Displaying items by tag: Plant

South African cement producer PPC reported this week that its annual profits rose due to ‘strong’ performance in Rwanda and Zimbabwe. Unfortunately it had no such luck in the Democratic Republic of the Congo (DRC) where its new plant near Kimpese in Kongo Central province has suffered from political instability, lower cement demand and subdued selling prices.

As the group went on to describe the local market as ‘challenging’ with production capacity above market demand. Research from the International Finance Corporation (IFC) suggests that the country will only reach a cement supply deficit by 2022. On top of this the country’s elections have been delayed from December 2017 to December 2018, creating uncertainty in the construction market and delaying infrastructure projects. Following an impairment assessment PPC took an impairment cost of US$14m on the unit. Or in other words it concluded that the value it might gain from selling its new 1.2Mt/yr plant was less than the estimated US$280m it cost to build it.

This outcome is depressing given that the plant was only commissioned during the last quarter of 2017 and the fundamental need for development in the DRC. The unit is run by local subsidiary PPC Barnet DRC, a joint venture 69% owned by PPC, 21% owned by Barnet Group, with the remaining 10% owned by the IFC. The plant was 60% debt funded by the IFC and Eastern and Southern African Trade and Development Bank. In January 2018 PPC agreed with its lenders to reschedule debts from the project until 2020. Then in April 2018 it was reported that PPC was in talks with China National Materials (Sinoma) over selling its stake in the plant. PPC chief executive officer (CEO) Johann Claassen said that the deal was dependent on the price and the on going merger between Sinoma and China National Building Material (CNBM).

With the merger between the Chinese cement giants close but yet to be confirmed, PPC remains stuck with a cement plant it’s losing money on. No doubt also the Chinese producers will aim for a bargain on the unit, especially since Sinoma built the plant. This also raises one potential method how the merged Sinoma-CNBM might expand internationally by scooping up plants it builds that have subsequently gotten into financial trouble.

All in all it’s a cautionary tale about how fast cement companies are able to expand in Sub-Saharan Africa. The demographics are enticing to investors but if the market isn’t there or if competitors get there first then building cement plants can go wrong. A 1.8Mt/yr joint-venture plant run by Lucky Cement started up in late 2016 also in the Kongo Central province. On top of this neighbouring countries have targeted DRC for exports. A local ban on imports of cement was implemented in mid-2017 and reportedly renewed in the west of the country for another six months in February 2018. However, Nigeria's Dangote Cement said in its first quarter results for 2018 that its operations in the Republic of Congo were targeting exports at the DRC. As PPC has discovered, investing in Sub-Saharan African has its risks.

Bolivia: Empresa Publica Productiva Cementos de Bolivia’s (ECEBOL) new 1.3Mt/yr plant at Caracollo in Oruro is scheduled to start operations in the first half of 2019. A consortium of Sacyr, Imasa and Polysius are working on the US$244m project, according to the La Patria newspaper. A US$2m electrical sub-station is also being built to support the plant.

Egypt: Helwan Cement has received several preliminary non-bidding offers for its white cement plant located in Minya Governorate. The subsidiary of Suez Cement and HeidelbergCement is now conducting financial, legal and technical due-diligence on the offers, according to Reuters. No values or timescale for the sale have been disclosed.

Namibia: Ohorongo Cement’s captive 5MWAC solar plant is preparing to start commercial operation by the end of June 2018. The unit is equipped with approximately 20,000 crystalline silicon modules mounted on a tracking system and an installed capacity of 6.5MWDC for an output of 5MWAC, according to the Daily Observer newspaper. Once it starts commercial operation it will provide an estimated 14GWhr/yr to the cement plant.

Investors have reached financial close in the project. The site has been developed and built by Germany’s SunEQ and its local partner Hungileni. Local financial partners also include Namibia Infrastructure Finance. Gildemeister Energy Solutions also worked on the project.

Spain: Cementos Molins has allocated Euro200m towards dismantling old production lines at its Sant Vicenç dels Horts plant near Barcelona. Kilns, towers, silos and obsolete buildings will be removed as part of the project, according to the La Vanguardia newspaper. The plant operates a single 1.4Mt/yr production line that was commissioned in 2010.

Nigeria: BUA Group is ready to commission a new 1.5Mt/yr cement production line at its Sokoto Cement plant in the northwest of the country. The upgrade will increase production at the unit to 0.5Mt/yr, according to the Vanguard newspaper. The company exports cement from the plant to neighbouring Niger. The new line will run on coal and natural gas. The cement producer also operates a 3.5Mt/yr plant at Okpella & Obu in Edo state in the mid-west of the country.

China: Austria’s Semperit has closed its Sempertrans Best (Shandong) Belting plant in Shandong. The decision was made as part of review of the group’s production footprint. The plant had a higher margin than other sites. The closure is also expected to reduce the complexity of operations at the group level. 120 employees will be affected and the shutdown is expected to burden the group’s earnings before interest and taxation (EBIT) by Euro10m in 2018.

The groups subsidiary in Shandong was founded by Semperit as a joint venture with the state-owned energy company Wang Chao Coal & Electricity Group in 2010. The Chinese partner currently holds a 16.1% stake. The production site manufactures textile and steel cord belts and has served the export markets and the Chinese market so far.

US: The Federal Trade Commission has forced CRH to sell the Three Forks cement plant in Montana as part of its proposed acquisition of Ash Grove Cement. The plant and its quarry will be sold to Mexico’s Grupo Cementos de Chihuahua (GCC). Also under the settlement, because the CRH cement plant in Montana currently sells a significant amount of cement into Canada through two CRH terminals in Alberta, GCC will have the option to use those terminals for three years. CRH also has agreed to purchase, at GCC’s option, cement produced at the plant for distribution in Canada for up to three years.

The commissions ruled that the acquisition would harm competition in Montana, Nebraska and Kansas. Other divestments the Irish building materials company has agreed to include selling two sand-and-gravel plants, one sand-and-gravel pit, three limestone quarries and two hot-mix asphalt plants.

Following the agreed divestments, the FTC has issued its consent for CRH’s proposed acquisition of Ash Grove Cement. No further regulatory approvals are now outstanding for the transaction. The acquisition is expected to complete in June 2018. Ireland’s CRH agreed to buy Ash Grove Cement for US$3.5bn in mid-2017.

Tunisia: Ciments de Bizerte is planning to upgrade the cement grinding capacity by 20% at its plant in Bizerte. Other anticipated upgrades include the installation of a new 10,000t cement silo and the contruction of a captive wind farm, according to the L'Economiste Maghrébin magazine.

Armenia: Hrazdan Cement has been purchased by GM Holding and is back in operation. According to local media reports the cement plant was bought by a company owned by Arsen Mikaelyan, the chairman of Armbusinessbank, in late 2017. The bankrupt cement producer was previously taken over by its creditor, the VTB Bank (Armenia).

Hrazdan Cement, originally known as Mika Cement, was built in 1970. The company was privatised in 2001 and has had financial problems since 2013. The cement plant has two production lines and a clinker production capacity of 1Mt/yr and a cement production capacity of 1.2Mt/yr.