Displaying items by tag: Capacity

India: UltraTech, India's leading cement producer, is planning a 19% increase in capacity to 62Mt/yr by April 2013 from its current output of 52Mt/yr. Company chairman Kumar Mangalam Birla, who made the announcement, added that the outlook for the sector remained challenging.

"I believe the short-term prospects for the industry appear bearish. Regardless, over the medium to long term, the sector offers good growth potential," said Birla in a statement released after the company's annual shareholder meeting. "Undoubtedly, we are facing some tough challenges today."

Rising input and energy costs have limited margins at cement companies, while demand remains a worry amid a weakening economy and high interest rates which have slowed housing and infrastructure development in Asia's third-largest economy. Producers have also come under pressure after the country's anti-trust watchdog fined 11 companies, including UltraTech, saying they colluded to under-use their plants and create an artificial shortage of cement.

UltraTech has been in talks to buy one of two cement plants put up for sale by debt-laden Jaiprakash Associates, in western and southern India. The company reported a 14% increase year-on-year in net profit for the quarter ending in June 2012 to US$129m.

The news this week that Vietnam's state-owned cement producer, Vicem, has made a first half profit 75% larger than that of the first half of 2011 is a surprising statistic from a country with so much spare cement.

The country has spent most of the past decade building cement plant after cement plant. According to research conducted for the April 2012 issue of Global Cement Magazine, Vietnam now has a cement capacity of over 70Mt/yr! Vicem says that it sold 9.7Mt of cement in the first six months of 2012 and reports that this level represents 44% of its intended production for the year. This makes its 2012 cement production target somewhere in the region of 22Mt.

How much of the non-Vicem cement capacity is being utilised in Vietnam is unknown, but it is certainly too much for Vietnam's current needs. When the country's own government owned cement producer announces that it expects to have 6Mt of cement stockpiled by the end of 2012 (enough to supply the UK for the whole of 2013), it is clear that there is a serious cement surplus. Oversupply has not been met by demand, cement prices are depressed and attempts to export, to countries both near and far, are on the up.

To help curb the problem, one cement plant project has been halted in the past week. The Kinh Bac City Development Share Holding Corp (KBC) has received permission from its state to not build its planned 5Mt/yr plant.

Halting new projects is one way for the country to reduce its overcapacity, but in the short term the industry is looking at exports. While its lengthly coastline makes getting cement to ports for export fairly straightforward, Vietnam is badly located to exploit its current situation in this way. It's proximity to China, which itself is starting to face an oversupply scenario despite its efficiency gains, leaves Vietnam at a cost disadvantage.

As well as there being China on Vietnam's doorstep, many other countries in the region, (Indonesia, Malaysia, Japan, South Korea, Philippines, etc), are also self-sufficient in terms of cement and are able to export extra capacity as necessary. Additionally, East Asian countries have often seen Africa as a good export market but the recent rise of Nigeria as a major producer may reduce this opportunity.

Amid all of these numbers the Vietnam News Brief Service commented that the current oversupply in the socialist state was down to the 'unplanned' construction of cement plants over recent years.

China: China intends to implement strict restrictions on the increase of new cement production capacity in 2012 to deal with a capacity surplus, said Liu Ming, an official with the department of industry within the National Development and Reform Commission.

Speaking at an industrial meeting, Liu said the main task for the time being is to contain the rapid increase of capacity. Currently China faces national overcapacity during the period of 2011-2015. Liu said the government will encourage mergers and acquisitions in the national industry, and increase financial support.

China's cement output increased by 11% to 2.09Bt in 2011 with an annual capacity of 2.9Bt. Liu added that China would roughly complete its task of phasing out out-dated capacity by the end of 2012. However, domestic producers remain optimistic about the growth of national consumption in 2012. The performance of China's cement industry will remain optimistic and annual output will reach new high with around 8% of growth, predicted Kong Xiangzhong, secretary general of the China Cement Association.

China's cement industry will see around 5% of growth in 2012 and 2013, said Cui Xingtai, chairman of the China United Cement Corporation. Cui said that the Chinese cement market will shake off its current weak performance from the second half of 2012 with the annual peak season. The decrease of cement demand in the first quarter of 2012 was directly related to the slowdown of construction projects in the railway, road and airport sectors and cement demand would have good performance in the second half, said Cui.

India: Ultratech Cement plans to invest USD2.2bn to expand its production capacity the company has told its shareholders. The expansion will add 10Mt/yr to the company's capacity with a completion date of March 2014. Ultratech currently produces 52Mt/yr. Ultratech said it would fund its capital expenditure through a 'judicious mix of internal accruals and borrowings.'

In the first six months of this fiscal year, which began 1 April 2011, the company spent USD220m on its expansion projects. Ultratech said India's cement demand is expected to grow by 8%/yr over the coming years.

Nigeria: Cement imports in Nigeria may begin to wind down soon, as the management of Dangote cement has concluded arrangements to finally launch its new 6Mt/yr cement plant in Ibese, Ogun State. Dangote Group additionally revealed that production at Gboko plant would soon be boosted because the company has almost concluded its expansion process in the plant to hit 4Mt/yr. The Gboko plant's current output is 3.5Mt/yr.

Dangote said that with 4Mt/yr in Gboko, about 10Mt/yr in Obajana and 6Mt/yr in Ibese, Dangote's cement production capacity will hit 20Mt/yr by the end of 2011. Nigerian demand is reportedly around 17Mt/yr. "What the Dangote Group alone will be producing will be far more than the country's demand, giving room for the group to commence cement exports to other African countries," said Dangote Group in a statement.

The group stated that by having cement plant in 14 different African countries, Dangote Cement has emerged as Africa's largest and most widespread cement producer, present in Zambia, Tanzania, South Africa, Congo, Ethiopia, Cameroon, Sierra Leone, Ivory Coast, Liberia, Ghana and Senegal. Dangote's plan, according to the company, was to ensure that Africa remains self-sufficient in cement production and in making the products easily available and affordable to end users.

The group was also keen to stress the benefits of increased production to its shareholders, with the Special Advisor to Aliko Dangote, Joseph Makoju, saying, "Very soon, the new lines in Obajana and Ibese will commence full production. By then the local capacity and output will be far more than the local demand of cement and that will set the scene for exporting our products. This will lead to increased product (sales), more revenue for the company and better returns for the shareholders."

Azerbaijan: Holcim has announced the completion of its expansion and efficiency improvement project at its OJSC Garadagh Cement plant in Azerbaijan. Garadagh Cement's CEO, Raoul Waldburger said that the USD448m investment was coming to a close. "The new kiln at Garadagh Cement will start clinker production by the end of 2011," he said. Work on the project, which was carried out by the Chinese firm CBMI Construction Company (belonging to Sinoma International Engineering), had been expected be completed by the end of June 2011.

Thanks to the new kiln, the plant will switch from wet to dry cement production technology. At the same time, the capacity of the plant will rise 2600t/day to 4000t/day. The cost of the project was split between (USD251m), the Asian Development Bank (USD27m) and the European Bank for Reconstruction and Development (USD170m).

Indonesia: The Makassar-based Bosowa Corporation, which has interests in property development, cement, financial services, power and rice production, has announced plans to spend USD120m to expand its cement production and distribution capacity. The company is hoping to cash in on a planned infrastructure spending spree by the government and a rapidly developing property market.

Erwin Aksa, president director of Bosowa, said that the combined production of its two cement units, Semen Bosowa Maros and Semen Bosowa Batam, was expected to reach 3.5Mt/yr in 2011. Between January and September 2011 the company sold 3Mt of cement, 86% of its production target for the whole of 2011.

"We are bullish that our target is achievable as demand for cement remains stable, supported by the growth in the property and infrastructure sectors," said Erwin.

Bosowa will spend USD70m to build another cement plant in Maros, South Sulawesi. After completion of the factory in 2012 Erwin said that the group's cement production capacity would rise to 4.5Mt/yr.

Ecuador: Holcim expects to increase production capacity at its plant in the capital Guayaquil by 54% by 2012. The company will spend USD120m on expansion work and new machinery to boost cement production to 5.4Mt/yr from 3.5Mt/yr.

The machinery includes a new mill with production capacity of 250t/hr. The company is also building two warehouses for clinker and cement storage. The expansion project is currently 85% complete and will be ready to operate by the start of 2012.

Holcim decided to carry out the project based on the steady growth of public and private infrastructure projects in the country during the last few years, according to administrative manager Giancarlo Muñz. Current demand for cement in Ecuador is around 5Mt/yr, which is supplied by Holcim, Lafarge, Guapá and Cementos Chimborazo.

India: The Rajkot-based Kishan group of companies will increase its cement making capacity by investing USD53-63m to set up a new cement plant, which is expected to be commissioned by the end of November 2011. The company already operates a mini cement plant and markets cement under the brand name of Kishan Cement.

For the major cement plant, the Kishan group has formed a new company under the name of 'Hi-Bond Cement India Private Limited.' The group's director, Rajan Vadaliya Vadalia, who also heads the cement plant project, said that the production capacity of new cement plant would be 0.9Mt/yr, with the potential for further expansion in the future. Vadalia added that production would continue at the 0.2Mt/yr mini cement plant.

"The Kishan brand will help us to get new business because it has already a well known name," said Vadaliya. The company is focusing on Gujarat, Maharashtra, Rajasthan and some parts of Madhya Pradesh for marketing.

"Logistically it is costly to cater to the pan-India market, hence we are focusing on markets in western India. Meanwhile, we are also looking at export opportunities and our team is working on various options for exports," he said. He also reported that the machinery for the new cement plant was being imported by a well-known Danish company.

India: A panel of India's environment ministry has cleared a USD98.6m proposal by Jaiprakash Associates to expand the capacity of its cement plant in Madhya Pradesh. The panel has recommended clearance, with certain riders, for the project in the Sidhi district, where the company already operates a 2Mt/yr plant. The Jaypee Group firm proposes to augment the existing capacity to 3.5Mt/yr by constructing a 1.5Mt/yr line.

The Expert Appraisal Committee (EAC) recommended the proposal for environmental clearance subject to the stipulation of specific conditions that include developing a green belt in at least 33% of the area in and around the plant and earmarking at least 5% of the total cost of the project towards social commitments. Jaiprakash plans to put up the new line on 10 hectares and has plans to invest USD13.1m for the installation of pollution control measures.

The Jaypee Group has over 26Mt/yr of cement production capacity across all of its cement interests and has embarked upon expanding it to around 36Mt/yr.