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US tariffs on Mexico - consequences for the cement industry

05 June 2019

Talk of US tariffs on imports from Mexico was not troubling the National Chamber of Cement (CANACEM) this week. Director general Yanina Navarro pointed out to local media that Mexico only exports 1.42Mt or 3.4% of its total production of 44Mt/yr to its northern neighbour. This is a little higher than the 1.04Mt reported by the United States Geological Survey (USGS) in 2018, although that figure is believed to have underestimated imports to El Paso district in Texas. Mexico was the fifth largest exporter of hydraulic cement and clinker to the US behind Canada, Turkey, China and Greece.

Commentators pointed out that Grupo Cementos de Chihuahua (GCC) might be affected more that other Mexican producers as two of its plants are close to the border at Samalayuca and Juárez in Chihuahua. However, GCC operates five plants in the US. Cemex also has a plant near the US border at Ensenada in Baja California. Yet it’s the fourth largest producer in the US by integrated production capacity. If either company had its export markets seriously disrupted by any border duties they could likely focus on production in the US to compensate.

Once again this is similar to the situation with the proposed border wall where, although President Donald Trump wanted Mexico to pay, it would have been Mexican companies benefiting the most from any construction boom. This was also the case with the US-Mexico-Canada Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA). The international structure of many of the larger Mexican cement producers insulates them from these kinds of political and trade disputes.

Mexican producers shouldn’t be too complacent though. Tariffs are likely to play havoc with integrated supply chains as in the car industry. Building materials will probably be affected less so but that 1.42Mt export figure is more than the production capacity of many individual Mexican cement plants. Taking away this export market will drag on the industry’s utilisation rate and alternate destinations may be hard to find. Note the trouble Mexico has had distributing its products in Peru. The Supreme Court there upheld a fine this week on UNACEM for trying to block the distribution of Cemex’s brand of cement in 2014. Also, although Trump’s tariffs on Chinese products may not have much of an impact on building materials, USGS data shows that Chinese imports of cement to the US fell by 27% year-on-year to 0.76Mt in the six months to the end of February 2019. Similar reductions could await Mexico’s exporters.

The general consensus from the free market press is that tariffs will ultimately hurt both economies. In agreement the Portland Cement Association (PCA) published a market report in April 2018 on the effects of tariffs on US cement consumption in the wake of tariffs on steel and aluminium imports from the European Union (EU), Canada and Mexico. The summary was that all forms of tariff – from minor to a global trade war – would likely result in reduced US cement consumption to varying degrees due to slower economic growth. A full-scale set of tariffs on Mexican imports is likely to induce similar consequences.

Published in Analysis
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Alexander Sapronov appointed senior vice president of Eurocement

05 June 2019

Russia: Alexander Sapronov has been appointed as the senior vice president of Eurocement. His responsibilities include production, sales and purchases, transport and logistics, strategy and marketing, industrial safety and capital construction. Sapronov has held a variety of senior positions are large industrial companies in Russia, including Freight One, Novolipetsk Steel, Rosneft and others.

Published in People
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Krzysztof Kieres elected as chairman of Polish Cement Association

05 June 2019

Poland: Krzysztof Kieres, the general director of Dyckerhoff Polska, has been elected as the new chairman of the Polish Cement Association. The term of office lasts four years and he succeeds Ernest Jelito, the president of Górażdże Cement, in the role.

Kieres, aged 64 years, is a graduate of the Faculty of Economics and Sociology at the University of Lodz. He holds experience with various construction companies, including Germany’s Bilfinger. He has worked for Dyckerhoff, part of Italy’s Buzzi Unicem, for 20 years as a financial director and the general director.

The association has also elected Dariusz Gawlak, the president of the board of the Warta Cement, as its vice chairman. Other new members of the board include: Włodzimierz Chołu, Cemex Polska; Xavier Guesnu, Lafarge Cement; Janusz Miłucha, Grupa Ożarów; and Andrzej Reclik, Górażdże Cement. The association has also accepted Andrzej Ptak as an honoury member.

Published in People
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Simon Marriott appointed as managing director of Concrete Products by Aggregate Industries

05 June 2019

UK: Aggregate Industries has appointed Simon Marriott as the managing director of its Concrete Products division. He has also been promoted to the executive committee of the company as part of a strategic decision to raise the profile of the division. The new role will give him responsibility for all hard landscaping aspects of the business including Charcon, Bradstone, Masterblock, Charcon Construction Solutions and Simply Paving. He will also lead the marketing communications function.

Marriott started his career as a plant manager before moving to Bardon Aggregates in 1996. When it merged with Camas to become Aggregate Industries, he become general manager of the Express Asphalt division and later became director of the mainstream asphalt division’s southern region. He then ran Bardon Concrete and Aggregate Industries’ cement importing function, before becoming director of Concrete Products in late 2015.

Published in People
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Manfred Bracher resigns from board of RKW

05 June 2019

Germany: Manfred Bracher has resigned from the executive management board of RKW and will leave the company at the end of June 2019 to pursue new professional opportunities. RKW’s chief executive officer (CEO) Harald Biederbick will take over his responsibilities until further notice.

Bracher started his professional career as a project leader at the Austria’s Lenzing Group, followed by 12 years at the Finnish packaging manufacturer Huhtamaki in various positions, including General Manager Films. From 2008 until 2013, he served as managing director at Clopay Europe. He has been a member of the RKW board since January 2014 and leads the Division Hygiene & Industrial. In addition to that, he is also responsible for group operational excellence and purchasing.

RKW Group manufactures film solutions including products for powdery goods and films and non-wovens for the construction sector.

Published in People
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Protestors damaged Alpha Cement plant during May 2019 riot

05 June 2019

Myanmar: Police say that protestors rioting about the Alpha Cement plant at Patheingyi, Kyaukse district in the Mandalay region in mid-May 2019 caused over US$40,000 worth of damage to the site. Residents armed with slings and rocks entered the site and set fire to buildings and vehicles, according to the Myanmar Times newspaper. A petrol bomb was also thrown at a building. The police are still looking for several people in relation to the incident.

Local residents were complaining about compensation related to the project as well as the use of Chinese nationals at the site. The plant, previously known as Myanmar Conch Cement, is a joint venture between Myanmar's Myint Investment Group and China's Anhui Conch. The unit is currently being upgraded to a production capacity of 5000t/day. Construction work started in late 2017. The unit is expected to be operational in 2021.

Published in Global Cement News
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EAPCC to cut workforce by September 2019

05 June 2019

Kenya: The East African Portland Cement Company (EAPCC) plans to reduce its costs by making 220 workers redundant. It says it needs US$170m to return to profitability, according to the Business Daily newspaper. Other plans to reduce its debts include raising money through land sales and reducing its energy costs. It is considering selling over 2400 hectares of land in Athi River. It has already sold around 360 hectares to Kenya Railways for around US$50m.

The company currently has 821 contracted and permanent and pensionable employees. It intends to reduce its workforce by September 2019.

Published in Global Cement News
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Penna Cement cleared for initial public offering

05 June 2019

India: Penna Cement has received approval from the Securities and Exchange Board of India (SEBI) for a US$220m initial public offering (IPO). The company intends to use the funds to pay off debts and for general corporate purposes, according to the Hindu newspaper. The cement producer operates four integrated plants and two grinding plants in Andhra Pradesh, Telangana and Maharashtra that share a total production capacity of 10Mt/yr.

Published in Global Cement News
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Cementos Argos to sell stake in Omya Andina for US$18.6m

05 June 2019

Colombia: Cementos Argos plans to sell its stake in Omya Andina for US$18.6m. It said it was focusing on the cement, concrete and aggregates business, according to the La República newspaper. Omya Andina is a subsidiary of Switzerland’s Omya that operates in Colombia. It produces calcium carbonate and speciality chemicals for a range of industries including construction and agriculture.

Published in Global Cement News
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Dominican Republic exports US$72.3m of cement in 2018

05 June 2019

Dominican Republic: Alexander Medina Herasme, the director of the General Directorate of Mining, says that the country exported grey cement worth US$72.3m in 2018, according to the El Caribe newspaper. The nation has five integrated cement plants and two grinding plants.

Published in Global Cement News
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