Displaying items by tag: New Zealand
New Zealand: Fletcher Building has appointed Ian Jones as the chief executive of its newly created Concrete Division. The new division includes Golden Bay Cement, Winstone Aggregates and Firth. The appointment is a move by the Antipodean building materials company to focus its business on core operations in building products and distribution. The group also plans to sell its Formica and Roof Tile Group businesses.
Council reverses decision to buy Westport assets
12 June 2018New Zealand: The Buller District Council has backed out of plans to buy Holcim Cement’s former Westport plant assets and land on the West Coast of New Zealand’s South Island, including a water supply and treatment plant, a quarry, land, silos and a packing plant.
Buller District Mayor Garry Howard said that the council has been negotiating for over a year on US$3.5m deal, but concerns over the Cape Foulwind site led to it abandoning its plans. He said that buying the former cement plant site could have made the council liable for remediation of the land. Howard says the council had been keen to get the quarry as a source of rock for river and coastal protection.
Westport lost over 100 jobs when Holcim closed the cement plant in 2016, after 58 years of operation.
New Zealand: Golden Bay Cement plans to start shipping cement directly from its integrated plant at Whangarei, Northland in the North Island. Previously, cement from the plant was being shipped to the South Island via Auckland, according to the New Zealand Herald newspaper. Once the logistic change is completed around 11% of Whangarei’s output will be shipped to the South Island.
Chinese ripples on the Pacific Rim
16 August 2017After a couple of weeks looking at the capacity-rich cement markets of Angola and Vietnam, we turn our attention this week to some of those countries on the receiving end of overcapacity.
Costa Rica is an unlikely place to start but it came to our attention this week due to a short but significant news item. In summary, the amount of cement imported into Costa Rica increased by a factor of 10 between 2014 and 2016, from around 10,000t to over 100,000t. This is around 5% of its 2Mt/yr domesitic capacity, so the change is already fairly big news. The fact that an incredible 97% of this came from just one country, China, makes the story far more interesting as it shows the effects that Chinese overcapacity can have on smaller markets.
But when we look at how the value of the cement imports has changed over time, we see an even more dynamic shift. While the amount of cement imported into the country increased by nearly 10-fold, the value of the same imports only increased by around half as much between 2014 and 2016. If these figures can be taken at face value, the implication is stark. Taking the very low base as effectively ‘zero,’ each tonne of cement imported must cost around half as much as it used to.
Digging a little deeper and the picture gets more complicated. While they have fallen, Costa Rican cement prices have not fallen by 50% and why the sudden deluge of imports anyway? In 2015 the country changed its rules on cement imports to facilitate more flexible imports and lower prices for consumers. It did this by changing a regulation relating to how long cement can be stored, previously set at just 45 days, with the aim of allowing cement to come from further afield and, crucially, in bulk rather than bags.
The effects on price were immediate. Previously as high as US$13/bag (50kg) in December 2014, fairly high by global standards, Sinocem, the first Chinese importer, immediately sold its first shipment at US$10/bag. This effect of lower prices has now forced the average sales prices down to around US$10/bag across the country by 2017. This is good for consumers but not necessarily the local plants.
Back in 2015, the two local integrated plants operated by Cemex and Holcim warned that cement quality would suffer if cement bags were not used within 45 days. This apparently self-serving ‘warning’ went unheeded by the Ministry of Economy, Industry and Trade (MEIC), which pointed out that other countries in South America, as well as the European Union and United States, had no analogous short use-by dates for cement bags.
The rule remains in place, although discontent rumbles on. Indeed LafargeHolcim noted in its third quarter results for 2016 that ‘Costa Rica was adversely affected by increased foreign imports.’ This may well be a little bit of posturing and it doesn’t square with the fact that Costa Rica exported three times more cement that it imported in 2016. Of total exports of 0.34Mt, over 95% went to neighbouring Nicaragua, which has a single 0.6Mt/yr wet process plant owned by Cemex. It seems that the two Costa Rican plants have found a way to keep a little bit of the Chinese producers’ margin for themselves.
Of course, Chinese cement overcapacity doesn’t only affect the Central American market. It has been rippling all around the Pacific Rim. In July 2017, this column looked at the decision by Cementos Bío Bío to stop making clinker at its Talcahuano plant in Chile. It now favours grinding imported clinker from Asia. Before that, Holcim New Zealand closed its Westport cement plant in 2016, finally admitting that domestic clinker was not viable.
In the grand scheme of things, this all makes sense. The market has forced those operating on thin margins to adjust. Ultimately, the end consumer is likely to benefit from lower prices, at least for as long as reliable low-cost imports can be secured. What happens, however, if China actually gets round to curtailing its rampant cement capacity, or simply decides to charge more for its cement? Flexible imports, the main aim of the Costa Rican rule change, may then prove vital, as long as there is more than one international supplier of cement.
New Zealand: Holcim New Zealand has reported a loss of US$8.9m in 2016 as it changed its business from production to importation and distribution. The subsidiary of LafargeHolcim made a profit of US$58m in 2015, according to the Business Desk news agency. Its distribution costs also rose to US$54m from US$45m. A company spokesperson attributed the rising distribution costs to a transition away from manufacturing.
The company’s results in 2016 benefited from its sale of its lime business to Canada’s Graymont. It also closed its Westport cement plant and invested in import terminals. It operates terminals in Auckland and Timaru and depots in Dunedin, Lyttelton, Nelson, Wellington and Napier.
HR Cement launches Eco-Cem brand in New Zealand
24 January 2017New Zealand: HR Cement has launched Eco-Cem, a brand of pozzolanic cement. The cement producers says it will source its pozzolan from the Central Plateau on the North Island, according to the Scoop news website. The cement producer operates a cement grinding plant at Mt Maunganui near Tauranga. It also produces a Ordinary Portland Cement branded as HR Cement General Purpose (GP) Cement.
Holcim New Zealand in talks to sell Westport plant
20 January 2017New Zealand: Holcim is conducting negotiations with prospective buyers for its Westport cement plant and associated assets. The cement producer closed the site in June 2016 with the loss of 100 jobs, according to the Daily Post newspaper. The assets on sale include the cement plant site, a quarry, a packing plant site, wharf silos, a water treatment plant and 11 houses. The assets comprise about 500 hectares of land, including 200 hectares of farmland. Expressions of interest closed in July 2016.
Australia: Adelaide Brighton says it has prepared for an acquisition of the operations of LafargeHolcim in Australia and New Zealand. Chief executive Martin Brydon confirmed the plans to The Australian newspaper. He added that the plan includes measures to cope with competition issues that could arise from the takeover. However, Brydon admitted that LafargeHolcim has not declared if it is actually selling its assets in the region.
Holcim New Zealand opens 30,000t Timaru cement terminal
26 February 2016New Zealand: Holcim Zealand has officially opened its 30,000t cement terminal at Timaru port. Economic Development Minister Steven Joyce and Rangitata MP Jo Goodhew attended the opening. The US$34m project is intended to serve South Island and lower North Island, according to local press.
The terminal has unloaded two ships since December 2015. The cement producer aim’s for 18 inbound ships a year to Timaru, with the Holcim-owned Milburn Carrier II shipping outbound orders from its berth at the reconstructed No 2 wharf. Another cement terminal is being built in Auckland and is planned for opening in mid-2016.
Holcim plans rehabilitation of Westport cement plant
19 January 2016New Zealand: Plans for the future use of Holcim's Westport cement plant after it closes are still unknown. Holcim plans to close its Westport plant in 2016 in favour of importing cement from Japan, resulting in 105 staff and contractors losing their jobs.
The company announced in September 2015 that the Westport plant might close at the end of May 2016 and plans were under way for the plant to be demolished and the quarry site rehabilitated. Holcim owned more than 500 hectares of land around Westport, including the Cape Foulwind cement plant and quarry, 11 houses at Cape Foulwind and a rail siding near Westport.
General Manager Ross Pickworth said that no decisions had been made on the future of the company's land and assets in Westport. "The focus is on looking after our people and the work that needs to be done before plant closure. Preparatory and planning work is being carried out with a focus mainly on the plant site, quarry and houses," said Pickworth.
The company was investigating what work was needed on the 11 houses occupied by staff near Westport so that they could be sold after the plant closed. The Buller District Council was looking for new businesses to occupy the plant site and make use of the town's port. The council owned the port and transporting Holcim's cement was its main source of income. Council Business Development Facilitator, John Hill, had been investigating turning the plant into an eco-park, which could include making energy from rubbish incineration or turning waste timber into diesel.
Pickworth said that demolition work was unlikely to commence until late 2016, so any potential users had, "Quite some time to register interest in the site and any equipment that may be of use."
The council had been trying to attract new industries to Buller to increase employment opportunities in the region. "Holcim is supporting this process by promoting its Cape Foulwind site to see if there is interest from other potential users of the site," said Pickworth. "An advisor has been appointed to assist Holcim with demolition planning and project management. The cost of demolition will depend on what buildings and assets may be left on site and tenders will be called for such work closer to the time."