Displaying items by tag: Schwenk Zement

Croatia: HeidelbergCement has appealed against an investigation by the European Commission into the proposed joint purchase with Germany’s Schwenk Zement of Cemex Croatia. The cement producer asserts that by considering Schwenk and itself rather than Duna-Dráva Cement (DDC), a subsidiary that both companies own equally, the commission has given the transaction a ‘Union dimension,’ according to the Official Journal of the European Union. Although DDC is based in Hungary, within the European Union (EU), it imports cement into Croatia (in the EU) from Bosnia & Herzegovina, a country outside of the union. The appeal was made in late December 2016 but only reported in late February 2017.

The European Commission revealed that it was investigating the proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk in October 2016. The commission was concerned that the transaction would merge the biggest producer in the area with the biggest importer, potentially reducing local competition.

The European Commission’s decision to investigate Duna-Dráva Cement’s (DDC) purchase of Cemex Croatia sticks out in a busy news week. There have been a few noteworthy news stories this week from the Indonesian government making preparations to fight overcapacity, LafargeHolcim retreating from Chile, Cemex restructuring its management in Colombia after investigations into a land deal and the announcement of merger plans between two of the larger refractory manufacturers. Yet the commission’s probe is a response to what may be in effect a ‘land grab’ by DDC. How on earth did HeidelbergCement and Schwenk, the joint-owners of DDC, think they were going to pass this one past the relevant competition bodies?!

As the commissions describes it, the “proposed transaction would combine Cemex Croatia, the largest producer in the area, and DDC, the largest importer.” So far, so bad. Then add the observation that Cemex Croatia and LafargeHolcim control all the cement terminals in ports along the Croatian coast. Cemex has three cement plants in the south of the country with no nearby competition. Giving the owners of DDC those assets ties up the market southern Croatia nicely. Understandably, the European Commission has concerns.

Croatia has five cement plants. LafargeHolcim runs a 0.45Mt/yr plant at Koromačno and Nasicecement run a 0.6Mt/yr plant at Nasice. Cemex’s three plants are all in the south near Split within about 10km of each other. When Global Cement visited in late 2014 Cemex Croatia told us that the plants were so close together that the company considered them as one plant. The sites also share one quarry for their raw materials. Only one of three plants, Sv Juraj the largest, has a bagging unit and Sv 10 Kolovoz was mothballed due to poor market demand. Together the plants have a cement production capacity of 1.92Mt/yr. This gives Cemex 65% of the market by production capacity.

Describing the three plants as one certainly makes sense for a company that might have been considering selling them. However, it is a fair comment given the close proximity of the plants to each other and the joint-capacity below that of some of the larger single site multi-kiln plants around the world. In this sense, the real questions for the European Commission will be how much of a dent to competition will it make to hand over the area’s main importer to the area’s main producer?

Graph 1: Cement consumption in Croatia, 2011 - 2015 (Mt). Source: Croatian Bureau of Statistics.

Looking at the national cement market since 2011 in Graph 1 using data from the Croatian Bureau of Statistics, sales volumes fell to a low in 2013 and have picked up since then, although not to the same levels. Prior to this cement sales halved from 2008 to 2013. Under these kinds of conditions Nexe Grupa, the owner of Nasicecement, filed with pre-bankruptcy settlements in 2013. HeidelbergCement expressed interest in the cement assets around this time, although nothing eventually happened. Imports of cement grew by 11% year-on-year to 312,000t in 2015 from 280,000t in 2014. This compares to a 1% increase to 2.36Mt in domestic cement sales in 2015.

As the commission suggests, combining the region’s biggest producer and its biggest importer seems like a recipe for reduced competition and inflated prices. This could be mitigated, in theory, if DDC decided to flood the region with imports from HeidelbergCement’s new assets from Italcementi once it completes its purchase of that company. Although a dominant player in a region undercutting its own prices seems far fetched. Theoreticals aside, it seems very unlikely that the European Commission will let the purchase go ahead without taking some sort of action.

Croatia: The European Commission has opened an investigation to check whether the proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk is in line with the European Union (EU) Merger Regulation. The commission has concerns that the proposed takeover may reduce competition for grey cement in Croatia. It will make its decision by 23 February 2017.

"The construction sector, like any other sector, needs competition. As cement is an essential part of the sector we need to make sure that consolidation does not lead to higher prices for construction companies and ultimately consumers in Croatia," said commissioner Margrethe Vestager.

The commission has concerns regarding the supply of grey cement in southern Croatia, including Dalmatia in particular, where Cemex Croatia operates three cement plants in Split and faces competition from DDC's imports from Bosnia and Herzegovina, which is not an EU member. The proposed transaction would combine Cemex Croatia, the largest producer in the area, and DDC, the largest importer. The commission's initial investigation indicates that the proposed transaction may remove a significant competitor from an already concentrated regional market.

The remaining actual or potential suppliers may exercise only limited competitive pressure on the merged entity because of the transport costs to reach southern Croatia. Additionally, the domestic cement suppliers Cemex Croatia and LafargeHolcim control all the cement terminals in ports along the Croatian coast. The commission has preliminary concerns that the transaction may strengthen the market power of Cemex Croatia in southern Croatia and result in price increases for grey cement.

HeidelbergCement and Schwenk plan to acquire, via their joint subsidiary DDC, assets in Croatia and Hungary that currently belonging to Cemex. The Hungarian part of the transaction as been referred to the Hungarian competition authority, so the commission's investigation will focuses on the acquisition of Cemex's Croatian assets.

Germany: Schwenk Zement KG has recently brought into operation two new Liebherr R 980 SME crawler excavators at its limestone quarry in Heidenheim an der Brenz. The quarry is adjacent to Schwenk Zement's cement plant.

The SME crawler excavators from Liebherr are particularly suitable for deployment in excavation and are tailored to the tough operating conditions associated with quarrying. SME stands for 'Super Mass Excavation.' A bonus feature is that the excavator is equipped with a reinforced undercarriage, on which the running gear components of the next larger model from the standard programme, namely the R 9100 mining excavator, can be installed. In conjunction with a heavy ballast weight, this undercarriage improves the stability of the machine and, at the same time, enables the use of a backhoe with greater capacity. The equipment, such as the stick and backhoe cylinders, has been adapted to the higher tearing and breaking out forces with a larger diameter and matching kinematics.

At Schwenk Zement KG, the Liebherr R 980 SME crawler excavators are deployed together with a wheel loader directly at the quarry wall. Material is always excavated using two of the three machines. While the wheel loader is more flexible and mobile, the crawler excavator is suitable for sorting the stone and, at the same time, offers higher tearing and breaking out forces. "We used to work with three wheel loaders in production. With the two Liebherr crawler excavators, we have now found the ideal solution as we have a greater output and productivity and maintain flexibility thanks to the wheel loader," said Wolfgang Kuhnt, Quarry Manager. Since the two crawler excavators have been in operation, the number of detonations for stone excavation has dropped. The bed and material can be collected and processed in a dryer state and the loss of raw material at Schwenk Zement KG can be reduced.

The Liebherr crawler excavators achieve an average material handling performance of 350t/hr and ensure optimum supply of the crushing plant, which is restricted to a capacity of 700t/hr. "The crawler excavators are capable of dealing with 500t/hr as well, however, which equates to 1000t/hr when two are in operation," said Kuhnt. Material transport is then carried out by rigid frame dump trucks with a payload of 65t.

Germany: The member companies of the German Cement Works Association (VDZ) elected a new board of directors on 8 April 2014. After a three-year period of tenure, VDZ president, Gerhard Hirth of Schwenk Zement was again confirmed in office. HeidelbergCement's Christian Knell, Spenner Zement's Dirk Spenner and Cemex Deutchland's Eric Wittmann were elected as vice presidents.

"I would like to thank our member companies for their support over the previous years and I look forward to the pending tasks," said VDZ president Gerhard Hirth. After some difficult years for the German cement industry, he takes a positive view and expects the demand for cement to grow in 2014 due to the favourable trend in terms of building permissions for both residential and non-residential construction, as already indicated by the good figures from domestic cement deliveries during the few first months 2014.

"The agreement with regard to the EU state aid procedure on the Renewable Energies Act (EEG) surcharge is also a great relief for German cement manufacturers," said Hirth. The complete elimination of the so-called special equalisation scheme would have burdened companies with more than Euro30,000 of additional power costs per job. Hirth added, "However, the sharpened competition pressure from abroad, which can be seen from the increase in cement imports and the sinking exports, continues to present our industry with enormous challenges together with the compliance with climate protection goals and emission reductions."

The German Cement Works Association has campaigned for the interests and concerns of German cement manufacturers for more than 135 years. Currently, 20 German cement manufacturers are full members of the Association, which, together with a total of 49 cement plants and around 7300 employees, produce around 32Mt/yr cement and generate a turnover of Euro2.2bn.