Displaying items by tag: GCW155

Industrial energy consumers in Romania have succeeded in extracting concessions from the government's green certificates scheme this week. Cement producers, including Lafarge, Holcim and local HeidelbergCement subsidiary CarpatCement Holding, will benefit now from a 10-year facility to acquire the certificates and they will be allowed to buy up to 85% fewer certificates than at present.

The Romanian government reckons the change will save industry Euro750m. It will be good news for the cement producers and aluminium producer Alro Slatina, one of the chief lobbyists for the change which paid Euro39m for the certificates in 2013, reported losses of Euro17m and threatened production closures.

The debacle strikes a chord with other government-led attempts to nudge society towards lower-carbon emitting energy sources. First a national or international scheme offers economic incentives toward some sort of carbon reduction. Then major industrial users either complain that the system 'unfairly' penalises them or they find a way to play the system. The latest example of the adjustments in Romania is an example of the former, as is the current Australian government's intention to remove its carbon tax. Multinational companies surrendering carbon offsets into the European Union's (EU) emissions trading scheme (ETS) is an example of the latter.

In defence of government-industry negotiation, the EU ETS is now in its third phase of trying to make the scheme work as the EU tries to reach its target of a 20% cut in emissions compared to 1990 levels by 2020. In late 2013 environmental group Sandbag accused the target of containing a loophole that allows for a much smaller cut in emissions due to a slack in carbon budgets, of potentially 2% of 1990 levels. However, the EU confirmed in early June 2014 that it is on track to beat its target and cut down total emissions by 24.5% by 2020.

Alongside all of this arguing, overall energy costs have steadily risen over the last decade, as have the rates of co-processing at European cement plants. As a secondary major fuels consumer, behind energy generation and transportation, the cement industry is particularly susceptible to energy prices being jolted around behind various market trends, such as increases in natural gas supply in the US market. In effect the cement industry hops between different 'next best' options, after the leading energy consumers have taken the premium fuels. The interplay between legislators and heavy industry over carbon taxes prompts the following question: what encourages cement producers more to move to reduce their carbon emissions – legislation or fuel prices?

In other news this week, the chief executive of African producer Bamburi Cement, Hussein Mansi, has announced his plans to move on to Lafarge Egypt. In his memo to staff he mentioned, '...five very interesting years leading the Kenya – Uganda business.' Telling words perhaps given the Kenyan government's attention on Bamburi Cement and the East Africa Portland Cement Company, a producer minority-owned by Lafarge. Of course Mansi may discover that 'interesting' is relative in Egypt, a country on the other side of the energy subsidy spectrum to Europe and its carbon taxes.

Kenya: Bamburi Cement chief executive Hussein Mansi is set to leave in July 2014. Mansi is relocating to Lafarge Egypt, ending his five-and-a-half year tenure overseeing Bamburi's operations in Kenya and Uganda. In an internal memo sent to staff, Mansi said he will be replaced by Bruno Pescheux, currently the chief executive of Lafarge Cement Syria.

"After five very interesting years leading the Kenya – Uganda business I have accepted a new challenge with Lafarge in Egypt and will be doing so by the end of July 2014," said Mansi.

Mansi, aged 47, holds a post-graduate certificate of Business Administration from the University of Leicester and a bachelor's degree in civil engineering from the University of Cairo. He began his career in 1991 at Saudi Building Systems as a design engineer and later as the sales manager before joining Orascom Construction Industries as works director in charge of sales and marketing.

Mansi joined Bamburi Cement in January 2009 from Algerian Cement Company (ACC), wholly owned by Orascom, where he was the commercial director for five years until December 2008. Orascom was acquired by Lafarge in 2007 leading to Mansi's promotion to head the French multinational's business in East Africa.

India: The board of directors of ACC Ltd has appointed Harish Badami as CEO and managing director (MD) designate with effect from 1 August 2014. Badami will assume responsibility as CEO and MD of the company for a period of five years. He will succeed Kuldip Kaura.

"With the Jamul cement plant (in Chhattisgarh State) expansion coming on stream in 2015, ACC is now well poised to serve the Indian market which is on the threshold of rapid growth," said Kaura.

"At this juncture, with the economy showing positive signs, I look forward to the exciting opportunity to participate in its growth," said Badami.

Cambodia/China: Huaxin Cement has injected US$24m into Cambodia Cement Chakrey Ting Factory to acquire a 40% stake in the southeast Asia-based company on 17 June 2014. After the investment, the Cambodia cement producer's registered capital grew to US$60m from US$32m. The Hubei Province-based cement manufacturer said that the acquisition in Cambodia is the company's second overseas investment after establishing a subsidiary in Tajikistan in 2011.

Iran: The Iranian government has given permission to cement producers to increase their prices. The new prices will become effective on 21 June 2014, according to the Mehr News Agency. Previously it was reported that Iran's Cement Producers Association planned to increase cement prices by 14 – 21% in the current Iranian calendar year (which started on 21 March 2014). The Cement Producers Association and the Industry, Mine, and Trade ministry signed an agreement in the 2013 – 2014 Iranian year, establishing the trade association as the driver of cement prices.

Saudi Arabia/Finland: Wärtsilä has received an order to supply a turnkey power plant for the Umm Al-Qura Cement Company. The 47MW captive power plant will be located close to Taif city. The equipment will be delivered by February 2015 and the project will enter commercial operation by October 2015.

The power plant consists of five 20-cylinder Wärtsilä 32TS engines, a new two-stage turbocharged version of the Wärtsilä 32 series. This new engine is designed to operate efficiently in high temperate and altitude conditions such as a location of this project with temperatures up to 50°C and an altitude above 1000m. After completion of this project, Wärtsilä will have supplied more than 1600MW of installed power plant capacity in Saudi Arabia.

Germany: HeidelbergCement intends to sell its building products business and has already contacted several banks about the deal. The division is expected to be sold for Euro1.1 – 1.5bn, according to the Financial Times. CEO Bernd Scheifele has been reportedly planning on conducting the sale for a long period. In the 2013 financial year the company's building products business saw its revenue fall by a tenth to Euro1.1bn.

Vietnam: Semen Indonesia plans to invest up to US$300m towards building a cement plant in Vietnam in the next five years as part of its business expansion in Southeast Asia. The Indonesian state-run cement producer intends for its subsidiary Thang Long Cement to build a 1.5Mt/yr cement plant, according to General Director Dwi Soetjipto. Construction is scheduled to start in early 2015 with a operation due to start in 2018.

Thang Long Cement currently holds a cement production capacity of 2.5Mt/yr and the new plant is intended to meet the increasing demand for cement in Vietnam and other Asian countries, including Singapore, Cambodia, Laos and Myanmar. Semen Indonesia holds a 70% stake in Thang Long Cement. It has set a target of becoming one of the leading cement producers in Southeast Asia.

Vietnam will not face a shortage of cement in either the short or long term as the supply is estimated at 75 - 76Mt/yr in 2015 while demand in 2014 is estimated at 65 – 67Mt/yr, according to the Ministry of Construction. The local cement industry had around 2.59Mt of unsold products, mainly clinker, at the end of April 2014.

Sri Lanka: Holcim Lanka is spending US$22m towards upgrading its cement grinding plant in Ruhunu, Galle. The investment will increase the plant's cement grinding capacity from 0.6Mt/yr to 1Mt/yr. The upgrade will also increase capacity on a Geocycle waste shredding line, building up the clinker warehouse and process efficiency improvement to a sludge drying facility.

"We also intend to make considerable improvements to our distribution by enhancing our logistics," said Holcim Group CEO Bernard Fontana during his first visit to Sri Lanka. Holcim will be concentrating on increasing their production from both their facilities in Puttalam and Ruhunu in the future.

"In our 18 years of existence in Sri Lanka, we have tripled our cement manufacturing capacity to reach 2.3Mt/yr," said Philippe Richart, CEO, Holcim Lanka. Holcim Lanka sold approximately 1.5Mt of cement in 2013 and generated annual revenues of US$154m in 2013.

Romania: Industrial energy consumers in Romania will gain a 10-year facility for green certificate acquisition, which will save them approximately Euro750m, the government has decided. About 300 large industrial companies in Romania, including Lafarge, Holcim and CarpatCement Holding, that will benefit from this measure, as they will be allowed to buy up to 85% less green certificates than they currently have to buy. The ratios are established on the rate of energy costs in their total production costs.

However, the adjustment to the green certificate scheme will add 1% to the energy costs for other consumers, who will have to buy more green certificates to support the existing subsidy scheme for green energy producers. The general population and smaller Romanian firms will see increases in electricity bills.

The support scheme will be applied from 1 August 2014 and it will also be notified to the European Commission.