Displaying items by tag: Government

Philippines: The tariff on cement imports will not exceed US$5.68/t, the figure recommended by the Tariff Commission. Trade and Industry Secretary Ramón López has stated that the safeguard ought not cause prices to rise. The provisional safeguard duty of US$4.02/t will remain until 10th September 2019.

Iraq: The Ministry of Finance has approved construction work to restore the capacity of a cement plant in Kufa, Nafaj governorate, damaged in recent conflict. Thompson Reuters reported that work is set to commence pending the imminent release of the funds. Member of Parliament Fadhil Al-Fatlawi of the Labour and Social Care Committee has expressed the expectation that, at its full capacity of 0.18Mt/yr, the plant will accelerate the country’s restoration.

Canada: The federal carbon tax, set to increase to US$37.64/t in 2022 from C$15.06/t as of January 2019, may drive Canadian businesses abroad to polities with less stringent climate laws, most notably the US. The Fraser Institute, an independent, non-partisan public policy think-tank, has named cement and concrete product manufacturing amongst the 13 industries most heavily affected, with a forecasted rise in production costs of 2.69%.

Predictably, the recent investigation by the Tariff Commission in the Philippines on whether to maintain duties on imported cement recommended that the safeguard duty be kept. It even suggested raising the rate to nearly US$6/t from US$4/t at present. The report has been passed to the Department of Trade and Industry (DTI), which will make the final decision on the matter.

Graph 1: Market share of the Philippines cement industry between local producers and traders, 2013 - 2018. Source: Tariff Commission of the Philippines.

As the commission built its argument it released a great snapshot of the local cement industry and it’s well worth a read for anyone who is interested. One key graph here was the speed at which the market share of cement sold by local producers fell compared to importers from 2013 to 2018. As Graph 1 shows above, traders imported 0.29Mt in 2015 and this rose to 4.66Mt 2018. Imports by local producers also grew during this time but at a far slower rate. They were 0.45Mt in 2015, grew to a high of 1.65Mt in 2016 and then stabilised at around 1Mt/yr since then. Seven of the top 10 cement exporters were Vietnamese companies followed by two from China and one from Thailand. However, the local producers were importing clinker on a far larger scale during this period. 16.8Mt of clinker was imported from 2013 to 2018 led by Holcim Philippines with 5.54Mt or a 33% share. In Holcim’s case this was coming from China, Indonesia, Japan, South Korea, Malaysia, Thailand and Vietnam.

Elsewhere, the report established the various production capacity upgrades the local cement producers had invested in or were planning to in the near future. Taiheiyo Cement Philippines, for example, was reported as planning an expansion to its Cebu plant production line from 2022 to 2025. It then looked at kiln capacity utilisation rates, prices and how profits have changed amongst much else. It concluded that the import surge from 2015 to 2018 had depressed prices and decreased the profitability of the local producers. This fitted its definition of ‘serious injury’ as one reason to impose a safeguard duty on imports.

Importers presented a different scenario to the commission during its investigation and afterwards. Phinma, for example, told local press that the commission’s comparison calculation of the costs behind local and imported cement didn’t take into all the costs the importers endured such as a local distribution and handling once in the country. The Philippines Cement Importers Association reiterated the view of its members that they were simply meeting market demand, that local producers had caused their own problems through overcapacity and that profits varied considerably amongst local producers, amongst other arguments. This has been borne out by some of the half-year results amongst the local producers. Eagle Cement, for example, saw its earnings before interest, taxation, depreciation and amortisation (EBITDA) grow by 21% year-on-year to US$80.6m.

With the publication of the commission’s report the DTI has been handed the impetus to hold up or even raise the duty on imported cement. Based on its actions in recent years the ministry seems likely to do so. This presents a contrast to Trinidad & Tobago where importer Rock Hard Cement won a legal battle earlier in August 2019 against competitor and Cemex-subsidiary Trinidad Cement over the classification of imported cement products. These kinds of trade conflicts are likely to proliferate whilst global production capacity outstrips demand but the outcomes may vary.

Afghanistan: The Afghan Ministry of Mines and Petroleum has reported progress in discussions on projects totalling an investment of US$350m, including improvements to the Jabal Siraj and Samangan cement plants worth US$170m and US$136m respectively.

Wadsam reports that the Afghan Chamber of Commerce and Industries has voiced concerns as to delays caused by the lengthy approval process for the ‘much-needed projects.’ With the successful conclusion of these talks, the plans will require the ratification of the High Economic Council and subsequently the Afghan Cabinet.

South Korea: The Korea Cement Association (KCA) says its members will increase the use of coal ash from local thermal power plants or source alternative raw materials from domestic clay mines. The decision follows a trade dispute between South Korea and Japan, according to the Aju Business Daily newspaper.

The Environment Ministry started to tighten rules concerning the import of coal ashes from Japan in August 2019 citing fears of radioactive and heavy metal contamination. Importers are now required to submit an authorised radioactive inspection report and the analysis of heavy metal components. The KCA said its members use 3.15Mt/yr of coal ash and 1.28Mt/yr is imported from Japan.

Vietnam: 20 factories in Quang Ninh, Thanh Hoa, Quang Nam and Thua Thien Hue provinces will be subject to a new carbon tax in a pilot project. The Ministry of Agriculture and Rural Development has started to put the programme into action following approval from Prime Minister Nguyen Xuan Phuc, according to the Vietnam News Agency Bulletin. The pilot project will start in 2020 and run until the end of 2021.

The scheme will include 11 cement companies and nine power plants. Cement producers and traders will be charged US$0.09/t of clinker, equivalent to US1.35/t of CO₂. The tax will also increase electricity costs for cement producers. It is expected to increase the production cost at plants by 0.29%.

Nguyen Van Vu, head of Finance and Planning Department under Vietnam Administration of Forestry (VAF), said that the tariff was lower than the World Bank’s Forest Carbon Partnership Facility pledge to pay for emission reduction efforts in North Central Region of US$5/t of CO2. The provinces running the tariff are expected to generate around US$7.4m/yr. Most of this revenue will be accrued in Quang Ninh, followed by Thanh Hoa, Thua Thien Hue and Quang Nam.

Algeria: Groupe des Ciments d’Algérie’s (GICA) Aïn el Kebira cement plant in Setif has been certified by the American Petroleum Institute (API) to produce oil well cement products. It has been award two certificates following a one-year audit, according to the El Moudjahid newspaper. Djamila Tamazirt, Minister of Industry and Mining, who was on a tour of the unit, said that the development would help the country to stop importing oil well cements. The country imports an estimated 0.2Mt/yr of oil well cement at a cost of nearly US$30m.

Libya: The Libyan Cement Company (LCC) says taxes, poor weather and local fighting have hampered its progress over the last year. The introduction of a 183% Foreign Exchange Tax in the last quarter of 2018 has tripled the price of imported spare parts, supplies and capital goods. This has delayed repairs to the cement producer’s plants. However the company believes that the tax may be lowered in the near future. A long and wet winter has also been blamed for reducing the demand for cement and reducing the company’s cash flow.

Fighting in Tripoli has affected the LCC’s operations in the east of the country with multi-month long interruptions to the supply of raw materials. It said that key roads have recently been re-opened following negotiations relieving the situation and that it hopes they will stay open.

The company said that it is still working towards a Euro200m upgrade project to its plant in Benghazi. The plan is to increase the unit’s production capacity to 3Mt/yr from 2Mt/yr.

Malaysia: Deputy Chief Minister and State Trade and Industries Minister Datuk Seri Wilfred Madius Tangau says that the Sabah Economic Development Corporation (SEDCO) and Cement Industries (Sabah) (CIS) are in talks about building an integrated cement plant in Sabah state in Borneo. The minister was replying to questions in the state assembly about the higher cost of cement in the region compared to West Malaysia, according to the Daily Express newspaper. There are no integrated plants in the state, although CIS operates a grinding plant that uses imported clinker.