Displaying items by tag: UAE

UAE: Arkan Building Materials has sold the closed Emirates Cement plant for US$13.6m, according to Mubasher. The unit was originally closed in late 2016 on a temporary basis due to rising gas and electricity costs. It later decided to permanently close the plant. The company continues to run its Al Ain Cement plant.

Earlier this year South Africa’s PPC commented on the drought facing Cape Town. It said that cement manufacturing was not water intensive, that its operations were ‘totally’ self-sufficient from its own surface water sources with capacity for several months and that it was working with the local government which viewed construction as an important economic sector. Point made!

Water conservation is an established part of the sustainability toolkit for cement producers. Yet recent weather patterns in the Northern Hemisphere may also test how well companies are doing. Above average temperatures have been recorded this summer, in some places accompanied by unusually dry conditions. A news story this week about Cemex Colombia being fined for using water from a river shows one aspect of the problems that can face industrial users. Another story that we’ve covered previously has been the legal action taken against producers using water from a site near to the Katas Raj Temples in Pakistan.

Wet process cement manufacturing uses more water than dry process but even modern plants use water for cooling equipment and exhaust gases, in emission control systems such as wet scrubbers. In addition, quarrying and aggregate production may require water, and concrete production also needs water. Issues also arise with quarry dewatering and discharging water into rivers and the like. Global Cement Directory 2018 data indicates that, where known, about 10% of integrated cement plants still use a wet production method.

Graph 1: Specific water consumption by selected cement producers in 2017. Source: Corporate sustainability reports.

As Graph 1 shows there is some variation between the major cement producers with regards to how much water they use. They all operate with different types of equipment and production methods in different geographical locations so the difference between the companies is to be expected. A cement plant in northern Europe that normally experiences high levels of rainfall will have a different approach to water conservation than one, say, in a water stressed area like the Middle East. Incidentally, the definition used to define a water-stressed or scarce area is one where there is less than 1000m³/yr per person. One other point to note here is that each of the companies has a higher consumption figure than the 100 – 200L/t that the Cement Manufacturers' Association of the Philippines (CeMAP) reckoned that an average dry-process cement plant used when it was promoting water conservation back in 2013.

Looking at specific recent success stories, India’s UltraTech Cement reported a specific water consumption of 54L/t of clinker at its Star Cement plant in Dubai, UAE in 2016 – 2017 following a dedicated initiative at the site. An another milestone that UltraTech Cement was keen to point out in its last sustainability report was that three of 13 integrated plants had achieved water sufficiency though the use of the company’s 360° Water Management Model with its use of rainwater harvesting and recharging groundwater. These plants are not dependent on any groundwater or fresh water sources. The other larger cement producers all have similar water management schemes with reduction targets in place.

Climate change models generally predict hotter and wetter weather but changing weather patterns and growing populations are likely to impact upon water management and consumption. Given the integral nature of water in the cement production process, many cement producers have realised the importance of it and treat it as an input material like fuel or limestone. Hence the highlighting of water conservation in company sustainability reports over the last decade. The test for the success of these initiatives will be how producers cope in drought situations where they may be seen as being in competition with domestic users. Thankfully in PPC’s case, Cape Town avoided having to ration water to the general public, as the rains returned in the spring.

UAE: Raysut Cement has appointed Afzaal Qadri as the Plant Manager of its subsidiary Pioneer Cement Industries. Afzaal will report to Raysut’s chief executive officer (CEO) Joey Ghose. Qadri, aged 49 years, holds over 30 years of experience of the Cement Industry. He started his career in the cement industry in 1987 and has worked in various engineering and operational roles in the US, Saudi Arabia, UAE and Pakistan. Most recently he worked by HeidelbergCement in the US.

UAE: Ashley Bryan has been appointed as the general manager of Pioneer Cement. He will report to Joey Ghose, the chief executive officer of the parent company Raysut Cement. Bryan, aged 49 years, started working the cement industry in 1988. He has held various engineering and operational roles in the UK, Nigeria and South East Asia.

Persistence has paid off for UltraTech Cement this week. Although the deal is not complete, all the signs are pointing towards India’s largest cement producer buying Binani Cement despite losing an auction for it last month. Here’s a recap of what has happened so far.

In July 2017 the National Company Law Tribunal (NCLT) in Kolkata, a semi-judicial body that rules on issues relating to companies, started insolvency proceedings for Binani Cement. It followed a plea by one of the cement company’s creditors, the Bank of Baroda, that had an outstanding claim of around US$15m. The Kolkata bench of the NCLT rejected Binani Cement’s argument that the debt was tiny compared to the assets of its parent company Binani Industries of US$2.15bn. It then appointed an administrator, or resolution professional, called Vijaykumar Iyer, a partner at Deloitte Touche Tohmatsu India. More on him later on.

The subsequent auction of Binani Cement raised lots of interest both internationally and locally due to its production base. The company operates a 4.9Mt/yr plant at Binanigram in Rajasthan with two kilns and four mills. It also runs a 1.4Mt/yr cement grinding plant at Sirohi in the same state. Unusually though for an Indian producer it also runs a 2Mt/yr grinding plant at Jebel Ali, Dubai in the UAE and a 0.5Mt/yr integrated plant, Shandong Cement, in China.

Its products domestically in India include 43 and 53 grades Ordinary Portland Cement and Portland Pozzolana Cement, with the Bollywood film star Amitabh Bachchan as its brand ambassador. On that last point the Indian Supreme Court chastised Binani Cement in 2014 for not paying sales tax in Rajasthan whilst being able to hire Bachchan! However, given the ferocity of the struggle to buy Binani Cement maybe all that marketing of the brand paid off, giving the producer a much higher profile than it might otherwise have had.

Anyway, lots of companies showed interest in Binani Cement in the first round of bidding in late 2017. CRH, LafargeHolcim, HeidelbergCement, India Cement, Orient Cement, Ramco Cement, Shree Cement, UltraTech Cement and Piramal Group were all linked to the auction. Eventually UltraTech Cement, JSW Cement, Ramco Cement, HeidelbergCement India, Dalmia Bharat and a pair of Indian investors all submitted bids and JSW Cement emerged as the winner with a bid of US$919m. However the emergence of an additional liability of around US$250m scuppered that auction when it turned out that Binani Cement had offered a corporate guarantee for the acquisition of a fibreglass asset in Europe known as 3B in 2012 by Binani Industries. By February 2018 the next auction was in progress and this time Dalmia Bharat Cement and UltraTech Cement led the race. Dalmia Bharat won the second auction with a bid of around US$1.03bn made in a consortium with Bain Capital’s India Resurgent Fund and Piramal Enterprises.

At this point the situation might have conceivably slowed down. Instead, UltraTech Cement kept on fighting and queried the entire bidding process. It then made a direct offer of US$1.11bn to Binani Cement in the form of a so-called ‘comfort letter’ that Binani Industries used to stop the insolvency process. At the same time it received approval from the Competition Commission of India in its bid for Binani Cement, the previous absence of which was one of the reasons its bid against Dalmia Bharat was rejected.

Indian company law now faced a dilemma over how a bankruptcy works given that the NCLT was meant to be in charge. A way out was found though when the NCLT in Kolkata and the National Company Law Appellate Tribunal both allowed the bidders to settle the dispute ‘amicably.’ To add further confusion the administrator Vijaykumar Iyer also alleged right in the middle of the final tussle between Dalmia Bharat and UltraTech Cement that fraudulent transactions had been made by Binani Cement! Whether this has any further implications remains to be seen.

At this stage nobody is likely to declare UltraTech Cement the winner of Binani Cement until it actually picks up the keys to the cement plants. Perhaps not even then in case of any lingering legal issues! UltraTech Cement clearly views Rajasthan as a growth area given the tenacity with which it has gone after Binani Cement. It operates two integrated plants in the state and is building two more of its own. After its long journey in buying plants from Jaiprakash Associates in 2017, UltraTech Cement is starting to look like the cement producer that simply won’t take no for an answer.

Given the low oil price the economies of the Gulf Cooperation Countries (GCC) (including the UAE) have taken a knock in recent years. So, the news this week that Arkan has closed its Emirates Cement plant in Al Ain for good may not be too surprising. The building materials producer opened its whopping 5.7Mt/yr Al Ain Cement plant in late 2014 and, now that rising energy costs have become too much of a burden it appears to have shut down the older plant for good and moved the production across. Now it says the new unit is operating at nearly full capacity.

Arkan’s cement business saw its revenue fall by 9% year-on-year to US$220m in 2016 from US$239m in 2015. Net profit fell more sharply, by 25% to US$20.6m. The chairman cited a ‘harsh current market cycle’ as the cause of his company’s woes and also blamed a heavy rainstorm in March 2016. The storm caused an interruption in production due to a damaged conveyor belt at its Al Ain Cement plant that stalled the production on half of its raw material handling line. The producer turbocharged its sales and profits in 2014 with the opening of the new plant and managing to continue the growth in 2015 but it slowed down in 2016. Arkan has also been in the alternative fuels news this week with the announcement of plans to test burning spent pot lining. This certainly hints at a producer trying to minimise its fuel spend.

Other local producers have had similar experiences. Fujairah Cement reported that its revenue fell by 2.5% to US$162m from US$167m although it did manage to grow its profit by 12% to US$15.4m. Earlier in the year it attributed the rise in profits to higher prices and cost control on the production side. The producer, a subsidiary of India’s JK Cement, operates a dual Ordinary Portland Cement and White Cement plant. Union Cement’s revenue fell by 10% to US$153m from US$170m and its profit fell by 19% to US$22.9m from US$28.2m.

A report by Deloitte on the construction market in Dubai published in early 2016 showed that the UAE became a net exporter of cement in 2010. Local producers exported 3Mt of cement in 2012 and this was aided by high energy cost subsidies. Prior to this the nation had been importing large amounts of cement and building up its local production capacity to meet its voracious real estate market. However, this previously caused problems in 2007 when the real estate market crashed. More recently the Dubai Chamber reported that the potential value of construction projects awarded in 2016 was US$36.5bn. Overall in the GCC the value of contracts fell by 17% year-on-year. Locally, the Dubai construction sector’s real added value, or its contribution to the national gross domestic product, fell in 2012 before rising slowly subsequently but its growth rate picked up in 2013 and then started to slow down.

Looking at the broader economy the World Bank reckoned in the autumn of 2016 that growth in the UAE was predicted to continue slowing in 2016 before picking up in 2018 due to rising oil prices. In the midst of uncertain times a report by the Dubai Chamber called for cement producers to improve their competitiveness, save on production costs, use more alternative fuels and push exports. To this end Arkan’s trial with spent pot lining and today’s news of a technology start-up promoting a fly ash and slag cement for 3D printing suggest a cement and construction industry marking time before growth returns.

UAE: After more than 14 years with HeidelbergCement, Kerim Tunçay has been offered the position of general manager at Union Cement Norcem (UCN). Union Cement Norcem (UCN) is a joint venture between Union Cement Company (UCC) of Ras Al Khaimah, UAE and Norcem of HeidelbergCement. It was set up in 1980 to market and sell the American Petroleum Institute (API) certified oil well cement, concentrating on export markets.

Tunçay, who took charge of his new assignment from 1 September 2014, will be in charge of all domestic and export sales of cement and clinker of UCC in addition to the sales of oil well cement.

Born in Istanbul, Turkey in 1972, Tunçay has a Masters Degree in Business Administration from University of Saarland, in Saarbrucken, Germany and a Marketing Diploma from University of California, Berkeley. Trained as an International Trader Candidate, Tunçay started his career with the cement industry in 2000 at HeidelbergCement Trading (HCT) in Istanbul.