Displaying items by tag: Eurocement

Eurocement changed owners this week when Sberbank took control of the company’s parent organisation. Due to a ‘difficult financial situation’ the state-owned bank said it had consolidated 100% of the shares of Eurocement’s parent company GFI Investment Limited. It’s uncertain quite how difficult this situation is but in 2016 the cement producer owed the bank Euro700m. Local media agency RosBiznesConsulting (RBC) reported in September 2020 that the ‘problem borrower’ that had caused a record increase in overdue debt at Sberbank in July 2020 was none other than Eurocement. Whilst Sberbank has said so far that it does not have operational control of the group, it is seeking a strategic investor for the asset.

This is a major story given that Eurocement is Russia’s largest cement producer and it operates 19 cement plants Russia, Ukraine and Uzbekistan. It said it produced 16.5Mt of cement domestically in 2019 but this compares to a production capacity of around 50Mt/yr suggesting a considerably low utilisation rate of just one third! The producer has embarked on a modernisation programme in recent years but many of its plants are old and use wet-process production lines.

2019 finally saw the Russian cement market turn around following decline since 2015. Unfortunately, CM Pro reports that cement production in Russia as a whole fell by 5% year-on-year to 25.1Mt in the first half of 2020. Cement shipments fell by a similar rate. This trend appears to have carried on through July and August 2020. Cement consumption has fallen fairly uniformly in most regions with the exception of the Northwestern Federal District, which has seen a modest increase. In the middle of the year, Soyuzcement - the Union of Russian Cement Producers, was expecting wildly different scenarios ranging from falls of up to 10% in a negative situation to rebound of up to 3% in a positive one. It was pinning its hopes on government support for the construction industry in various ways. With the trend to August 2020, record breaking numbers of new coronavirus cases in early November 2020 and the onset of winter, it seems unlikely that Soyuzcement’s positive thinking will come to pass.

With this in mind who might want to buy into Eurocement? No doubt various private equity firms and local producers are watching the oil price carefully while they plan their next move. Internationally, LafargeHolcim seems the obvious western multinational contender with a presence in the country. Yet it seems unlikely it would want to take the risk, following its departure from certain regions like South-East Asia in recent years and persistent rumours about other divestment targets. HeidelbergCement’s balance sheet, credit lines and appetite for risk might not yet withstand a major investment in Russia. Buzzi Unicem has actually been expanding recently with an acquisition in Brazil but whether it’s prepared to bet on another market disrupted by coronavirus is unknown. China National Building Materials Group Corporation (CNBM) was reportedly planning on becoming a shareholder of Eurocement Group in 2016 but this may have just been bluster surrounding geopolitical links between Russia and China, and general cooperation between the companies on upgrading Eurocement’s old production lines. However, Russia is the next location in China’s Belt and Road initiative so it’s not ridiculous. Whoever steps up can expect the Russian government to take a keen interest, depending on how much control Sberbank wants to offer up of Eurocement. The story continues.

Russia: Sberbank has acquired a 100% stake in GFI Investment Limited, owner of Eurocement. RosBusinessConsulting News has reported that the acquisition followed an increase in GFI Investment Limited’s overdue debt to Sberbank in mid-2020. Sberbank in turn reported the largest increase in its overdue corporate loans in its history in July 2020. The bank says it does not have operational control of the group. However, it is reportedly “Looking for a strategic investor” for the asset.

Eurocement is the largest cement producer in Russia operating 10 plants domestically and abroad.

Russia: Eurocement subsidiary Mordovcement has begun packaging its CEM-I Ordinary Portland Cement (OPC) in 50kg bags made of polypropylene. The company said that the plastic has strength advantages over paper and makes its products harder to counterfeit. It advised customers to reuse the bags for collection and disposal of waste, or to recycle them.

Russia: Eurocement Group’s exports rose by 67% year-on-year to 0.33Mt in the first seven months of 2020 from 0.20Mt in the same period in 2019. Deliveries to the Belarus, Finland, Latvia, Estonia and Kazakhstan have grown significantly. The group says it managed this despite coronavirus-related lockdowns with construction project suspensions in many markets.

Russia: Eurocement subsidiary Kavkazcement has announced the launch of a new CEM-II Portland limestone cement product. The company says that the cement has a wide range of applications, from “general purpose structures to objects operating under aggressive environmental conditions: concrete and reinforced concrete structures, monolithic structures, massive foundations and indoor structures, as well as in screeds, plaster mortars and dry building mixes.” Kavkazcement general director Nikolai Muradov said, “The use of cements with mineral additives provides a high-quality concrete surface; in finished products, the risk of efflorescence, cracking and other defects is reduced.” Customers can purchase the product in 50kg or 1t bags.

Russia: Eurocement subsidiary Belgorodsky Cement has announced the start of commercial production of a new CEM-III slag Portland cement. The company says that the cement is highly water and frost resistant and suitable for use in the construction of massive ground and underground structures. Belgorodsky Cement director general Eduard Androsov said, “We offer our customers an individual approach to solving construction problems and guarantee a stable supply of high quality products in the required volumes and within strictly defined deadlines.”

Russia: The International Standards Organisation (ISO) has granted Eurocement subsidiary Akhangarantsement ISO 9001:2015 quality management systems certification for its Akhangarantsement integrated cement plant. A TÜV audit concluded that the plant’s production, distribution and management systems conform to international quality standards.

Akhangarantsement general director Gennady Kulikov said, “The introduction of a modern management system allows us to flexibly respond to changes in demand and implement an active investment program. The development strategy of the enterprise involves increasing production capabilities through the construction of a new high-tech dry process plant with a capacity of 3Mt/yr. A number of measures are aimed at sustainable development and increasing efficiency: introduction of energy-saving technologies, automation of production, development of new types of products, professional development of employees and the creation of high-tech jobs and the introduction of green technologies and advanced environmental solutions.”

Uzbekistan: Russia-based Eurocement subsidiary Akhangaran Cement said that it shipped 180,000t of cement in May 2020, up by 11% year-on-year from 163,000t in May 2019. Uzbekistan Newsline has reported that the increase resulted from a combination of production modernisation, business process efficiency improvement and personnel training and development.

Akhangaran Cement general director Gennady Kulikov said, “Despite the special mode of operation associated with the coronavirus pandemic, the enterprise team at all stages of the technological process is set to work efficiently. Together with the achievements of high production results, employees pay special attention to ensuring industrial safety, production culture and organisation of workplaces.” The Akhangaran Cement cement plant’s new 3.0Mt integrated line is due for completion in mid-late 2020. It will enable the company to serve 100% of demand in the Toshkent region and 30% of Uzbekistan’s total domestic demand of 17.3Mt/yr.

Russia: Eurocement subsidiary Maltovsky Portland Cement has announced that it will be selling wholesale and retail products from its plant in Dyadkovsky, Bryansk Oblast from a newly opened shop at the site. While the new sales format is being trialled, customers are able to purchase 50kg bags or big-bags of CEM-II cement or 1750kg pallets of CEM-III cement. Eurocement commercial director Natalya Strzhalkovskaya said, “Customers thereby eliminate the risk of buying counterfeit goods and can be sure that they are purchasing reliable and high-quality Maltovsky Portland Cement products.”

Russia: Eurocement has announced the completion of Phase 2 of an upgrade project at its 2.4Mt/yr integrated Pikalevsky Cement plant. Following the modernisation of the grinding unit in the first phase of the upgrade in August 2019 at a cost of US$2.14m, Phase 2 work consisted of an expansion to ‘the assortment of high-quality products,’ including ‘large-scale construction and installation, reconstruction of air supply and aspiration systems and power supply and repair of existing buildings and structures’ at a total cost of US$2.86m. Eurocement completed the upgrade without any downtime to the existing lines.

Pikalevsky Cement director general Andrei Vashchilov said, “We have tested the new cement. The activity of cement at the age of 28 days increased by an average of  10MPa, which allows for cost-optimised concrete production. The modernisation also enabled the improvement and stabilisation of another important indicator - water separation.