Displaying items by tag: China

China: Construction of the No. 1 rotary kiln at the Shaaxi Fuping cement plant, Shaaxi Province has been completed by the China 20MCC Construction Group (20MCC Group). Construction started in March 2013.

The range of the masonry work covered by 20MCC Group included the rotary kiln, grate cooler, hot kiln hood, tertiary air duct, hot-blast stove and the other equipment of the two production lines, casting of wear-resistant ceramic materials for the raw mill, cement grinding mill and the pipelines on the top of the slag mill.

Clinker production capacity at the plant will be 4.03Mt/yr, ground slag capacity will be 1.2Mt/yr and cement capacity will be 3.35Mt/yr.

China: Dongwu Cement and Hengtong Group have agreed to establish a 50:50 joint venture company with a registered capital of US$24.8m.

The joint venture scope includes highways, urban roads, bridges, tunnels, foundation works, sewage treatment and drainage works. It also covers the construction and management of industrial and civil buildings and landscaping projects, including engineering technical consultation, project supervision, project bidding agency, property management, sales of building materials and domestic trade.

China: Fujian Cement Inc sold 12m shares in Industrial Bank Co Ltd between 30 - 31 December 2013. Fujian Cement will earn US$14.5m from the deal and continues to hold 50.4m shares in the Industrial Bank.

China: Shijiazhuang, Hebei province has started the demolition of its first batch of 18 cement plants on 17 December 2013 to fight air pollution. 74 cement plants in the suburbs of Shijiazhuang are targeted for deconstruction by March 2014 according to China Daily. The planned demolition is planned to include all the western areas of the city by 2017.

"The cement companies have been a major source of dust pollution, making them a priority for demolition," said Niu Yongzhi, the official from the Bureau of Industry and Information in Shijiazhuang who is in charge of the project.

Demolition of the first 18 cement plants will be completed in January 2014. Removal of these cement units is expected to significantly reduce dust and nitrogen oxides emissions. More than 3500 cement plant employees will lose their jobs in the demolition.

The government will pay compensation to the companies whose plants are being shut down. Seven plants in Pingshan county will receive an average of US$1.5m each and tax breaks will be given to the companies when they start other businesses. The other 11 cement plants in Luquan will receive similar compensation.

The 18 cement plants, scattered throughout the northwestern area of Shijiazhuang produce 9.4Mt/yr or about 21% of the city's annual output. By 2014 cement production capacity in Hebei will drop to 61Mt/yr, half of the province's cement production in 2012.

China: CKI Holdings has announced that the cement plant owned by its subsidiary, Green Island Cement, has officially commenced production. The cement plant is located in Yunfu city, Guangdong province and the total investment was US$1.3bn.

Lambert Leung, chief of materials division at CKI Holdings, stated that the group might invest another US$600m to build a second production line if the operating performance is satisfactory.

In late November 2013 Guangdong province in China announced that it will be launching its carbon emissions trading scheme (ETS) in December 2013. Together with six other pilot projects in China the scheme will be the second largest carbon market in the world after the European Union (EU) when fully operational. Yet with the EU ETS floundering from excess carbon permits, with a resulting low price of permits and large cement producers such as a Lafarge reported as stockpiling permits, what are the Chinese schemes planning to do differently to avoid these pitfalls?

Overall, China has announced that it intends to cut its carbon dioxide emissions per unit of GDP by up to 45% by 2020 compared to 2005. In Guangdong, emissions from 202 companies will be capped at 350Mt for 2013, according to the local Development and Reform Commission. As shown in an article in the December 2013 issue of Global Cement Magazine, Guangdong province has a cement production capacity of 132.7Mt/yr, the second highest in the country after Anhui province.

From the perspective of the cement industry, Chunfang Wang from Huaxin Cement spoke about the importance of monitoring, reporting and verification (MRV) at an International Emissions Trading Association (IETA) workshop that took place in Guangzhou, Guangdong in early 2013. From Wang's perspective, emission assessment standards were at a 'developmental' stage in China and 'smooth' carbon trading would depend on consistent standards being adopted everywhere. Although at the time the particulars of the Guangdong scheme were unknown, participants at the IETA event advised cooperation with scheme planners to ensure emission producers and purchasers remained part of the decision process. Sliding carbon prices in the EU ETS may have been beneficial for permit buyers but once the government planners become involved to revive the market they might lose out.

As the Economist pointed out the summer of 2013, an ETS is a cap-and-trade scheme. Since China appears to have no definite cap to carbon emissions, how can the trading work? The Chinese schemes cap carbon per unit of Gross Domestic Product (GDP). Yet since GDP is dependent on production, any ETS run in this way would have to include adjustments at the end of trading. This would give central planners of the scheme plenty of wiggle room to rig the scheme. Worse yet, analysts Thomson Reuters Point Carbon have pointed out that the Chinese schemes face over-allocation of permits, the same issue that sank EU carbon prices. Additionally, one of the criticisms of the Guangdong Emissions Trading Scheme (GETS) pilot scheme was that the carbon prices may have been higher than expected due to market collusion.

The Chinese ETS projects face issues over their openness. If traders don't know accurately how much carbon dioxide is being produced by industry, such as cement production, then the scheme may be undermined. Similarly, over-allocating carbon permits may make it easier for producers to meet targets but it will cause problems in the trading price of carbon. However, given that a carbon emissions cap is an artificial mechanism to encourage markets to cut emissions, should any of these concerns really matter? The main question for Chinese citizens is whether or not China can cut its overall emissions and clear the air in its smog filled mega-cities.

Specifically for cement producers, it seems likely that large producers will be able to cope with the scheme best, from having more carbon permits to sell, to rolling out unified emissions assessment protocols, to liaising better with scheme planners. In Europe smaller cement producers, like Ecocem, have criticised the EU ETS for slowing a transition to a low carbon economy by subsidising the larger producers' emissions through over-allocation. In China, with its self-declared intention to consolidate an over-producing cement industry, whatever else happens it seems likely that smaller cement producers may become lost in the haze.

China: Sichuan Shuangma Cement plans to buy a 25% stake in Lafarge Dujiangyan Cement for US$137m. Shuangma Cement will pay for the acquisition by issuing shares to the company's major shareholder, Lafarge China Overseas Holding.

China: Guangdong Province plans to launch carbon emission trading in December 2013. It will be the world's biggest carbon trading scheme after the European Union.

Guangdong has started allotting 388Mt of carbon emission quotas to selected enterprises, according to the provincial development and reform commission. Initially 242 companies from cement, power, iron and steel and petrochemical industries have been included in the quota allocation. The scheme will cap CO₂ emissions at 350Mt for 2013.

Quotas equivalent to 29Mt of carbon emissions will be auctioned and the base price will be US$9.8/t. The rest of the quotas will be allotted to companies for free.

Shenzhen City started its carbon trading market in June 2013 and Shanghai launched its market on 26 November 2013. The National Development and Reform Commission has also approved pilot carbon emission trading schemes in Beijing, Tianjin, Chongqing and Hubei. China has pledged to reduce CO₂ emissions by 40 – 45% per unit of GDP by 2020.

Minority shareholders have bowled a googly at Holcim's attempt to simplify its business structure in India.

Or for readers unacquainted with cricket terminology, domestic institutions which hold about 9% in Ambuja Cements have been widely reported in the Indian media as having voted against a move to merge the cement producer with its parent company, Holcim India. The final results of the shareholders vote will be publicly announced on 21 November 2013. The shareholders actions follow Holcim's recent approval by the Indian Foreign Investment Promotion Board for the merger.

That this is bad news for Holcim is not in doubt given that the multinational cement producer has taken a hit in its Asia-Pacific region, particularly in India. Overall for the region its operating profit fell by 32.5% year-on-year to US$333m for the quarter to 30 September 2013.

Specifically, Ambuja Cements managed to maintain its sales volume of cement and clinker year-on-year at 4.89Mt for the third quarter. However, its net profit after tax fell by 45.4% to US$27m. It blamed the decline on subdued demand due to overall economic slowdown combined with higher input costs. Meanwhile, ACC saw its sales revenue from cement fall slightly to US$388m for the third quarter while its profit for cement before costs and tax fell by 57% year-on-year to US$22m.

As mentioned in August 2013 when this column last looked at India, the parallels to cement industry consolidation in China are telling. In China guidelines have been issued to cut overcapacity in the cement industry, with the Ministry of Industry and Information Technology releasing lists of companies that should cut excess production. Alongside this, the country's leading cement producers have reported a return to profit so far in 2013. Who exactly is taking the loss from this production retraction in China, if it is happening, remains unreported and unclear.

In India, much more light has been shone upon an over-producing cement industry. Holcim and its subsidiaries are just some of the companies reporting falling profits at present. Ambuja's minor shareholders look like they have made a decision that is counter to the best interests of the Indian cement industry.

In a recent UK newspaper article, political theorist David Runciman compared the respective merits of democratic and more autocratic modes of government. Unsurprisingly for a British academic Runciman came out in favour of democracies, yet the advantages of more centralised governments were noted, such as the ability to make wide-reaching decisions faster and more comprehensively.

In light of this, comparing the Indian and Chinese cement industries in 2040 will be fascinating. Minor shareholder tussles will likely be forgotten but cement (and hopefully cricket) will be as vital then as they are now.

China: Xinjiang Qingsong Building Materials & Chemicals has acquired a 31.6% stake in Yili Nangang Building Materials for US$27.7m. After the acquisition, Qingsong Building Materials' stake in the Xinjiang Uyghur Autonomous-based company has increased to 51%, further expanding its market share in the region.