competition Commission. Key parties will be contacted directly but parties wishing to make a submission are invited to contact the OFT in writing.

Egypt: In collaboration with the Egyptian Environmental Affairs Agency (EEAA) Suez Cement Group of Companies (SCGC) has begun the implementation of a new integrated alternative fuel (AF) system at its Kattameya plant in New Cairo.

"As part of the activities to enhance our sustainability, this project will realise environmental returns through the application of advanced technologies for using AFs in cement production operations, a matter which will maximise our competitiveness and reduce the use of traditional energy sources thus helping the country," said Carlo Foroni, technical director of the SCGC. "This will also relieve the community from the need to treat their waste materials and will also limit CO₂ emissions," Foroni added.

According to Mohamed Aymen, SGCC environment affairs manager, following EEAA's 2009 approval of burning agricultural and municipal wastes at the company's Kattameya and Helwan plants, industrial testing started at Kattameya through a pilot feeding line. "All of these products will be recycled and used as an alternative fuel by being safely burnt at cement kilns," said Aymen.

While the environmental impact assessment for using alternative fuel systems at the Suez plant is underway, the project's feeding line will already be applied as planned at the company's Helwan plant later in 2011.

Japan: Taiheiyo Cement Corp has announced a net loss of USD67.7m from sales of USD2.14bn in the three months to 30 June 2011. The company's net loss was less than half the loss that it suffered in the same quarter of the previous fiscal year, which was USD140.6m. The closure of three domestic factories in the previous quarter and smaller payrolls boosted its bottom line.

While sales at the firm's mainstay cement operations were nearly unchanged from 2010, its operating loss totaled USD15.6m, far better than the USD49.5m operating loss logged in the same quarter of the previous fiscal year.

Cement demand in the Tohoku region fell in the wake of the massive earthquake that hit north east Japan in March 2011, but demand from construction of condominiums and commercial facilities rose in the Tokyo metropolitan area in particular, leading to the rise in sales.

Taiheiyo Cement expects its net profit through to the end of the current fiscal year (ending 31 March 2012) to jump by 150% to USD141.3m. The firm has also forecast that sales will drop by 2% to USD9.15bn and that operating profit will surge by 64% to USD351.5m for the full year.

UK: Plans to burn used tyres and plastics for energy at Lafarge's Aberthaw works in South Wales have been submitted to the Environment Agency for approval. Lafarge's comes after it sent out 5000 letters to residents explaining the latest proposals and held two public consultations. The proposal has previously sparked concerns among some residents and environmentalists.

The plant's management team says that the move would cut costs and reduce coal burning and CO₂ emissions. The proposal comes six years after the Lafarge meat and bone meal (MBM) from cows and sheep as a sustainable waste-derived fuel at the plant. If the move is approved by the Environment Agency, the used Solid Recovered Fuel (SRF), including papers and plastics, and end-of-life car and van tyres, could save up to 15,500t/yr of coal and reduce carbon dioxide emissions by up to 20,000t/yr.

James Kirkpatrick, manager at the Aberthaw works, which has an integrated capacity of 0.55Mt/yr, said the plan had been prompted by increased competition in the cement market and a serious downturn in demand for construction products. "Since it was introduced in 2005, we have used 50,000t of MBM which has significantly reduced our consumption of fossil fuels," he said. "Extending the range of sustainable waste-derived fuels we can use offers us a good way to keep a check on our costs which have been escalating."

Keith Stockdale, secretary of Barry and Vale Friends of the Earth, said, "The Environment Agency will have to impose strict conditions on the burning of this potentially hazardous waste."

Kenya: Investors behind the US$148m plant in the Pokot region of Kenya have pledged to go ahead with construction, which has failed to take off 14 months after the ground-breaking ceremony. Directors have blamed the delay on various studies required before the investment.

“The Chinese contractors will be on the site soon,” said project director Rajeshkumar Rawal. “A general manager is already on the ground.” He rebuked industry talk that Indian plant builders Sanghi Cement had approached a local cement industry player insisting that local investors still held 26% of the stake with the Indian group taking the balance. Mr Rawal, a shareholder in the project, was in the thick of the battle to secure rights and licences for the project but he could not give a specific time frame promising more details in late August 2011 when Sanghi chiefs visit Kenya.

Some industry players have doubted the viability of setting up a factory in the remote area with poor infrastructure despite its proximity to the South Sudan which has strong potential for cement consumption.

Pakistan: The Capital Development Authority (CDA) for Islamabad has made temporary arrangement with Fauji Cement for the disposal of garbage from Sector I-14 of the city to cut pollution. Disposal of garbage has become a major issue for the city and the agreement was carried out in the interests of citizens a CDA official announced.

Fauji Cement has installed a waste processing plant at its site in the Tehsil Fateh Jang region of the Attock District. Here solid waste is processed for the generation of fuel to run the plant using Refuse Derived Fuel technology. As per the agreement, the CDA transports garbage to a nearby green belt whereupon Fauji Cement takes responsibility for segregating the material, taking it to the plant and covering the remaining material with mud.

The CDA official stated that previously the garbage was being disposed of in deep ditches covered with soil but it was an unhygienic and undesirable practice. However, as the Fauji Cement covers the garbage (remains) with mud, there is hardly any adverse impact on the environment. Currently a study is being conducted to gauge the impact of disposal of garbage on the environment in Islamabad.

Iran: Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) has announced that Iran produced 23.41Mt of cement in the first four months of the current Iranian year (21 March 2011 to 22 July 2011) showing a 19% rise compared with the same period in 2010.

The report added that Iranian companies produced 6.37Mt in Tir (4th month in the solar calendar, 22 June 2011 – 22 July 2011). Mohammad Hassan Pourkhalil, the secretary of the Cement Industry Contractors Union, stated that Iran exported 0.94Mt of cement in this month. Pourkhalil added that Iran's exports of cement and clinker surpassed 3.40Mt from 21 March to 22 July, showing a 14% growth compared with the same period in 2010.

In June 2011 Iran launched two new cement factories in the provinces of West Azerbaijan and Golestan. Khoy cement factory, which cost USD140m, has the capacity to produce more than 1Mt/yr. Galikesh cement factory, which employs some 210 workers and cost about USD165m, has the capacity to produce more than 3,400t/day.

Argentina: Cement maker Loma Negra, controlled by Brazil's Grupo Camargo Correa, will invest USD404m in Argentina between 2012 and 2014, President Cristina Fernandez has announced.

Camargo Correa officials met with the Argentine president Fernandez and presented an investment plan that includes a new cement plant. "They told me about investments... for USD404m with a cement plant that will allow them to produce 900,000t more," Fernandez, who is seeking re-election in October 2011, said in a speech.

The investments, aimed at increasing output, also include a coal stockpile yard, said Ricardo Lima, vice president of operations at Camargo Correa. Loma Negra has nine cement plants and six concrete plants.

Oman: Raysut Cement's Chairman, Alawi Ali Muqaibal, has announced that the company's pre-tax profit declined by 44% in the second half of 2011, falling to USD19.6m from the USD35m that was earnt in the same period of 2010. For the first six months of 2011 Raysut's production cement production was 1.62Mt and its clinker production was 1.71Mt.

Muqaibal added that during the period under review, total sales reached USD77.6m, a decline of 17% from the USD93m taken in 2010. Despite competition in the UAE, the company's subsidiary, Pioneer Cement, earned USD3m.

India: Grace Construction Products, an operating segment of W R Grace & Company has started manufacturing from a new facility near Delhi, India. Development at the site, which manufactures cement additives as well as concrete admixtures that are sold to cement producers in northern India, is part of Grace's ongoing growth strategy to invest in emerging regions.

Grace's cement additives help cement producers to improve grinding efficiency and overall cement quality, helping to build stronger structures in more energy-efficient ways, which helps to reduce manufacturing costs. In the past India has had issues with sub-standard cement and concrete products, including the much-publicised collapse of a bridge in New Delhi at the Commonwealth Games site in 2010.

The new facility is the most recent addition in a series of emerging market investments in the construction industry for Grace. The company has opened similar facilities in China, Colombia, Panama, Saudi Arabia and Vietnam since 2010.

"We continue to invest in emerging economies in order to meet our customers' needs," said Andrew Bonham, President of Grace Construction Products. "The new facility will allow us to enhance service and delivery times to our customers in Northern India."

The manager at the new plant, Ajay Kapoor said, "Our number one priority is to provide a safe environment and safe practices at the site. We must ensure our company culture extends throughout all our facilities from safety to product quality to community outreach."