Displaying items by tag: China

As a companion to the trends based article in the December 2016 issue of Global Cement Magazine, here are some of the major news stories from the industry in 2016. Remember this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..

HeidelbergCement buys Italcementi
Undeniably the big story of the year, HeidelbergCement has gradually acquired Italcementi throughout 2016. Notably, unlike the merger of Lafarge and Holcim, the cement producer has not held a party to mark the occasion. Instead each major step of the process has been reported upon incrementally in press releases and other sources throughout the year. The enlarged HeidelbergCement appears to be in a better market position than LafargeHolcim but it will be watched carefully in 2017 for signs of weakness.

LafargeHolcim faces accusations over conduct in Syria
The general theme for LafargeHolcim in 2016 has been one of divestments to shore up its balance sheet. However, one news story could potentially sum up its decline for the wider public. In June 2016 French newspaper Le Monde alleged that Lafarge had struck deals with armed groups in Syria, including so-called Islamic State (IS), to protect its assets in 2013 and 2014. LafargeHolcim didn’t deny the claims directly in June. Then in response to a legal challenge on the issue mounted in November 2016 its language tightened to statements condoning terrorism whilst still allowing some wriggle room. As almost all of the international groups in Syria are opposed to IS, should these allegations prove to be true it will not look good for the world’s largest cement producer.

China and India balance sector restructuring with production growth
Both China and India seem to have turned a corner in 2016 with growing cement production and a generally more upbeat feeling for the industries. Both have also seen some high profile consolidations or mergers underway which will hopefully cut inefficiencies. China’s focus on its ‘One Belt, One Road’ appears to be delivering foreign contracts as CBMI’s recent flurry of orders in Africa attests although Sinoma’s equipment arm was losing money in the first half of 2016. Meanwhile, India may have damaged its own growth in the short term through its demonetisation policy to take high value Indian rupee currency notes out of circulation. In November 2016 cement demand was believed to have dropped by up to half as the real estate sector struggled to adapt. The pain is anticipated to carry on until the end of March 2017.

US industry growth stuck in the slow lane
The US cement industry has failed to take off yet again in 2016 with growth lagging below 5%. The United States Geological Survey (USGS) has reported that clinker production has risen by 1% in the first ten months of 2016 and that it fell in the third quarter of the year. In response, the Portland Cement Association (PCA) lowered its forecasts for both 2016 and 2017. One unknown here has been the election of President-elect Donald Trump and the uncertainty over what his policies might bring. If he ‘goes large,’ as he said he wants to, on infrastructure then the cement industry will benefit. Yet, knock-on effects from other potential policies like restricting migrant labour might have unpredictable consequences upon the general construction industry.

African expansion follows the money
International cement producers have prospered at the expense of local ones in 2016. The big shock this year was when Nigeria’s Dangote announced that it was scaling back its expansion plans in response to problems in Nigeria principally with the devaluation of the Naira. Since then it has also faced local problems in Ghana, Ethiopia and Tanzania. Its sub-Saharan competitor PPC has also had problems too. By contrast, foreign investors from outside the continent, led by China, have scented opportunity and opened their wallets.

Changes in store for the European Union Emissions Trading Scheme
A late entry to this roundup is the proposed amendment to the European Union (EU) Emissions Trading Scheme (ETS). This may entail the introduction of a Border Adjustment Measure (BAM) with the loss of free allowances for the cement sector in Phase IV. Cembureau, the European Cement Association, has slammed the changes as ‘discriminatory’ and raised concerns over how this would affect competitiveness. In opposition the environmental campaign group Sandbag has defended the changes as ones that could put a stop to the ‘cement sector’s windfall profits from the ETS.’

High growth shifts to Philippines and other territories
Indonesia may be lurching towards production overcapacity, but fear not, the Philippines have arrived on the scene to provide high double-digit growth on the back of the Duterte Infrastructure Plan. The Cement Manufacturers Association of the Philippines (CEMAP) has said that cement sales have risen by 10.1% year-on-year to 20.1Mt in the first three quarters of 2016 and lots of new plants and upgrade projects are underway. The other place drawing attention in the second half of the year has been Pakistan with cement sales jumping in response to projects being built by the China-Pakistan Economic Corridor.

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China: China Resources Cement and BBMG Corporation have entered into a strategic co-operation agreement. According to the agreement the companies shall jointly explore Chinese and overseas markets and promote technology for the industry. Both parties intend to create a 'market communications mechanism' to share information on the market, production and technology. China Resources Cement previously signed a similar agreement with Anhui Conch in July 2016, although that agreement subsequently fell apart.

China: Industrial and Commercial Bank of China has agreed to a US$720m debt swap with Jindong Development Group. The bank will use a limited partnership fund to invest US$360m in the cement producer in the first phase of the transaction, according to Reuters. After the proposed swap is completed, Jindong Development's leverage ratio will fall by 8%.

China: Shandong Shanshui Cement has entered into a debt investment framework agreement. Cinda Shandong will acquire the defaulted bonds issued by Shandong Shanshui. It will also loan Shandong Shanshui up to US$1.15bn. Deputy chairman Mi Jingtian told the Xinhua News Agency that his company had 'paid in full' all outstanding interest and regained a 'normal working relationship' with commercial banks. Earlier in December 2016 Shandong Shanshui said that it had settled with China Merchants Bank in a dispute over US$81m of loans. Shanshui Cement has faced financial problems since a shareholder battle for control of the company took place in late 2015.

Nepal: Residents of Jyamire are seeking ’fair’ compensation from a quarry that Hongshi-Shivam Cement is building. Villagers have prevented Chinese technicians from the Nepal-China joint venture from working near the village, claiming that the company has ignored their complaints, according to the Kathmandu Post. Around 32 households in the region will be displaced by the mining project. The villagers are seeking compensation in excess of the rate set by the government, which they say the cement company offered them initially.

Hongshi-Shivam Cement is building a cement factory at Sardi in Nawalparasi district. It has acquired a permit from the Department of Mines and Geology to extract limestone at Jyamire in Palpa. China's Hongshi Holding Group has invested US$330m and its local partner has contributed around US$140m towards the project. The plant will have a production capacity of 6000t/day when operational and it is expected to be opened in 2017.

Pakistan: DG Khan Cement plans to build a new 9000t/day cement plant at Hub in Balochistan. It has contracted Izhar Construction to conduct all civil work on the project, according to the Nation newspaper. The plant is being built to benefit from demand generated from infrastructure built via the China-Pakistan Economic Corridor.

Pakistan: Tax bodies are expecting to see a jump in revenue in the 2016 – 2017 financial year from cement producers as Chinese-funded infrastructure starts to be built. The Large Taxpayers Unit (LTU) in Karachi, the largest revenue-collecting arm, estimates that it will tax producers US$114m in the 2016 – 2017 financial year, according to the News International newspaper. A study by the LUT said that growth would arise from increases in sales tax and federal excise duty following the start of projects worth US$46bn from the China-Pakistan Economic Corridor.

Cement sales have risen by 8.3% year-on-year to 8.98Mt in the first quarter of the local financial year. This follows a 17% rise in domestic sales to 33Mt in the 2015 – 2016 financial year.

Cambodia: Cambodia Capital Mineral Resources, a Chinese owned company, and the Ministry of Mines and Energy has met to discuss building a new cement plant. The ministry intends to seek government support before the company begins a feasibility study, according to the Khmer Times.

The ministry estimates that domestic demand for cement will reach 5Mt/yr in 2017. In December 2015 Chip Mong Group signed a partnership with Chinese-owned CITIC Heavy Industries to build a US$262m cement plant in Kampot province, with a daily production capacity of 5000t/day. In June 2016 Thai Siam Cement Group invested US$120m in a second production line at its factory in Kampot province, which will increase production to 0.9Mt/yr.

North Korea: Traders are importing more cement from China to meet demand for rebuilding following floods in North Hamgyong. The government has warned traders that future tenders will rely on how much cement they are currently providing for reconstruction work, according to DailyNK. A source quoted by the media source said that imports are favoured over local cement due to quality differences. The trading companies reportedly buy the cement in China and then donate it for free towards the restoration drive.

China: Anhui Conch has reported that its revenue fell by 0.05% year-on-year to US$5.6bn in the first nine months of 2016. Its net profit fell by 2.2% to US$881m from US$901m. Although after extraordinary items, due to government subsidies and asset disposals, its profit rose by 28% to US$782m. No comment was made on the results but the cement producer did note that its prepayments for coal and other raw materials and fuel rose during the third quarter of the year.