Displaying items by tag: Cementos Avellaneda

Argentina: Cementos Avellaneda has inaugurated its 22MW La Calera solar power plant in San Luis Province. Forbes has reported that the power plant will supply electricity to the producer's 1.1Mt/yr San Luis cement plant. As a result, operations at the plant will henceforth be 55% renewably powered. In total, the new solar power plant will eliminate 22,600t/yr-worth of CO₂ emissions. Engineering company Industrias Juan F Secco supported the installation of the US$25m plant, which took 16 months to build.

Cementos Avellaneda's general director José Luis Maestri said "It was key to the success of this project to have been able to find a strategic partner such as Industrias Juan F Secco, an Argentine company with more than 80 years of history and experience in the energy sector, which provided us with all its professionalism and commitment."

Argentina: Cementos Avellaneda has signed a memorandum of understanding (MoU) with energy provider YPF Luz for the construction of a new wind farm. Local press has reported that the planned plant will have a capacity of 63MW and be situated in Olavarría, Buenos Aires Province. There, it will supply 100% of the energy used in cement production at Cementos Avellaneda's Olavarría cement plant. The cement producer will transmit any surplus energy from the wind farm to its San Luis plant at La Calera, with the longer-term aim of becoming Argentina's first 100% renewably-powered cement company.

The partners will carry out technical and economic feasibility studies in mid-2023, and publish plans and budget before the end of the year.

Cementos Molins’ financial results took a tumble this week, in part due to the poorly performing Argentinian economy. A decrease in sales in Mexico was also to blame but rampant inflation in Argentina caused the Spanish cement producer problems.

Cementos Molins owns a 51% stake in Cementos Avellaneda, with Brazil’s Votorantim Cimentos owning the remainder. Molins took pains in its financial report to point out that the aggregate rate of inflation had been 109% in mid-2018. Accordingly, its income and earnings in 2018 would have been much better if the economy had been in a better state. As it was, its income fell by 24% year-on-year to Euro134m and its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 30% to Euro30.3m. Adjusted for negative inflationary effects these should have risen by 43% and 31% in 2018.

Graph 1: Construction activity in Argentina (year-on-year growth, %). Source: El Instituto Nacional de Estadística y Censos de la República Argentina (INDEC).

Graph 2: Monthly changes in cement despatches in Argentina (year-on-year growth, %). Source: Asociación de Fabricantes de Cemento Portland (AFCP).

The other major local producers, Loma Negra and LafargeHolcim Argentina, are owned by Brazil’s InterCement and Switzerland’s LafargeHolcim respectively. Both companies are due to present their financial results later this week but the signs were not looking good earlier in the financial year. In its third quarter results Loma Negra said that the general economy was dragging on cement demand. Construction activity data from El Instituto Nacional de Estadística y Censos de la República Argentina (INDEC) showed that growth nosedived in mid-2018. This corresponds roughly with falling year-on-year cement despatches. Loma Negra noted that the depreciation of the Argentine Peso was hitting its bottom line and that its cement sales volumes dropped by 6.2% to 1.61Mt in the third quarter of 2018 from 1.72Mt in the same period in 2017. Despite this, its net revenue grew by 42.3% in the nine months to the end of September 2018.

Understandably, much of the talk in Loma Negra’s third quarter earnings call was about the effects of local currency depreciation with questions about how the expenditure for its L’Amalí plant expansion project was split between different currencies or how fuel costs were being affected. More revealing though was information about Loma Negra’s plans to reduce production capacity as national demand falls. Chief executive officer (CEO) Sergio Faifman said that the production cost at L’Amalí would be US$15/t less than the national average and that its Olavarría and Barker integrated plants would be first in line for production cuts given their closeness to L’Amalí.

Holcim Argentina reported ‘significant’ growth until May 2018 in its third quarter report. From here its sales fell and it expected zero growth for the year as a whole. It blamed this on the state of the general economy, the lower attractiveness of mortgages in the residential sector and problems with infrastructure project financing. Its sales volumes of cement rose by 6.4% year-on-year to 2.54Mt in the first nine months of 2018 from 2.39Mt in the same period in 2017. Holcim Argentina also has an upgrade project underway, at its Malagueño cement plant near Córdoba. Once completed by the end of 2019, the project is expected to increase the unit’s production capacity by 0.73Mt to over 3Mt/yr.

The problems facing the Argentine cement producers are clearly due to the poor general economy. The government took a US$56bn loan from the International Monetary Fund (IMF) in mid-2018 to shore up the situation. Since then the Argentinean Peso seems to have stabilised against the US Dollar and inflation has settled. At this point the question is whether this is the bottom of the economic trough. The other thing to note is that Argentina has faced economic problems at the same time as Turkey. Although Turkey has a much bigger cement industry, both countries are prominent cement producers in their regions.

The sad thing though is that the local cement market was facing shortages in late 2017, producers were investing in new production capacity and Loma Negra launched an initial public offering (IPO). All of this growth in the cement industry has been jeopardised by the general economy. Let’s hope it rebounds soon.

Argentina: Aumund Brazil and Aumund China have collaborated with Sinoma Tianjin TDI to supply two clinker-conveying orders for cement plants. No value for either order has been disclosed.

Aumund will supply three chain bucket elevators, eight belt bucket elevators, five pan conveyors and a drag chain conveyor for Line 2 at Loma Negra’s L’Amali cement plant. The order also includes 19 silo discharge gates. In August 2017 Loma Negra awarded Aumund the order to build a second kiln line with a capacity of 5800t/day at the L’Amali plant in Olavarria in Buenos Aires province. The new line, which will produce 2.7Mt/yr of clinker, will be located adjacent to the existing kiln line. Production will start early in 2020.

In June 2018 Aumund Brazil worked with Aumund Brazil and Sinoma to supply four belt bucket elevators, three chain bucket elevators and three pan conveyors via Sinoma TDI to Cementos Avellaneda. Cementos Avellaneda is a joint venture operated by Brazil’s Votorantim Group and Spain’s Cementos Molins.

Forget the news stories about poor markets in Colombia and Brazil. Argentina is riding a construction boom right now. Local producer Loma Negra recently ran an initial public offering and it picked a good time to do it. It aimed to generate up to US$800m from the flotation and in the end it raised over US$1bn. Good news for its Brazilian owner InterCement no doubt, which was last reported as aiming to sell a 32% stake in the company in order to cover its debts. More cheer must have followed from Loma Negra’s third quarter results this week. Its cement sales volumes rose by 9% in the latest quarter to 1.72Mt due to expanding local construction activity.

Graph 1: Cement production and consumption in Argentina Q1 – 3, 2008 – 2017. Source: Asociación de Fabricantes de Cemento Portland (AFCP).

As Graph 1 shows its experience mirrors the wider industry. Cement production rose by almost the same rate for the industry as whole, by 10% year-on-year to 3.19Mt for the quarter, according to Asociación de Fabricantes de Cemento Portland (AFCP) data. For the nine months as a whole production has also risen by 9% to 8.7Mt. This figure is the third highest in the last decade since 2008. Production peaked in 2015 before dropping a major 10Mt following a subdued construction industry in the wake of devaluation of the Argentinean Peso in late 2015 and early 2016. At the time LafargeHolcim, the operator of Holcim Argentina, also blamed the negative influence of neighbouring Brazil’s own financial woes. The economy has bounced back giving the country’s its highest nine month cement consumption figure, 8.8Mt, in the last decade.

Earlier in the year LafargeHolcim said it was importing 0.25Mt of cement into Argentina between May 2017 and April 2018 because it couldn’t meet local demand from its own plants. Given the over-abundance of clinker in the world one might be forgiven for being sceptical about this claim. Bolivia’s Itacamba announced it was also exporting cement to Argentina this week. However, the other point to note from the graph is that consumption has been about 90,500t higher than production so far in 2017. This is an envious position for local producers to be in. One more striking feature that sticks out from the graph above is the undulating curve than both production and consumption has. The Argentinean economy has been through the ringer in recent years and this shows in the ups and downs of the figures.

From the perspective of the three major domestic producers, Loma Negra’s sales revenue rose by 53.9% year-on-year to US$620m in the first nine months of 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by a whopping 73% to US$157m. Cementos Avellaneda, owned by Spain Cementos Mollins and Brazil’s Votorantim, reported similar good news with its overall results boosted by the Argentine market. Its sales revenue in the country rose by 28.3% to Euro130m and its EBITDA rose by 59.5% to Euro32.4m. Although Mollins did make the point that inflation had been particular problem in Argentina, although its impact had been ‘greatly’ outweighed by price rises. LafargeHolcim has had its problems globally so far in 2017 but Argentina hasn’t been one of them. Its operations in the country have been propping up the group’s Latin American results each quarter so far in 2017. Despite being one of its smaller regions by sales revenues, its sales and earnings delivered some of the group’s highest growth in the third quarter of 2017.

In this kind of environment new production capacity can’t be far away. Sure enough Cementos Avellaneda plans to increases the capacity of its San Luís cement grinding plant by 0.7Mt to 1Mt/yr by the second quarter of 2019. US$200m has been earmarked for the project.

So, great news for Argentina and proof that poor markets can turn around. The Brazilian cement association SNIC reckoned in October 2017 that the rate decline of cement sales was slowing, suggesting that the bottom of the downturn was in sight. On the evidence of the current situation in Argentina once the market does revive, South America will be the place to watch.

Argentina: Cementos Avellaneda plans to spend US$230m towards upgrading its La Calera and Olavarría cement plants. The company is a joint venture between Spain's Cementos Molins and Brazil’s Votorantim. US$200m will be used to increase the production capacity of the La Calera plant in San Luis to 1Mt/yr from 0.7Mt/yr by the second half of 2019. US$30m has been targeted to increase the Olavarría plant’s capacity by 0.3Mt/yr. Commissioning is planned for the end of 2017.

Argentina: Cementos Molins plans to invest US$189m towards upgrading production at its San Jacinto cement grinding plant according to local press. The upgrade will increase the plant’s cement production capacity to 1Mt/yr from 0.3Mt/yr.

It will also create 130 new jobs. The project is expected to last 30 months. Cementos Molins operates in Argentina via its subsidiary Cementos Avellaneda.

Cement shortages have been reported again in western Argentina this week. The story has been simmering over the summer in Mendoza and San Juan Provinces with local construction firms becoming irate with delays to their projects.

The cause is reported by local media to be a broken raw mill at Holcim Argentina's Capdeville cement plant north of the city of Mendoza. Production has been reduced by 2400t/month of cement from the 0.66Mt/yr capacity plant. Unfortunately, cement plants in neighbouring states have lowered their deliveries. Subsequently prices are estimated to have risen by 8 – 10% in July and August 2015 alone..

To put some perspective on the cement shortage, the Cuyo region of Argentina (comprising Mendoza, San Juan and San Luis Provinces) consumed just over 1Mt of cement in 2014 compared to 11Mt for the entire country. However all three provinces in the region are above the national mean cement consumption of 271kg/capita.

Despite the bottleneck in the provinces, the Asociacion de Fabricantes de Cemento (AFCP) recently revised its cement sales forecast for 2015 upwards to over 12Mt, the highest level on record. It attributed the rise demand to public infrastructure projects, house building and the Argentina Credit Programme (ProCreAr). Total despatches to the end of August 2015 were 7.99Mt, a rise of 8.73% or 641,664t from 7.35Mt in August 2014.

This followed a poor year in 2014 when national cement consumption fell by 3.5% year-on-year according to local press. The AFCP reported a fall in production by 4.1% to 11.4Mt.

Notably for the current news story, San Juan Province saw one of the biggest sales drops in 2014 at 10.5%. As InterCement (through its subsidiary Loma Negra) commented in its annual report, the country suffered both a gross domestic product (GDP) contraction of 1% in 2014 and instability in its financial markets that adversely affected consumption. Both the other major cement producers, Cementos Avellaneda (a subsidiary of Cementos Molins) and Holcim Argentina, also reported poor sales in 2014. Under these conditions it is unsurprising that consumers have angered due to localised cement shortages. There should be lots of cement available!

Into 2015, Holcim reported increased cement volumes in the first half of 2015 due to high demand in the Cordoba Province that neighbours Mendoza Province. By contrast, InterCement forecast in its 2014 annual report that it expected sales to remain lower than the high set in 2013. However it also expected continued demand for cement to reflect a response to the economic situation in Argentina with private investors moving to real estate for security.

InterCement and the rest will be monitoring Argentina's economy very closely for the remainder of 2015. Presidential elections are due in October that may change the current scenario. For the moment though the country remains in recession but it has managed to bring in foreign investment. Regardless of this though, the quicker Holcim Argentina and the others address the shortage in Mendoza the better. Demand may not last forever.

Spain: Cementos Molins has sold 10.61% in its Argentina-based unit Cementos Avellaneda to Votorantim Europe for Euro45.2m. Following the deal Cementos Molins retains 51% in the company and Votorantim Europe, part of Brazilian group Votorantim, is holds 49%. The Spanish firm also transferred a 12.61% stake in its Uruguayan-based unit Cementos Artigas to Votorantim Europe for Euro19m, keeping 49% in the subsidiary and its partner raised its stake to 51%.

Argentina: Cementos Avellaneda has dedicated a new 2.5Mt/yr cement plant at Olavarria, where it has invested US$85m, with the aim of meeting growing demand in Argentina. Cement sales increased to 11.6Mt in 2011, an 11% rise compared to sales in 2010. Demand in 2003 was just 6.5Mt.