Displaying items by tag: China

Consolidation of the Chinese cement industry looks set to take a major step forward this week. China National Building Material Company (CNBM) announced that it is restructuring its cement production assets and companies under one subsidiary, Tianshan Cement. The move is significant since CNBM is the world’s largest cement producer, with a production capacity of over 500Mt/yr. That’s more than the total output of any single country except China. It’s also between a quarter and a third of national capacity domestically.

Little information has been revealed except that it concerns most of CNBM’s cement producing subsidiaries. Namely: China United Cement, South Cement, North Cement, Southwest Cement and Sinoma Cement. Note that this leaves out Ningxia Building Materials and Qilianshan Holdings, although some commentators have suggested that they may be merged in later on. It was announced to stock markets as a proposal with a ‘letter of intent of cooperation’ exchanged between CNBM and Tianshan Cement. CNBM will remain the controlling shareholder of Tianshan Cement after the restructuring. However, the assets concerned - the cement companies are still being discussed and considered. The aim of the reorganisation is to ‘facilitate resolving industry competition’ among the subsidiaries of CNBM.

The move is expected to significantly increase operational efficiency at the cement companies as they start to act in a more coordinated manner. It also fits the government-requested drive for the industry as a whole to consolidate and follow supply-side reform initiatives by, hopefully, eliminating old production assets and other measures. Indeed as CNBM’s president Peng Shou said in the company’s report for 2019, “Production overcapacity of the industry has not been fundamentally resolved. The task of cutting production overcapacity was arduous, and the supply-side structural reform remains the major task.” The company says it is committed to building a three-pillar development platform of cement, new materials and engineering services.

How much more operational efficiency the world’s largest cement producer will need to do this is a key question. In 2019 the sales revenue from its cement business rose by 12% year-on-year to US$18.7bn and its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 19% to US$5bn. Growth at this level is novel to western-based multinational cement producers! So the implication might be that CNBM is hoping to turbo-charge its financial performance before (or if) the serious government-forced supply side cuts occur or a general economic slowdown happens so that it can return to ‘normal’ Chinese performance afterwards.

The Chinese Cement Association presented a good overview of the history of CNBM that you can read here. The quick version is that it’s the embodiment of the Chinese government’s desire to build and merge its cement industry since 2005. The latest restructuring with Tianshan Cement is the latest chapter in this 15 year story. What the reorganisation means internationally is ‘probably not much’ in the short term. Better coordination between CNBM’s cement companies could have implications in the longer term if they acted together on an international strategy, such as a strategy on exports for example, or if group-wide suppliers were agreed upon.

That’s all on China but finally if readers were not able to join us for Global Cement Live last week on 23 July 2020, we recommend watching the playback of Arif Bashir, Director (Technical/Operations) of DG Khan Cement Nishat Group Pakistan. He gave a great overview of Pakistan’s cement industry and the challenges it is facing and overcoming. Be sure to tune in for this week’s guest speaker, Regina Krammer from Loesche who will be discussing how the coronavirus crisis will change communications in the sector.

To register for Global Cement Live visit: www.globalcement.com/live

China: Song Shoushun has resigned as the chairman of China National Materials International Engineering (CNBM Engineering). He has left the position for personal reasons. The company is part of CNBM Group and it provides engineering services and equipment to the international cement, housing, industrial equipment and light industry sectors.

China: China National Building Materials (CNBM) has shared plans for a restructuring. Under the new arrangement, its subsidiary Tianshan Cement will take control of China United Cement, North Cement, Sinoma Cement, South Cement, Southwest Cement and CNBM Investment. The reorganisation awaits internal negotiations and finalisation and regulatory approval.

China: Dongwu Cement has predicted a net profit of US$1.71m in the first half of 2020, down by 62% year-on-year from US$4.56m in the first half of 2019. Company chairman Liu Dong said the expected decrease was “primarily attributable to a decline in sales volume and sales price of the group’s products resulting from the outbreak of the coronavirus pandemic during the period.”

Zambia: Sinoma Mpande Limestone has donated 1000 bags of cement for use in the construction of a new secondary school in Chongwe, Lusaka Province. The People’s Daily newspaper has reported that the community is responsible for a 25% contribution in addition to World Bank funding for the project. District Commissioner Robster Mwanza said that it was “hard pushed to meet this requirement” and that the cement would “go a long way” in helping.

China: Asia Cement China has estimated a 40% - 45% year-on-year decline in profit in 2020 due to lower sales volumes and selling prices. Dow Jones Newswires has reported that this is due to the impacts of the coronavirus outbreak on cement demand outside of China. The company is active in several countries including Thailand, Taiwan and South Korea.

Pakistan: The upcoming Diamer Basha Dam and 21MW Tangir Hydropower Project will use concrete made from Ordinary Portland Cement mixed with fly ash and other additives. The Frontier Works Organisation said, “This reduces thermal loads on the dam and reduces chances of thermal cracking,” according to China Daily News. The Chinese-backed project is scheduled for completion in 2028.

China: Anhui Conch and its subsidiaries have responded to increased rainfall and raised water levels in the Yangtze River in Jiangnan Province since June 2020 by building a “solid line of defence against floods.” The Group says that with the help of the Central Committee of the Communist Part of China it has planned and implemented flood monitoring, strategic precautions and local flood control using earth and sandbags. Anhui Conch subsidiary Chizhou Conch mines limestone for cement production in the area. It said, “Chizhou Conch will continue to pay close attention to all the work of flood prevention and flood preparation, ensure the safety of the flood season, and help the company achieve its annual production and operation goals and tasks smoothly.”

China: The Tibet Autonomous Region Department of Economics and Information has awarded Huaxin Cement subsidiary Huaxin Tibet’s Shigatse Company Tibet Company cement plants with regional Green Factory status. The plants are among eight businesses across the autonomous region selected for their dedication to green development. The company says that it attaches “great importance to the protection of plateau ecology, the scientific development of mineral resources and the promotion of mine reclamation and greening.”

The Tibet Company circulates used cooling water from cement production into irrigation systems for mine reclamation. The Shigatse Company “strengthened the greening of mines and plant areas according to local conditions, and insisted on special environmental protection training for front-line employees and middle-level leaders,” improving environmental awareness across its operations, according to Huaxin Tibet.

Mozambique: Dugong Cimentos says that construction of its new 1.8Mt/yr integrated cement plant in Matutuíne District, Maputo Province, is 90% complete. The Noticias newspaper has reported that the plant cost US$330m and was paid for by private Chinese investors. It will permanently employ 500 people, including 400 Mozambicans, when operational. The plant will consume 400,000t/yr of coal and produce cement as well as clinker for grinding at other Mozambique plants that currently import it.