Global Cement Weekly
Issue: gcw178 / 26 November 2014
Headlines
A couple of news stories this week from Myanmar present an opportunity to look at the country. Lafarge has opened a cement repacking plant in the Thilawa special economic zone (SEZ). Upcountry meanwhile, Anhui Conch has had a joint venture approved by the government for an upgrade to an existing cement plant in Kyaukse.
Towards the end of 2013 the government announced that 13 companies were to establish joint ventures with the local state-owned cement plants. In addition the Myanmar Investment Commission had approved the construction of nine new cement plants with an aim of a target cement production capacity of 10.53Mt/yr. Following this, Siam Cement Group's on-going investment in a 1.8Mt/yr plant is due for completion in 2016. Semen Indonesia have been pushing for a joint venture since mid-2014 although it was still trying to agree terms in September 2014, according to local media. Italcementi's chief executive Carlo Pesenti also expressed his company's interest in setting up a joint venture in early 2014.
Association of Southeast Asian Nations (ASEAN) investment bank CIMB placed cement demand in Myanmar at 4Mt in 2012 and a local cement production capacity of 3Mt/yr. Cement consumption was placed at 76kg/capita for the country's population of 52.8 million. In contrast, Thai cement engineering supplier LV Technology reported demand of 6Mt in 2012. CIMB recorded Myanmar's capacity utilisation rate at 60%. Cement sales were broken down as 95% by bag and 5% by bulk.
This kind of supply-demand gap excites foreign investors. Neighbouring Thailand has a consumption of 515kg/capita, Myanmar imports cement from Thailand, Indonesia and India and the country's GDP growth rate is currently estimated to be around 8%.
Yet what's notable about Myanmar's industry are the high number of small, low production capacity cement plants. Many of them are wet process plants. Only one plant is reported as being capable of producing over 0.5Mt/yr with the Siam Cement plant project due to significantly bust this record when it is commissioned in 2016. Limited limestone deposits in the country may also make plants larger than 1.5Mt/yr unviable. Fuel is also an issue, with LV Technology advocating a wholesale industry conversion from state-subsidised gas to coal due to power shortages and impending competition issues.
In 2015 Myanmar is set to enact free trade tariffs from its ASEAN membership. Without protection or preparation, its cement plants could face serious consequences from cheaper imports from Thailand, Indonesia and Vietnam. The move by the government to encourage joint ventures with foreign partners looks like one way to mitigate this. In a market report in 2013 CIMB described the situation for investors as 'high-growth, high-barrier.' This seems to be an apt description given the experiences of Semen Indonesia.
US: The PCA board of directors has elected Lafarge North America's CEO John Stull as its 2014 - 15 chairman. He succeeds American Cement Co's Cary Cohrs.
"This is an important time for the PCA to champion resilient construction and advocate for critical national infrastructure funding, both of which will ensure the vitality of the cement industry," said Stull, who in addition to being a long-standing director has co-chaired the PCA Manufacturing Technical Committee.
Over a 22-year Lafarge Group career, Stull has progressed through vice president and regional president roles for US, Latin American and Sub-Saharan African businesses. He holds a chemical engineering degree from the University of Akron and is a Harvard Business School executive management programme graduate.
Netherlands: Silicon, a specialist company in refractory anchoring systems and rapid arc stud welding technology, has announced that six new members have joined its team, where they will be instrumental in leading the organisation to drive worldwide business growth.
Marc Beers, who has been appointed as sales manager, has 15 years of experience at different sales management positions. "I look forward to working with such an awesome team and we are excited to work together on providing the best products and services to our customers." said Beers.
Denmark/US: FLSmidth has signed an engineering, procurement and construction (EPC) contract with Cemex for the supply of a new cement production line at its Odessa cement plant in Texas, US. Once the installation is finished, the cement production line is expected to have a capacity of approximately 2540t/day.
The expansion will focus on higher fuel efficiency and improved productivity. The equipment scope includes a five-stage ILC preheater with a Low NOx Calciner, three-pier kiln, FLSmidth Cross-Bar cooler, Duoflex burner, Pfister weighing and dosing systems, gas analysers and three Fuller-Kinyon pumps. The line will also use an FLSmidth control system.
Laos: Siam Cement Group (SCG) is carrying out a survey of available raw materials and possible locations with a view to setting up one of the largest cement factories in Laos. Vanthong Sitthikoun, president of the Lao Cement Producers' Association, said that the Laotian government had authorised SCG to conduct a survey in Boualapha district, Khammuan province, where the company proposes construction of the plant.
"There are now two surveys under way in Khammuan province for the construction of cement factories, by Thai and Chinese investors. When they have finished, they will submit their findings to the government before building the factories," said Vanthong.
SCG intends to build a plant in Laos to tap its growing demand for cement especially for dam construction. Laos currently has 10 operational cement factories, with a total production capacity of about 3.84Mt/yr according to local media. Two of the factories are in Vientiane, three are in Vientiane province, and there is one in each of the provinces of Luang Prabang, Xieng Khuang, Khammuan, Savannakhet and Saravan.
Bolivia: FLSmidth has confirmed that it has signed a contract with Sociedad Boliviana de Cemento (SOBOCE) for supplies of equipment and machinery for a cement plant in Bolivia. Full information regarding the order will be released once the contract is considered binding, following exchange of down payment and guarantees. Local media has reported that the US$180m Yacuses, Puerto Suarez cement plant will have a cement production capacity of 0.8Mt/yr.
Nigeria: Lafarge is considering opening its sixth research centre in Nigeria. It will be the sixth development laboratory in the network following those in France, China, India, Algeria and Brazil. Lafarge's prospective research and development director, Gilles Rochard, made the announcement on a press tour in France.
India: Kerneos Aluminate Technologies, a leader in specialty cements, hopes to commission a proposed US$19m plant in India by December 2016. The company has finalised plans to set up a greenfield unit near Visakhapatnam in Andhra Pradesh.
"We chose Visakhapatnam as the site for our own factory since it is ideally placed close to our customers in the eastern region. Being a port-based site, it offers the advantage of raw materials imports while serving as a base for exports in the near future," said president and CEO of Kerneos Jean-Marc Bianchi. The new plant will produce calcium alumina cement. It will have an initial capacity of 30,000t/yr. Kerneos plans to add a similar capacity at a later stage depending on the rate of product uptake in India. The Visakhapatnam unit will be Kerneos' seventh manufacturing facility worldwide.
India: JCB India has inaugurated two plants in Jaipur facility costing US$80m. The 115 acre site consists of a fabrication and a manufacturing plant. Once fully operational it will employ around 1000 people.
"We decided on this majestic state because it holds strategic importance for future growth under the Delhi-Mumbai Industrial corridor, of which a considerable part passes through the state," said Joesph Bamford, group chairman of JCB. JCB has invested nearly US$400m in India since its entry in 1979 with the Ballabgarh facility in Haryana. The fully-owned subsidiary of JCB also runs two factories in Pune.
India: The Competition Commission of India (CCI) has closed a case of alleged cartel activity among 11 cement companies due to a lack of evidence. The companies were named as Penna Cements, India Cements, Bharathi Cements, Dalmia (Bharat) Cements, Bhavya Cements, Zuari Cements, Ultratech Cements, Jaypee Cements, Ramco Cements, KCP Cements and My Home Cements.
Pakistan: Cherat Cement has reportedly decided to install a new 1.3Mt/yr capacity production line, according to local media.
Abid A Vazir, executive director of Cherat Cement, said that the expansion is being undertaken to meet expected increases in domestic demand. The increase is expected to be fuelled by government spending on major infrastructure projects, with a special focus on the construction of highways and hydropower as well as housing projects. Expected improvements in the political situation in neighbouring Afghanistan, Pakistan's largest export market, may also give a boost to reconstruction activities.
Tianjin Cement Industry Design and Research Institute has reportedly been contracted to build the plant. Cherat Cement currently operates a 1.1Mt/yr capacity cement plant near Nowshera, in the Khyber-Pakhtunkhwa Province of Pakistan.
Turkey: Turkish cement producer Afyon Çimento has decided to allot Euro133m to reconstruct its cement plant in the western Turkish city of Afyonkarahisar, Afyon Province. The company will relocate the plant from Afyonkarahisar to a site in Halimoru Village in the same district. The plant has a clinker production capacity of 450,000t/yr and cement grinding capacity of 550,000t/yr.
Myanmar: Lafarge has opened a cement repacking and storing plant in Thilawa special economic zone (SEZ) in Myanmar. The plant cost an estimated US$10 - 20m. Lafarge owns 60% of the distribution depot, while two local firms own 20% each.
The depot, which is near Thilawa port, 20km outside Yangon, can store 20,000t of cement and will be able to expand capacity based on customer demand. The depot will mainly be used for repacking and storing cement, while the cement will be imported in bulk from Lafarge plants in the region, mainly from Malaysia and Vietnam. The company will primarily supply its cement to construction projects in the ongoing Japanese-backed Thilawa SEZ project and the rest to the local market.
Germany: The IT logistic solution VAS, of FRITZ & MACZIOL, has become an integral part of the 'Logistic Efficiency Optimisation' (LEO) initiative initiative of HeidelbergCement.
Within the project, an integrated material-flow management will be introduced that will lead to a considerable cost reduction in the fields of logistics. Globally, several plants in the cement, aggregates as well as concrete businesses will be equipped with VAS. The implementation of VAS will lead to a significant optimisation of the dispatch and related logistical processes, as the increased level of automation will result in a much faster execution of many activities within the plants.
In this context, FRITZ & MACZIOL has also been announced as a 'preferred supplier' by HeidelbergCement. "FRITZ & MACZIOL reflects an ideal partner for us in the fields of IT logistics," said Tanja Hofmann, HeidelbergCement's group purchasing spokesperson.
HeidelbergCement currently runs the IT-Logistic solution VAS at four of its German cement plants. The solution will now be further implemented in its remaining German plants. At the same time both sides will work on the international roll-out.
Loesche supplies the first two vertical roller mills for cement grinding to El Arish Cement
24 November 2014Egypt: El Arish Cement is extending the clinker production capacity of its existing cement plant and will add two new lines with a clinker production capacity of 5500t/day.
El Arish Cement already operates two Loesche vertical roller mills, type LM 56.4, for cement raw material grinding within its existing two lines. The new type LM 56.4 mills will have 450t/hr of grinding capacity and a product fineness of 12% R90μm. As the new mills are of the same type as the existing ones, common spare parts can be used, keeping the spare parts demand to a minimum.
For cement grinding, El Arish Cement has also selected Loesche vertical roller mills of type LM 63.3+3. The table diameter of the mills is 6.3m and will be driven by a drive system with a rated capacity of 6800kW. The mills will grind various cement types, with capacities of up to 305t/hr.
Competition Commission of India to take more time to decide on LafargeHolcim merger
24 November 2014India: The Competition Commission of India (CCI) has said that the LafargeHolcim merger is likely to have an adverse effect on the competition in the cement industry. The anti-trust regulator has asked the two companies to publish details of the deal on their websites as well as publish them in four leading daily newspapers. It has also sought comments or objections from the public within 15 days of the merger details being published. CCI chairman Ashok Chawla has said that the CCI would take around two months to decide on the deal.
Philippines: Cash-strapped Pacific Cement Company (PACEMCO) has decided to extend the suspension of its cement plant operations for three months to complete ongoing negotiations regarding a possible investment of funds needed to re-open the plant.
"During this period of work suspension, management has committed to respect the benefits of the employees which are clearly spelled in the minutes of the conciliation conference held at the office of the Department of Labour and Employment (DOLE) Secretary on 14 November 2014," said Inocencio R Cortes, executive vice president of PACEMCO. "As a result of this extended work-suspension, all employees are hereby advised not to report to the main plant site or the port site as the case may be, as well as to those in the head office in Makati City, effective 17 November 2014 and until further notice," he added.
PACEMCO's cement plant halted operations on 5 May 2014 after the Surigao del Norte Electric Cooperative cut its power supply for unsettled obligations worth at least US$555,432. Edwin Batac, union president of Pacemco Mamumuong Nagkahiusa, said that the company has 343 employees who were on forced leave after the company stopped its operations. Batac added that the company is financially drained.
UAE: Arkan Building Material Company has opened a US$354m cement plant outside Al Ain, with 4Mt/yr of clinker and 5.7Mt/yr of cement of production capacity. The company said that the cement plant will source its raw materials from its own queries in Al Ain and Oman. Arkan plans to sell 90% of its production on the domestic market and 10% will be exported to GCC countries.
Myanmar: The local Myint Investment Group has joined China's Anhui Conch Cement to upgrade the No 33 Kyaukse cement plant to 5000t/day of cement production capacity through a build-operate-transfer (BOT) system, according to the Ministry of Industry. The plant currently has a production capacity of 400t/day. The Directorate of Investment and Company Administration approved the joint venture, Myanmar Conch Cement Co Ltd, on 11 November 2014.
South Africa: PPC has concluded an agreement to source waste tyres from the Recycling and Economic Development Initiative of South Africa (Redisa) for use at its De Hoek cement plant in Piketburg, Westerm Cape. PPC is also investigating the possibility of using waste tyres in some of its other plants, according to Azola Lowan, the executive for investor relations and strategy.
Redisa is the only waste tyre management plan approved by the Department of Water and Environmental Affairs and is involved in the collection and processing of waste tyres. Lowan said that the use of the waste tyres in the kilns at the De Hoek plant would be introduced from the middle of 2015 and indications were that the tyres could replace 10% of its coal usage. Lowan also confirmed there was a cost benefit from using the waste tyres instead of coal and a carbon advantage because of the reduced use of coal. Some investment was required in the feeder system to use waste tyres, which meant this initiative would only generate a return over a few years.
Lowan stressed this was one of several environmental and alternative energy initiatives being undertaken by PPC to ensure that PPC is compliant with environmental legislation and regulations by 2020. PPC has already commissioned the use of carbonaceous spent pot liner, a waste material from the aluminium industry, at its Dwaalboom cement plant in Limpopo. "We basically get paid to use that product and again it replaces about 5% of the coal," Lowan said. She added that PPC was also doing a feasibility study on a waste heat recovery (WHR) system at its Dwaalboom plant. PPC also has an agreement with Innowind, which is constructing a 60MW wind farm in the Eastern Cape to provide electricity to PPC's Grassridge quarry.
Canada: Efforts by Lafarge and Holcim to sell assets as part of their planned merger may be complicated by the new McInnis cement plant in Canada, which some claim will inject more capacity into an already saturated market and further depress prices.
McInnis Cement's plant in the northeastern Quebec region of Gaspé will have 2.2Mt/yr of installed cement production capacity and may start shipping to clients in two years, according to Jim Braselton, a senior vice president at the company. That represents about 66% of the local cement capacity that Lafarge and Holcim plan to sell. The assets for sale, including construction and aggregates units, have an estimated value of US$884m, excluding the impact of increased supply by the McInnis plant.
India: According to J P Morgan, Indian cement demand is likely to remain sluggish until the end of the 2015 financial year as government spending remains weak. However demand should pick up from the 2016 financial year onwards. "We would wait for clarity on the recently completed Ministry of Highways' tender for cement procurement, as roads can be a big driver and it has relatively fewer issues," said J P Morgan.
Brazil: Holcim and Lafarge are actively negotiating an agreement with Brazil's anti-trust council, Conselho Administrativo de Defesa Econômica (Cade), to gain approval for their merger.
The deal involves divestitures of 31% or 3.6Mt/yr of Lafarge and Holcim's joint cement production capacity in Brazil. The assets could be sold to single company or several bidders. Holcim is still bound to pay Cade a US$197m fine that was imposed due to cartel practices. Lafarge paid US$16.7m to Cade in 2007 to end the investigation into its practices.
Russia: Sibirsky Cement has announced that it expects its sales to decrease by 7% year-on-year in 2015, according to first vice president Gennady Rasskazov. "We are making budget plans for next year, but I think that sales will stand at 4 - 4.1Mt," said Rasskazov. In 2014, Sibirsky Cement aims to sell 4.3Mt of cement.
Australia: Fibre cement producer James Hardie has posted a sharp increase in its operating profit for the second quarter of its 2015 financial year, despite a slower-than-expected recovery in the US housing sector.
James Hardie, which generates 66% of its revenue in Europe and the US, had warned of short-term US uncertainty with the recent 'flattening in housing activity,' but has forecast a moderate improvement for the year ending in March 2015. Its Australian, New Zealand and Philippines businesses are also expected to improve.
"Management cautions that, although US housing activity has been improving for some time, market conditions remain somewhat uncertain and some input costs remain volatile," said James Hardie.
The company reported a net operating profit of US$127m for the quarter that ended 30 September 2014, up from US$51.9m in the same period of 2013. Chief executive Louis Gries said that the 66% jump reflected increased volumes and higher average net sales prices across its US, European and Asian fibre cement businesses, which drove net sales up by 12% for both the quarter and the half-year. "The recovery of the US housing market remains below our expectations at the beginning of the year," said Gries.
For the 2015 financial year, James Hardie expects US$205 – 235m of net operating profit, excluding asbestos compensation costs. In the 2014 financial year, the company reported US$197m of net operating profit.
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