Global Cement Newsletter

Issue: GCW355 / 30 May 2018

Headlines


LafargeHolcim’s announcement this week that it is to close its headquarters in Paris is the latest sign of the tension within the world’s largest cement producer. The decision is rational for a company making savings in the aftermath of the merger of two rivals – France’s Lafarge and Switzerland’s Holcim – back in 2015. Yet, it also carries symbolic weight. Lafarge was an iconic French company that had been in operation since 1833. Its hydrated lime was used to build the Suez Canal, one of the great infrastructure projects of the 19th century.

In the lead up to the merger in 2015 the union of Lafarge and Holcim was repeatedly described as one of equals. However, the diverging share price between the two companies killed that idea on the balance sheets in early 2015. Renegotiation on the share-swap ratio between the companies followed with an exchange ratio of nine Holcim shares for 10 Lafarge shares. In the end Holcim’s shareholders ended up owning 55.6% of LafargeHolcim. Lafarge’s Bruno Lafont lost out on the top job as chief executive officer (CEO) in the frenzy but the role did go to another former Lafarge executive. The new company also retained its former corporate offices in both France and Switzerland.

Since the merger LafargeHolcim has underperformed, reporting a loss of Euro1.46bn in 2017. Former senior executives from Lafarge have become embroiled in a legal investigation looking at the company’s conduct in Syria. LafargeHolcim’s first chief executive officer Eric Olsen resigned from the company in mid-2017 following fallout from a review into the Syria affair. Both Olsen and Lafont are currently under investigation by the French police into their actions with respect to a cement plant that the company kept operational during the on-going Syrian conflict. Olsen’s replacement, Jan Jenisch, is a German national who previously ran the Swiss building chemicals manufacturer Sika.

Regrettably the closure of LafargeHolcim’s corporate office in Paris will also see the loss of 97 jobs although some of the workers in Paris will be transferred to Clamart, in the south-western suburbs of the city. Another 107 jobs will also be cut in Zurich and Holderbank in Switzerland.

One more knock at the local nature of cement companies in the very international arena they operate in doesn’t mean that much beyond bruised national pride. British readers may mourn the loss of Blue Circle or Rugby Cement but the country still has a cement industry even if it mostly owned by foreign companies. France’s industry is doing better as it recovers following the lost decade since the financial crisis in 2008.

Jump to 2018 and LafargeHolcim is being run by a German with links to Switzerland, Holcim shareholders had the advantage during the merger, its former Lafarge executives and assets are facing legal scrutiny over its conduct in Syria and Lafarge’s old headquarters in Paris are being closed. LafargeHolcim in France still retains the group’s research and development centre at Lyon and a big chunk of the local industry. Yet Holcim has held an advantage ever since the final terms of the Lafarge-Holcim merger agreement were agreed so this slow slide to Switzerland is not really a surprise. From a distance it feels very much like the Holcim acquisition of Lafarge is finally complete.


UK: Albert Manifold, the head of CRH, has been elected as the president of the Global Cement and Concrete Association (GCCA) at its first meeting. Fernando A González, chief executive of Cemex, and Jianglin Cao, chief executive of CNBM, were named as vice-presidents.

“We are proud to launch this new global cement and concrete advocacy platform. Cement and concrete are integral elements of the built environment around the world and the GCCA represents a strong sector-wide voice and responsible industrial leadership in the manufacture and use of these materials,” said GCCA President, Albert Manifold.

The GCCA comprises 10 cement companies including Cemex, CNBM, CRH, Dangote, Eurocement, HeidelbergCement, LafargeHolcim, Taiheiyo, UltraTech and Votorantim. All board appointments are on an interim basis until formal elections can take place of the full board comprising 15 members at the organisation’s first annual general meeting to be held in London, UK in November 2018. The association will also present a work programme, launch its sustainability charter and run a conference at the same time. The GCCA has established its headquarters in London.


US: CalPortland has appointed Kerri L Leininger as vice president of government relations. She will be located in Washington, DC and will monitor and lobby advocacy issues at the state and federal level.

Leininger joins CalPortland after almost 14 years of working for the National Ready Mixed Concrete Association (NRMCA) where she served as the executive vice president of government and political affairs. In her former position, she focused on industry issues that included building codes, resiliency, transportation, labour and small business.

Prior to NRMCA, Leininger worked for Baker, Donelson, Bearman, Caldwell & Berkowitz, a law firm specialising in healthcare and transportation public policy in Washington, DC. Leininger has also worked for the offices of former Senator Mike DeWine, Senator Jim Bunning, Senate Majority Leader Mitch McConnell and US Representative Ed Whitfield.

Leininger is a graduate of Eastern Kentucky University with a Bachelor of Arts degree in journalism and applied technology.


Mexico: Siemens has appointed Juan Ignacio Diaz as the chief executive officer (CEO) of Siemens Mexico, Central America and Caribbean with effect from 1 June 2018. He succeeds Louise Goeser, who has left the company. Diaz was previously Country CEO of Siemens Chile and lead for its Mobility division.

Diaz joined Siemens in 2008. He has served in various functions in Chile and South America, first as General Counsel for Chile and later as General Counsel for the South America region. In 2010 he also took the position of City Account Manager for the Metropolitan Region of Santiago de Chile, responsible for developing the portfolio of sustainable solutions for megacities. Since 2013, he has been CEO of Siemens Chile and lead for its Mobility division.


Austria: Stefan Kern has been appointed as the head of A TEC Group. He succeeded Wolfgang Hammer on 1 April 2018. Kern started at A TEC in August 2013 and was responsible for sales activities in Northern Europe, Eastern Europe and South Africa. In 2016 he joined the management board. Kern originally studied chemical engineering in Vienna.


Turkey: Göltaş Çimento and AS Çimento are being investigated by the Turkish Competition Authority for alleged price fixing of cement. The government body says that its preliminary investigation in early May 2018 has discovered ‘serious’ findings. Further investiation will follow to examine whether the law has been broken and whether fines are applicable. Both cement producers operate plants in the southwest of the country.


Bangladesh: The local cement industry has a cement production utilisation rate of 54%. Cement consumption was 27.1Mt in 2017, according to the Daily Star newspaper. However, the country had a production capacity of 50.2Mt/yr in 2017 from around 45 companies of various sizes. Production capacity is expected to grow to 80Mt/yr by 2019.

Masud Khan, the chief executive officer of Crown Cement Group, forecasts that cement consumption will grow by 8 – 10% by 2022. He blamed the local oversupply on an overpopulated market. Other issues the local industry faces include a recent rise in the price of raw materials, port congestion which causes delay in unloading raw materials, a lack of smaller ships, local currency depreciation, low retail price and low load limits on local roads.


Uganda: The Ministry of Trade, Industry and Cooperatives has backed down from allowing bulk imports of cement into the country following price stabilisation. The market faced soaring prices in April 2018, according to the Daily Monitor newspaper. The ministry said that prices have returned to the level they were before the crisis. In April 2018 the government asked cement producers to resolve a local cement shortage. Local companies Hima Cement and Tororo Cement blamed the problem on reduced electricity supplies to their plants.


Peru: Invercem plans buy equipment for a 0.25Mt/yr cement grinding plant in August 2018. The president of the company, Victor de la Torre, will travel to Spain to finalise the deal, according to the Gestión newspaper. Previously the project was scheduled to start in late 2017. Invercem imports cement from HeidelbergCement at Salaverry near Trujillo. It then bags and sells it locally under the Qhuna brand.


UK: Tarmac’s Women in Cement group has held its first networking event with colleagues from across the company’s cement and lime business coming together to discuss key industry challenges and opportunities. The event was attended by team members from the businesses supply chain and logistics, customer service, health and safety and cement plant teams. It included a range of discussion topics and presentations, from personal protective equipment (PPE) and welfare facilities to profiling role models and opportunities to attract more women to pursue careers at Tarmac and in the wider construction industry.

“It has been fantastic to bring together colleagues from across the business to share their experiences and continue our work to collaborate and drive positive change. We’re looking forward to building and broadening activities across Tarmac and continuing to encourage people from all age groups, genders nationalities and ethnicities to be part of the debate and help to define opportunities for development and progress,” said Johanna O’Driscoll, Tarmac’s finance director.

The Women in Cement group is one of a number of diversity and inclusion initiatives across Tarmac. The company has partnered with organisations including the Taylor Bennett Foundation, Skillforce and the Career Transition Partnership, which all focus on supporting people from diverse backgrounds into jobs.


Mozambique: President Filipe Nyusi has inaugurated the 0.25Mt/yr Cimentos de Maiaia plant in Nacala. The US$10m project was a joint venture between Chinese firms and local investors, according to the Mozambique News Agency. Chinese investors provided 85% of the funding. The new plant is the third in the port of Nacala. Cimentos de Maiaia plans to focus on markets in the north of the country.


Nigeria: Ibeto Cement has signed a deal with Milost Global for US$850m. The US-based private equity firm will provide US$500m in equity and US$350m as debt to the cement producer, according to Bloomberg. In a separate development Ibeto Cement has also entered into a reverse merger with Century Petroleum, an oil and gas exploration company.

Ibeto Cement has operated a cement terminal in Port Harcourt since 2005. It is also renovating the former Nigercem plant in Nkalagu. It announced a US$386m contract with China’s Sinoma in late 2015 to build a cement plant in Enugu.


Rwanda: Vincent Munyeshyaka, the Minister of Trade and Industry, says that traders who are charging too much for cement will be fined. He told the New Times newspaper that about 30 traders have been fined for cement price speculation so far. Fines range up to about US$350. The country has faced a shortage of cement since February 2018 when local producer Cimerwa started upgrade work at its Bugarama plant.


Pakistan: Germany’s Loesche has sold four vertical roller mills (VRM) to Bestway Cement through China’s Sinoma International Engineering. The mills will be used to upgrade Bestway Cement’s Farooqia plant in the Punjab province. No expected date of commissioning or value for the order has been disclosed.

The order consists of one raw mill, one coal mill and two clinker mills. One four-roller mill VRM with a capacity of 450t/hr will be used to grind cement raw material to a fineness of 12% with sieving residue of R 90μm. Two further mills with a throughput of 170t/hr will serve for the subsequent grinding of cement clinker to a fineness of 3200 Blaine. One large modular VRM with a capacity of 40t/hr will be used in the grinding of coal to a fineness of 10% and R 90μm sieving residue.


India: Binani Cement's committee of creditors (COC) has accepted a bid by UltraTech Cement. The COC will now submit UltraTech Cement’s plan to the National Company Law Tribunal (NCLT) for approval, according to the Times of India newspaper. However, the Supreme Court is also looking at the case following a petition by rival bidder Dalmia Bharat.

UltraTech Cement made a direct bid of US$1.12bn for the bankrupt Binani Cement following an auction in March 2018 that was originally won by Dalmia Bharat. Dalmia Bharat has disputed UltraTech Cement’s offer and the two companies have conducted legal campaigns to reinforce their respective claims.


Oman: Cyclone Mekunu has forced Raysut Cement to stop production for eight to 10 days. The cement producer said that the storm caused external damage to its plant at Salalah and flooded production buildings and the stockyard.


Brazil: Cemex Latam has signed an agreement to sell its stake in Cimento Vencemos do Amazonas to Votorantim Cimentos for US$30m. Cimento Vencemos do Amazonas operates a river cement terminal in Manaus in Amazonas, according to the La Republica newspaper. The deal is subject to approval by the Brazilian and Colombian competition bodies and the Brazilian waterways transportation agency.


Nigeria: Lafarge Africa’s chairman Mobolaji Balogun says that the company plans to cut its debts by 2020 before continuing with its expansion programme. In an interview with Bloomberg he said that the cement producer wants reduce its leverage ratio to below 70% from over 100% at present.

The subsidiary of LafargeHolcim wants to take advantage of improvements in the Nigerian economy and a recovery in South Africa to grow its profits. Its total debt recently dropped to about US$600m. Lafarge Africa incurred debt to expand the production capacity at its Calabar cement plant and plans to add more production to plants in the southwest and the north of the country.


India: Grasim Industries plans to invest up to US$870m in its cement business by the end of 2021. The subsidiary of Aditya Birla that also operates UltraTech Cement, wants to modernise its existing cement plants, carry out environmental upgrades and increase the production capacity of the units it acquired from Jaiprakash Associates, according to the Mint newspaper.

Aditya Birla Group’s chief financial officer Sushil Agarwal said that the company wants to increase the capacity utilisation rate of the former Jaiprakash Associates cement plants to over 85%, the standard level for the other UltraTech Cement plants. He added that on average cement plants in India have a capacity utilisation rate of 75%.


Qatar: France’s Fives FCB has released more information about its project to build a fifth production line for Qatar National Cement at its Umm Bab plant. The new 5000t/day clinker line was ordered in April 2014 and Fives has been responsible for the supply of a complete production line from raw material preparation to cement despatch. The new line is expected to be commissioned in the first half of 2018.

The line uses natural gas for fuel. Raw material preparation includes a 1000t/hr double impact rotor crusher for limestone, clay or shale, a gamma ray analyser, two limestone storage silos of 30,000t and two shale and clay storage siloes of 10,000t. For raw meal grinding the line will use a 440t/hr FCB B-mill with a diameter of 5.6m, a length of 21.2m and a power of 6600kW. It also has a FCB TSV 7500 Classifier BF.

The 5000t/day kiln consists of a five-stage single string FCB Preheater with low pressure drop cyclones, a FCB Zero-NOx Precalciner with a diameter of 5.2m fitted with a Pillard PRECAFLAM burner, a three piers FCB rotary Kiln with a diameter of 4.8m and length of 76m, a Pillard NOVAFLAM burner for rotary kiln, a clinker grate cooler with an active area of 112m2, an electrostatic precipitator for cooler dedusting, a Pillard ROTAFLAM burner as auxiliary burner and a Pillard HeatGen Systems for hot gas generation. The kiln line also includes Fives TGT UP Filters for the kiln and alkali bypass. The line has a 40,000t clinker storage silo.

Cement grinding comprises two FCB B mills with a capacity of 115t/hr. These have a diameter of 4.6m, a length of 14m and a power of 4200kW respectively. Cement grinding also includes Two Fives SONAIR Filters, two FCB TSV Classifiers and two Fives SONAIR Filters. Cement storage consists of two 20,000t silos.

Finally, cement packing and dispatch includes four truck loading systems with a capacity of 250 - 300t/yr each and one big bag loading station with a capacity of 30t/hr.

The project follows collaboration between Fives and Qatar National Cement on lines two, three and four at Umm Bab.


France/Switzerland: LafargeHolcim plans to close its headquarters in Paris. The decision to move the company’s head office solely to Switzerland follows a cost cutting review at the building materials company. It will also close its corporate office in Zurich. Remaining jobs in Switzerland will be moved to the company’s Holderbank site and a new corporate office in Zug. In Paris, remaining positions will be moved to Clamart. The plan is expected to be completed by the end of 2018. Around 200 jobs will be affected.

“This painful but necessary simplification step is key to creating a leaner, faster and more competitive LafargeHolcim,” said chief executive officer Jan Jenisch. The move follows decisions to close offices in Singapore and Miami.

The decision to close its headquarters in Paris marks a further move away from the ‘merger of equals’ announced when France’s Lafarge merged with Switzerland’s Holcim in 2015. Since the merger LafargeHolcim has underperformed reporting a loss of Euro1.46bn in 2017. Former senior executives from Lafarge have become embroiled in a legal investigation looking at the company’s conduct in Syria. LafargeHolcim’s first chief executive officer Eric Olsen resigned from the company in mid-2017 following fallout from a review into the Syria affair.


Argentina: The National Commission for Protection of Competition (CNDC) has hastened an investigation into alleged collusion and coordinated behaviour in the cement industry. Cement prices increased by 13% in May 2018, according to La Nacion newspaper. So far in 2018 the price of cement has risen by 23% and the cement companies say that further price rises are expected in June 2018.

The local industry has blamed rising input prices of up to 50% due to local currency devaluation but the Argentine Peso has only fallen by 30% so far in 2018. The companies under investigation include Loma Negra, LafargeHolcim, Petroquimica Comodoro Rivadavia and others.


Bolivia: Fábrica Nacional de Cemento (Fancesa) has increased its monthly sales target following local strikes in Chuquisaca. The company estimates that it lost US$6.95m in sales during the unrest, according to the Correo del Sur newspaper. It doesn’t intend to cut the cost of cement in Santa Cruz but it will give away a limited amount of free cement bags. Fancesa also plans to start selling bulk cement through concrete firms in the city.


Venezuela: Production at FMC Venezolana’s Pertigalete plant has dropped to 30% while repair work is being unertaken on its line 6. The production line was orignally shut down in February 2018 for upgrades to its filters, according to the El Tiempo newspaper. However the maintenance work has been delayed while the plant waits for a crane. At present only line 7 is operational at the site.


France: Eqiom plans to spend Euro8m on an upgrade to its kiln at its Lumbres cement plant. The subsidiary of Ireland’s CRH is installing a new clinker cooler on Kiln 5 at the site, according to the Nord Éclair newspaper. In February 2018 Fives FCB said it had won the contract to replace the kiln at the plant. The upgrade is expected to start in December 2018.


Cameroon: Cement exports from Cameroon came to 57,459t in 2017, a 191% rise year-on-year compared to 19,700t in 2016, according to figures released by the Ministry of Economy, Planning and Spatial Planning (MINEPAT). Most of these exports to the countries of the Economic and Monetary Community of Central Africa (CEMAC).

Imports pale in comparison to exports at just 1282t in 2017, mainly coming from China and Turkey. They were, however, up on the 900t imported in 2017.

This increase in exports is explained by the increase in local cement production. Cameroon now has a cement production capacity of 3.7Mt/yr.


Vietnam: At a recent working session with the authorities of Vietnam’s northern province of Ha Nam, Prime Minister Nguyen Xuan Phuc asked the region not to grant an investment license for any new cement plants. He also urged the provincial authorities to take a closer look at environmental protection.

At present, Ha Nam province has 11 rotary kilns making cement that share a combined capacity of 21Mt/yr, including the Xuan Thanh 2, the Vissai Ha Nam, and the Thanh Thang cement plants. The province has the largest production capacity in the country, according to data from the Ministry of Construction.


Vietnam: State-owned Vietnam Cement Industry Corporation (Vicem), the country’s leading cement producer, sold 9.2Mt of cement and clinker in the first four months of 2018, a 6.7% year-on-year rise from the same period in 2017. The corporation’s clinker and cement output also increased by 5% and 1.5% to 6.49Mt and 7.24Mt, respectively. Vicem aims to produce 1.8Mt of clinker and 2.5Mt of cement in May 2018. Its cement and clinker sales are expected to reach 2.7Mt in May 2018.

Vicem sold about 26.6Mt of cement and clinker in 2017, a rise of 3% year-on-year. 23.6Mt was sold locally, a 4% rise, and 3Mt was exported, a fall of 3%.