Displaying items by tag: UK

UK: The UK Competition Commission has decided provisionally that the proposed joint venture between Anglo American plc and Lafarge SA in the UK could damage competition in certain markets for construction materials.

In February 2011 Anglo American, through its UK subsidiary Tarmac Ltd, and Lafarge announced a proposal to establish a 50:50 joint venture, to which each of them would contribute the bulk of their construction materials businesses in the UK. The two parties' main overlapping activities in relation to the joint venture are in the production and supply of cement, aggregates, asphalt and ready-mixed concrete. The Office of Fair Trading referred the case to the Competition Commission on 2 September 2011.

Now the Competition Commission has reported that the joint venture could lead to a substantial lessening of competition in the markets for the supply of bulk cement, rail ballast, high-purity limestone (when used for flue-gas desulphurisation), primary aggregates for construction applications in 23 local markets, asphalt in two local markets and ready-mixed concrete in seven local markets.

"We have a number of concerns about this joint venture," said Roger Witcomb, chairman of the Anglo/Lafarge Inquiry Group. "In bulk cement there are currently only four UK producers and there is evidence that the market is not as competitive as it could be. Prices and profit margins haven't been affected in the way we would have expected following the big falls in the demand for cement in the past few years."

Although the Commission has not reached a view on whether or not there has been coordination in the bulk cement market, Witcomb said there were concerns that the proposed tie-up would increase the susceptibility of this market to co-ordination. "Some of the reasons for this arise from the proposed combination of the cement businesses and some from the increased vertical integration that would result from the combination of their ready-mixed concrete businesses," he said. "Lafarge currently have a relatively small ready-mixed concrete business, while Tarmac have a relatively large one."

Witcomb continued, "We are now consulting on the possible actions we could take in response to the reductions in competition we have found, bearing in mind the close links that exist between the different product markets."

As well as the summary of provisional findings, the Competition Commission has published a notice of possible remedies, outlining ways that the potential anti-competitive effects of the joint venture could be prevented. It will issue a final report no later than 1 May 2012.

UK: A report by Markit/CIPS has shown that the UK construction industry as a whole experienced a slow down in January 2012. Jason Heath, a construction specialist at Bibby Financial Services said, "The latest Markit/CIPS survey highlighted that the construction sector slowed down in January 2012. Although the numbers indicate a fall in productivity, the survey also revealed that construction managers and owners are feeling optimistic for the first time in eight months."

"This optimism is perhaps down to construction firms having a particularly successful December 2011, potentially due to milder weather conditions and infrastructure projects commencing, which surprised economists who had predicted a decline towards the end of 2011," he continued. "In order to retain this positive outlook, the government needs to make funding the construction industry a priority by making it more accessible to firms so this sector can continue to provide a vital contribution to the UK economy," concluded Heath.

UK: A worker was killed in an industrial accident at the Cemex plant in Rugby in the early hours of this morning.

A spokesman for the plant confirmed that a man working for a sub-contractor was killed at the plant and emergency services attended the scene. Police officers and the Health and Safety Executive are currently at the site investigating what happened. Another man suffered a broken arm in the incident and had to be taken to hospital for treatment.

Cemex community affairs manager Ian Southcott said, "Regrettably one person has died and our thoughts and sympathies are with their family and friends. Cemex is cooperating fully with all of the investigations taking place." Southcott refused to reveal any more details about the accident while investigations are on-going.

The cement plant is currently in its annual shutdown period for regular maintenance. There are a number of contractors working on the site as a result. In December 2011 Cemex was fined for a worker's death in 2008 at the same plant.

UK: The Mineral Products Association (MPA), which covers the cement and lime industries in the UK, has released its 3rd Sustainable Development Report, which shows the continued progress of its members in the realms of health and safety, carbon emissions, biodiversity, nature conservation and resource efficiency. It highlighted that, while growth prospects are uncertain and markets remain 20% to 40% below pre-recession levels, its members continue to be committed to stringent sustainability targets.

Highlights from the report include the planting of 1 million trees in the UK by MPA member since 2005 and a drop in direct carbon dioxide emission from cement production in 2010. The ratio of land prepared for quarrying to that which was restored to nature was 0.8:1. The report also showed the extent of the slump in UK cement demand. The UK consumed just 158kg/capita of cement in 2010 against the European average of 404kg/capita.

Nigel Jackson, Chief Executive MPA, said, "Our third Sustainable Development Report shows where we have gained considerable ground. For example, there is a growing awareness of the contribution that good building design can make to sustainability and how the use of concrete can significantly reduce the whole life energy performance of buildings through thermal mass benefits."

However, the MPA used the report to reiterate its stance on certain government policies. It believes that the government should not impose excessive costs on energy intensive industries, such cement and lime, which could drive the supply of essential and indigenously available resources overseas. "The MPA believes that genuine sustainable development demands that UK industries and supply chains are both resource efficient, where our industry is best in class in Europe, and also financially sustainable."

UK: Hanson UK has announced that it is preparing for a 'tough' 2012. Jon Morrish, managing director, said "We informed employees two weeks ago that we were carrying out a detailed review of the cement business to prepare us for what we expect to be a very tough market in 2012 and beyond."

Morrish's comments arose is the wake of rumours that jobs may be cut at the company's Castle Cement plant in Lancashire. The site currently meets 25% of the UK demand for cement and employs around 300 people. Hanson, a subsidiary of the HeidelbergCement Group, currently runs three plants in the UK including plants in Lincolnshire and Wales, with a workforce of over 1000.

Morrish added, "This review, which includes an assessment of recent changes to the European carbon trading rules, encompasses all three of our cement plants and covers all functions from production and sales to technical and distribution. The three plants are all vitally important to the long term future of the business and there is no intention to close any of them."

"However, it is likely that production levels will change, which will have an impact on jobs. We plan to table outline proposals to employee representatives and recognised trade unions early next week and begin a proper and effective consultation process."

UK: The head of the UK Mineral Products Association (MPA), Nigel Jackson, has backed a 3 October 2011 announcement by the Chancellor of the Exchequer, George Osborne, in which he said that environmental laws and regulations were 'piling costs' on to the energy bills of homeowners and business and that "we're not going to save the planet by putting our country out of business."

Commenting ahead of Osborne's Autumn Statement, which is expected to be on 29 November 2011, Jackson said, "I could not agree more with the sentiment and look forward to seeing how that welcome statement translates into positive action to reduce the complexity and plethora of energy related legislation that exists, as well as the actual amount of additional cost that this industry now faces."

Jackson additionally stressed the importance of keeping strategically important energy-intensive industries, such as cement and lime, in the UK. He warned against over-regulation of such industries, saying that it would not only threaten the UK's security of supply but would also export jobs and carbon for no environmental gain. Jackson said, "When the Chancellor announces the government's proposed package of help with energy costs for those energy-intensive industries at risk of 'carbon leakage' we need to see the cement and lime industries included. Government must act decisively to signal that it wants to retain viable domestic cement and lime industries in the UK." Jackson stressed, "This is the Chancellor's opportunity to put his words into practice and help protect British jobs, British manufacturing and British business. We need this Government to be the most enterprising ever."

UK: Cemex UK has been fined Euro230,000 following the death of a worker in an explosion at its Rugby cement plant. The UK Health and Safety Executive (HSE) prosecuted Cemex after the death of 28-year-old Peter Reynolds on 15 January 2008.

Leamington Spa Crown Court heard that Reynolds was treating waste cement dust in the bypass dust plant at the company's Rugby Cement Works. While he was clearing a blockage in the lower mixer, there was a violent explosion of steam and dust from inside the machine. The force of the explosion blew Reynolds out through the side of the building onto the road ten metres below. He was pronounced dead at the scene.

HSE's investigation into the incident found that Cemex had recognised the potential for blockages to cause explosions as steam pressure built up within the mixer but it took no action to prevent them. The court also heard the company had failed to review its risk assessment following a previous incident in May 2006, when another man was injured using the same machine. This explosion bent a metal-cladded external wall, pushing it out by 50cm.

Speaking after the hearing, HSE Principal Inspector Neil Craig said, "This was an entirely avoidable tragedy, which has left a young family without a husband and a father. If Cemex had investigated the previous incident properly, Mr Reynolds would still be alive today."

"Cemex's protection against the build up of pressure was for the plant to be continuously vented when processing waste cement dust, but it frequently blocked. These blockages then caused steam to build up to a high pressure."

"The company could have made a number of changes to the mixer to reduce the flow of dust and improve the venting and cooling systems, or devised a new system of work. However, no action was taken and employees were expected to operate this dangerous piece of machinery."

Cemex UK pleaded guilty to breaching Section 2(1) of the Health and Safety at Work etc Act 1974. The company was fined Euro230,000 and ordered to pay Euro200,000 costs.

UK: Lafarge Cement's vision for the future is starting to take shape at the company's former cement works at Northfleet in Kent, UK, where it is conducting a major investment to reconnect rail freight facilities to the main north Kent line. Lafarge expects the rail sidings to be operational by mid February 2012.

The first main user of the restored line will be the cross-London rail project, Crossrail, which will transport excavated material from a tunnel bore near Paddington, London by train to Northfleet for onward transportation by ship.

Balfour Beatty Rail is carrying out all the design and construction of the new sidings and connection to the main line, whilst Chunnel Group has carried out the siding preparation works within the main site. The overall length of the rail link is around 2.25km and in total 4.75km of new track will be provided.

The 104-acre site is undergoing redevelopment by Lafarge in association with the Councils of Kent and Gravesham. The linkage of the site to the main line represents another important step in the regeneration of Northfleet embankment.

UK: The Office of Fair Trading (OFT) has referred the proposed UK construction materials joint venture between Anglo American plc and Lafarge SA to the Competition Commission for further investigation. The companies had proposed the establishment of a 50:50 joint venture to which each of them would contribute the bulk of their construction materials businesses in the UK.

The OFT concluded that competition concerns arise in a number of markets including: overlaps in the supply of aggregates, asphalt and ready-mixed concrete in a large number of local areas (as well as particular types of aggregates at regional and national level); an overlap in the supply of bulk grey cement at a regional and/or national level, as well as, separately, an increased prospect of coordination in the supply of bulk grey cement; and a concern that the joint venture could foreclose independent ready-mix concrete suppliers by making it substantially more difficult for them to source bulk grey cement at competitive prices.

Ali Nikpay, OFT Senior Director, said - "The proposed joint venture would bring together Tarmac's and Lafarge's construction material assets in the UK. This represents a significant structural change in this sector and raises serious competition issues in several markets which need to be considered in detail by the Competition Commission. Although the parties did offer to divest a variety of assets in order to try to resolve the issues identified, we are not confident that the package proposed would clearly remove our concerns in all areas."

Anglo American and Lafarge provided a significant quantity of information and analysis to the OFT to inform its review. The OFT also received information from around 300 customers and competitors of the two parties as part of its merger investigation. The Competition Commission is expected to report by 16 February 2012. This announcement follows the OFT's decision in August 2011 to refer the UK cement, ready-mix concrete and aggregates sectors to the Competition Commission.

UK: The Office of Fair Trading (OFT) has published a market study into cement, ready-mix concrete and aggregates. It proposes to refer these key sectors of the construction industry to the Competition Commission for more detailed investigation.

Key issues that the OFT study covered featured the high barriers to entry in these sectors due to the difficulty of obtaining planning permission and the level of investment required. It was noted that high and increasing concentration dominated the market with five major players accounting for over 90% of the cement market and 68% of ready-mix concrete production.

The study picked up on the effects of vertical integration pointing out that the major firms are integrated across ready-mix concrete and cement. The OFT had also received complaints about vertically integrated firms refusing to supply or discriminating against non-integrated competitors through their pricing. Multiple contacts and information exchanges across the markets were mentioned, with major firms supplying each other with both aggregates and cement and engaging in joint ventures and asset swaps.

Lastly the study noticed an apparent squeeze between rising cement prices and stable or falling ready-mix concrete prices, affecting independents that both buy cement from vertically integrated majors and compete against them in the ready-mix concrete market.

John Fingleton, OFT Chief Executive, said, "We are concerned that competition is not working well in these sectors, with underlying features of the market giving rise to persistent concerns."

Cement, ready-mix concrete and aggregates sectors had a combined turnover in 2009 of up to Euro3.86bn and are vital inputs in the construction sector, which represents 7% of UK GDP. Some 40% of construction expenditure is in the public sector, for schools, hospitals, roads and other physical and social infrastructure, with central government being the biggest customer.

The OFT will consult until 30 September 2011 on its proposal to refer the market to the Competition Commission. Key parties will be contacted directly but parties wishing to make a submission are invited to contact the OFT in writing.