Displaying items by tag: Elementia

Mexico: Elementia’s first quarter sales were US$49.0m, down by 5.0% year-on year from US$52.0m in 2019. Group earnings before interest, tax, depreciation and amortisation (EBITDA) was US$20.4m, down by 7.0% from US$22.0m in the first quarter 2019. Cement volumes fell by 11% year-on-year to 1.08Mt from 1.22Mt.

The company suspended all operations in Peru, Bolivia and Ecuador from 20 March 2020 and in Colombia and El Salvador from 30 March 2020. It says that it has moved its 2020 strategic focus to ‘inventory reduction and sustained US cement growth.’

Mexico: Elementia has announced the death of its board member Jaime Ruiz Sacristán who died on 12 April 2020. The company said that Sacristán worked with ‘tireless dedication’ at the company for 20 years to ‘build Elementia, contributing knowledge, talent and direction.’

During a distinguished career, Sacristán held positions such as president of the board of directors of the Mexican Stock Exchange, president, partner and founder of Grupo Financiero Ve por Más and president of the Mexican Association of Bankers. He was also a member of the board of directors of numerous companies in the financial, industrial and commercial sectors.

Francisco del Valle Perochena, chairman of the board at Elementia said, “I am very sad to report the death of a great man and friend. He will always be present in our lives and in our hearts. He leaves us an invaluable legacy as a professional and as a great human being. His temperance, wisdom, good sense and prudence are just some of the great qualities that we admired and respected in him.”

Colombia/El Salvador/US: Mexico’s Elementia has stopped operations in El Salvador and Colombia to stop the spread of coronavirus in line with local government recommendations. It expected to resume operations in mid-April 2020. However, this may be modified based on ‘successful virus containment.’ However, it intends to continue operations in the US as the government has declared its industry as ‘essential.’ It added that it is maintaining all necessary sanitary measures to minimise transmission of the virus.

Interesting news from Holcim Mexico this week with the announcement that it is planning to invest US$40m towards building a 0.7Mt/yr grinding plant in the state of Yucátan. The unit will be supplied with clinker from Holcim Mexico’s Macuspana and Orizaba integrated cement plants. This follows the news in August 2018 that Elementia’s cement company, Cementos Fortaleza, had started to build a new 0.25Mt/yr grinding plant at Merida in Yucatan. That project has a budget of US$30m.

These two projects offer a contrast to comments made by the head of Cemex Mexico, Ricardo Naya Barba, who was lamenting the state of the market to local press at the start of the month. He said that sales volumes of cement, concrete and aggregates had fallen by 12 – 15% in the first seven months of 2019. He blamed the decline partly on falling national infrastructure investment. This marked a slight improvement on Cemex’s Mexican results for the first of 2019 where sales, sales volumes and earnings were all down. At this time as well as slowing infrastructure projects the situation was also attributed to a residential sector hit by the slower-than anticipated start of the new programs.

Elementia’s Mexican cement business, Cementos Fortaleza, reported a similar picture in the second quarter of 2019. Its net sales fell by 6% year-on-year to US65.4m from US$69.7m. This was attributed to a market contraction affecting all of Elementia’s businesses in the country, as well as the redefinition of its core products for the Building Systems business unit. Earnings fell also and this was further attributed to mounting energy and freight costs. Cementos Moctezuma faced many of the same issues. Its cement sales fell by 13% to US$147m in the second quarter of 2019. It is expecting a similar picture for the remainder of the year.

Data from the National Institute of Statistics and Geography (INEGI) shows that the value of cement sales in Mexico fell by 7% year-on-year to US$1.21bn in the first quarter of 2019 from US$1.30bn in the same period in 2018. Cement sales volumes fell by 8.2% to 10.9Mt from 11.9Mt. This was the lowest figure since 2014.

The one larger Mexican cement producer that doesn’t seem to have been overly troubled so far in 2019 is Grupo Cementos de Chihuahua (GCC). Earlier in the year the company was considered to be the Mexican cement producer most at risk from potential US tariffs due to higher reliance on exports than its competitors. Yet Mexico’s National Chamber of Cement (CANACEM) publicly said that that it didn’t consider US tariffs a significant barrier to the local industry. GCC reported growing net sales and cement sales volumes in the second quarter of 2019 due to industrial warehouse construction, mining projects and middle-income housing at the northern cities.

Two new grinding plants in a particular region of Mexico don’t necessarily reflect the state of the country’s industry as a whole. Yucatan may suit the grinding model due to a lack of raw materials or strong shipping links. The region may also be defying the gloomy national state of affairs in the construction sector. Alternatively, producers may be chasing low-cost and low-risk expansion plans in a tough market. The grinding model wins out over the clinker producing one in this scenario. In the wider picture in August 2019 Cemento Cruz Azul ordered two petcoke grinding mills from Germany’s Loesche and Austria’s Unitherm Cemcon said it had been awarded the supply of an MAS DT burner to an unnamed cement plant. These suggest that, although the sector may be having a bad year so far, things are expected to get better.

No overarching theme this week but rather four changes of note in different markets. The first is Lehigh Hanson’s agreement to buy the integrated Bath plant in Pennsylvania, US, from Giant Cement, a subsidiary of Mexico’s Elementia. Lehigh Hanson, a subsidiary of Germany’s HeidelbergCement, plans to pay US$151m for the 1.1Mt/yr unit giving it a cost of US$137/t of cement capacity. That’s a similar price that Elementia paid when it acquired Giant Cement in 2016. The Mexican conglomerate paid US$220m for a 55% stake in 2016 for three cement plants with a combined production capacity of 2.8Mt/yr or US$143/t.

The purchase by HeidelbergCement draws a line following problems selling its business activities in Ukraine. The group blamed a drop in profit in the first half of 2019 on this. Since then though it has been linked to a takeover of UltraTech’s stake in Emirates Cement, the owner of the 0.5Mt/yr Emirates grinding plant in Dhaka, Bangladesh. Buying a cement plant in North America, its second most lucrative region after Western and Southern Europe, looks set to be a wise investment.

The timing here is interesting given that Elementia, the building materials company partly-owned by ‘Mexico’s richest man,’ Carlos Slim, has been steadily expanding in recent years. As stated above it only acquired Giant Cement in 2016. However, its net sales and earnings fell in the second quarter of 2019 caused by a market contraction in Mexico affecting all of its businesses. Sales from its cement businesses in the US and Central America grew but they fell by 6% at home in Mexico. Elementia said that proceeds from the sale of the Bath plant will be used for debt repayment and ‘general’ corporate purposes. Notably, Ricardo Naya Barba, the president of Cemex Mexico, has also described the local market as ‘difficult’ this week, in comments reported upon by local media.

Meanwhile in Africa, China’s Huaxin Cement purchased Maweni Limestone from Athi River Mining (ARM) Cement in Tanzania as part of the latter’s on-going administration process. Local press reported the transaction as costing US$116m and subject to regulatory approval. This one’s interesting because it shows a major Chinese cement producer buying related assets outside of China. This is likely part of the country’s Belt and Road Initiative to develop industry and infrastructure around the world and to give its overproducing industries new markets. Perhaps the surprise here is that Huaxin Cement hasn’t gone after the rest of Kenya’s ARM Cement… yet.

The other African news story of note this week was the confirmation that Singapore’s International Cement Group (ICG)’s intended purchase of Schwenk Namibia had failed. This deal was announced in March 2019 but it later ran into trouble when the Singapore Exchange blocked the proposed acquisition in June 2019 on the grounds that ICG didn’t appear to have the money to pay for it.

Lastly, Yamama Cement announced that it wants to sell its Production Lines 1-5, which have a daily clinker production capacity of 5600t/day. The producer previously temporarily shut down the lines in 2017 and it has been planning to build a new cement plant. Since then though it has faced shrinking sales and profits in the tough Saudi Arabian market.

The takeaway from all of this is that, despite the doom and gloom of a world producing too much clinker, some cement companies are targeting growth in specific territories. Sometimes these schemes succeed, as in the case of HeidelbergCement and Huaxin Cement, and sometimes they don’t, as ICG has found out. Heavy building materials like cement are costly to move around so a plant or assets in the right place at the right time can make a fortune.

US: Keystone Cement plans to convert its Bath cement plant in Pennsylvania to gas firing from coal. The project will cost US$2.2m, with a US$0.32m grant from the Pennsylvania Department of Community and Economic Development, according to the Express-Times newspaper. Gas supplier UGI Utilities will work with Keystone to install a new underground gas line from an existing substation to a new substation at the plant. The project is scheduled for competition by mid-2020.

Mexico: According to figures from INEGI, Mexico’s national institute of statistics, sales of cement were worth US$1.21bn during the first quarter of 2019. This figure was 7% lower than during the first quarter of 2018. In volume terms sales fell from 11.89Mt to 10.91Mt, a fall of 8.1% year-on-year.

Market leader Cemex reported a sales fall of 15% in the analysed period despite a price increase of 4%. Cementos Fortaleza, owned by Elementia, posted a sales growth of 1% in terms of value, thanks to rising prices.

Swiss firm LafargeHolcim, through its subsidiary Holcim Apasco, saw total sales shrink by 7.4% in Latin America, with sales of cement falling by 2.6% as a consequence of the demand drop in Mexico and Argentina. Only Cementos Chihuahua registered significant growth, with sales increasing by 8% in during the quarter due to the construction of new industrial buildings and mining projects in the north of the country.

US: Dragon Products’ Thomaston cement plant in Maine restarted production in early May 2019. A fire damaged the unit in late March 2019, according to the Penobscot Bay Pilot. Plant employees and contractors spent six weeks repairing and replacing building structures, conduit and wires, motors, gearboxes, bearings, material transport equipment and other equipment.

US: A fire has damanged Dragon Products’ Thomaston cement plant in Maine. The incident took place on evening of 26 March 2019 following a spill of fuel oil, according to the Portland Press Herald newspaper. The blaze was stopped by firefighters as it started to enter a laboratory and control rooms. No employees were injured.

Plant manager Martin Turecky said that no customers would be affected by the fire and that it was continuing to distribute cement. He added that the cement grinding plant had not been affected. An investigation into how the fire started is underway.

US: France’s Fives Group has released detail about a project to upgrade the cement mill workshop at Giant Cement’s Harleyville plant in South Carolina. The contracts included the complete engineering, supply, fabrication, transport, installation and commissioning services for material handling, cement grinding and cement loading. New equipment included a clinker and additives transport circuit with a dedusting system, a classifying circuit with a FCB TSV Classifier, a new Fives TGT Filter, all gas and material connections as well as the ball mill internals revamping, a cement truck bulk loading area and a weighing station.

Engineering, offshore supplies and project management were handled by Fives FCB. Onshore supplies and all site works including civil and structural works, mechanical and electrical installations were covered by Fives Solios. Major milestones of the project included starting civil works in November 2017. Mechanical and electrical erection work ran from February to July 2018. First cement production was on 29 June 2018.