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Indonesia: It seems that not a week goes past without a forecast, announcement or other report about the continued boom in the Indonesian cement industry. Similarly, there is a steady stream of expansion announcements to accommodate the future demand. In light of another round of impressive cement statistics, what's the story for Indonesia in 2012 and beyond?

In the three months to 31 March 2012 Indonesia produced 12.5Mt of cement, an 18% rise on the first quarter of 2011. In the whole of that year, the cement industry turned out a massive 17% more cement than in 2010. These headline increases are certainly impressive and show that if the first quarter of 2012 was repeated three more times throughout the rest of the year, Indonesia would hit its 53Mt production forecast. This is more than double the cement production of 1998 (22Mt/yr in the midst of the Asian banking crisis) and, while from a low base, the values represent incredible sustained year-on-year demand growth.

But what is the potential of the Indonesian cement industry? This can be assessed by looking one of Indonesia's neighbours, namely Malaysia, and doing a quick thought-experiment. What would the Indonesian cement industry look like if the country were to suddenly develop demands and cement consumption patterns like Malaysia does today? Indonesia has a population 8.3 times higher than Malaysia¹ and a cement consumption/capita rate approximately 2.4 times lower.² Assuming current Indonesian cement consumption to be 50Mt, if all of the people in Indonesia were to suddenly start using cement like Malaysia does today, the country's cement industry would have to be nearly 1000Mt/yr to support demand!

While this is clearly not the case today and is unlikely to be fully realised, Indonesia will continue to develop economically. As it does, the world's fourth most populous nation will need more cement. How much is open to debate, but even if a small percentage of that hypothetical 1000Mt can be realised, it will certainly justify the current rush to add extra capacity. This is now especially likely in light of the December 2011 relaxation of land acquisition rules, which will make it easier to build both cement projects and the large construction projects that need cement.

Click here for much more on the cement industries of Indonesia and Malaysia (as well as Vietnam) from the April 2012 issue of Global Cement Magazine.

1. CIA World Factbook website, https://www.cia.gov/library/publications/the-world-factbook.

2. Cement consumption per capita data for Malaysia taken from Lafarge 2010 Annual Report. (http://www.lafarge.com/04112011-customers_activities-cement_market_2010-uk.pdf). Malaysia is a representative comparison for Indonesia based on its GDP to cement consumption ratio.

US: Henrik Wesseling, the plant manager at the Lehigh Cement Permanente Plant in Cupertino, California, is returning to Germany. Lehigh Cement announced that Wesseling will be leading the global fuel optimisation strategy for its parent company HeidelbergCement. His last day at the Lehigh facility will be on 26 April 2012.

Wesseling took on the plant manager role at Permanente in 2008. In his time there, he worked toward helping the company install emission-reducing technology to meet new environmental regulations. Over the past two years, he led an initiative to install an activated carbon injection system that aims to reduce mercury emissions by more than 90%.

"Henrik has performed admirably as plant manager and I commend him for all he has achieved," Kari Saragusa, Lehigh Western Regional President, said in a statement. Axel Conrads, Lehigh's region west vice president of cement operations, will lead plant operations on an interim basis while a new plant manager is sought. A new plant manager is expected to be in place within the coming months.

US: Lafarge North America will relocate its headquarters from Virginia to Illinois, a move that is expected to create around 100 jobs.

The company, currently based in Reston, already has a presence in Illinois with a facility in South Chicago and about 300 employees in the state. The relocation would move its administrative offices and create around 90 jobs in the first two years. Company officials haven't determined a timeline for the move or the exact location but said the new headquarters would be near Chicago's O'Hare International Airport.

"The location and all of the infrastructure this area offers is very important: the airport, the trains, the rivers, the lakes and the roads," said John Stull, a CEO for Larfarge's cement and aggregate concrete operations. He added that the company does a majority of its business in the Midwest and a Chicago-area location made sense.

In exchange, Illinois is offering about US$6.3m million in tax incentives to the company, which the company only gets if it meets certain job creation and economic targets. Despite this Illinois has come under fire in recent months with some business groups and companies alleging an unfriendly business climate because of high taxes and state budget woes including US$8bn in unpaid bills.

Kazakhstan: Steppe Cement, a construction materials producer in Kazakhstan, has sold 170,080t of cement for US$13.2m in the first quarter of 2012, a fall in sales volume of 9% year-on-year. Yet in the same period in 2011 the producer sold 187,404t for US$11.7m, an increase of revenue of 13%.

Total market consumption in Kazakhstan during the first quarter of 2012 increased by 9% compared to the same quarter in 2011. Its marketshare fell to 18% in the quarter compared with 20% for the whole of 2011. The average price of cement from the producer increased by 25% in the first quarter year-on-year. By share price the company is currently valued at US$68.5m.

Italy: Italcementi has inaugurated its new research centre, i.lab, costing Euro40m near Bergamo in northern Italy. Once complete the centre, which was designed by US architect Richard Meier, will cover 23,000km³ and will employ 1300 researchers.

Italcementi will focus the research on the development of new building materials and on the use of renewable and reusable raw materials. The centre will also research special products such as 'pollution' cement.

In 2010, Italcementi's ITCLab received the European Greenbuilding Award of the European Commission for energy efficient construction and now the centre can also boast Leadership in Energy and Environmental Design platinum certification. The centre allows energy saving of up to 60% compared to traditional buildings, director general Giovanni Ferrari said.

Oman: Oman's biggest cement producer Raysut Cement Company (RCC) has decided to take a fresh term loan of US$166m from BankDhofar, BankMuscat and Oman Arab Bank. The loan has been taken to refinance existing borrowing.

RCC Chief Executive Officer Mohammed Ahmed Al Dheeb stated that extending the tenure of the loan from five to 10 years would reduce the instalment and interest rate, which require an outgoing of about US$16 – 18m during the first three years. RCC also said it had taken the new loan in order to protect itself and its subsidiaries from pressure by the existing consortium of bankers to mortgage all of its properties.

In 2011 RCC acquired United Arab Emirates' Pioneer Cement for US$172m, making it one of the largest cement producers in the Gulf region. The acquisition was financed by long-term borrowing from the consortium of bankers led by BankDhofar. The move added 1.7 – 1.8Mt/yr capacity to RCC bringing its total to about 4.7Mt/yr.

RCC posted a net profit of US$38.8m in 2011, a fall of compared to US$53.8m in 2010. It attributed the decline in profit to severe competition in the domestic and the export markets impacting both volume and the price. The company's revenue rose to US$218m in 2011 from US$169m in 2010.

Indonesia: Indonesia's domestic cement sales were 12.5Mt in the first quarter of 2012, up 18.2% year-on-year compared to the same period in 2011, according to data from cement firm PT Semen Gresik. March 2012 sales were 4.4Mt, a rise of 16.2% year-on-year, the data showed, with most sales on the islands of Sumatra and Java.

"Indonesia's low cement consumption of around 199kg/capita in 2011 continues to provide ample room for growth," said Teguh Hartanto, analyst at Bahana Securities in Jakarta.

PT Indocement Tunggal Perkasa Tbk, Indonesia's biggest cement firm by market value, has estimated that national demand for cement will grow by 8-10% as infrastructure projects increase after a government law in December 2011 speeds up land acquisition. The country's cement sales fluctuate month to month depending on factors such as holidays and the government's end-of-year project completion deadlines.

Dubai: Cement factories in Dubai face permanent closure if they fail to meet new green measures announced by the Ministry of Environment and Water.

In an advisory statement issued by Dr Rashid Ahmad Bin Fahd, Minister of Environment and Water, cement companies were warned that a temporary three-month closure may be issued to the 11 existing factories in the country if facilities were found in non-compliance. If problems identified in the first warning are not rectified within 90 days, the ministry could shut down an errant cement factory for good.

"In case of not removing violations within the period of administrative closure (three months), the ministry has the right to close the violating factory forever and withdraw its licence," state news agency WAM said.

New green measures aimed at improving air quality and workplace safety will apply not only to established production facilities but also to new cement plants, the ministry said. The ministry has called for cement companies to create new health, safety and environmental systems for all operations and to maintain ongoing records to monitor and follow up new measures.

One of the main thrusts of the resolution is to markedly reduce 'volatile dust emissions' created through concrete production. To achieve this, "cement factories are obliged to measure the amount of dust inhaled in ambient air," and send monthly reports for monitoring the quality of air and particles, in addition to the flue gas, to the Ministry and the competent authority. To keep dust from migrating into adjacent properties, cement factories have also been ordered to, "form a green belt around the plant" by covering external borders of the site with up to 50% of newly planted trees.

New Zealand: Holcim New Zealand has reported an after-tax surplus of US$6.77m in 2011 according to its annual report. Total revenue for the year fell by 1.55% to US$214 from US$217m in 2010. Sales of cement fell slightly in 2011 and have been in decline since mid-2008. The national use of cement is a quarter lower than the last peak in 2007.

Notably a proposed new cement plant at Weston, near Oamaru, was on hold because of global economic uncertainty and would not be considered again before late in 2012, the annual report said. However, Holcim's partnerships with large construction companies brought several new projects in 2011, including the Fisher & Paykel Healthcare plant in Auckland and the Auckland District Health Board's six-level car park. Customers south of Christchurch were serviced from Dunedin and bagged cement for Christchurch came from Nelson and Dunedin while bulk cement for Holcim's Sockburn silos was railed from Westport and trucked from Dunedin.

Portugal: Cimpor says a takeover offer from Brazil's Camargo Corrêa is too low and lacks detail on its plans for Cimpor's future. The leading Portuguese cement-maker would not recommend to shareholders whether they should sell or keep their stakes.

Camargo, Brazil's second-largest construction group, launched a Euro5.5/share takeover bid for the 67.1% of Cimpor it does not own at the end of March 2012. Analysts had expected the bid to succeed after two key shareholders said they were prepared to sell. Yet the board's opinion, given in a statement issued late on 13 April 2012, could complicate the process or require sweetening of the bid. Camargo is already the largest single Cimpor shareholder and the outstanding shares it does not own in Cimpor are valued at around Euro2.4bn.

Cimpor's statement said the offer does not include a premium for taking control of the company and lacks detail on what would happen to Cimpor's asset portfolio, debt profile and dividend policy. "For the above reasons, the board is not in a position to recommend to shareholders to tender their shares, as the price is low and significantly undervalues Cimpor, and, in the absence of adequate information on the future of Cimpor post-offer, neither may the board recommend to shareholders to maintain their investment," it said.

Portuguese conglomerate Semapa earlier proposed that some Cimpor shareholders should form a joint holding company to try to keep the company in Portuguese hands. Its offer does not represent a counter-bid, but Semapa said it implies a price of Euro5.75/share.

Camargo has said the price it offered is fair, expecting most Cimpor shareholders to use this 'good opportunity', but would not say if it would consider sweetening the offer. It also said in the statement that the price implied in Semapa's complex proposal could not be compared to Camargo's direct bid. It said that Semapa's arrangement, if it were to go ahead, would have to trigger a compulsory competing bid by those who join the Semapa-proposed holding company.