Displaying items by tag: Lafarge Egypt

Egypt: Lafarge Egypt has appointed Khaled El Dokani as its CEO.

El Dokani has worked for Holcim group since 2004. He started his career with the building materials manufacturer as the chief financial officer of Lafarge Algeria. He became the Country Manager for Qatar in 2016. This was followed by Country CEO roles in Iraq, Nigeria and the GCC (UAE, Qatar & Oman). He holds a bachelor's degree in commerce and accounting from Alexandria University.

Egypt: Lafarge Egypt has confirmed that it is aiming to reduce its CO₂ emissions in excess of 20% by 2030. Its key steps to achieve this include increasing its use of alternative fuels and lowering its clinker factor, according to the Daily News Egypt newspaper. Chief executive officer Jimmy Khan added that the company is also working on developing digital methods to reduce emissions by improving transport logistics. The cement producer launched its Shatbna Masonry Cement product in 2022, part of parent company Holcim’s ECOPlanet range.

Holcim has set a worldwide target to reduce its gross Scope 1 CO₂ emissions from cement production of 22% by 2030 from a baseline of 590kg/t in 2018. It reported a 5% reduction to 562kg/t in its 2022 sustainability report. Ultimately the group is targeting net zero emissions from its activities by 2050.

Egypt: Lafarge Egypt has appointed Jimmy Khan as its chief executive officer (CEO).

Khan has worked for Holcim, LafargeHolcim and Lafarge for 18 years. Notable positions include becoming Head of Business Processes, Internal Control and Audit - Nigeria in 2013, CEO of LafargeHolcim Mauritius and Seychelles in 2015 and Country CEO of Zambia in 2018. He is a graduate of the Pamplin College of Business at Virginia Tech in the US.

Egypt: Lafarge Egypt has signed a US$93m solar energy deal with Lumika Renewables Egypt, a subsidiary of AP Moller Egypt, to produce 140GWh/yr. The agreement is scheduled to become effective by the first quarter of 2024, according to Mist News. Under the terms of the deal the two companies will build a new 50MW solar power plant. This will be the first such plant operated by Lumika Renewables Egypt in the country. The subsidiary of Holcim says it aims to secure a renewable energy supply for 50% of its Ain Al-Sokhna cement plant's total daily energy consumption.

Vicat’s plans to buy another 42% stake in Sinai Cement became public this week. Once completed, the France-based company should own 98% of the Egyptian company, based on previously published ownership figures. The announcement heralds a rapprochement in the relationship between the cement producer and the Egyptian government.

Last year Vicat raised a case against the government with the International Centre for Settlement of Investment Disputes (ICSID) over an argument about how it could invest in Sinai Cement as a foreign company. All seems forgiven and forgotten now with a settlement agreement signed in March 2022 between Rania el Mashat, the Minister of International Cooperation on behalf of the Egyptian government, and Guy Sidos, the chairman and chief executive officer of Vicat Group. Local press reported that the government is trying to attract more direct foreign investment. Sinai Cement reported a loss attributable to its parent company of around US$19.1m in 2021, down from a loss of US$30.3m in 2020. However, its sales rose by 63% year-on-year to US$78m.

Sinai Cement has some specific operating issues related to its geographic position in the Sinai Peninsula and ongoing security concerns. Yet its mixed fortunes also sum up some of the continuing challenges the Egyptian cement industry is facing. After years of overcapacity, the government introduced reduced cement production quotas in July 2021 and this is mostly perceived to have improved prices in the second half of the year. Vicat described the arrangement as having capped the local market at 65% of its production capacity and it said that prices recovered ‘significantly’ as a result in the second half of 2021. Cemex’s regional chief Carlos Gonzalez told local press that the move had given plants “A glimmer of hope for the return of balance to the cement market.” The company has also announced a US$20m local investment backing up this view. Not all the foreign multinational companies entirely agreed, with HeidelbergCement reporting a ‘sharp’ decline in sales volumes although chief executive officer Dominik von Achten did describe the country as ‘coming back’ in an earnings call about his company’s financial results in 2021. Solomon Baumgartner Aviles, the chief executive officer of Lafarge Egypt, was also cooler about the production cap in a press interview in October 2021, describing it as too early to assess how well the cap was working and noting that the gap between supply and demand was still large.

Vicat said in its annual report for 2021 that, “Provided no further adverse geopolitical, health or security developments occur, the current climate is unlikely to jeopardise the prospects of an improvement in the subsidiary’s profitability, which should begin to gradually occur.” The geopolitical bit was timely given that Russia’s war in Ukraine started on 24 February 2022. It also targets the latest problem hitting Egyptian cement producers: energy costs. The head of Arabian Cement told Enterprise Press that initially some producers had opted to temporarily stop production and use stocks instead to attempt to try and wait until the energy price volatility ended. However, it stayed high so the cost of cement has gone up generally. Producers are now trying to switch to using a high ratio of natural gas, such as 10%, but this is dependent on the government letting them.

The Egyptian government, for its part, is facing a decision whether to supply subsidised gas for domestic industry or to export to Europe. The backstory here is that Egyptian cement producers are facing yet another step change in fuel supply. In the mid-2010s lots of plants switched from heavy fuel oil and gas to coal. High international coal prices could be heralding another change.

Alongside this the value of Egypt’s cement exports rose by 151% year-on-year to US$456m in 2021 from US$182m in 2020. The Cement Division of the Federation of Egyptian Industries has attributed this to growth mainly on the African market. This trend continued in January and February 2022 with cement exports up by 141% year-on-year to US$104m from US$43m. The main destinations were Ghana, Cameroon, Ivory Coast and Libya.

HeidelbergCement summed up the current state of the Egyptian cement market in its 2021 annual report as follows “The development of the Egyptian cement market continues to be determined by government intervention.” What happens next is very much in the hands of the state as it decides whether to extend the production cap, which fuels to subsidise, whether to allow exports and where to invest in infrastructure projects. One variation on this theme may be local decarbonisation targets. At the end of March 2022 the Global Cement and Concrete Association (GCCA) launched a series of Net Zero Accelerator initiatives, including one in Egypt. How a country that produces more cement than it needs reduces its CO₂ emissions presents another challenge for manufacturers and the government to grapple with.

Egypt: Redecam says it has successfully started up a project one line two at Lafarge Egypt’s Ain Al-Sokhna cement plant. The upgrade consisted of: converting the main kiln’s electrostatic precipitator (ESP) into a bag filter; enhanced the cooling system for the clinker cooler, including a partial ESP retrofit; and revamping the bypass the gas conditioning tower and dust transport system. The Italy-based engineering company previously carried out a similar project on line three at the plant in 2020.

Egypt: Developer Mountain View has awarded a 300,000m³ concrete supply contract to Lafarge Egypt, part of Switzerland-based LafargeHolcim. Mountain View will use the concrete to build its Mountain View iCity in East Cairo. The investment in the project totals US$12.7m.

The producer has also signed a memorandum of understanding with the Egyptian National Research Centre to undertake initiatives aimed at enhancing construction.

The one thing that the Egyptian cement industry really didn’t need this year was any more jolts. Since the gargantuan 13Mt/yr government/army-run El-Arish Cement plant at Beni Suef opened in 2018, the sector has been stuck in production overcapacity and struggling to catch up. Yet, like the rest of us, they got one nasty surprise in the shape of the coronavirus pandemic. This has added stress to the whole situation and we can see some of this in various news stories that Global Cement has covered recently.

HeidelbergCement’s local subsidiary Suez Cement has been busy in recent days making changes to its corporate structure in the form of a tender offer to buy a 100% stake in Egyptian Tourah Portland Cement. Production stopped at Tourah Cement in June 2019 due to market conditions. This follows yet more lacklustre financial results earlier in September 2020 that show the pain that it and other cement producers have been enduring. Suez Cement’s loss nearly doubled year-on-year to Euro38m for the first half of 2020 and its sales fell by 18% to Euro145m. This was blamed on production overcapacity and a coronavirus-related lockdown. Other producers, both multinational and local, have experienced a similar situation.

Suez Cement also announced in mid-September 2020 that its Ready Mix Beton subsidiary had secured a contract for the supply of concrete for the construction of two new monorail lines connecting the country’s new city projects. Unfortunately, as Suez Cement’s chief executive officer (CEO) Jose Maria Magrina explained in an interview to Daily Egypt News in July 2020, “the New Administrative Capital (NAC) is a very big project, but in the end it has not offset the decrease in informal buildings that have been stopped.” Despite Suez Cement being a major supplier and the proximity of its plants to the site, overall sales have gone down.

Graph 1: Cement consumption in Egypt. Source: Cement Division of the Building Materials Chamber of the Federation of Egyptian Industries.

Magrina’s gloom is shared by other industry figures with a general assumption that perhaps up to a quarter of the country’s 20-something cement plants may have to close in the next year or so. Coronavirus has only deepened this view as the government’s response was to cease issuing construction licences for private buildings in Greater Cairo, governorate capitals and major cities from late May 2020 for six months. Solomon Baumgartner Aviles, the CEO of Lafarge Egypt, said in July 2020 that local cement demand fell by 6.5% year-on-year in the first half of 2020. He added that coronavirus had ‘strongly’ impacted the building materials sector with a big effect on the individual market, and with the licence halting exacerbating the situation further. As data from the Cement Division of the Building Materials Chamber of the Federation of Egyptian Industries shows above in Graph 1 demand peaked at 56.5Mt in 2016 and has since declined to a low of 48Mt in 2019. By month the sector recovered in January and February 2020 respectively with growing cement sales on a year-on-year basis but this has since declined with losses in most months subsequently. This is set against a production capacity of 81.2Mt/yr in 2018, giving an excess of 30Mt/yr and a utilisation rate of 59%.

One story that was mentioned in the local press this week is that Arabian Cement Company (ACC) had started negotiations with the European Bank for Reconstruction and Development and the Commercial International Bank – Egypt to secure new loans worth over US$20m. The ACC has denied this publicly in a statement to the Egyptian Exchange but it’s a sign of the trouble that is expected in the sector given the current circumstances.

All of this leaves cement producers scrabbling to hold on until the market picks up again, takes action in other ways or the government intervenes. Some analysts expect the market to stabilise in the medium to longer term as work on large infrastructure projects like the NAC mounts. Suez Cement’s Jose Maria Magrina has said that, “the government must, within the law, dictate norms that will rationalise the market, while making sure that companies survive since current prices do not cover the costs of production.” Local press has since reported that the Ministry of Trade and Industry has started trying to help cement companies, including measures such as limiting production to balance supply and demand, and decrease the surplus in the market. Another option is a coordinated export subsidy programme in coordination with the government but nothing appears to have happened yet after several years of discussion. Unhelpfully for any export aspirations, Egypt finds itself in a very cement export-heavy part of the world, wedged as it is between North Africa, Turkey and Southern Europe.

Hope springs eternal though as, almost unbelievably, Egyptian Cement Group’s CEO Ahmed Abou Hashima surfaced last week to remind everyone that his company still plans to inaugurate its new integrated cement plant in 2021. The project to build a new 2Mt/yr unit in Sohag has been brewing since 2017 when it was announced with China-based Sinoma on board as the engineering partner. It was originally scheduled to open in the first half of 2020 but it was delayed by coronavirus. Let’s hope the picture looks better when it finally opens.

Egypt: Solomon Baumgartner Aviles, the chief executive officer (CEO) of Lafarge Egypt, says that cement demand fell by 6.5% year-on-year in the first half of 2020. In an interview with the Daily News Egypt newspaper he said that coronavirus has “strongly impacted the building materials sector” with the biggest effect on the individual construction market as people decided to save their money instead. He added that a government decision to halt licences for building, expanding, upgrading, amending, or supporting construction work for private housing in larger cities had also compounded the problem. Despite this he praised the government for supporting infrastructure projects, which are operating at full capacity.

Aviles also outlined how Lafarge Egypt has developed an integrated plan on Health, Cost and Cash to tackle the coronavirus crisis. So far it has donated over 80,000 masks and gloves, made 200L of antibacterial gel available, and supported public hospitals by refurbishing 460 ventilators.

Egypt: Siemens has submitted an integrated survey of the digitalisation potential of various industries in four zones to the Ministry of Industry (MoI) with a view to improving the competitiveness of the country’s products. Daily News Egypt has reported that the Germany-based technology company has already signed contracts for the supply of digital efficiency solutions with El Ameria Cement and Lafarge Egypt. It is also negotiating with Misr Beni Suef for the installation of thermal emission measuring units at its 3.5Mt/yr integrated cement plant in Beni Suef, Maadi.