Displaying items by tag: South Africa

South Africa: Lafarge is considering approaching the International Trade Administration Commission of South Africa to protect the local market from what it calls 'low-quality cheap cement' imported from Pakistan. The multinational is concerned that substandard products are being used for large infrastructure projects in the country, including the construction of hospitals, government housing and schools. Some importers are labelling cement as flour to dodge quality tests. Yet when the regulators do test imported product, they refuse to disclose the outcome, citing confidentiality.

"Imports are a concern for several reasons; sometimes the prices are very low, which affects us financially. We are looking at approaching the International Trade Administration Commission of SA to intervene in the market, but no decision has been made," said Lafarge South Africa CEO Thierry Legrand. He added that some cement sellers did not comply with the National Regulator for Compulsory Specifications, yet had import licences. Other domestic producers including AfriSam and Pretoria Portland Cement have also expressed concern at the situation.

In 2011 three companies importing from Lucky Cement, Pakistan's biggest cement exporter, were shut down. Cement and Concrete Institute (CCI) managing director Bryan Perrie said that 140,000t of cement were imported into South Africa in the first quarter of 2012 and that a substantial portion of it probably came from Lucky Cement. "People have struggled to keep accurate import statistics of cement but we know that Lucky is a major importer. People bring cement in as flour, so the statistics of how much comes in is often incorrect," he said.

Importers in South Africa are supposed to test samples for every 500t of imported cement. Yet when the CCI asked third-party regulators about the results of these checks, they were told this was confidential. The CCI had asked the regulator to publish a list of cement importers online, recording which products had letters of authority, but this has not happened.

South Africa: Pretoria Portland Cement (PPC) has seen its sales volumes drop by 3% year-on-year in the first half of 2012, which ended on 31 March 2012, mainly due to weak demand from Botswana and the Western Cape region of South Africa. However, the overall group revenue rose by 8% over the same period of 2011 from US$395m to US$427m, due to positive pricing of cement and lime products.

"Our results improved despite being tempered by weak demand in the Western Cape and Botswana and fierce competition on cement prices in all our regions," said PPC CEO Paul Stuiver.

PPC's earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 5% in the half-year, from US$126m to US$132m. Operating profit rose by 4%, from US$99.3m to US$104m. However, costs of sales were 11% higher than in 2011. The group said that it continued to be significantly affected by higher electricity and diesel prices, which both rose by 30% in 2011.

Thierry Legrand: Lafarge has appointed a new country CEO for its South African operations. Thierry Legrand was formerly the General Manager of Lafarge in South Africa but has changed role in line with the French building material giant's worldwide restructuring programme.

"Implementing this new structure will allow us to focus more efficiently on our customers and get closer to our markets," said Legrand. "We will use the strengths of our different product lines to design solutions in line with our customers' needs."

Legrand has managed several senior portfolios within the Lafarge group, both in South Africa and Europe.

South Africa: An order by South African competition authorities to delay cement industry statistics by three months will negatively affect perceptions of economic activity in the country, according to industry newcomer Sephaku Cement.

The CEO of Sephaku Pieter Fourie said that the directive by the South African Competition Commission to the Cement and Concrete Institute that it delay the publication of its quarterly national cement sales figures by three months made 'no sense'. The institute represents the four major cement producers in South Africa: Pretoria Portland Cement, AfriSam, Lafarge and NPC-Cimpor.

Sephaku, a Nigerian-backed newcomer, is building an integrated cement production facility in the Limpopo province, where it intends to produce cement from the fourth quarter of 2013. It says that cement sales form a large component of construction activity in South Africa and are a leading economic indicator. Sephaku believe that the change in reporting will affect related economic predictions.

Stephan Olivier, CEO of AfriSam, commented that the change in industry reporting was a bid to make it difficult to use the data for anti-competitive behaviour. Simon Roberts, chief economist and manager of the commission's policy and research division, said that companies had previously used the data provided by the institute to 'monitor' their cartel agreement.

Projects by Nigerian-backed Sephaku and a new Chinese-backed empowerment entity, Conticem, will boost South Africa's capacity by nearly 5Mt/yr. Both Sephaku and AfriSam anticipate a better industry outlook in 2012 but uncertainty remains over the government's ability to accelerate its infrastructure plans.

South Africa: The French multinational Lafarge will pay US$19.3m after it was found guilty of involvement in a cement cartel in South Africa. The Competition Tribunal confirmed that the settlement represented 6% of Lafarge's 2010 turnover in the Southern African Customs Union countries (South Africa, Botswana, Lesotho, Swaziland and Namibia). AfriSam, another of the cartel participants, previously agreed to pay an 'administrative penalty' of US$16.1m.

South Africa: Lafarge Industries SA has admitted taking part in a cement cartel and agreed to pay a US$19.6m penalty. The company reached the settlement with the South African Competition Commission after admitting to having taken part in price fixing and market division in the cement industry. As part of the deal Lafarge agreed to pay the penalty, 6% of its 2010 annual turnover in the Southern African Customs Union (SACU) region, which covers South Africa, Botswana, Lesotho, Swaziland and Namibia.

The case, which has been running since 2008, has investigated dealings at Lafarge, Pretoria Portland Cement (PPC), AfriSam and Natal Portland Cement-Cimpor (NPC-Cimpor). Following a 2009 raid at the offices of the accused parties, PPC applied for leniency and confirmed the existence of a cartel among the four cement producers. In December 2011, an agreement was reached with Afrisam, in which it confirmed the information provided by PPC and agreed to pay a US$16.5m penalty, representing 3% of its 2010 annual turnover in the SACU region.

The commission said that it will continue to investigate NPC-Cimpor.

Switzerland: Holcim surprised investors with a profit warning today, after announcing it would take a Euro641m hit in one-off charges on its 2011 accounts. The bulk of the impairment relates to a Holcim-specific issue in South Africa regarding AfriSam but analysts noted the decision to write down the value of assets in parts of Europe and the US on the back of sharply lower demand could be echoed by other cement makers.

"Some mature markets will never again see the record levels of profitability of the mid-2000s. Other players could be forced to do the same," warned Josep Pujal of Kepler Capital Markets.

Euro343m of Holcim's charges stemmed from completely writing down its remaining South Africa investment following a steep fall in demand for construction materials in the country since 2010. Holcim's South African exposure stems from its former local subsidiary, the country's biggest cement maker by sales, AfriSam. The remainder of the write-offs stem from adjusting property, equipment and goodwill lines in the group's accounts to much weaker markets. Some Euro271m in writedowns related to Spain and eastern Europe and Euro26m related to the US.

South Africa: South African cement sales rose for the first time in four years in 2011.

Sales climbed by 3.2% to 11.2Mt/yr in 2011 compared with 2010, when they fell by 7.8%, according to newly released figures from the Johannesburg-based Cement and Concrete Institute. Sales dipped by 1.8% to 730,000t in December 2011 from a year earlier.

"A long-term recovery in South African cement demand is long overdue and latest industry trends indicate that further decline is unlikely," said Pretoria Portland Cement Co, South Africa's largest cement producer.

India: Aditya Birla Group is considering buying Lafarge's operations in South Africa to further bolster its presence overseas. The US$35bn conglomerate, which owns India's biggest cement producer Ultratech, is conducting an initial assessment for a possible bid for the Lafarge unit. Lafarge South Africa Holding has a value, comprising both equity and debt, close to US$800-900m according to a report from December 2011. It has a cement capacity of over 3Mt/yr and it operates 20 quarries and 55 ready-mix concrete plants.

The sell-off of its cement operations in the region is part of Lafarge's plans to restructure its global operations through a series of asset sales to retire debt, which currently stands at over US$18bn. Lafarge may also sell off its majority equity holding in Pan African Cement, which has its units in Zambia, Tanzania and Malawi.

A spokeswoman for the Aditya Birla Group declined to comment on the report. The group, one of the world's 10 largest cement producers, operates across 36 countries and has recently considered bids for overseas coal assets. Lafarge has also been unavailable for comment.

Another Indian company Shree Cement is also believed to have shown interest in the asset. "We have initially shown some interest in the project but we would not like to comment on the present status," stated an unnamed senior group official.

South Africa: Lafarge, the world's largest cement maker, is rumoured to be seeking a buyer for its cement operations in South Africa in a deal that may fetch US$700-800m. Potential bidders are rumoured to include the Indian conglomerate Aditya Birla Group, the owner of India's largest cement maker, UltraTech Cement Ltd.