
Displaying items by tag: GCW102
Pouring into the Philippines cement industry
29 May 2013Three stories this week from the Philippines build a complex picture of a booming cement industry. San Miguel purchased a 25% stake in Northern Cement, Lafarge Republic announced its capital expenditure budget for 2013 and the country's on-going price probe reported on its progress.
San Miguel's entry into the market should raise the most interest since its president stated that the company intends to spend US$750m on the construction of three cement plants. Each plant will have a cement production capacity of 2Mt/yr with construction timed to start in 2013 and finish by the end of 2015.
This level of investment, if it happens, surpasses the last major build announcement in the Philippines. In May 2013 Holcim released details of a US$550m plant in Bulacan with a capacity of 2.5Mt/yr. Some indication of the viability of San Miguel's plans may be gleaned from the comparative costs of the projects. San Miguel's plans will cost US$125/t of installed capacity, less than half of Holcim's US$220/t. Possible reasons for this difference may lie in San Miguel releasing the wrong figures or a reliance on lower build quality. However San Miguel's sheer size - its net income was US$2.25bn in 2011 - may itself herald the start of a major player in the domestic cement industry.
Meanwhile the Department of Trade and Industry (DTI) has continued to investigate why the price of cement has risen since 2012. Currently prices are about 5% above the suggested retail price for cement. Cement producers blamed the increases on a higher cost of coal.
The Philippines is currently experiencing massive cement sales increases. In 2012 sales rose by 17.5% to 18.4Mt from 15.6Mt in 2011. With a total capacity of 21Mt/yr and a capacity utilisation rate of 85% in 2012, this growth looks set to continue in 2013, as confirmed by more rises in sales in the first quarter.
Power Cement announces new directors
29 May 2013Pakistan: Power Cement, formerly Al Abbas Cement Industries, has released the names of its directors for the period to 2016. Kashif Habib, Samad Habib, Muhammad Ejaz, Nasim Beg, Syed Salman Rasheed, M Yousuf Adil and Muhammad Yahya Khan are all set to be elected unopposed at the company's extraordinary general meeting to be held on 4 June 2013 in Karachi.
Indonesia: PT Semen Baturaja is seeking to raise up to US$163m in an initial public offering (IPO) in June 2013, officials have said. It will use the proceeds to increase its cement production capacity to 2Mt/yr.
The state-owned cement producer plans to sell 2.34bn shares, equivalent to 23.8% of the company after the issuing. It will sell the shares in an indicative price range of US$0.05–0.07 each, according to State Enterprises Ministry strategic planning deputy Wahyu Hidayat.
"We're targeting production to reach 2Mt this year from 1.2Mt in 2012. We will invest about US$270m in a new 1.85Mt/yr plant. We aim to start operation of the additional capacity in the fourth quarter of 2016," said chief executive Pamudji Raharjo. The offering is scheduled for between 20 June 2013 and 24 June 2013.
Tanzania: Dangote Cement has started construction of a US$500m cement plant in Mtwara, Tanzania. The 3Mt/yr plant is expected to be completed by March 2015. Company president Aliko Dangote said commencement of the Tanzania plant is part of the strategy of the group's strategy to increase its cement production capacity to at least 29Mt/yr by 2015.
"Our investment in this sector, which is outside the traditional mining sector, is to take advantage of the abundance of limestone in the country and work towards making Tanzania self-sufficient in cement production. We must commend the government and people of Tanzania for recent public sector and banking reforms as well as revamped and new legislative frameworks, which have spurred private sector-driven investment," said Dangote.
Lafarge prepares US$47m expansion in 2013
29 May 2013Philippines: Lafarge Republic has set aside US$47m for capital expenditure in the Philippines in 2013 to increase cement production capacity to meet demand. President Renato Sunico made the announcement at the company's annual stockholders' meeting in response to a profit of US$23.6m in the first quarter of 2013, a 35% increase year-on-year from US$17.5m in 2012. He added that the industry expects total demand for cement to increase by 6 to 8% in 2013.
Lafarge Republic is increasing its capital expenditure for a new mill at its plant located in Teresa, Rizal which will have a capacity to produce 850,000t/yr from 2015 onwards. It is also automating the processes of some of its plants, including that in Norzagaray, Bulacan. Sunico added that various productivity improvement projects are also expected to deliver additional capacity to supply the rising cement consumption. He noted that the company is planning to add an additional 2.3Mt/yr in cement milling capacity by 2015 to its current capacity of 6Mt/yr.
"We are predominantly strong in Luzon because all our four plants are here. We wanted a national footprint so we are moving to Davao, Iloilo, Batangas and mostly to Cagayan," said Sunico. He added the company is relying on the growth of high-rise real estate projects, increasing remittances of overseas Filipino workers and increases in the call centre industry to boost cement demand.
In 2012 Lafarge Republic spent US$35.3m on improvements at its cement plant in Danao City, for its Iligan City pre-heater project and the construction of the feeding system for refuse-derived fuel (RDF) at its Bulacan plant.
Philippines: The Department of Trade and Industry (DTI) has asked cement producers in the Philippines to justify recent price hikes that led prices to exceed the suggested levels set by the agency.
Trade Undersecretary Zenaida C Maglaya said the three largest cement firms in the country - Holcim Philippines, Lafarge Republic, Cemex Philippines - have started submitting documents to support adjustments in their prices. Eagle Cement is set to meet with DTI and Board of Investment (BOI) officials to explain its pricing scheme. Maglaya said one of the large cement manufacturers had made a submission but had yet to complete all requested data due to 'antitrust issues', referring to laws addressing anti-competitive behavior among corporations.
In April 2013, Maglaya said that cement companies had increased their prices due to the higher cost of coal, a raw material that accounted for about 25% of the cement industry's manufacturing costs. Holcim reportedly raised its price by 11%, Lafarge by 7%, Cemex by 15% and Eagle Cement by 5%.
In 2012, the Cement Manufacturers' Association of the Philippines (Cemap) reported record-high sales of 18.4Mt, up by 17.5% from 15.6Mt in 2011. This was due to the boom in public and private construction projects. In the fourth quarter of 2012, 4.4Mt of cement were sold compared to 4Mt in the fourth quarter of 2011.
Cimpor Q1 results benefit from asset swap
29 May 2013Portugal: Cimpor has seen its turnover and earnings before interest, taxation, depreciation and amortisation (EBITDA) grow in the first quarter of 2013, due to the assets brought in from an asset swap with InterCement.
Turnover grew by 22% to Euro636m from the same quarter in 2012. EBITDA rose by 15.2% to Euro147m from Euro128m. The Portugal-based cement producer gained new operations in Argentina, Brazil and Paraguay from the asset swap while it lost assets in Spain, Morocco, Tunisia, Turkey, China and Peru.
Total cement and clinker sales increased by 5.9% to 6.4Mt from 6.1Mt. However, operations that remained with Cimpor suffered a 4.6% drop in sales due to continued demand retraction in Portugal and increased competition from imports in South Africa.
China cement news in brief
29 May 2013National: China's cement output grew by 8.7% year-on-year in April 2013, rising from a 4% increase in the same month of last year, according to the latest statistics released by the National Development and Reform Commission (NDRC). In the first four months of 2013, the country's total cement output reached 641Mt, an increase of 8.4% year-on-year from the same period in 2012. Profits for the cement industry fell by 29.4% for the first quarter of 2013 to US$606m.
Regional: In southwest China, Chongqing Municipality produced 17.7Mt of cement over the first four months of 2013, a year-on-year increase of 11.2%, according to the local statistics bureau. Yunnan Province produced 28.4Mt of cement in the first four months of 2013, a year-on-year increase of 27.8%.
The central Hubei Province saw cement output slide by 2.6% year-on-year to 31Mt for the first four months of 2013. Hunan Province saw its cement output rise by 8.3% year-on-year to 9.33Mt in April 2013.
Eastern China's Jiangsu Province saw cement output grow by 15.1% year-on-year to 55.5Mt for the first four months of 2013.
Government: China has confirmed that it intends to release a blueprint for urbanisation in 2013, the state-run Xinhua News Agency has reported, citing officials with China's top economic planner. Officials with the NDRC said the urbanisation development plan is 'very important' and that the NDRC was leading the drafting. Shares in cement suppliers and other construction-related companies have already benefited from expectations of more housing and infrastructure projects.
Corporate: Chinares Cement has announced it is in discussion with Fujian Cement about setting up a joint-venture to build cement grinding lines, and to coordinate marketing and sales. No agreement has been reached yet.
Southern Province profit slides
29 May 2013Saudi Arabia: Saudi cement producer Southern Province Cement (SPC), the nation's largest cement firm by market value, posted a US$71.6m net profit for the first quarter of 2013, down from US$75.8m a year ago. Without providing exact figures, the company attributed the decrease to lower cement prices.
The cement manufacturer registered an operating profit of US$72.7m for the first three months of 2013, down from US$76.8m in the first quarter of 2012.
Hail Cement loss deepens in 2013
29 May 2013Saudi Arabia: Hail Cement has booked a US$3.7m net loss for the first quarter of 2013, more than double the loss of US$1.7m suffered in the first quarter of 2012. Without providing any exact figures, the company attributed the loss to higher expenses related to launching production, coupled with higher salary costs due to the growing number of employees.
Hail Cement, established in 2010, is yet to start commercial production. According to the current plans, this is expected by the end of the second quarter of 2013. In February 2013 Hail Cement said that its rotary cement kiln had started trial production and that the trial operations were expected to take three months.