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Another week and another massive Indian cement industry deal. This week Nirma has won the bidding for the assets of Lafarge India that LafargeHolcim is selling. Before we get too carried away though, the diversified conglomerate entered into a letter agreement with LafargeHolcim on 7 July 2016 to pay US$1.4bn for three cement plants and two grinding plants with a total cement production capacity of 11Mt/yr.

It is worth noting that this is only a letter agreement. LafargeHolcim signed one previously with Birla Corporation for some of the same assets in August 2015. Unfortunately, an ambiguous amendment to the Mines and Minerals (Development and Regulation) (MMDR) Act struck in January 2015 made it unclear how easily mineral rights could be transferred with an industrial plant sale. After much likely internal squabbling Lafarge India said it was selling all of its assets in January 2016 followed by threats of legal action by Birla.

Some commentators in the Indian media have flagged the new deal as expensive for Nirma. It will be paying US$127/t for the new capacity compared to the US$118/t that UltraTech Cement is offering Jaiprakash Associates for its laboured deal. The Nirma deal comprises integrated cement plants at Sonadih in Chattisgarh, Arasmeta in Chattisgarh and Chittorgarh in Rajasthan, and cement grinding plants at Jojobera in Jharkhand and Mejia, West Bengal. Other assets include 63 ready mix concrete plants, two aggregate plants and a blending unit.

However, unlike UltraTech, Nirma is a relatively new entrant in the cement industry. Its main industries are in detergents and soda ash manufacture. It invested US$194m in a 2.28Mt/yr cement plant in Rajasthan that was commissioned in November 2014. It also ran into environmental issues over a proposal to build a new cement plant at Mahuva in Gujarat. One report compiled under request by the Indian Supreme Court in 2011 cited the presence of Asiatic lions as a reason for concern!

Lions aside, Nirma may be paying over the odds for its new cement business but it will gain a bigger presence in the industry quickly and diversify from its other existing industries in which it faces fierce competition. The Lafarge India plants are mostly in eastern Indian states compared to Nirma’s plant in Rajasthan in the west, giving it a reasonable geographic spread.

Nirma reportedly plans to finance the purchase through a leveraged buyout and the Mint business newspaper has described this as the largest transaction of its kind in India to date. The risk here will be how the Indian cement market plays out in the short term. LafargeHolcim reported that its cement volumes fell in 2015, although this has since picked up in the first half of 2016. UltraTech did better in its 2015 – 2016 financial year but it reported a slow construction market. Longer-term demographic trends suggest that the cement industry will grow, especially in the east of the country. With this in mind it may be a while before Nirma’s cement business roars.

Germany: Michael Höllermann and Johan P Cnossen are to join the management board of the Industrial Solutions division of ThyssenKrupp with effect from 1 August 2016. Höllermann, aged 51 years, CEO of the Regional Headquarters South America since 2012, will be the new Chief Human Resources Officer (CHRO). Johan P Cnossen, aged 56 years, who joined Industrial Solutions on 1 May 2016 as head of the transformation office for the implementation of ‘planets’, will hold the new position of Chief Operating Officer. The appointments are part of the ‘planets’ program reorganisation of the group’s Industrial Solutions business area.

With the appointments, Jens Michael Wegmann, CEO of the Industrial Solutions business area since 15 October 2015, has now filled all board positions. The new CFO, already in place since 1 June 2016, is Stefan Gesing. Also on the board is Dr Hans Christoph Atzpodien, who will focus on the management of Marine Systems.

Mexico: The International Finance Corporation (IFC) has granted Cemex a loan of Euro106m to support the cement producer’s sustainable investment programs in emerging markets. The IFC will grant Cemex funding for projects designed to enhance environmental performance that were completed in 2014 and 2015 as well as on-going during 2016, which are part of the capital expenditure plan previously communicated by Cemex. Approximately 60% of the funds will be allocated for projects related to the reduction of Cemex’s greenhouse gas emissions, while the remainder of the funds will be allocated to cover improvements to Cemex’s overall air emission controls.

“IFC’s financing to Cemex sustainable programs is part of our commitment to invest in critical climate-smart solutions across emerging markets,” said Liz Bronder, IFC Director for Latin America and the Caribbean. “We are encouraged by Cemex’s innovative initiatives and look forward to the company’s leadership expanding the climate change agenda among global key players”.

The IFC is joining Cemex’s facilities agreement dated 29 September 2014, as amended and restated maturing in 2020. This transaction increases the currently outstanding commitments under this credit agreement by approximately Euro106m and diversifies Cemex’s sources of funding.

Puerto Rico: The US Department of Labor’s Mine Safety and Health Administration (MSHA) has fined Cemex Puerto Rico US$291,722 in penalties relating to 119 citations and orders issued for safety violations at the company’s Ponce Cement Plant and Cantera Canas mines. The cement producer must now implement enhanced safety measures at its three MSHA-regulated facilities in Puerto Rico.

The MSHA issued the citations and orders for a wide variety of violations, including obstructed and unsafe travel ways and workplaces, safety defects on mobile equipment and machinery, and unguarded machine parts. The settlement was approved on 7 June 2016.

In the settlement Cemex agrees to hire an independent external safety consultant knowledgeable about surface mining and cement plant operations to conduct annual, wall-to-wall employee safety audits of these three facilities over the next four years. It will also arrange for the MSHA’s Educational Field and Small Mine Services to teach a mine safety course and cement plant safety course to safety directors, assistant safety directors, area supervisors and foremen.

US: HarbisonWalker International (HWI) has increased its inventory levels of monolithic refractory materials in response to customer demand. The North American supplier refractory products and services says it is now supplying its widest ever range of materials. The company previously announced a restructuring and rebranding initiative in May 2016 to increase its competitiveness. This included reorganising its distribution centres as Global Sourcing Centres to hasten delivery and product availability.

HWI runs an international network in North America, Europe and Asia, with 19 manufacturing plants, 30 global sourcing centres and technology facilities in both the US and China. Its cement refractory products include Versagun, Versaflow, Shot-Tech, Kruzite-70, Kala, Magnel RS, Magnel, Thor, Magnel Ultra and Magnel Ultra AF.

Denmark: FLSmidth has released ECS/ProcessExpert 8.3, the latest version of its process control system. Following installation and testing at four sites, it is now available for different cement and mineral plant applications, including as a free commercial release to all existing ECS/ProcessExpert version eight customers. The update improves a number of features and benefits including easier transitions for cement recipes.

"Some of the advanced techniques used by the new system include model predictive control and fuzzy logic rules. These allow it to continuously monitor the plant's process and quality parameters and continuously compute new control set points with more speed and accuracy than a human operator," said FLSmidth's Global Product Line Manager for Process Optimisation, King Becerra.

Other benefits offered by the update include a full decision tree on the front page of the system to help operators understand controller actions better and enhanced full plots on the front page to allow operators to see actuator actions and measure responses to a given action from the main page.

Zambia: Lafarge Zambia and Zambia Railways have signed a transport agreement to improve the delivery of production inputs for cement production and to distribute clinker and cement products locally and to neighbouring countries. The deal is intended to complement other modes of transport, reduce reliance on roads and promote sustainability. The agreement will run for three years and is subject to renewal.

“We continue to have a high fleet of trucks on our roads responsible for both inbound and outbound logistics, in excess of 500 trucks. The pressure exerted on the roads continues to be high as a result of this activity. Therefore, this partnership will relieve some pressure off our roads as it complements other modes of transportation currently in use today and we also anticipate to reduce the safety risk on the road,” said Chrissie Moloseni, Chief Financial Officer of Lafarge Zambia at the signing ceremony on 8 July 2016.

Christopher Musonda, the Chief Executive Officer of Zambia Railways, added that the company has devised a new transport model to improve efficiency. The Wagon Monitoring and Control System (WAMCO) is designed in a way that will enable customers to have dedicated wagons for all movements, thereby improving efficiency levels.

India: The National Capital Region (NCR) division of the Confederation of Real Estate Developers’ Associations of India (CREDAI) has decided to boycott Shree Cement due to complaints of alleged inconsistent price increases and shortages of cement. The property body also intends to file a complaint with the Competition Commission of India, according to the Economic Times newspaper.

“Shree Cement is arbitrarily increasing prices and stopping supply in between, demanding a price revision, despite taking an advance,” said a CREDAI NCR spokesperson. “Through excuses such as plant not functioning properly and issues with transportation these companies are not meeting the delivery deadlines, thereby affecting the builders’ construction timelines.”

The NCR CREDAI previously stopped using cement from UltraTech and Lafarge, on alleged grounds of cartelisation and malpractices. However it reversed this decision when the cement producers reduced their prices. Shree Cement has not commented on the matter.

Vietnam: Bedeschi has sign a contract for the supply of all the raw material crushing, transporting and storage machines at the Tan Thang cement plant Nhe An province. The new plant will have a cement production capacity of 2Mt/yr.

The order includes:

• One crusher for limestone with a capacity up to 850t/hr,
• A limestone circular storage with a stacking capacity of 850t/hr and a reclaiming capacity of 350t/hr,
• One clay crushing group with an apron feeder and a Bedeschi double roller crusher, suitable to crush sticky and moist material, with a capacity of 300t/hour; a stacking and reclaiming system for raw material additives (clay, iron ore, silica) made up of a luffing stacker with a capacity of 300t/hour and a bucket reclaimer with a capacity of 200t/hr,
• A stacking and reclaiming system for coal with a luffing and travelling stacker with a capacity of 200t/hr,
• A side type scraper reclaimer with a capacity 100t/hr.

The supply includes all connecting belt conveyors, including one long conveyor that connects the quarry to the cement plant, and all the dedusting filters for the conveyors. No value has been released for the order.

India/Switzerland: LafargeHolcim has announced that it has entered into a letter agreement with Nirma Limited subject to approval by the Competition Commission of India (CCI) for the divestment of its interest in Lafarge India for an enterprise value of approximately US$1.4bn. Lafarge India operates three cement plants and two grinding stations with a total capacity of around 11Mt/yr. The company also markets aggregates and is one of India’s leading ready-mix concrete manufacturers. The proceeds from the divestment will be used to reduce LafargeHolcim’s debt.

Eric Olsen, CEO of LafargeHolcim, said, “This agreement is an important step in our US$3.6bn divestment programme. With this deal, two thirds of the programme has been secured and it is well on track. We are confident that we will meet our target by the end of this year. With the proposed buyer we have found the right partner who will be able to develop the business further in the interest of all of our stakeholders.”

LafargeHolcim will continue to operate in India through its subsidiaries ACC Ltd. and Ambuja Cements Ltd., which have a combined cement capacity of more than 60Mt/yr and a distribution network that extends across the entire country.