Global Cement Newsletter

Issue: GCW385 / 02 January 2019

Headlines


Making predictions is a mug’s game. Mug, if you don’t know already, is British slang for a fool. Although you can also drink tea or coffee out of a mug. Newspapers and magazines love predictions at this time of year and Global Cement is no exception. But before we give you our predictions, let’s see how a real expert got on 36 years ago. The science fiction author Isaac Asimov, of Three Laws of Robotics fame, had a go in 1983 when he was asked by the Toronto Star newspaper to try and guess the state of the world in 2019. You can read his original article here.

First up for a construction audience is where the great writer of fiction set in space gets it wrong: space. Asimov thought we’d be on the moon ‘in force’ by 2019, building a mining station to process minerals to make materials such as a concrete, metals, ceramics and glass. Other projects would include satellite solar farms in low earth orbit, observatories, factories and serious planning towards an off-earth settlement. ‘Mooncrete’ or ‘lunarcrete’ is definitely a theoretical thing that has received academic thought since the mid-1980s. We’re guessing that CO2 emissions for cement and concrete would be less of a problem on the moon! Observatories and probes like the Hubble Space Telescope satellite have enriched astronomy. Factories and extra-terrestrial settlements appear another 36 years away.

As for the rest of the predictions, Asimov starts off with an immediate misstep for us smug citizens of 2019 with a riff on a potential nuclear confrontation between the US and the Soviet Union invalidating everything else he was about to say. Past this opening fumble though he’s not bad. He immediately identifies computers as the source of coming change on the scale of the industrial revolution as they enable some human jobs to be replaced and change the nature of others. Next up he identifies pollution and overpopulation as concerns for society before heading on to the importance of trans-national organisations to tackle these issues. He’s generally on trend although there are plenty of holes. For example, he doesn’t foresee networking effects such as a social media and the political implications of enhanced connectivity.

So, having seen how well a noted science fiction author got on, our first forecast is not to trust our predictions. However, if you really want to hear our thoughts, read on.

Chinese cement companies continue to build plants overseas
The background to this is that Song Zhiping, the former chairman of China National Building Material (CNBM) said in late 2017 that the company was planning to build 100 new plants in 50 countries by 2021. Lots of Chinese companies are backing projects in Central Asia and Africa. Many of these are joint ventures. The question arises as to what will happen if local investors default on their loan repayments…

Indian market heats up
Many of the major cement producers are betting on India in 2019 to hold their finances together. The Cement Manufacturers Association of India has forecast growth of 10% in the 2019 financial year to the end of March 2019, the fastest growth in the sector since it slowed down in 2011. A pledge by Prime Minister Narendra Modi to cut the Goods and Services Tax (GST) on cement to 18% from 28% can only help the market.

A tale of two Africas
By the demographics, investing in Africa should be a no-brainer for cement companies as countries develop. However, northern Africa is rapidly turning into an export market as capacity outstrips local demand. Sub-Saharan Africa is decidedly mixed as the coastal regions potentially get swamped by foreign clinker imports and capacity investments further inland can be risky. The current political instability in the Democratic Republic of Congo is one example of this. Another, the collapse of Kenya’s ARM Cement in mid-2018 offers a warning to investors of what can happen when things go wrong. Producers like Ngieria’s Dangote Cement are waiting in the wings to snap up a bargain. Expect more of the same in 2019.

Acquisitions to continue in Brazil
After years of poor performance the acquisitions and divestments in the cement industry finally started in Brazil in 2018. A new ‘pro-business’ president and a growing economy suggests that this trend should continue in 2019.

European cement producers test how fast legislators are prepared to meet climate commitments
European cement associations were warning in 2018 that the local industry faces issues balancing competiveness versus tightening climate legislation. In October 2018 three plants – two in Spain and one in Sweden – were targeted for closure proving that the associations were not kidding. More difficult choices are likely to follow in 2019.

If any readers have their own industry forecasts for 2019 let us know by emailing editorial@propubs.com. If we get enough we’ll run a recap at the end of the year to let everyone know how they got on.

Happy New Year from Global Cement!


Saudi Arabia: Saudi Cement Company has appointed Khalid bin Abdulrahman Al-Rajhi as the chairman of the board, Mohammed bin Abdulkarim Al-Khuraiji as Vice-President of the board and Mohammed bin Ali Al-Qarni as secretary of the council.


US: Randall P Breaux has been appointed as the president of Motion Industries. He was most recently Executive Vice President of Marketing, Distribution, and Purchasing for Motion Industries, and has nearly four decades of experience in the industrial manufacturing and distribution markets.

Breaux joined Motion Industries in mid-2011 following 21 years with ABB/Baldor Electric Company, a manufacturer of industrial electric motors, drives and mechanical power transmission components, based in Fort Smith, Arkansas. He joined Baldor in 1989, and held various sales and marketing positions in the company. Just prior to joining Motion, Baldor was acquired by ABB. At that time, he was promoted to Vice President of Integration by ABB and was tasked with bringing the Baldor and ABB electric motor businesses together in North America. He served as Baldor's Vice President of Marketing from 2001 - 2011, played a key role in Baldor's acquisition of Dodge and Reliance Electric from Rockwell Automation in 2007, and served as an officer of the company for over 11 years.


Japan: Taiheiyo Cement says it has started the country’s first carbon capture and storage (CCS) test at its Fujiwara plant in Inabe, in conjunction with the Ministry of Environment. It is testing a chemical absorption method on kiln exhaust gases at the plant. Further installations on the project will continue during January 2019.


Bangladesh: Saudi Arabia’s Southern Province Cement has signed a deal with Peakward Enterprises in Hong Kong to export 1.5Mt of clinker to Bangladesh. The first shipment was scheduled to start on 31 December 2018 and they will run until the end of June 2020. No value for the contract has been disclosed.


India: Shree Cement has commissioned its 3Mt/yr integrated plant at Kodla, Kalaburagi in Karnataka state. The cement mill and the clinker line at the line were commissioned at the same time in late December 2018.


Namibia: China’s Tianjin Cement Industry Design & Research Institute (TDI) has successfully ignited the kiln on a new 1.2Mt/yr production line at Whale Rock Cement’s plant near Otjiwarongo. The Chinese equipment supplier says that the line was started on 25 December 2018, 58 days ahead of the contracted start date. The project officially began in late 2017. The US$350m plant was originally scheduled to be commissioned in late October 2018, according to local media.


Nigeria: The Cement Company of Northern Nigeria (CCNN) says it has received formal approval from the Securities Exchange Commission and the Federal High Court for its merger with Kalambaina Cement. It added that the scheme of the merger was effective from 24 December 2018. New CCNN shares have been issued to and allotted to Kalambaina Cement’s shareholders at an agreed ratio.


Russia: South Ural Mining and Processing Company has purchased a 77% stake in Gornozavodsktsement in Perm region. It intends to buy the rest of the company at a later date, according to the Kommersant newspaper. The acquisition was supported by Gazprombank.


Belarus: The Architecture and Construction Ministry has supported the country’s use of a commodity exchange to sell cement. Deputy Architecture and Construction Minister Alexander Sidorov said that his ministry was prepared to support an increase in supply to the exchange if demand allowed, according to the Belarusian Telegraph Agency (BelTA). It was previously announced that the country was planning to make 0.2Mt/yr of 10% of the country’s cement exports available to purchase via the Belarusian Universal Commodity Exchange (BUCE) from the start of 2019.


Chile: Colbún has signed a deal with Grupo Polpaico to supply the cement producer with 183GWhr/yr of renewable energy for a 10 year period. Cementos Polpaico will start using renewable energy at its Cerro Blanco integrated plant and its Coronel cement grinding plant in 2019 to allow energy efficiency upgrades to be implemented. Other plants in the group’s portfolio will start using the renewable energy supply by 2022.


Germany: The RKW Group came second in a study into ‘Germany's Most Sought-After Employer 2018’ by the FAZ Institute and the IMWF Institute for Management and Economic Research. The institutes looked at the 5000 largest companies in the country and scored them by quality, performance, success, sustainability, corporate culture and values.

The RKW Group is a family-owned company headquartered in Frankenthal, Germany and a manufacturer of film solutions for hygiene, agricultural and beverage sectors. It also produces packaging for powdery goods. In addition, the company makes films and nonwovens for medical applications, for the chemical and converting industries as well as for the construction sector.


UAE: Fives Group’s Mineral Business Line has set up a new subsidiary in the Middle East to support customers with services and technical assistance. Based in Dubai and referring to the Services Department, the new division aims to support Fives' customers through a local presence and by offering its services including upgrade and revamping projects, technical assistance, supply of spare parts, on-site machining and so on.


Nigeria: Ashaka Cement has spent over US$4m on community projects in Gombe state since 2010. The funding has been invested in social initiatives near its Ashaka cement plant and Maiganga coal mine, according to the Daily Independent newspaper. Its projects include training young people in vocational trades and engineering. It also distributed 5000 safety vests to schoolchildren at a community day.


Bolivia: A group of retired workers who used to work for Sociedad Boliviana de Cemento (Soboce) have asked for a 10% share in the cement producer. They have made their request to the company’s largest shareholder, the businessman and politician Samuel Doria Medina, according to the La Razon newspaper. They were allocated a 10% share in the business in 1975. However, the pensioners allege that Doria Medina cancelled their shares using false documentation. Doria Medina holds a 49% share in the company. He sold the other 51% share for US$300m to Holding Cementero, the largest shareholder of Consorcio Cementero del Sur, which is part of Gloria Group in 2014.


Lithuania: The Bega cement terminal has won a ‘Product of Lithuania’ award from the government. Minister of Economy Virginijus Sinkevičius and the President of the Lithuanian Confederation of Industrialists (LPK) Robert Dargis presented a medal to Laimonas Rimkus, the general manager of Bega, according to the Vakarų Ekspresas newspaper. The joint venture with local cement producer Akmenes Cementas was commissioned in early 2018. The terminal plans to increase its exports of cement to 0.35Mt/yr by 2020.


Barbados: The Caribbean Court Of Justice has ruled in favour of Trinidad Cement on maintaining a 60% tariff on imports of cement. The subsidiary of Mexico’s Cemex and its own subsidiary Arawak Cement complained that import company Rock Hard Cement was only being taxed by 5%, according to the Nation News newspaper. However, the case will continue as the ruling only refers to hydraulic cement. It is unclear what classification of cement that Rock Hard Cement is importing.


India: Emami Cement has been granted permission by the National Company Law Tribunal (NCLT) to demerge its solar power assets. The cement producer has decided to focus on its core business, according to the Daily News and Analysis newspaper. The solar business part of the cement producer operates a 10MW plant at Gujarat Solar Park in Patan, Gujarat and a 3MW plant at Perunali in Tamil Nadu. The subsidiary of Emami Group will eventually be consolidated into sister company Emami Power.


Bolivia: The Potosí cement plant being built by Empresa Publica Productiva Cementos de Bolivia (ECEBOL) hopes to produce its first cement bag by December 2019. Work on the plant is over half-complete, according to the El Potosí newspaper. Construction work on the main platform of the preheater tower is continuing and civil engineering work on the mill has been completed. Most of the equipment for the project has been supplied. The plant is being built by Sociedad Accidental Imasa Polysius, a joint venture created by Polysius and Imasa. The US$240m unit will have a production capacity of 1.3Mt/yr when finished.


Spain: Cementos Portland Valderrivas’ (CPV) Alcalá de Guadaíra plant has awarded first place in its children’s painting competition to Eva María Gómez, a student at the nearby CEIP Ángeles Martín Mateo primary school. The student depicted the daily work conducted at the plant in vibrant colours. Second place went to Lucía López from the same school. Special mention was also made to Ainhoa Manzano. The competition was run with the Andalusian Foundation for Cement and Environment (FLACEMA).


US: Aggregate Industries, a US subsidiary of LafargeHolcim, has secured the contract to provide concrete for the US$2bn Minneapolis-area Southwest Light Rail Transit (LRT) extension of the Metro Green Line. The new line will run 14.5 miles from downtown Minneapolis to the suburb of Eden Prairie, Minnesota, and require construction of 16 new stations, plus the rail infrastructure itself. The project will require an estimated 0.30Mm3 of ready-mix concrete. It includes the construction of 44 structures, 29 new bridges, two cut and cover tunnels, six pedestrian tunnels, 15 at-grade crossings, 110 retaining walls and over 45,000m of track.


Philippines: The Philippine Cement Importers Association (PCIA) has warned of a slowdown in the construction sector due to an investigation in tariffs started by the Department of Trade and Industry (DTI) in September 2018. The association says that several importers are ‘wary’ and have stopped imports, according to Philippine Daily Inquirer newspaper. Napoleon Co, president of the PCIA, said that although local cement producers have started building new plants it will take three or four years for these to start production. In the meantime, he argued, importers are required to meet market demand. He added that import tariffs on cement would also add costs to end consumers.


India: Germany’s Gebr. Pfeiffer has hosted a customer event for the Indian cement industry at Gurugram near New Delhi. The two-day event in late November 2018 consisted of specialist talks on mineral processing. The equipment producer covered 3D system design, optimising grinding processes, after sales service strategies and other industrial sectors that intersect with the cement industry.


US: Grupo Cementos de Chihuahua (GCC) says that the upgrade to its Rapid City cement plant in South Dakota has started operation. The expansion has added 0.44Mt/yr of production capacity to the unit taking its total capacity to 1.18Mt/yr. The project cost US$105m and it started in 2016. Tie-in of the upgrade was finished in late November 2018. Production was suspended during the tie-in-process and has now resumed. The new facilities are now being stabilised.

“The Rapid City expansion comes at an opportune time, as our US cement plants are running nearly at full capacity, and we expect to see continued, steady growth in demand across our market area. We will be able to serve our customers better and operate our cement logistics network more efficiently with the additional capacity,” said Enrique Escalante, GCC’s chief executive officer (CEO).

GCC has 5.8Mt/yr of cement production capacity. Of this, 3.5Mt/yr is in the US, with plants in Pueblo in Colorado, Odessa in Texas, Tijeras in New Mexico, Trident in Montana and Rapid City in South Dakota. GCC expects to ramp up the new production capacity at Rapid City gradually over the next 18 to 24 months, in accordance with market conditions.

GCC’s cement production capacity in Mexico is 2.3Mt/yr from plants in Chihuahua, Juarez and Samalayuca in Chihuahua state. In the third quarter of 2018, GCC reactivated two idled kilns in Chihuahua to increase production of both oil well cement and construction cement.


US: France’s Fives Group has released detail about a project to upgrade the cement mill workshop at Giant Cement’s Harleyville plant in South Carolina. The contracts included the complete engineering, supply, fabrication, transport, installation and commissioning services for material handling, cement grinding and cement loading. New equipment included a clinker and additives transport circuit with a dedusting system, a classifying circuit with a FCB TSV Classifier, a new Fives TGT Filter, all gas and material connections as well as the ball mill internals revamping, a cement truck bulk loading area and a weighing station.

Engineering, offshore supplies and project management were handled by Fives FCB. Onshore supplies and all site works including civil and structural works, mechanical and electrical installations were covered by Fives Solios. Major milestones of the project included starting civil works in November 2017. Mechanical and electrical erection work ran from February to July 2018. First cement production was on 29 June 2018.


Uzbekistan: Uzbek-Chinese joint venture Titan Cement (unrelated to the Greek group of the same name) has commissioned a 0.2Mt/yr plant in the Korauzyak District of the Republic of Karakalpakstan. The project had an investment of nearly US$40m, according to the Uzbekistan Daily newspaper. The funding was comprised of US$19m in direct investment from the joint venture, US$17m from loans and US$2m in foreign investment. This plant was originally reported as having started operation in mid-2016.


Bangladesh: Saudi Arabian company Engineering Dimensions has signed a partnership agreement with Bangladesh Chemical Industries Corporation (BCIC) to build a cement plant at Chhatak in Sunamgan. BCIC Chairman Shah M Aminul Haque and Engineering Dimensions President Mohammed N Hijji signed the deal, according to the Financial Express newspaper. Representatives of the Ministry of Industries and the Saudi Arabian embassy also attended the ceremony.


China: Russia’s Mechel says it has prolonged a coal supply contract with Jidong Cement until the end of 2019. The mining and steel company will supply 2Mt/yr of thermal coal mined at the company’s Elga and Yakutugol mines in South Yakutia. Monthly supplies will vary from 100,000 to 150,000t of coal products. Prices will be adjusted on a monthly basis following negotiations and on the basis of index rates.

“This is a third major contract signed by Mechel and Jidong Cement. I am sure that our ties will continue to develop in a constructive manner in the future. It is also important to note that Jidong Cement is a key customer of Elga’s thermal coal in Asia. In 2017 we supplied our Chinese partners with 1.9Mt and another 1.4Mt in 2018. In 2019 we plan to export thermal coal from Elga in comparable volumes,” said Mechel Mining Management’s chief executive officer (CEO) Pavel Shtark.


India: Prime Minister Narendra Modi says he wants to reduce the rate of the Goods and Services Tax (GST) on regular items, including cement, to 18% from 28%. A proposal to reduce the rate will be considered by the GST Council in late December 2018, according to the Economic Times. Luxury items are likely to remain in the higher tax bracket.


Pakistan: Two contract workers at Lucky Cement’s plant in Pezu, Khyber-Pakhtunkhwa province have been killed in a gun attacked on a bus. A third worker was wounded in the incident, according to the Dawn newspaper. Local police are searching for the killers.


US: Claudius Peters has been awarded the ‘Innovator of the Year’ award in the Design & Manufacturing category at the Autodesk University (AU) Las Vegas in November 2018. It was given due to changes Claudius Peters made to its engineering and business processes, which led in turn to a ’generative design’ approach to some of its largest manufactured components, including its clinker cooler product. The equipment manufacturer has adopted an agile project management system similar to that used in computer software development. It has removed traditional departmental barriers between engineering and manufacturing teams and replaced them with ‘scrum’ teams of 5 to 9 persons.

“Our project team included young people who embraced this new concept and understood that the electric light didn’t come from the continuous improvement of candles. It needed a complete change. That’s how we came to try generative design. By inputting the project parameters, computers can do the heavy lifting, freeing up our engineers to innovate,” said Thomas Nagel, Chief Digital Officer at Claudius Peters.