Displaying items by tag: Clinker
Update on Bangladesh, June 2023
14 June 2023Cement producers in Bangladesh received a surprise at the start of June 2023 when the government budget proposed increasing the duty on imported clinker. The Bangladesh Cement Manufacturers Association (BCMA) reacted this week by calling for the duty on clinker to be reduced, while also calling for the same for a non-adjustable advance income tax (AIT) applied to associated imports and sales.
During a press conference, reported upon by the Financial Express newspaper and other media, BCMA president Alamgir Kabir said that the customs duty on key raw materials for the sector had previously been around 5% of the import value. However, he argued that the new suggested increased tariff was “disproportionate” because it placed the burden at 12 - 13%. He urged the government to treat the cement sector as a "priority sector" given that it was facing higher prices generally due to the aftermath of the Covid-19 pandemic, the energy shocks from the Russian invasion of Ukraine and negative currency exchange effects.
The BCMA’s latest lobbying call may sound familiar because it follows a similar battle against import charges from late 2022. A supplementary duty was introduced in November 2022 when the National Board of Revenue (NBR) changed the way limestone was coded in response to a significant increase in imports from 2020. At the time, the price of limestone imports reportedly nearly doubled. The BCMA may have won this battle because in March 2023 the NBR withdrew its supplementary duty. It did require that importers submit to further scrutiny including an updated Import Registration Certificate and various tax related requirements.
The timing of the NBR’s decision to relax the limestone duty is telling given that the previous month or so six of the country’s seven publicly listed cement producers reported either falling profits or losses for the second half of 2022 or the year as a whole. Only LafargeHolcim Bangladesh bucked the trend with an increase year-on-year in its annual profit after tax in 2022, although it attributed this to 95% volume growth in its aggregates business.
As discussed previously a characteristic of the cement sector in Bangladesh is that the country has no domestic limestone reserves. It all has to be imported. Arusha Ahmed Khan, Shun Shing Group presented a summary of the national industry at the Global Slag Conference that took place in early June 2023 in Düsseldorf. The country has two integrated cement plants and 36 grinding mills operated by 31 companies with a total capacity of 84Mt/yr. At present around 14Mt/yr of new cement grinding production capacity is planned by UK Bangla Cement, MI Cement, Confidence Cement and Dubai Bangla with commissioning dates expected from mid-2023 to mid-2025. Khan revealed that the government switched from British to European standards in the early 2000s leading to a high level (95%) of blended cements on the market. Use of slag cements has grown as more producers commission vertical roller mills and more uptake of slag and other blended cements using secondary cementitious materials (SCM) is expected in the future.
A key vulnerability for a grinding-heavy cement sector, like the one in Bangladesh, is any burden on imports such as logistic costs, currency exchange effects and government tariffs. Sure enough each of these examples has been reported locally. The government says that its proposed higher import tariff on clinker is the first such change in a decade. Cement producers have reacted, predictably, in a negative manner. Whether the authorities go ahead with the planned increase and how well the cement sector could absorb it remains to be seen. There may never be a good time for a tax rise but the BCMA has been able to present the current period as being especially bad.
Read the review of the 15th Global Slag Conference 2023
Buy the Proceedings Pack for the 15th Global Slag Conference 2023
Bangladesh: The Bangladesh Cement Manufacturers Association (BCMA) has called for a 60% cut to duties on clinker imports, to US$1.84/t from US$4.61/t. The Financial Express newspaper has reported that BCMA members are struggling with high shipping costs and supply issues due to Russia’s war in Ukraine.
The Bangladesh government published plans to raise the duty on imports of clinker by 40% to US$6.46/t in its 2023 budget on 13 June 2023.
Cheonnaeri Cement upgrades Cheonae cement plant
12 June 2023North Korea: State-owned Cheonnaeri Cement has completed a successful upgrade to its 1Mt/yr Cheonae cement plant in South Hamgyong Province. Korean News has reported that the upgrade involved the replacement of the plant's clinker cooler, burners and clinker and raw materials handling systems. A new bucket conveyor has more than doubled raw materials handling capacity.
Cheonnaeri Cement reportedly plans to further expand the capacity of the plant.
Shiva Cement commissions Sundergarh cement plant
01 June 2023India: Shiva Cement has commissioned its new US$185m Sundergarh cement plant in Odisha. Pragativadi News has reported that the new plant has an integrated capacity of 1.05Mt/yr and an additional grinding capacity of 0.27Mt/yr.
In October 2022, parent company JSW Cement announced plans to increase its total installed capacity by 47% to 25Mt/yr.
Peru: Invercem has successfully commissioned its new 220,000t/yr Pisco grinding plant in Ica Department. Management News has reported that the plant cost US$30m to build. Cemex Peru will supply clinker for use in cement production at the plant. Invercem plans to supply cement produced at the plant to the Cusco market under the Patrón brand. The company says that the facility has the potential to further expand up to a capacity of 330,000t/yr. In the longer term, Invercem aims to establish an integrated cement plant and limestone mine.
Update on Saudi Arabia, May 2023
24 May 2023Sinoma International Engineering was revealed this week as the winner of a contract to build a new production line at Southern Province Cement’s Jizan plant. The China-based engineering firm said that the US$330m contract was to build a full line, from limestone crushing to bagging, with an output of 5000t/day. The construction period is expected to take just over two years, suggesting a commissioning date in mid-2025 if work starts now. The project has been in the pipeline for a while with an announcement in mid-2021. It was previously reported that the new line is intended to replace the two existing production lines at the site once completed.
Other recent projects in the country include Yamama Cement’s plans to move its cement plant near Riyadh to a new location. Sinoma International Engineering was also selected as the main contractor in November 2022 for the US$220m project. The relocated line – using both old and new equipment – will have a production capacity of 10,000t/yr. Project duration was estimated at around two-and-a half years following financial contractual commitments. So the earliest this one might be completed is also mid-2025. Eastern Province Cement also started making moves to build a new major upgrade in March 2023 when it started the tendering process for a planned 10,000t/day production line at its Al Khursaniyah Plant. The intention is to replace some of the obsolete lines at the unit. The project dates back to 2015, when it was first announced.
Graph 1: Domestic cement sales and clinker exports in Saudi Arabia, 2013 – 2022. Source: Yamama Cement
The timing of these new projects is compelling given that sales by the local industry peaked in 2015. They declined in 2018 to a low of around 40Mt before stabilising at around 50Mt for the last three years. However, one trend to note is how clinker exports reached 7.1Mt in 2022, the highest figure in a decade, since export rules were relaxed in 2017. They have grown year-on-year since 2018 with the exception of 2020. Cement exports have been lower since 2013 hitting a high of 1.9Mt in 2019, although 2022 was nearly as good at 1.8Mt.
The other big news story from the local sector in 2023 was the US$37m fine that the General Authority for Competition (GAC) levied for price fixing in April 2023. 14 of the 17 main cement companies in the country were found to have broken local competition law following an investigation. Detail on specifically what happened is light, but the GAC said that it took exception to companies “controlling prices of commodities and services meant for sale by increasing, decreasing, fixing their prices or in any other manner detrimental to lawful competition.”
As ever with the Saudi construction market, government spending is expected to keep things buoyant. Although input and logistic costs have risen like everywhere else, energy costs have also risen. This, no doubt, is useful to a government planning on building a bunch of so-called ‘Giga’ projects. Local sales of cement may have dipped slightly in 2022 but building all these big new projects will require plenty of cement. A report by the SICO Bank in January 2023 forecast that local cement demand was expected to remain ‘flat’ in 2023 but that it would grow by 5% year-on-year in 2024. Interestingly, it added that demand from the tourism and exhibition sector would also fuel demand in the run-up to 2030 as various schemes connected to the ‘Giga’ projects reached fruition.
Each of the three projects detailed above are intended to replace existing capacity. This suggests that none of these companies expect the market to grow significantly anytime soon. These cement producers are likely to be focusing on improving efficiencies from their existing market share. Alongside this, exports of cement and clinker have grown, giving combined local and export sales that are similar to the market peak in 2015. Efficiency savings and adapting to a mature market appear to be the way forward for Saudi cement producers in the near-term.
India: The government of Andhra Pradesh broke ground on the construction of the 35.1Mt/yr-capacity Machilipatnam Port in Krishna District on 22 May 2023. The New Indian Express newspaper has reported that the project is scheduled for completion in mid-2025. When operational, the Port will handle despatches of cement and clinker by local producers.
Iraq: Najmat Al Samawa Company for Cement Manufacturing (NASCCM) plans to build a new 1.82Mt/yr clinker line at its Samawa cement plant. When commissioned, the new line will more than double the plant's clinker capacity to 3Mt/yr. Pakistan Company News has reported that the expanded plant will secure a supply of clinker for the producer's Basra grinding plant.
NASCCM is a joint venture of Al Shumookh Group and Pakistan-based Lucky Cement.
Qizilqumsement to upgrade Qizilqum cement plant
12 May 2023Uzbekistan: United Cement Group subsidiary Qizilqumsement says that it has awarded contracts for the upgrade of Lines 1 and 2 at its Qizilqum cement plant in Navoiy Region. Uzbekistan Newsline has reported that the producer has completed testing to ascertain the lines' parameters of operation, fuel and energy consumption and output. This will inform its decisions, with a view to reducing the cost of clinker production.
Qizilqumsement is currently in the process of building the Qizilqum plant's new 767,000t/yr Line 4, which will also increase its clinker capacity by 657,000t/yr. The producer expects this to lower the cost of its clinker production by 30%.
Fiji: A court has ordered Pacific Cement, Tengy Cement and haulage contractor RPA Group to pay damages to Fiji Fish Marketing Group for creating a nuisance. The Fiji Times newspaper has reported that the court found that the cement importers emitted dust during the unloading of clinker, which caused Fiji Fish to incur a loss. The damages amounted to US$900,000.