Displaying items by tag: Peru

Two fairly serious investments in Peru made the industry headlines this week. The first was Yura’s plans to upgrade its Arequipa cement plant at a cost of US$200m. The project will involve increasing the plant’s clinker production capacity as well as installing a new mill and a 4.3km conveyor. The second was the latest instalment in Cementos Interoceanicos’ long held ambition to build a plant. It has struck a deal with France-based Satarem to build a 1Mt/yr plant near Puno. The deal also includes Satarem buying a 30% stake in Cementos Interoceanicos and plans to construct two lime units as well.

Graph 1: Local cement sales in Peru, January 2020 to February 2021 compared to January 2019 to February 2020. Source: ASOCEM.

These projects follow a squeeze for the local industry due to coronavirus-related containment measures. Data from the Association of Cement Producers (ASOCEM) shows that cement sales collapsed during the lockdown to just 11,000t in April 2020 before recovering in the autumn. Total annual local sales fell by 17% year-on-year to 9.7Mt from 11.6Mt. Sales have also remained high in January and February 2021.

The experience from the larger cement producers mirror the data from ASOCEM. Cementos Pacasmayo’s sales revenue fell by 7% year-on-year to US$354m in 2020 and its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 21% to US$86.3m. Unión Andina de Cementos’ (UNACEM) income fell by 14% year-on-year to US$467m in 2020. Despite this, UNACEM managed to sign a deal to buy Cementos La Unión Chile for US$23m in December 2020. The purchase consists of a 0.3Mt/yr cement grinding plant and a 0.34Mm³/yr ready-mix concrete business with multiple concrete plants and trucks. UNACEM described Chile as its main clinker export destination and it holds concrete and precast subsidiaries in the country.

Yura’s general manager Ramón Pizá reportedly called his company’s plans a “vote of faith in Peru.” This is not an understatement considering the market shocks caused by coronavirus in 2020. The country implemented public health measures relatively early during the pandemic but still ended up with one of the worst death rates per capita in Latin America so far. As the British Medical Journal (BMJ) pointed out earlier this month, the timing was right but tragically the application of public health measures has been found wanting. Yet, the fundamentals for the Peruvian cement market are strong. Annual sales mounted from 2017 to 2019, and were showing signs of continuing this in early 2020 before the lockdown shut the market down. This growth pattern has continued so far in 2021.

Peru: Cementos Interoceanicos has contracted Switzerland-based Satarem to establish a 1.0Mt/yr cement plant in Puno. The Gestión newspaper has reported that Satarem intends to buy a 30% stake in the producer. The scheduled completion date for the work, which also includes setting up two new lime plants, is mid-late 2022. The total estimated cost of the project is US$158m.

The producer is reportedly seeking to expand its area of operations in other areas within Peru.

Peru: Yura plans to upgrade its Arequipa cement plant at a cost of US$200m. The planned upgrade will increase the plant’s clinker production capacity to 8000t/day from 5000t/day. The La República newspaper has reported that the sustainability-enhancing expansion involves the installation of a new vertical roller mill, packing, storage and dispatch equipment and a 4.3km raw materials conveyor. General manager Ramón Pizá called the modernisation a “vote of faith in Peru.”

Peru: Cementos Pacasmayo recorded sales of US$354m in 2020, down by 7% year-on-year from US$381m in 2019. Consolidated earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 21% to US$86.3m from US$110m. Sales volumes of cement, concrete and precast shipments fell by 1% to 2.58Mt from 2.61Mt. Cement production capacity utilisation was 45%, down by 2% from 47%. In the fourth quarter of 2020 cement dispatches rose by 37% year-on-year.

The company said, “Despite political changes, the economic recovery continued its course during the fourth quarter of 2020. Thanks to the economic relief measures taken by the government and the fast adaptation of the private sector, an important part of the productive capacity was preserved. Public investment in particular has played an important role in the economic recovery, and it is expected to continue to do so during 2021.” It added, “The uncertainty around the end of the Covid-19 pandemic continues, but what is certain is that the world has been forever changed. The capacity to adapt quickly and efficiently in an increasingly digital world is key to success and will prevail long after this pandemic is behind us. We believe that the steps we have taken in that direction have both helped us weather the storm and given us a promising future. We are confident that we are better equipped to face another year that may prove challenging and continue to generate value to our stakeholders.”

The Good Employers Association (ABE) recognised the company in the Leadership category at its ABE Awards 2020.

Chile: The protest organisation Frente de Defensa de Islay has launched a challenge against the legality of Cbb’s planned 200,000Mt/yr Arequipa grinding plant in the Port of Matarani. The La República newspaper has reported that the organisation says that the plans would violate Islay district’s urban zoning law due to the risk of contamination.

The producer plans to complete the US$20m plant in mid-2021. It acquired the project from Inversiones Primax in 2019.

Peru: Unión Andina de Cementos’ (UNACEM) income fell by 14% year-on-year to US$467m in 2020 from US$546m in 2019. Cement despatches dropped by 16% to 4.46Mt from 5.32Mt. Its profit decreased to US$8.33m from US$96m. The cement producer attributed the reduction in sales and profits due to the country’s coronavirus-related lockdown from March to May 2020. In December 2020 it agreed to buy Chile-based Cementos La Unión Chile for US$23m. The deal includes the 0.3Mt/yr San Antonio grinding plant and a concrete plant.

Peru: Cement and clinker production fell by 14% year-on-year to 9.14Mt and 39% year-on-year to 5.54Mt respectively in 2020. Data from the Association of Cement Producers (ASOCEM) shows that production fell significantly during March to May 2020 at the same time as a coronavirus-related lockdown. However, ASOCEM reports that cement sales from August to December 2020 were higher than the historical monthly averages. Exports of cement and clinker fell by 28% to 0.14Mt and 56% to 0.31Mt. Imports of cement decreased by 7% to 0.72Mt but clinker imports grew by 7% to 0.67Mt.

Chile: Peru-based Unión Andina de Cementos (Unacem) has signed a contract with Inversiones Mel 20 Limitada and Spain-based Cementos La Unión for the acquisition of the latter’s Chilean subsidiary Cementos La Unión Chile. Diario Financiero News has reported that the company operates the 300,000t/yr San Antonio grinding plant and a concrete plant. The value of the deal is US$23m. The agreement is subject to approval by local regulators.

Algeria: The Ain El Kebira (SCAEK) cement plant near Setif, part of the Industrial Cement Group of Algeria (GICA), has launched an operation to export 40,000t of clinker to the Dominican Republic. The company has already been marketed its products in Senegal, Ivory Coast, Guinea, Peru and Brazil, according to the Algeria Press Service. SCAEK has already exported 0.55Mt of clinker to countries in Africa and South America. The cement producer plans to export 0.75Mt of clinker in 2020.

US: A US federal court has upheld the ruling of a Colorado district court that Mexico-based Grupo Cementos de Chihuahua (GCC) must pay around US$36m compensation to Compañía de Inversiones Mercantiles (CIMSA) for failing to grant it a right of preference prior to GCC’s sale of its 47% stake in Sociedad Boliviana de Cemento (SOBOCE).

Peru-based Consorcio Cementero del Sur obtained 100% ownership of Bolivia-based SOBOCE following its acquisition of GCC’s stake in 2011.