Global Cement Newsletter

Issue: GCW339 / 07 February 2018

Headlines


A couple of news stories have emerged from West Africa this week reminding Global Cement of the growth potential the region holds. First Ghacem announced that it had opened a new truck terminal at Sefwi Dwenase in Ghana. Then LafargeHolcim Ivory Coast inaugurated a new mill at its grinding plant in Abidjan. Then Cimburkina, a subsidiary of Germany’s HeidelbergCement, said that it was starting work on enlarging its grinding plant at Kossodo in Burkina Faso.

The other theme that received some coverage this week was another attempt by an African government to regulate its hastily growing cement sectors. Jean-Claude Brou, the Minister of Industry and Mines in Ivory Coast also found time to announce the creation of a commission to monitor the quality control of cement when he inaugurated the new mill in Abidjan. As building collapses due to substandard cement in Nigeria have shown, this kind of government monitoring is essential to protect the public in booming markets. Unfortunately, rightly or wrongly, these kind of bodies often seem to end up embroiled in rows about imports of cement competing with local producers.

Away from the cut and thrust of the market, the new mill at Abidjan is particularly interesting because it was imported and reinstalled piece-by-piece from its original home at a former Holcim plant in Spain. The move cost Euro23m and LafargeHolcim say that it is now the largest horizontal ball mill in French-speaking west Africa. The 1Mt/yr year mill was originally manufactured by Polysius (ThyssenKrupp) in 2006 and uses a 4500kW motor.

Data from the National Institute for Statistics in Ivory Coast reported a 39% rise year-on-year in cement production to 1.64Mt in the first half of 2017. This follows reports of cement shortages in early 2017. The government then took the action of importing 0.15Mt of cement to meet the shortfall until local production capacity caught up.

This is starting to happen now with the LafargeHolcim opening. Other projects that were in the pipeline include Cim Ivoire’s 2.6Mt/yr grinding plant, also in Abidjan, that was due to be completed by the end of 2017. This project is interesting because Cim Ivoire is a subsidiary of Burkina Faso’s Cim Metal Group. It also operates a grinding plant, Cimfaso, near the capital Ouagadougou. Similar to LafargeHolcim it is preparing its supply lines to the African interior. Finally, Nigeria’s Dangote Cement was also building a 3Mt/yr grinding plant near Abidjan. This unit was due to be finished by the end of 2017 but there has been little news about it in recent months.

Ghana’s cement industry has been consolidating itself and is facing an oversupply situation. The government placed production capacity at 8.5Mt/yr in 2016 versus demand of 6Mt. It has since made the headlines with spats between local producers and foreign companies like Dangote Cement. Unlike Ivory Coast, Ghana has two integrated plants that, no doubt, want to preserve their markets from imports. Despite this, Ciments de l'Afrique (CIMAF) and Diamond Cement both opened plants in late 2016. More recently two grinding plant projects have been announced near Tema.

Although the timing is fortuitous , we admit that these stories are fairly loosely connected at best. However, they do illustrate an inward development trend in the region. Bigger and more efficient grinding plants to process locally made or imported clinker, more terminal infrastructure to distribute the cement and then more grinding plants further inside the region geographically as the logistics situation permits. The Cimburkina plant, for example, is situated in landlocked Burkina Faso. Clinker for its mills will initially be supplied by HeidelbergCement’s integrated Scantogo plant at Tabligbo. The drive to develop these countries moves ever forwards and they demand cement.


India: Shri Sajjan Bhajanka has been appointed as the new Managing Director of Star Cement. He is a Commerce Graduate from Dibrugarh University, Assam. He has business and industrial experience of more than 25 years in the fields of plywood, ferro silicon and granite. He is the Managing Director of Century Plyboards (I) Limited, the largest producer of plywood, laminates and block-boards in India. Mr. Bhajanka is also the Chairman of Shyam Century Ferrous Ltd., one of the leading manufacturers of Ferro Silicon in India. He is also the President of the Federation of Indian Plywood and Panel Industry and All India Veneer Manufacturers Association.


Austria: Christoph Stotter has been appointed as the head of Development & Quality Assurance at w+p Zement. He succeeds Walter Steinwender, who had been working at the Wietersdorf plant since 2008. Stotter studied at the Montanuniversität in Leoben and has since gained experience in process engineering, research and development and product management.


Honduras: Colombian cement manufacturer Cementos Argos has reported a positive performance in Honduras. The company, which entered the domestic market in 2013, sold over 1.1Mt of cement in the local market in 2017, a record figure that was 15% more than the 0.95Mt that it sold in 2016.


India: Binani Cement is back on the market after its liabilities were revised upwards, according to sources close to the deal. JSW Cement had previously emerged as the winner of a very competitive bidding process earlier in 2018 with an offer of US$919m. The creditors have now sought fresh bids from interested parties, which previously included LafargeHolcim, HeidelbergCement, Ramco Cement, UltraTech Cement, Dalmia Bharat and the Bain Piramal Resurgence Fund. The resolution professional, Deloitte Touche Tohmatsu India LLP partner Vijaykumar Iyer, has set a new deadline of 12 February 2018, extended from 5 February 2018.

The additional liability of around US$250m has emerged due to Binani Cement’s corporate guarantee for the acquisition of a fibreglass asset in Europe known as 3B in 2012 by group company Binani Industries. As one of the contacts close to the deal is reported to have said, ‘this is not a small amount.’


Uzbekistan: In 2017 Qizilqumsement JSC, the biggest cement plant in Uzbekistan, increased cement production to 3.6Mt, 1.9% more than in 2016. 60% of the production volume was sold through exchange trades, 23% to direct contracts with regulated prices, 15% was exported and 2% was sold according to direct contracts based on exchange quotations. According to the business plan of Qizilqumsement JSC, cement production is expected to be at least 3.5Mt in 2018.

There are five large cement facilities and several small ones with total capacity of 8.5Mt/yr in Uzbekistan. The country exports cement to Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan.


Argentina: Cement producers in Argentina sold 1.03Mt of Portland cement in January 2018, including exports. This represented a 3.2% increase compared to sales in December 2017 and was 17.3% higher than sales made in January 2017, according to data from AFCP. Domestic sales, including imports, totalled 1.04Mt, 3.9% above the same sales in December 2017 and 19.4% higher than sales in January 2017.


Mexico: Cruz Azul has been forced to partially close its cement plant in Tula, Hidalgo due to a lack of an active environmental clearance certificate. Personnel from the Federal Attorney for Environmental Protection made an inspection of the facilities at the cement plant. When verifying the documentation, they found that it lacked the current authorisation issued by the Ministry of Environment and Natural Resources. In this situation, the temporary partial closure of the plant was imposed as a safety measure.


Bolivia: Itacamba plans exports of 119,000t of cement to Paraguay and Argentina in 2018. It will send over 60,000t to Argentina alone. It will also begin exports to Paraguay. Itacamba exported 4000t to Argentina and 158,000t of clinker to Paraguay in 2017.


Turkey: Dal Teknik Makina has completed an upgrade project on Kiln Line 1 at Nuh Çimento in Kocaeli. Key features of the project included increasing the line’s production capacity, decreasing its energy requirements, making savings on power consumption and lowering the exit temperature of the clinker. The work has increased the plant’s production capacity to 3400t/day from 2800t/day. Other benefits of the update include decreasing the specific heat consumption of clinker to 740kcal/kg clinker from 870kcal/kg clinker, reducing electrical power consumption by 7kWh/t and increasing the raw mill capacity to 185t/hr from 160t/hr. The exit temperature of clinker was also reduced to 55oC plus the ambient temperature.

This project involved the design, manufacturing and erection of the pre-heater tower cyclones group, kiln feed transport system, clinker cooler, kiln hood, removing of dust cyclone at tertiary air duct, cooler vent fan modification, main bag filter duct modification and kiln inlet seal and commissioning of the system.

The first part of the upgrade project was the modification of the pre-heater tower, which as a result reduced the pressure drop, improved heat transfer and separation efficiency, and heat consumption. The second part of the project was the retrofit of the grate cooler. The clinker cooler, kiln hood, cooler fans and cooler vent fan were replaced by Fons Technology International. In this part, kiln hood, cooler vent, exit pipe of waste heat recovery (WHR) unit and tertiary air duct were modified as well. The third part was to replace the horizontal duct of main bag filter inlet with an inclined one in order to avoid dust accumulation. The last step was the replacement of the pneumatic kiln feed by bucket elevator.

The project followed Dal Teknik Makina’s Filter-To-Filter Pyro-Process Concept.


Pakistan: A consortium of investors including Denmark’s FLSmidth have purchased a stake in Power Cement. The investors include the Danish Investment Fund for Under-Developed Countries (IFU) and IFU Investment Partners (IIP). As part of the deal the board of the cement producer has approved the appointment of Anders Paludan as a director.


France: Fives FCB has been awarded an engineering, equipment supply and supervision of works contract for the replacement of a kiln at the Lumbres cement plant. The work covers replacing the downstream shell of the 42.2m kiln, including the tyre. The project is part of the cement producer’s plan to adapt Kiln 5 at the site for the installation of a new clinker cooler.


China: Italy’s Gambarotta Gschwendt has received an order from CBMI-Sinoma for four surface feeders and five apron feeders. The company manufactures bulk handling equipment such as elevators and conveyors.


Ivory Coast: Jean-Claude Brou, the Minister of Industry and Mines, has announced the creation of a commission for the quality control of cement. The minister made the statement at the opening of a new mill at LafargeHolcim plant at Abidjan, according to the Agence Ivoirienne de Presse. Brou added the country’s demand for cement rose to 5Mt in 2017 from 2.5Mt in 2015.


South Africa: PPC estimates that local cement demand fell by 3 – 4% in 2017 due to a lack of large infrastructure projects. In an operating update for the nine months to 31 December 2017 it reported that its cement sales volumes fell by 1 – 2% year-on-year, although it had increased its prices. It increased its exports by 23%. The cement producer also reported that its Slurry Kiln 9 project was 90% complete, with commissioning scheduled for the second quarter of 2018.

Elsewhere in Africa, PPC’s sales volumes rose by 20 – 30% in Rwanda due to a rise in bulk cement sales and higher exports. In Zimbabwe sales volumes grew by 30 – 40% supported by retail sales.


Burkina Faso: Cimburkina has started upgrading its Kossodo cement grinding plant. The US$2.85m project will centre on the installation of a new mill. This will double its production capacity to 2Mt/yr, according to the Sidwaya newspaper. Other works will include a new 2000t limestone silo and a new bagging unit. The new mill is scheduled to start production in December 2018.

The plant, a subsidiary of Germany’s HeidelbergCement, produces two types of cement: CEM II 42.5 R and CEM II BL 32.5 R. Clinker for production comes from the group’s Scantogo plant in Togo.


Ivory Coast: Jean-Claude Brou, the Minister of Industry and Mines, has inaugurated a new mill at LafargeHolcim Ivory Coast’s plant at Abidjan. The new mill has increased the unit’s production capacity to 2Mt/yr, according to the Agence Ivoirienne de Presse. LafargeHolcim Ivory Coast re-used a ball mill from a Spanish cement plant that was dismantled and shipped to Abidjan. The mill uses a 4.5MW motor and the cement producer says it is the largest horizontal ball mill in French-speaking West Africa. The project cost US$28.5m.


Tunisia: Carthage Cement has completed the loading of its first clinker shipment to Sub-Saharan Africa. The 38,000t consignment was loaded at the port of La Goulette. It is part of a 350,000t deal that the cement producer announced in December 2017.


India: JK Cement has received approval for an upgrade at its Mangrol cement plant near Chittorgarh in Rajasthan. The plant will have an investment of US$312m, according to Accord Fintech. Following the expansion the plant will have a cement production capacity of 4.2Mt/yr. Cement grinding will be supported by units in Uttar Pradesh and Gujarat.


Bahrain: The local construction sector is expected to grow following the lifting of export duties on cement by Saudi Arabia. Saudi National Committee of Cement Producers chairman Jehad Al Rasheed told said that cement export duties were cancelled at the end of January 2018, according to the Gulf Daily News newspaper. Export tariffs were originally set at US$23 – 35/t but were then halved in July 2017 to encourage the market.

Bahrain had been the only country allowed to import cement from Saudi Arabia since 2009. However, the price rose significantly in March 2017 after the Saudi government introduced new tariffs and permitted cement exports globally.


France: Lafarge Syria’s former director Christian Herrault has claimed that Eric Chevallier, the former ambassador to Syria, knew about payments to armed groups by the cement producer. French investigators questioned Herrault in the presence of Chevallier, according to a source quoted by the Agence France Presse. Herrault allegedly said that he had met Chevallier several times, that he knew about the situation and that he said that the company should stay as, “…these problems won't last long."

Jean-Claude Veillard, the group's former security boss, has said he regularly informed French intelligence services about its operations in the region. Investigators have also found evidence of meetings between Lafarge and diplomats, including a note suggesting that one took place in Paris in January 2013.

The investigation is attempting to determine whether LafargeHolcim’s predecessor company Lafarge Syria paid terrorist groups in Syria and how much managers knew about the situation.


Honduras: Cementos Argos plans to spend US$20m on building a new cement grinding plant at Choloma. The unit will have a production capacity of 0.44Mt/yr. It will join the cement producer’s integrated plant in Comayagua and another grinding plant in San Lorenzo. The new grinding plant, loacted in the north of the country, is intended to integrate into Cementos Argos’ logistics network in the wider region. It will create 200 jobs.


Pakistan: The local cement industry has asked the government to increase the custom duty on imported clinker to support local production as export rates continue to decline. The industry has also recommended that cement importers should be registered with the Pakistan Standards and Quality Control Authority (PSQCA) and country of origin bodies, according to the Nation newspaper. Falling exports in Afghanistan have been blamed on Iranian competition and high local energy costs.


UK: CO2 emissions from cement production fell by 2% year-on-year to 696kg/t in 2016 from 709kg/t in 2015. Data from the Mineral Products Association (MPA) Sustainable Development (SD) Summary Data for 2017 report shows that local cement sales rose by 3% to 10.5Mt from 10.2Mt at the same time. Alongside this waste and by-products recovered as raw materials and fuels by the cement industry fell by 6% to 1.5Mt from 1.6Mt.

“The MPA supports the industry's continuing commitment to measuring and reporting data and to transparency on performance. The reporting process is now evolving to reflect the 7 strategic priorities set out in the MPA Charter and as part of this process we will be working to further improve the quality and coverage of our sustainability data,” said Nigel Jackson, the chief executive of the MPA.


US: The Portland Cement Association (PCA) has backed President Donald Trump’s call for US$1.5tn to be invested in infrastructure. It has urged the US Congress to take ‘swift’ legislative action to fund and sustain such projects.

“America’s cement producers are proud to play a critical role in what the president so aptly described as our nation of builders,” said PCA President and chief executive officer (CEO) Michael Ireland. “Today, our industry is ready to help America both rebuild long-neglected infrastructure, and construct new-and-improved transportation networks capable of serving the nation long into the future.” He added that the cement industry also supported the need to address significant federal funding gaps including a shortfall in the Highway Trust Fund.


Saudi Arabia: Finland’s Wärtsilä has provided an update on a three-year asset management deal for Northern Region Cement’s (NRC) power plant at its Turaif plant signed in October 2017. Wärtsilä will continue to be responsible for the operation and maintenance of the power plant and to ensure the reliability and availability of its operations. This agreement is an extension of Wärtsilä’s previous service agreements for NRC’s power plant. The first service agreement with NRC was signed in 2008.

“We are proud to be able to continue our 10-year cooperation with NRC. By having full responsibility for the operation and maintenance of NRC’s power plant, we have been able to ensure reliable operations, optimised fuel consumption and reduced maintenance costs for NRC,” said Haidar al Hertani, managing director, Wärtsilä Saudi Arabia.

The agreement covers all aspects of operating and maintaining NRC’s power plant, including the day-to-day operation of the power plant as well as preventive and predictive maintenance. Wärtsilä’s Customer Centre in Dubai remotely monitors the power plant’s condition. Wärtsilä has also carried out electrical and automation services to improve the performance and extend the lifespan of NRC’s power plant.

The 62MW power plant is equipped with nine Wärtsilä 32 engines and provides energy for NRC’s Turaif cement plant. The cement plant has two production lines, producing nearly 10,000t/day of cement.


Iran: Cement production fell by 4.8% year-on-year to 37.7Mt in the eight-month period to 21 November 2017. The decline has been blamed on a recession in the construction industry, poor natural gas supplies and falling export rates, according to the Trend News Agency. The country produced 54.1Mt of cement in its last financial year. Cement production capacity has risen significantly locally from 29.5Mt/yr in 2001 to 83Mt/yr in 2017. The number of cement plants has grown from 30 to 72.


Pakistan: Mega Conglomerate says it plans to buy an 87.5% stake in Dewan Cement. The buyer operates in the dairy and real estate sectors. Dewan Cement operates two cement plants. Bestway Cement and Fecto Cement have previously made bids for Dewan Cement.


Mozambique: The African Elephant cement grinding plant is operating at a third of its production capacity due to low demand. The Chinese-owned plant near Pemba, Cabo Delgado in the north of the country is producing around 300t/day despite the plant’s production capacity of 1000t/day, according to sources quoted by the Mozambique News Agency. The plant’s manager expects demand to pickup once investment in the gas industry increase. The company has suffered from imports from Tanzania.


Colombia: Cement production fell by 1.5% year-on-year to 12.3Mt in 2017 from 12.5Mt in 2016. Sales fell by 1% to 12Mt from 12.1Mt, according to data from the National Administrative Department of Statistics (DANE). Sales in Antioquia, Caldas and Nariño rose by 5.7%, 16% and 17.1%, respectively. However, sales in Casanare, Cordoba and Santander dropped by 29.5%, 15.9% and 7.4%, respectively.


US: United States Lime & Minerals grew its sales revenue in 2017 due to higher business from its oil and gas services and industrial customers. Total revenue grew by 4% year-on-year to US$145m in 2017 from US$139m in 2016. The producer raised the price of its lime and limestone products in 2017.

“Demand for our lime and limestone products in the fourth quarter and full year 2017 remained steady. In addition to the St Clair replacement kiln project, we continue to seek innovative ways to enhance efficiencies at all of our facilities so we can compete in what remains a challenging pricing environment,” said Timothy W Byrne, president and chief executive officer of United States Lime & Minerals.