Displaying items by tag: Namibia

Namibia: The International Organisation for Standardisation (ISO) has recognised Ohorongo Cement’s commitment to quality with ISO 9001:2015 and ISO 14001:2015 certification. The former follows technical auditing of the entire cement-making process to ensure ‘quality at the core of all processes,’ according to New Era, while the latter signifies the attainment of ‘the global standard for an effective environmental management system.’ The company commented that: “Ohorongo ensures that all operations and practices exhibit responsibility towards all stakeholders and the environment.”

Ohorongo Cement’s 69.8% owner Schwenk Namibia failed to sell to Singaporean-based International Cement Group (ICG) in September 2019.

No overarching theme this week but rather four changes of note in different markets. The first is Lehigh Hanson’s agreement to buy the integrated Bath plant in Pennsylvania, US, from Giant Cement, a subsidiary of Mexico’s Elementia. Lehigh Hanson, a subsidiary of Germany’s HeidelbergCement, plans to pay US$151m for the 1.1Mt/yr unit giving it a cost of US$137/t of cement capacity. That’s a similar price that Elementia paid when it acquired Giant Cement in 2016. The Mexican conglomerate paid US$220m for a 55% stake in 2016 for three cement plants with a combined production capacity of 2.8Mt/yr or US$143/t.

The purchase by HeidelbergCement draws a line following problems selling its business activities in Ukraine. The group blamed a drop in profit in the first half of 2019 on this. Since then though it has been linked to a takeover of UltraTech’s stake in Emirates Cement, the owner of the 0.5Mt/yr Emirates grinding plant in Dhaka, Bangladesh. Buying a cement plant in North America, its second most lucrative region after Western and Southern Europe, looks set to be a wise investment.

The timing here is interesting given that Elementia, the building materials company partly-owned by ‘Mexico’s richest man,’ Carlos Slim, has been steadily expanding in recent years. As stated above it only acquired Giant Cement in 2016. However, its net sales and earnings fell in the second quarter of 2019 caused by a market contraction in Mexico affecting all of its businesses. Sales from its cement businesses in the US and Central America grew but they fell by 6% at home in Mexico. Elementia said that proceeds from the sale of the Bath plant will be used for debt repayment and ‘general’ corporate purposes. Notably, Ricardo Naya Barba, the president of Cemex Mexico, has also described the local market as ‘difficult’ this week, in comments reported upon by local media.

Meanwhile in Africa, China’s Huaxin Cement purchased Maweni Limestone from Athi River Mining (ARM) Cement in Tanzania as part of the latter’s on-going administration process. Local press reported the transaction as costing US$116m and subject to regulatory approval. This one’s interesting because it shows a major Chinese cement producer buying related assets outside of China. This is likely part of the country’s Belt and Road Initiative to develop industry and infrastructure around the world and to give its overproducing industries new markets. Perhaps the surprise here is that Huaxin Cement hasn’t gone after the rest of Kenya’s ARM Cement… yet.

The other African news story of note this week was the confirmation that Singapore’s International Cement Group (ICG)’s intended purchase of Schwenk Namibia had failed. This deal was announced in March 2019 but it later ran into trouble when the Singapore Exchange blocked the proposed acquisition in June 2019 on the grounds that ICG didn’t appear to have the money to pay for it.

Lastly, Yamama Cement announced that it wants to sell its Production Lines 1-5, which have a daily clinker production capacity of 5600t/day. The producer previously temporarily shut down the lines in 2017 and it has been planning to build a new cement plant. Since then though it has faced shrinking sales and profits in the tough Saudi Arabian market.

The takeaway from all of this is that, despite the doom and gloom of a world producing too much clinker, some cement companies are targeting growth in specific territories. Sometimes these schemes succeed, as in the case of HeidelbergCement and Huaxin Cement, and sometimes they don’t, as ICG has found out. Heavy building materials like cement are costly to move around so a plant or assets in the right place at the right time can make a fortune.

Namibia: Ohorongo Cement has marked nine years in a partnership with Transnamib, Namibia’s state railway company. The partnership covers coal transportation from the Port of Walvisbay to Ohorongo’s integrated cement plant at Otavi and despatches of palletised cement. Transnamib also arranged additional train services between Tsumeb and Ondangwa to support shipments to the north of the country.

“We highly value our relationship with Ohorongo Cement as their increased utilisation of rail transport allowed for the implementation of our road-to-rail strategy which have resulted in a reduction of approximately 150 trucks on the road between Tsumeb and Ondangwa,” said Zebby Mukungu, Marketing and Sales Manager at Transnamib.

Namibia: Singapore’s International Cement Group (ICG)’s intended purchase of Schwenk Namibia for US$104m has fallen through. The company stated that it will not buy the subsidiary of Germany’s Schwenk Zement, whose 1.0Mt/yr total integrated capacity consists of Ohorongo Cement’s Walvis Bay plant, over four months ahead of the deal’s long stop date of 31 January 2020. The deal’s deadline had previously been extended from 30 June 2019 following the Singapore Exchange forestalled the deal due to ICG’s inability to pay for the unprofitable company.

Namibia: Employees at Cheetah Cement have expressed ‘dismay’ with the lack of Namibians in higher ranks and managerial positions at the cement producer, despite them holding the relevant qualifications. The workers claim that Cheetah Cement, located a few kilometres north of Otjiwarongo in the Otjozondjupa region, largely employs Chinese nationals.

According to a recent grievance letter seen by The Namibian newspaper, the workers claim that the company currently employ more Chinese workers than local ones, even where Namibian employees have the necessary skills for those positions.

Speaking on condition of anonymity, one employee described the workings of the company’s 'understudy programme,’ which positions a Namibian to work under a Chinese employee, supposedly to allow an exchange of skills. The source stressed that the Namibian employees are often more qualified than their Chinese counterparts.

Furthermore, the letter details complaints about poor and unfair working conditions, amongst them the absence of work contracts, lack of medical aid, plus low wages and victimisation.

Singapore/Namibia: International Cement Group (ICG) has extended the stop date of its agreement to buy Schwenk Namibia by six months to 31 January 2020. It follows the decision by the Singapore Exchange to block the proposed acquisition in June 2019 on the grounds that it did not meet the requirements for a ‘very substantial acquisition.’ ICG announced in March 2019 that it had arranged to buy a 100% stake in Schwenk Namibia for US$104m. Schwenk Namibia owns a 69.8% share of Ohorongo Cement.

Singapore: The Singapore Exchange has blocked the International Cement Group’s (ICG) proposed acquisition of Schwenk Namibia. It said that the transaction did not meet the requirements of a very substantial acquisition (VSA) because the target business was not profitable and because the buyer did not have sufficient cash resources to fund the purchase.

In order to approve the acquisition in the future the exchange requires: that ICG commissions implement anti-money laundering measures on any potential funds for the transaction; that it put into place ‘adequate’ internal controls and risk management systems for any of its operations in Kazakhstan, Tajikistan, Namibia and any other developing country; and that the audit committee uses external auditors.

ICG announced in March 2019 that it had arranged to buy a 100% stake in Schwenk Namibia for US$104m. Schwenk Namibia owns a 69.8% share of Ohorongo Cement.

Namibia: The Industrial Development Corporation (IDC), a South African development finance institution, says it would like to increase its share in Ohorongo Cement. It has made the statement in response to the acquisition of a majority stake in the cement producer by Singapore’s International Cement Group in March 2019, according to the Namibian Sun newspaper.

The IDC owns a 14% stake in Ohorongo Cement. It says it is committed to Ohorongo Cement and that it wants to support Namibia's indigenisation programme through local ownership. It is talking to other shareholders including the Development Bank of Namibia (DBN), which owns an 11% stake in Ohorongo. The DBN has also expressed concerns on the takeover by International Cement Group.

Namibia: The Development Bank of Namibia (DBN) says it will consult the government about its minority stake in Ohorongo Cement following the purchase of a majority share in the cement producer by Singapore’s International Cement Group. International Cement Group acquired a 69.8% share in Ohorongo Cement from Germany’s Schwenk Namibia in March 2019, according to the Namibian newspaper. The DBN said that it originally invested in Ohorongo Cement to promote economic development in Namibia.

Singapore: International Cement Group is planning to build new cement plants in Central Asia, Africa and South-east Asia to complement China’s Belt and Road Initiative. The company, formerly known as Compact Metal Industries, has held a ceremony to mark its listing at the Singapore Stock Exchange, according to the Business Times Singapore newspaper.

The company holds a 65% stake in a 1.2Mt/yr cement plant in Tajikistan. This unit’s production capacity was recently upgraded to 1.35Mt/yr. In mid-2018 it said it was building a new plant in Kazakhstan. This project is scheduled for commissioning by the end of 2019. In late 2018 the group said it had failed to buy a majority stake in a partially-built cement plant at Salamanga in Mozambique. In March 2019 the group agreed to buy a majority stake in Namibia’s Ohorongo Cement from Schwenk Namibia for US$104m.