September 2024
French cement industry forecasts 3% growth in 2018 15 November 2018
France: Bénédicte de Bonnechose, the president of the French cement industry union (SFIC), says that country’s cement market is expected to grow by 3% in 2018. She made the comments whilst unveiling local CO2 reduction targets by 2050, according to the Agence France Presse. The local industry recorded growth of 4% in 2017. She described 2018 as a ‘positive recovery’ with sustained growth following a good first half.
SFIC forecasts that new low-clinker cement products will enter the market by mid-2020. These products include EMC II / CM, EMC VI and LC3 types of cement. These should reduce the CO2 emissions related to current sold cement products by 35%. Other CO2 capture initiatives including Oxyfuel, Leiliac and calcium looping cleanker technologies were also mentioned.
Angola prepares for utilisation rate below 30% in 2018 15 November 2018
Angola: Manuel Pacavira Júnior, the chairman of the Angolan Cement Industry Association (AICA) does not believe that the cement production utilisation rate in the country will reach 30% in 2018. Pacavira Júnior described the situation as one of ‘significant losses’ given that local producers are suffering from high operating costs, according to the Angola Press Agency. The country has a cement production capacity of 8.6Mt/yr but it only consumed 2.6Mt in 2017. This follows cement production of 3.87Mt in 2016, 5.2Mt in 2015 and 4.92Mt in 2.14. The five local producers are continuning to operate but at reduced levels due to the poor market. They are looking to build their export markets.
LafargeHolcim sells in Indonesia 14 November 2018
LafargeHolcim announced its plans to sell its business in Indonesia to Semen Indonesia this week for US$1.75bn. The deal covers four cement plants, 33 ready-mix plants and two aggregate quarries. It is part of its portfolio assessment scheme with a target to divest assets worth Euro1.7bn in 2019. At the current exchange rate, if the deal completes next year, then that’s most of the target met. Job done.
But wait just a moment. Global Cement Directory 2018 data has Holcim Indonesia’s cement production capacity listed as 11.9Mt/yr. Just taking the integrated cement plants into account and then recognising that the subsidiary has an 80.6% share in the business, puts the cost at a little under US$120/t of production capacity. The other concrete and aggregate assets can only reduce this figure as their value is taken into account. Then, don’t forget that Holcim Indonesia also operates two cement grinding plant: one at Ciwandan in Banten and a mothballed unit at Kuala Indah in North Sumatra. Nor did a cement terminal in Lampung and a cement warehouse in Palembang receive a mention. Holcim Indonesia placed its total cement production capacity at 15Mt/yr in its 2017 annual report. Take that figure into account and one gets a value of below US$100/t for the cement production capacity of Holcim Indonesia. It seems unlikely that LafargeHolcim has undervalued its assets but somebody somewhere must be taking a loss on this deal.
Earlier in the year we looked at LafargeHolcim’s options in Indonesia following speculation in the local press that it was considering selling. Our conclusion was that market overcapacity wasn’t going away anytime soon and LafargeHolcim had a publicly stated desire to sell its assets around the world to cut back its overheads towards profitability. The subsidiary made a loss in 2016 and this tripled to US$58m in 2017. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) have fallen in consecutive years since 2015. LafargeHolcim has opted for the bold option to totally leave the market of one of the world’s top ten national cement producers.
From its perspective, Semen Indonesia said that it was looking forward to taking on-board Holcim Indonesia’s co-processing technology and rolling it to its other plants. Holcim Indonesia’s alternative fuels and recycling subsidiary, Geocycle, processed 0.36Mt of waste fuels in 2017, a 23% year-on-year rise from 0.30Mt in 2016. Semen Indonesia also has plans to submit a mandatory tender offer for the remaining share of Holcim Indonesia. It expressed pride at the transaction making it the biggest cement producer in South-East Asia with a production capacity of 53Mt/yr but it didn’t say exactly where it plans to sell its products.
Graph 1: Domestic cement consumption in Indonesia, 2010 – 2017. Source: Indonesian Cement Association (ASI).
That last bit is important. Since the Holcim Indonesia assets and Semen Indonesia’s plants don’t seem to overlap too much geographically it seems likely that the competition authorities will approve the deal if they can overlook the state-owned company owning over half the country’s production capacity. Indonesian Cement Association (ASI) data put sales at 66.4Mt in 2017, giving a capacity utilisation rate of 84% using the Global Cement Directory’s national capacity of 79.3Mt/yr or 61% using the ASI’s figure of 108Mt/yr for 2017. ASI data shows that local cement consumption grew by 7.6% year-on-year in 2017 following five years of slowing growth. So far, growth for the first half of 2018 seems slower at 3.6% year-on-year to 30.1Mt. These figures may have prompted LafargeHolcim to make its final decision to exit the country suggesting that there is no end in sight to the poor market.
LafargeHolcim’s decision to leave Indonesia seems sound but the selling price seems low and it is walking away from a large market. Either the production assets are old, the market is worse than we think it is or something else is going on. That said though, LafargeHolcim has taken decisive action that should ultimately benefit its bottom line.
Germany: Stefan Penno has stepped down as the chairman of the board of directors of the German Powder and Bulk Association (DSIV). He has left after six years in the position although he will remain available to the board for consulting on international affairs. Fellow board members Michael Hengl and Stefan Zöbisch also stood down at the association’s annual general meeting.
Tom Henning of SHA Germany has been elected as the new chairman and Uwe Schmidt of Jacob as secretary. Current board members Wolfram Kreisel and Jochen Baumgartner were re-elected and Daniel Eisele, Easyfairs was also appointed as second assessor.
Poor Colombian performance drags on Cementos Argos sales 14 November 2018
Colombia: Falling sales at home have reduced Cementos Argos’ sales so far in 2018. Its revenue decreased by 1.8% year-on-year to US$1.99bn in the first nine months of 2018 from US$2.03bn in the same period in 2017. Its sales volumes of cement declined slightly to 12.1Mt. However, its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 6.1% to US$355m from US$330m.
“It´s been a year full of challenges and opportunities in which we have been focused on the strengthening of our value proposition, looking forward to be a strategic ally for our clients´ projects; improving the competitiveness of our operations through the execution of BEST, ensuring we have the financial flexibility to mitigate market risks, taking advantage of growth opportunities and becoming a leaner, more innovative and sustainable company for the years to come,” said Juan Esteban Calle, chief executive officer (CEO) of Cementos Argos.
By region, revenue fell by a little in the US and cement sales volumes remained stable. This was blamed, in part, on the negative effects of Hurricane Florence on its market in the Carolinas in the third quarter and on falling prices. Revenue and sales volumes were down in Colombia due to a poor market although this started to recover in the third quarter, notably with improving earnings. In the Caribbean and Central America region its revenue and sales volumes increased, lead by growth in the Dominican Republic, Puerto Rico and the Eastern Caribbean. Despite this, EBITDA margin fell due to decreased despatches in Honduras and Panama.
Cimasso produces first cement bag at Bobo Dioulasso grinding plant 14 November 2018
Burkina Faso: Cimasso has produced the first bag of cement at its new 2.6Mt/yr grinding plant at Bobo Dioulasso. The subsidiary of Cim Metal Group met the milestone in early November 2018, according to the Le Pays newspaper. The official inauguration of the unit is planned for the end of November 2018. It follows first production at Ciments de Côte d’Ivoire’s (Cimivoire) 3Mt/yr grinding plant in Abidjan in the Ivory Coast in September 2018. Cimivoire is another subsidiary of Cim Metal Group. The plant was built using loans from the West African Development Bank (BOAD).
National Company Law Appellate Tribunal approves UltraTech Cement’s bid for Binani Cement 14 November 2018
India: The National Company Law Appellate Tribunal (NCLAT) has approved a revised bid by UltraTech Cement for Binani Cement. The tribunal approved UltraTech’s resolution plan and said that the plan submitted by Rajputana Properties, a subsidiary of rival bidder Dalmia Bharat group, was ‘discriminatory’ against some financial creditors, according to the Press Trust of India. In July 2018 the Supreme Court transferred all matters related to corporate insolvency resolution process of Binani Cement to the NCLAT Kolkata.
CMS launches Portland Limestone Cement product 14 November 2018
Malaysia: Cahya Mata Sarawak (CMS) has launched a new Portland Limestone Cement (PLC) product. The 32.5N strength product is targeted for low-rise concrete structures such as single storey residential, office and commercial buildings. It is also intended for plastering, bricklaying and for use in the construction of drains and rural or kampong roads. CMS has also been conducting trials with Universiti Malaysia Sarawak (UNIMAS) on testing it as a binder for soil stabilisation. The new cement type will compliment CMS’ existing Portland Cement 42.5N product.
CMS operates one integrated cement plant and two grinding plants. Both grinding plants, at Pending in Kuching and Bintulu, have direct access to ports allowing entry to export markets for bagged and bulk product. The state-owned cement producer also operates two bulk marine terminals at Sibu and Miri.
Apo Cement to lay off third of employees following landslides 14 November 2018
Philippines: Apo Cement is preparing to temporarily lay-off up to 30% of its employees and 40% of its contractors. It has filed a formal notice detailing its intentions with the Department of Labor and Employment in Central Visayas, according to the Philippines News Agency. It says it has been forced into reducing its workforce in response to the on-going suspension of Apo Land and Quarry following landslides in September 2018. APO Land & Quarry supplies raw materials to CHP’s subsidiary Apo Cement, and it is indirectly 40% owned by Mexico’s Cemex.
Indonesia: LafargeHolcim has signed an agreement with Semen Indonesia to sell its 80.6% share of Holcim Indonesia for US$1.75bn. The assets to be sold to Semen Indonesia include the entirety of LafargeHolcim’s operations in Indonesia, which consists of four cement plants, 33 ready-mix plants and two aggregate quarries. LafargeHolcim says it decided to divest Holcim Indonesia as part of the on-going portfolio review. Closing of the transaction is subject to customary regulatory approvals.
“As part of our Strategy 2022 – ‘Building for Growth’ we have committed to divestments of at least Euro1.8bn. Today’s announcement is an important milestone in reaching our target and to increase our financial strength,” said Jan Jenisch, chief executive officer (CEO) of LafargeHolcim.