Displaying items by tag: Sinoma International Engineering

Two supplier news stories this week presented a snapshot of the global cement industry. The first was FLSmidth’s annual results for 2018. The second was the announcement by France’s Fives that it had signed a collaboration agreement with China’s CNBM.

Overall FLSmidth reported its highest order intake in six years with revenue growth driven by its minerals division. On the cement side though the equipment manufacturer was blunt, describing the market for new cement capacity as, “subdued with low plant utilisation globally.” In its assessment a slow increase in global consumption outside of China was not enough to absorb overall production overcapacity. It said it saw a ‘healthy’ level of small to mid-sized orders for grinding plants, upgrades, retrofits and single equipment orders. The market for replacements and upgrades was identified as a strategic focus. It also noted environmental upgrades for plants in China and India as environmental regulations tighten.

Fives’ news touched on the rivalry that western-based manufacturers have faced from Chinese competitors. Fives and CNBM have agreed to explore projects together in new plants, expansions and upgrades. Although the press release was brief, this seems to involve CNBM using Fives technology such as grinding mills, pyro-lines and burners. Like the rest of the industry Fives has had a tough time of it in recent years in the cement sector although 2018 seemed to have improved considerably at the nine-month stage in September 2018. So signing an agreement with a competitor at this stage is interesting. FLSmidth did a similar deal with CNBM in mid-2018 when it signed a framework agreement for future collaboration.

The context here is that the new plants that are being built are often part of China’s One Belt, One Road Initiative, typically in Central Asia or Africa. Mostly these plants are being financed by Chinese joint ventures and built by Chinese suppliers. This week Reuters published a map of new cement plants being built in 2018 with Chinese involvement along the silk road using Global Cement data. Rightly, FLSmidth and Fives are taking steps to be a part of this growth.

Figure 1: New Chinese cement plant projects outside of China in 2018. Source: Reuters using Global Cement data.

There is a tendency in the western press to play up Chinese imperial ambitions exemplified by US Vice President Mike Pence’s comments at the Asia-Pacific Economic Cooperation summit in Papua New Guinea in November 2018. Yet, Sinoma International Engineering, one of CNBM’s engineering subsidiaries, reported that its new order intake fell by 14% year-on-year to US$4.56bn in 2018. No reason for the decrease was given but most of this fall seemed to come from its construction division. In turn most of this came from a fall in foreign orders. The implication is that China’s attempts to move its cement industry out of the country may not be happening fast enough to preserve the size of these companies.

Returning to European equipment suppliers, FLSmidth summed up its response to this situation in its annual report. The cement market is split between premium and mid-market projects, with the latter dominated by Asian suppliers. FLSmidth says it is targeting the mid-market by becoming the preferred original equipment manufacturer (OEM) of choice. They are not alone in their ambition as the Fives deal shows.

China: Sinoma International Engineering’s new order intake fell by 14% year-on-year to US$4.56bn in 2018. No reason for the decrease was given but orders from its construction business segment fell by 10% to US$3.43bn. By region, local Chinese orders rose by 34% to US$1.3bn but foreign orders dropped by 24% to US$3.26bn.

Argentina: China’s Sinoma International says that it has successfully lifted the first steel column of the pre-heater tower on a 5800t/day production line it is building at Loma Negra’s L'Amalí cement plant. The work in late December 2018 marked the start of the installation phase of the project. It is the subsidiary of China National Building Material’s (CNBM) first engineering, procurement and construction (EPC) project in South America. When the project was first announced in late 2017 it had a completion date of early 2020.

Iraq: China’s Sinoma International Engineering has signed a contract to build a 6000t/day clinker production line for Iraqi Cement near Samawah in the Al Muthanna Governorate. The deal has a value of US$246m. The contract includes the entire production process from quarry to finished packaging of cement products. Once the contract is finalised and the customer’s credit secured then the project is expected to take 37 months to be completed.

Saudi Cement: City Cement’s Al Madina Cement subsidiary says it has reached a final settlement with China’s Sinoma International about the construction of a second production line. The parties have agreed an 8% discount on the total cost of the project worth around US$11m. Trial operation on the second line at the plant was originally announced in late 2014.

Zambia: China’s Sinoma International has signed a US$480m deal to build a 5000t/day clinker production line for Central African Cement. Sinoma will supply a cement plant with a 7.5MW waste heat recovery unit, two 25MW captive thermal power plants and cement mills with a capacity of 2Mt/yr. The project is a joint venture between Sinoma and ZCCM-Investment Holding, an investment company owned by the Zambian government. Sinoma will own a 51% stake in the project.

Argentina: Loma Negra’s net revenue grew by 42.3% year-on-year to US$435m in the first nine months of 2018 from US$305m in the same period in 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 46.5% to US$113m from US$77.3m. Overall, its cement masonry and lime sales volumes remained stable at 5.1Mt but sales in Paraguay fell by 4.2% to 0.42Mt. Sales volumes fell in both Argentina and Paraguay in the third quarter of 2018.

Sergio Faifman, Loma Negra’s chief executive officer (CEO), said, “Our core Argentine Cement business, delivered both revenue growth and adjusted EBITDA margin expansion notwithstanding the challenging macro backdrop in the country in which our volume declined at a mid single-digit pace year-on-year in line with overall industry performance.”

The subsidiary of Brazil’s InterCement said that it is moving ahead with building a new US$350m production line at its L’Amalí plant. The new line will have a clinker production capacity of 5800t/day. The project is being built by China’s Sinoma International Engineering and it is expected to be completed by early 2020. Main equipment is expected to arrive at the site by the end of 2018 and the steel structure is under construction.

China: Lubao Cement has ordered three vertical roller mills from Germany’s Loesche for a new 4500t/day plant that is being built at Bei Liu in Guang Xi. The project is being handled by Sinoma (Suzhou) Construction, part of Sinoma International Engineering and China National Building Material Group (CNBM) in turn.

Loesche is supplying three mills for the project, one each for raw material, coal and clinker/slag. One four-roller mill with a capacity of 450t/hr will be used for grinding cement raw material to a fineness of 12% with a sieving residue of R 80μm. Another mill with a throughput of 200t/hr will be used for the subsequent grinding of cement clinker to a fineness of 3400 - 3600 Blaine. A large three-roller mill with a capacity of 42t/hr will be used for grinding fuel coal to a fineness of 2% and a sieving residue of R 80μm.

No value for the order has been disclosed.

China: China National Building Material’s (CNBM) cement production volume fell by 5% year-on-year to 143Mt in the first half of 2018 from 150Mt in the same period in 2017. It has attributed this decrease to ‘flat’ demand, increased pressure on environmental protection and rising costs of fuel and raw materials. As part of its ‘Price – Cost – Profit’ (PCP) initiative the group has focused on reducing production capacity and output, implementing peak shifting production and eliminating old production facilities.

Despite the headwinds, the group’s sales revenue from its cement division rose by 22% to US$7.41bn from US$6.06bn. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 38% to US$2.08bn from US$1.51bn. Average cement prices also rose year-on-year. External sales from its engineering companies increased by 13% to US$2.18bn from US$1.92bn. Overall, group sales revenue rose by 22% to US$14bn from US$11.5bn.

CNBM completed its merger with China National Materials Company (Sinoma) on 2 May 2018. Its cement producing subsidiaries include China Untied, South Cement, North Cement, Southwest Cement, Sinoma Cement, Tianshan Cement, Ningxia Building Materials and Qilianshan. Its engineering subsidiaries include Sinoma International, China Triumph and Sinoma Milling.

China: Sinoma International Engineering’s sales revenue rose by 14% year-on-year to US$1.47bn in the first half of 2018 from US$1.29bn in the same period in 2017. Its net profit increased by 45% to US$94.6m from US$65.1m. The subsidiary of China National Building Material (CNBM) said that signed new contracts in the cement sector with a value of US$1.26bn in the reporting period, including seven cement production lines and two grinding units.