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With president-elect Trump due to take office this week we wonder what this means for the cement industry in Mexico. In 2016 this column looked a couple of times at the implications of Trump upon the US cement industry. First, we looked at who might benefit if he builds his wall along the Mexican border and then we wondered what his policies might mean for the US industry. To answer the latter first, the main issues for the US industry are infrastructure, changes to the Environment Protection Agency (EPA) and the repercussions if Trumps serious about a trade war with China. So long as a trade war doesn’t happen then Trump is probably good news for the US cement industry. As for Mexico, the joke has been that Trump will be good for the construction business ever since market analysts Bernstein’s passed a note around in the summer of 2016 about that wall.

Graph 1: Breakdown of Mexican cement industry by production capacity. Source: Global Cement Directory 2017.

The makeup of the domestic Mexican cement industry hasn’t changed too much in the last decade, even with the merger between Lafarge and Holcim, preserving the same market share in production capacity between the companies. Most of the producers have reported growth in 2016. Cemex reported that its cement sales volumes rose by 3% for the first nine months of 2016 and by 10% in the third quarter of that year. Overall though, its net sales fell slightly to US$2.16bn in the first nine months, alongside a fall in ready-mix concrete sales volumes. Cemex, crucially, also seems to have taken charge of its debts in 2016, saying that it was on track to meet its targets and that it had announced nearly US$2bn worth of divestments in that year. Currently the company is trying to buy out Trinidad Cement in the Caribbean, which may be a sign that it has turned a corner.

Grupo Cementos de Chihuahua’s (GCC) cement sales volumes rose in the first three quarters of 2016, in its case by 4%. Its overall net sales in Mexico rose by 4.2% in Mexican Pesos for the same period but fell when calculated in US Dollars due to currency variations. GCC attributed its sales growth to better pricing environment and increased cement volumes, mainly for projects in the commercial and industrial sectors that compensated for a decline in the public sector, following the culmination of two major urban paving and highway construction projects in 2015. At the smaller end of the market, Elementia reported that its cement sales skyrocketed by 30% to US$104m in the first nine months of the year aided by higher prices and volumes.

The major Mexican cement producers all have a presence in the US with the exception of Cruz Azul. Cemex has held assets north of the border for years, Cemento Portland Moctezuma has links to Buzzi Unicem, GCC bought US assets from Cemex in 2016 and Elementia completed its purchase of Giant Cement also in 2016. These companies have clinker in their kilns in plants on US soil manned by US citizens. This represents investment in local industry and it is exactly the kind of thing that appeals to the rhetoric of Trump’s approach so far. If the new president builds his wall then Mexican producers will probably be producing much of the cement that builds it. Even the Mexican Peso’s slow decline since 2014 could help the local cement industry, as it will cut the cost of moving exports and materials north of the border. Indeed, Enrique Escalante, the chief executive officer of GCC said in late 2016 that his company was ‘ready to build’ Trump’s wall.

However, the sheer uncertainty factor of an incoming president with as little experience of public office as Donald Trump must be giving chief executives pause for thought. After all, Trump's tweets before he has assumed office have forced car manufacturers to change policy. If he manages to disrupt the North American Free-Trade Agreement (NAFTA) in order to protect US jobs then the repercussions for the Mexican economy will be profound. It sends nearly three quarters of its exports to the US. Local cement producers would surely suffer in the resulting economic disruption.

So, currency devaluations aside, Mexican producers are making money from their cement operations at home and they are increasingly hedging their bets by operating or buying units in the US. Some, like GCC, are even being ebullient about the benefits that might come their way. It may be a bumpy ride but the Mexican industry is ready. However, it may wish to avoid appearing in any of Donald Trump’s tweets anytime soon.

Belgium: Philippe César has been appointed member of the board of directors of Compagnie des Ciments Belges (CCB), a company acquired and added to the Cementir Group’s consolidation in October 2016. He will also be appointed as the chairman of CCB’s board of directors.

UK: Hanson is spending Euro29m on upgrades at its Ribblesdale cement plant in a seven-year project to improve production efficiency and emissions. In the first six months nearly Euro13m will be spent on improvements and maintenance to enable the plant to meet new dust emission regulations. This is the biggest investment programme at the site since the 1990s and includes a Euro2m replacement of the filters on two cement mills.

“The permitted dust level is being reduced by 66% in April 2017, from 30mg/m² to 10 - the new equipment will perform better than this,” said plant manager Terry Reynolds. He added that the filters will run well below the new maximum dust emission levels after the installation

The plant will spend Euro7.5m, its largest investment, towards replacing its wet gas scrubber in March 2017. In addition, 75m of ducts have been replaced at a cost of Euro440,000 during a shutdown in January 2017 as part of a five-year improvement plan for the site’s exhaust gas handling system.

Ribblesdale employs 116 people and is supplied by two on-site quarries worked by an 11-person team and a team of contractors managing the loading and hauling of quarry materials. The cement plant has produced cement for projects including the Manchester International Airport, Heysham nuclear power station, Manchester United football stadium, Liverpool’s Roman Catholic cathedral and also now for Hinkley Point C nuclear power station.

Saudi Arabia: Cement producers are planning to cut their production by 5 – 10% in 2017 due to a fall in demand. The decision follows declines in profits of around 17% by local companies in 2016, according to the Al Sharq Al Awsat newspaper. The decrease in demand for cement has been blamed on competition, high production costs and high energy costs. Cement sales in the country started to decline in 2015 following the low international price of oil.

India: The Competition Appellate Tribunal (COMPAT) has rejected an appeal by Binani Cement to waive paying a 10% deposit of a US$25m fine that was given to it by the Competition Commission of India (CCI) for cartel-like behaviour. COMPAT said that the cement producer had failed to add any further information to the situation or pointed out any errors in the procedure, according to the Press Trust of India. In August 2016 the CCI imposed fines of nearly US$1bn on cement producers including ACC, ACL, Binani, Century, India Cements, JK Cement, Lafarge, Ramco, UltraTech, Jaiprakash Associates and the Cement Manufacturers Association for alleged cartelisation activity.

In November 2016, the COMPAT delayed the CCI condition that the cement producers deposit 10% of the fine. However, Binani Cement requested to waive the deposit on grounds of severe financial hardship. Binani Cement now potentially faces interest charges on top of the deposit as its appeal was dismissed.

US: Titan America's Pennsuco plant, which includes cement manufacturing, aggregates, quarrying, block manufacturing and ready-mix concrete operations, has been officially recognised as a Gold Level Zero Waste facility, making it the only facility of its kind in the US to achieve Zero Waste Status.

"The Zero Waste Certification is a remarkable accomplishment and consistent with Titan America's commitment to striving for best-in-class sustainability practices. Congratulations to our Environmental Department and thanks to everyone at Pennsuco for their help and support. We should all feel very proud of this," said Randy Dunlap, president of Titan America's Florida business.

To qualify for Zero Waste Certification, the Pennsuco Complex was required to demonstrate greater than 90% diversion from landfill use for a minimum of 12 consecutive months. This includes reducing, reusing, recycling or composting discarded materials or recovering the materials for productive use in nature of the economy at biological temperatures and pressures. It requires implementing sustainable strategies for resource and waste management. The process for certification process also included an extensive on-site audit, which was performed by Zero Waste Council members.

Zero Waste recertification occurs every three years. The Pennsuco site is now aiming for Platinum Certification. Titan's Pennsuco Plant has also been recognised for other sustainability initiatives, including Wildlife Habitat Certification and EnergyStar Certification. Titan's two cement plants at Pennsuco and Roanoke have been EnergyStar certified for 10 consecutive years.

Paraguay: Industria Nacional del Cemento’s (INC) production rose by 8% year-on-year to 13.2 million bags of cement in 2016 from 12.3 million bags in 2015. It also reported an operating profit of US$1.5m, according to La Nación newspaper. Company president Jorge Mendez said that the state-run cement producer produces 55,000bag/day of cement at its plants at Villeta and Vallemi, holding about 55% of the domestic market.

INC is completing a US$3.9m dryer upgrade at its Villeta plant with local contractor Engineering. Changes to the fuel used at its Vallemi plant are also on-going to cut energy costs.

Bangladesh: The Sena Kalyan Sangstha (SKS), a trust run by the Bangladesh Army, has launched 'Sena Cement and Sena LPG brand of cement at its Mongla Cement plant in Dhaka. Military and government officials also attended the event. The new cement brands are intended to grow the welfare activities of the SKS.

Spain: LafargeHolcim’s Sagunto cement plant in Valencia cut its production by nearly 10% in 2016 due to a fall in exports to Algeria. The plant exports 85% of its production and Algeria cut its imports by half, according to the Expansión newspaper. The plant is considering new export destinations including Colombia. However, its permit to mine aggregates from the Salt de Llop quarry is due to expire in December 2017 and the local government is reportedly not keen to renew it.

Pakistan: Maple Leaf Cement has ordered a 7300t/day cement production line from FLSmidth. The plant will be located in Iskanderabad in the Mianwali District. The order has been placed at above Euro75m and it will be completed by the end of 2018.

The order will include an ATOX 52.5 vertical mill for raw grinding, an ATOX 27.5 vertical mill for coal grinding, an EV 200x300 Hammer Impact Crusher, stacker and reclaimer systems for storage, a ROTAX-2 rotary kiln with low NOx ILC calciner, a FLSmidth Cross-Bar cooler, a JETFLEX burner and two OK 39-4 vertical mills for cement grinding.

"This is the latest project to underline FLSmidth's strength as the leading supplier of the most productive and energy-efficient equipment and technology - and our position as the preferred supplier of complete production lines to the Pakistani cement industry," said FLSmidth’s Group Executive Vice President, Cement Division, Per Mejnert Kristensen.