Global Cement Newsletter

Issue: GCW373 / 03 October 2018

Headlines


Cementos Fortaleza started building its new grinding plant in Merida this week. The 0.25Mt/yr unit is expected to open in July 2019. It marks the first new plant in the country in a while and it will be only the second in the south-eastern state of Yucatan, joining Cemex’s integrated plant. It follows a number of upgrades at existing plants over the last two years, such as various mill orders by Cruz Azul from European suppliers (as part of an upgrade at two of its plants) and Elementia’s upgrade to its Tula plant.

Note that Cementos Fortaleza is a subsidiary of Elementia, the building materials company partly-owned by ‘Mexico’s richest man’ Carlos Slim. The group has steadily been expanding with its purchase of the remaining share in Cementos Fortaleza in 2015, acquiring a controlling stake in Giant Cement in the US in 2016 and a project to build a grinding plant in Costa Rica in early 2018.

The other big news story this week with implications for the cement sector was the arrangement of the US-Mexico-Canada Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA). Although the exact details of the deal are still emerging, the consensus is that the cement industry in Mexico is unlikely to be affected much. The two points that might have implications for the cement industry are changes to rules of origin regulations and tariffs on imports made by low-wage workers. Both clauses are targeted at the automotive sector to protect US industry so it is unlikely that cement will be affected. In addition it is worth remembering that Mexico was the fifth largest exporter of cement and clinker to the US in 2017 after Canada, Greece, China and Turkey. And, all the major Mexican cement producers operate plants in the US, further protecting them from any potential negative consequences of the USMCA.

Graph 1: Mexican cement production, 2009 – 2017. Source: Camara Nacional del Cemento (CANCEM). 

Graph 1: Mexican cement production, 2009 – 2017. Source: Camara Nacional del Cemento (CANCEM).

Back in Mexico, the graph above shows that production has been growing in fits and starts over the last decade. The last growth trend started in 2013 but it stalled in 2017. However, the Camara Nacional del Cemento (CANCEM) was forecasting growth of 2.5% year-on-year for 2018 in April 2018. The last time this column covered Mexico, back in early 2017, we produced a breakdown of the industry by company and production capacity. This is worth looking at for an overview of the production base.

Cemex, the largest local producer, reported Ordinary Portland Cement sales volume growth of 3% year-on-year in the second quarter of 2018 but flat growth for the first half of the year. This growth was supported by good activity in the formal residential sector with support from the industrial and commercial sector. LafargeHolcim released less detailed figures for the first half of 2018 but it attributed its strong performance in Latin America to Mexico. Overall cement sales for the region grew by 12.1% to 12.6Mt, in part due to large infrastructure projects in Mexico, such as the new Mexico City International airport. The third biggest producer, Grupo Cementos de Chihuahua, said that its cement sales volumes rose by 2.5% in the first half of the year, supported by rising prices.

As reported in early 2017, the Mexican cement industry is moving ahead with confidence. A modest amount of production capacity is being built, the steady market growth since 2013 looks set to continue after a minor blip in 2017 and the main producers are all reporting good performance so far in 2018. Finally, the USMCA looks unlikely to trouble Mexican producers much and their diversified holdings will certainly help them if it does. For the moment - bravo!


Malaysia: Cahya Mata Sarawak (CMS) has appointed Abdul Rashid bin Abdul Manaf as it group chairman with effect from 1 October 2018. He succeeds interim group chairman Mahmud Abu Bekir Taib, who returns to the post of deputy group chairman.

Abdul Rashid started his career in 1970 in the Malaysia Judicial and Legal Service and served as magistrate, president, sessions court and Senior Federal Counsel to the Income Tax Department. He left government service in 1997 to pursue his career as a practicing lawyer and subsequently in business. Notably he became one of the principal legal advisers to the Renong Conglomerate, with involvement in various Federal Government transactions.

He has held key positions in local corporations, including chairman of S P Setia, Loh & Loh Corporation, Pohmay Holdings and SMIS Corporation. Abdul Rashid also set up Eco World Development Group, a property development company.


Ireland: CRH has appointed Mary Rhinehart and Siobhan Talbot as non-executive directors. Rhinehart will join with effect from 1 October 2018 and Talbot will join with effect from 1 December 2018.

Rhinehart, aged 60 years, is chairman, chief executive officer (CEO) and president of Johns Manville, a building materials manufacturer. Over nearly 40 years with Johns Manville she has held a wide range of global leadership roles, encompassing responsibility for business management and strategic business development. Prior to being appointed as president and CEO in 2012, she held the role of chief financial officer.

Rhinehart was until recently a non-executive Director of Ply Gem Holdings and is currently a non-executive director of CoBiz Financial. She holds a Bachelor's degree in Finance from the University of Colorado and an MBA degree from the University of Denver.

Talbot, aged 54 years, is Group Managing Director of Glanbia, a global nutrition company with operations in 32 countries, a position she has held since 2013. She has been a member of the Glanbia Board since 2009 and was previously finance director, a role which encompassed responsibility for Glanbia’s strategic planning. Prior to joining Glanbia, she worked with PricewaterhouseCoopers in Dublin and Sydney.

Talbot is a director of the Irish Business Employers Confederation. She is a fellow of Chartered Accountants Ireland and graduated from University College Dublin with a Bachelor of Commerce and Diploma in Professional Accounting.


Trinidad & Tobago: Trinidad Cement has appointed Claudia Emmanuel as a director of the company to fill a casual vacancy. Emmanuel will hold the position until the company’s next annual general meeting, whereupon she will be eligible for re-election.


France: Fives has appointed Denis Mercier in the newly created role of Deputy General Manager. He will start working for Fives on 15 October 2018. Directly reporting to Frédéric Sanchez, chairman of the executive board, he will join the Group’s Executive Committee.

Mercier’s main duties will be supervising all Fives functional departments involved in group transformation: operational performance, human resources, communication, innovation, strategy and marketing, international development and information technology.

Between 2012 and 2015, Mercier was Chief of Staff of the French Air Force. Since 2015, he has been North Atlantic Treaty Organization (NATO) Supreme Allied Commander Transformation, a role that ended in September 2018. Born in 1959, Denis Mercier has received the awards of Grand Officier de la Légion d’honneur and Officier de l’Ordre national du Mérite.


Russia: Eurocement is installing a 24MW captive natural gas power plant at its Kavkazcement plant in Chelyabinsk. The equipment was purchased from Finland’s Wärtsilä for the Euro15.5m project. Construction of the buildings to house the power plant is expected to be completed in November 2018.

The project is a part of an energy efficiency program that Mikhail Skorokhod, the president of Eurocement, signed with Rashid Temrezov, the head of the Karachay-Cherkess Federal Region, as part of the Russian Investment Forum, in 2018.

At present Eurocement has a power generation capacity of 150MW. It has built captive power plants at its Mordovcement, Sengileevskiy, Peterburgcement and Nevyansk cement plants. Upon the completion of the latest program the company is targeting a power capacty of over 400MW.


Russia: HeidelbergCement Russia has held an opening ceremony for a new despatch system at its Slantsev ‘Cesla’ plant in the Leningrad region. Mihail Polendakov, General Director of HeidelbergCement in Russia, Anton Hadjiiski, General Director of the plant, Mikhail Moskvin, Deputy Chairman of the Leningrad Region Government for Construction, and Deputy Prime Minister Leningrad Region - Chairman of the Committee for Economic Development and Investment Activities Dmitry Yalov attended the opening.

Following the upgrade the plant now uses an automated loading system for its trucks. The investment for the project was around Euro13m. The unit has a cement production capacity of 0.8Mt/yr.


France: Hoffmann Green Cement Technologies’ pilot plant at Bournezeau, Vendée is set to start commercial production of low-carbon cement products in January 2019. Construction of the 50,000t/yr unit is due to be completed in October 2018 with its inauguration scheduled for late November 2018, according to Batiactu. The plant will employ 10 workers initially and this will rise to 15 – 20 as production ramps up.

The producer intends to make cement products using metakaolin and blast-furnace slag. If the pilot plant is a success it then intends to raise funds to build a 0.5Mt/yr plant.


Guinea: La Société Guinée Industries (GI) Ciment has doubled the production capacity of its plant at Kagbélen near Dubréka to 1.4Mt/yr. The upgrade is intended to support cement consumption in the country, according to Mosaique Guinee. The work has originally scheduled for completion in July 2018. The capacity boost has increased the unit’s workforce by 17% to 450 direct employees and over 1500 indirect jobs.

Guinée has four cement plants, including grinding plants, operated by Cemenco, a subsidiary of HeidelbergCement, in Conakry and Ciments de l’Afrique (CIMAF) in Dubréka. LafargeHolcim Guinée also runs a unit locally. GI Ciment says it operates the largest plant in the country.


South Africa: Germany’s Haver & Boecker has entered into a joint-venture with Southport-based Portland Packaging. Through the joint venture, the Portland Packaging plant will start producing Haver & Boecker products and equipment alongside its own products, retaining the brands of both companies. The German company says that this is the first time a multinational full line packaging company has manufactured product for Africa, in Africa. It will be the minority partner in the joint venture.

Portland Packaging was founded in 2002 by Barry Buist, a former employee of a Haver & Boecker partner company in South Africa. It sells packaging machinery, parts and service to more than 100 customers across Africa and beyond, primarily in the cement industry.


China: Anhui Conch has signed a cement sale and purchase agreement with Jiangsu Conch Building Materials with a value of up to around US$230m. Subsidiaries of Anhui Conch based in east China will sell a total of 3.5Mt of cement products to Jiangsu Conch, a non-wholly owned subsidiary of Anhui Conch. The contract will last until the end of 2018.

The agreement has been setup for a relatively short time period as a pilot scheme to test the market. The intention is to allow the direct Anhui Conch subsidiaries to focus on production and to enable Jiangsu Conch to concentrate on using its ‘centralised sales advantage.’


Indonesia: China’s Anhui Conch is looking for finance to support a US$105m terminal it wants to build in Palembang. Yu Jun, a project manager at the cement producer said that the project will be able to import and export 0.4Mt/yr and it will have a berth for ships of 3000DWT, according to Inside International Industrials. The company hopes to secure funding by the end of February 2019.


India: High crude oil prices are forcing packaging costs to rise for cement producers. Data sourced from Capitaline shows that Ambuja Cements’ packaging material cost rose by 19% year-on-year in the 2018 financial year, according to the Mint business newspaper. Similarly, Shree Cement’s packaging costs rose by 9%. Both companies use high-density polyethylene bags, which are affected by the cost of oil. Crude oil prices have risen by around 24% to far in 2018 to above US$80/barrel.


Azerbaijan: LafargeHolcim has increased its stake in Holcim Azerbaijan to 76% from 66%. The move followed the decision by the European Bank for Reconstruction and Development (EBRD) to sell its 10% equity stake in the cement producer, according to ABZ News. Remaining shares in company are held by individual shareholders.


Australia: Boral Cement’s proposed 1.3Mt/yr grinding plant at Geelong in Melbourne is expected to be operational by 2020. Construction work on the US$94m unit is planed to start soon, according to the Geelong Advertiser newspaper. The plant will be connected to Lascelles Wharf at the Port of Geelong via a conveyor system.

The cement producer and the port have signed a 25-year agreement supporting the facility. Boral has operated at the port for the last seven years. The new grinding plant is intended to allow Boral to reduce the cost and time of transporting its products from its Waurn Ponds plant. It will also support an anticipated growth in infrastructure demand in Victoria.


Yemen: Saudi Arabia’s Al Jouf Cement says it has completed its first export to Yemen. It transported 9000t of cement. The financial impact of the shipment will be recorded in its financial report for the third quarter of 2018.


Tanzania: Energy minister Medard Kalemani has inaugurated a new natural gas connection project to Dangote Cement’s plant at Mtwara. The project is being implemented to two phases with a new power plant planned that will generate up to 45MW, according to the Tanzanian Guardian newspaper. The upgrade will cost around US$875,000. Phase two of the project will see the construction of a 2.7km pipeline to the cement plant as well as supporting infrastructure. This is expected to be completed by the end of October 2018. Using natural gas is expected to significantly reduce the running costs of making the cement, which has been using diesel generators.


Denmark: Engineering company FLSmidth is working with insulation manufacturer Rockwool and the Technical University of Denmark (DTU) on a research project to develop sustainable process technologies that will increase the use of renewable fuels and raw materials and reduce CO2 emissions. The project has received a Euro2.7m grant from Innovation Fund Denmark.

The project plans to investigate and optimise high-temperature processes throughout the entire production chain in both companies. The DTU holds experience in this field from the CHEC research centre at DTU Chemical Engineering, which has focused on combustion research and emission abatement in recent years. FLSmidth plans to explore using alternative cement formulas and production methods to enable the company to launch more efficient technologies for using renewable fuels and reducing emissions. Rockwool intends to lower CO2 emissions and reduce its fuel consumption to make its production become more sustainable.


China: Lubao Cement has ordered three vertical roller mills from Germany’s Loesche for a new 4500t/day plant that is being built at Bei Liu in Guang Xi. The project is being handled by Sinoma (Suzhou) Construction, part of Sinoma International Engineering and China National Building Material Group (CNBM) in turn.

Loesche is supplying three mills for the project, one each for raw material, coal and clinker/slag. One four-roller mill with a capacity of 450t/hr will be used for grinding cement raw material to a fineness of 12% with a sieving residue of R 80μm. Another mill with a throughput of 200t/hr will be used for the subsequent grinding of cement clinker to a fineness of 3400 - 3600 Blaine. A large three-roller mill with a capacity of 42t/hr will be used for grinding fuel coal to a fineness of 2% and a sieving residue of R 80μm.

No value for the order has been disclosed.


UK: Germany’s Schenck Process has acquired Process Components and its subsidiaries, including Kemutec Group in the US, with its brands Kemutec, Kek-Gardner, Mucon and PPS Air Classifier Mills from EPIC Private Equity. Process Components is a UK-based designer and manufacturer of powder processing and handling equipment, components and spare parts, serving the Chemical, Food, Pharmaceutical and Environmental industries.

The product portfolio of Process Components includes the brands: Kek-Gardner - founded in 1860, recognised for milling and sieving as well as mixing and blending technology; PPS Air Classifier Mills - founded in 1980; Mucon - founded in 1946, known for Iris Valves; and Kemutec - founded in 1980, known for powder processing equipment and systems.

“The acquisition of Process Components with its very well established product lines, a large installed base as well as a great reputation of its brands Kek-Gardner, PPS Air Classifier Mills, Mucon and Kemutec enriches the expertise and capabilities of Schenck Process. We are delighted to add key process steps in the area of mixing, milling and classification for our customers,” said Jay Brown, President Food, Chemicals & Plastics at Schenck Process.

Anthony Goodwin, managing director of Process Components will continue to lead the business following the takeover. No value for the purchase has been disclosed.


Mexico: Cementos Fortaleza has started to build a new 0.25Mt/yr grinding plant at Merida in Yucatan. The project has an investment of US$30m, according to the El Economista newspaper. The plant is scheduled to open in July 2019. It will create 50 direct jobs.


Kenya: The International Finance Corporation (IFC) says it is still considering investing in ARM Cement after it entered administration in late August 2018. IFC Kenya Country Manager Manuel Moses said that the World Bank institution was waiting for the outcome of the administration process to complete to see if a ‘good proposal’ would emerge, according to the Standard newspaper. Moses made the comments while unveiling the IFC’s investments in Sub-Saharan Africa in 2018.

The Kenya cement producer has been placed into admiration for 12 months to attempt to solve its debt problems. The IFC was previously set to take over loans worth US$120m at ARM Cement in July 2018 and was also interested in an equity stake.


Cameroon: Cimencam has assured Ernest Gbwaboubou, the Minister of Mines, Industry and Technological Development, that the first bag of cement will be despatched from the Nomayos grinding plant in the first quarter of 2019. The comments were made during a visit by Gbwaboubou to the unit, according to Business in Cameroon magazine. The minister also noted that the compensation process for residents affected by a power line to the plant had yet to be completed.

The new plant will have a production capacity of 0.5Mt/yr. The project has an investment of around US$40m. The plant will source pozzolans from a quarry at Foumbot.


US: GCCM Holdings has ordered a ship unloader from Siwertell for a terminal in Corpus Christi, Texas. The Siwertell ST 640-M unit will have a continuous rated cement-handling capacity of 1500t/hr and will be able to unload ships of up to 60,000dwt. The unloader is currently being built and will be delivered fully assembled by heavy-lift ship to the port. Siwertell will supervise its commissioning and the unit is expected to start operation in the third quarter of 2019.


Germany: Christian Knell, the president of the German Cement Works Association (VDZ), has warned that meeting climate change goals was leading to ‘considerable’ costs for the cement industry. He said that ‘suitable boundary conditions would have to be created’ for climate change issues and noted that on-going trends in European emissions trading and the ‘rapidly’ increasing price of CO2 were leading to mounting costs. “To be able to realise our efforts in terms of climate protection and at the same time not lose competitiveness, we need research policy-related support for our investment in breakthrough technologies and the corresponding demonstration projects,” said Knell.

Knell made the comments during the opening ceremony of the 8th International VDZ Congress 2018 in Duesseldorf. He identified climate protection and digitalisation as key issues for the future of the industry.


Philippines: The Department of Trade and Industry has notified the World Trade Organisation (WTO) that it is starting a preliminary investigation to examine whether increased imports of cement is causing or threatening to cause serious injury to the local industry. The cement covered by the investigation is classified under AHTN Codes 2523.2990 and 2523.9000, according to the Manila Bulletin newspaper. The investigation will look at 2013 - 2017. The ministry has cited the Safeguards Measures Act as part of its probe.


Central America: Denmark’s FLSmidth says it is moving ahead with two contracts for cement plants worth over Euro250m following the receipt of the agreed downpayment. One contract is for a new cement plant and the other is for an extension to an existing plant.

The cement plant engineering company has not released many details on the projects. However, both plans will be located in Central America and will supply cement mainly to their local markets. The expected commissioning is within 24 to 36 months and once operational, the cement plants will have a capacity of 2000t/day and 3500t/day respectively.