Displaying items by tag: Cruz Azul

Mexico: Cruz Azul has launched the construction of a fifth production line at its Oaxaca cement plant in Lagunas. State governor Alejandro Murat Hinojosa presided over the ceremony. The new line has an investment of over US$130m and is scheduled for completion by the end of 2020. It will also be able to co-process alternative fuels up to a rate of 40%. Previously, Germany’s Loesche and France’s Fives sold grinding mills for the upgrade.

Mexico: Germany’s Loesche has sold two coal or petcoke grinding mills to Cruz Azul. Both will be used on new production lines at cement plants in Hidalgo and Oaxaca respectively. No value for the deal has been disclosed.

Each mill will have a capacity of 65t/hr. Loesche will be supplying complete plant equipment, including process gas filters, mill fans, inerting units, explosion protection valves, kiln gas cyclone separators, feed screw and drag chain conveyors as well as the complete electrotechnical equipment. The scope of supply also includes engineering for steel and concrete construction.

Loesche previously delivered a LM 46.2+2 CS type mill to Cruz Azul’s Tepezalá cement plant, operated under the Cycna subsidiary, at the end of 2016.

Mexico: Cruz Azul has been forced to partially close its cement plant in Tula, Hidalgo due to a lack of an active environmental clearance certificate. Personnel from the Federal Attorney for Environmental Protection made an inspection of the facilities at the cement plant. When verifying the documentation, they found that it lacked the current authorisation issued by the Ministry of Environment and Natural Resources. In this situation, the temporary partial closure of the plant was imposed as a safety measure.

Mexico: The Cooperativa La Cruz Azul has ordered two raw meal grinding mills from France’s Fives. The first grinding unit, with a capacity of 280t/hr of raw meal, will be dedicated to the new clinker line no. 10 project to be installed at the Cruz Azul Hidalgo plant. The second one, with a capacity of 300t/hr of raw meal, will be installed in the Oaxaca Lagunas plant, as part of the new clinker line no. 5 project. Each grinding plant will be fitted with one FCB Horomill 4000mm grinding mill and one FCB TSV Classifier 6500mm. The deal, including the engineering, supply, construction and commissioning of the mills, was agreed in November 2017.

Mexico: Cruz Azul has confirmed that it plans to spend US$300m on upgrades at two of its cement plants over the next 28 months. Previously the plan was announced in late 2016. Guillermo Álvarez Cuevas told the El Economista newspaper that the cement producer intends to carry out work to increase production capacity at its Hildalgo and Oaxaca plants.

With president-elect Trump due to take office this week we wonder what this means for the cement industry in Mexico. In 2016 this column looked a couple of times at the implications of Trump upon the US cement industry. First, we looked at who might benefit if he builds his wall along the Mexican border and then we wondered what his policies might mean for the US industry. To answer the latter first, the main issues for the US industry are infrastructure, changes to the Environment Protection Agency (EPA) and the repercussions if Trumps serious about a trade war with China. So long as a trade war doesn’t happen then Trump is probably good news for the US cement industry. As for Mexico, the joke has been that Trump will be good for the construction business ever since market analysts Bernstein’s passed a note around in the summer of 2016 about that wall.

Graph 1: Breakdown of Mexican cement industry by production capacity. Source: Global Cement Directory 2017.

The makeup of the domestic Mexican cement industry hasn’t changed too much in the last decade, even with the merger between Lafarge and Holcim, preserving the same market share in production capacity between the companies. Most of the producers have reported growth in 2016. Cemex reported that its cement sales volumes rose by 3% for the first nine months of 2016 and by 10% in the third quarter of that year. Overall though, its net sales fell slightly to US$2.16bn in the first nine months, alongside a fall in ready-mix concrete sales volumes. Cemex, crucially, also seems to have taken charge of its debts in 2016, saying that it was on track to meet its targets and that it had announced nearly US$2bn worth of divestments in that year. Currently the company is trying to buy out Trinidad Cement in the Caribbean, which may be a sign that it has turned a corner.

Grupo Cementos de Chihuahua’s (GCC) cement sales volumes rose in the first three quarters of 2016, in its case by 4%. Its overall net sales in Mexico rose by 4.2% in Mexican Pesos for the same period but fell when calculated in US Dollars due to currency variations. GCC attributed its sales growth to better pricing environment and increased cement volumes, mainly for projects in the commercial and industrial sectors that compensated for a decline in the public sector, following the culmination of two major urban paving and highway construction projects in 2015. At the smaller end of the market, Elementia reported that its cement sales skyrocketed by 30% to US$104m in the first nine months of the year aided by higher prices and volumes.

The major Mexican cement producers all have a presence in the US with the exception of Cruz Azul. Cemex has held assets north of the border for years, Cemento Portland Moctezuma has links to Buzzi Unicem, GCC bought US assets from Cemex in 2016 and Elementia completed its purchase of Giant Cement also in 2016. These companies have clinker in their kilns in plants on US soil manned by US citizens. This represents investment in local industry and it is exactly the kind of thing that appeals to the rhetoric of Trump’s approach so far. If the new president builds his wall then Mexican producers will probably be producing much of the cement that builds it. Even the Mexican Peso’s slow decline since 2014 could help the local cement industry, as it will cut the cost of moving exports and materials north of the border. Indeed, Enrique Escalante, the chief executive officer of GCC said in late 2016 that his company was ‘ready to build’ Trump’s wall.

However, the sheer uncertainty factor of an incoming president with as little experience of public office as Donald Trump must be giving chief executives pause for thought. After all, Trump's tweets before he has assumed office have forced car manufacturers to change policy. If he manages to disrupt the North American Free-Trade Agreement (NAFTA) in order to protect US jobs then the repercussions for the Mexican economy will be profound. It sends nearly three quarters of its exports to the US. Local cement producers would surely suffer in the resulting economic disruption.

So, currency devaluations aside, Mexican producers are making money from their cement operations at home and they are increasingly hedging their bets by operating or buying units in the US. Some, like GCC, are even being ebullient about the benefits that might come their way. It may be a bumpy ride but the Mexican industry is ready. However, it may wish to avoid appearing in any of Donald Trump’s tweets anytime soon.

Mexico: The Cruz Azul Cooperative plans to spend US$300m towards upgrades at its four cement plants. The investment will form part of a modernisation project over the next four years, according to CNN Expansión. The initiative will involve updating older production lines with environmental upgrades, expanding its production capacity for export and generating energy from wind power.