Global Cement Newsletter

Issue: GCW393 / 27 February 2019

Headlines


The UAE is having a moment. Over the last week Fujairah Natural Resources, a new entrant to cement, said it is going to build a clinker plant at Habbab in Fujairah. It’s also looking likely that Raysut Cement might buy UAE-based Fujairah Cement Company’s shares in Sohar Cement in Oman. Then, Ras Al Khaimah (RAK) Cement announced that it had purchased the Newtech cement plant. What’s happening here?

The last couple of years have been tough ones for Emirati cement producers, which have been fighting falling sales and beleaguered profits. The largest producer, Arkan Building Materials - a group majority controlled by the Abu Dhabi government, reported flat sales growth for the first nine months of 2018. It blamed this on falling sales of clinker due to imports from Iran and a tough pricing environment. Its profits were hit by rising clinker production costs due to its reliance on imported limestone from Oman whilst it resolves problems with its own local quarry. Arkan had closed its Emirates Cement plant in Al Ain following revenue and profit falls in 2016. This story thread reached its end earlier in February 2019 when Arkan sold the closed plant for around US$14m. National Cement reported a similar experience in its nine months results, with growing revenue but sales sapped by mounting costs.

Data from Riyad Capital in early-2018 suggested that the UAE only consumes about half of its own cement production. The rest is exported to the Middle East and North African region, particularly Oman and Egypt, and African countries. The country has 14 integrated cement plants with a production capacity of 31.4Mt/yr and eight grinding plants with a capacity of 10.4Mt/yr. These are owned by a mixture of local companies and multinationals.

The European producers still have a presence through LafargeHolcim’s Lafarge Emirates plant in Fujairah and a grinding plant run by Cemex. Although how long LafargeHolcim will remain seems uncertain given a report by Bloomberg earlier in February 2019 suggesting that the group is seriously looking at exiting the Middle East and Africa. Oman’s Raysut Cement holds a plant too via its Pioneer Cement subsidiary but the majority of the foreign-owned plants are Indian. Their presence has been steadily growing.

Aditya Birla/UltraTech Cement, JK Cement and Shree Cement all run plants in the UAE and JSW Cement said in mid-2018 that it was going to build a 1Mt/yr integrated plant in Fujairah. UltraTech Cement renamed its grinding plant UltraTech Nathdwara Cement in December 2018. This plant was formerly a Binani Cement plant and part of the rancorous bidding war between UltraTech Cement and Dalmia Bharat.

The background to all of this has been a country that is very willing to spend big on infrastructure projects when the need arises. Forbes reckoned, for example, that the UAE had awarded US$20.7bn on infrastructure projects in 2018 in the first nine months of 2018. Impending projects like the Expo 2020 are still generating construction activity and longer ones like Dubai Metro are in progress. However, the country is in a dynamic place geographically between the two-major economic and cement-producing powerhouses of Saudi Arabia and Iran. For the cement industry this explains the prominence of the grinding sector and the growing interest from Indian companies looking to expand overseas. For the new project and acquisition this week it’s looking more like local variation in the market at this stage. In this context though the fourth quarter results from local producers will make interesting reading to see if anything bigger is going on.


Australia: Boral has made a number of changes to its senior executive team that will take effect from 1 March 2019. Joe Goss, currently Chief Executive Boral Australia, moves to a senior advisory role reporting to Boral’s chief executive officer (CEO) and managing director, Mike Kane.

Wayne Manners, currently Executive General Manager, Western Australia, Building Products & Major Projects, will become President and CEO Boral Australia.

Ross Harper, currently Executive General Manager Cement will become Group President Operations, responsible for Boral Australia and Boral North America as well as Group HS&E. Ross will be working closely with Wayne Manners and David Mariner (President & CEO Boral North America) in this new role.

Ros Ng, currently Chief Financial Officer (CFO) and Chair of USG Boral will have an expanded role as Group President Ventures and CFO, which includes Group Strategy and M&A and broader responsibility for the USG Boral and Meridian Brick joint ventures. Ros will work closely with Frederic de Rougemont (CEO USG Boral) and Chris Fenwick (CEO Meridian Brick) to deliver the strategy and results of the joint ventures.

In addition to these changes, Greg Price, currently Executive General Manager, New South Wales, for Boral Australia will take on an expanded role, including responsibility for Boral’s Project Management Office, which manages major projects.


US: Plibrico has appointed Roger Smith as its Technical Manager. He will be responsible for development of refractory formulas and providing technical guidance to the company’s partners and customers. Smith will report to Plibrico’s Vice President of Engineering, Dan Szynal.

Smith holds 15 years of experience in the processing, characterisation and testing of traditional and advanced ceramics. Prior to Plibrico, his previous positions include RHI Magnesita and Bucher Emhart Glass, where he was a ceramist for almost 10 years. As a ceramist, Smith conducted technical customer visits to address performance concerns, developed and commercialised new refractory material.

Smith is a member of the America Ceramic Society, serving as chairman of the St Louis, Missouri section from 2014 - 2016. He also was a member of the ASTM Committee C08 on refractories from 2010 - 2017. Smith holds a Master’s degree in Ceramic Engineering from the University of Missouri-Rolla.


Philippines: Department of Trade and Industry (DTI) Undersecretary Ruth Castelo says that the government is considering implementing a suggested retail price (SRP) on cement. However, cement companies have previously resisted sharing information with the government to help it devise a SRP, according to the Philippine Daily Inquirer. The DTI is considering publishing a SRP for cement due to consumer concerns about prices rises following newly introduced tariffs on imports. To do so it will need cement producer costs for labour, raw materials, fuels and logistics.


Pakistan: A slowdown in construction activity has reduced Cherat Cement’s sales. Its local cement sales volumes fell by 12% year-on-year to 0.90Mt in the half-year to 31 December 2018 from 1.03Mt in the same period in 2017. Its exports declined by 23% to 0.18Mt from 0.23Mt. The cement producer’s net turnover decreased by 7% to US$50.3m from US$54.3m. Its net profit fell by 24% to US$7.35m from US$9.65m. The cement producer noted that the price of coal had risen.

Cherat Cement said that it had commissioned a third line at its integrated plant during the reporting period. The new line has a clinker production capacity of 6700t/day and it includes a waste heat recovery unit. Following the upgrade, Cherat Cement’s plant has a production capacity of 4.5Mt/yr. The company also installed Wartsila dual fuel engines. These generators have been ordered in anticipation of the completion of new gas pipeline to the plant.


Pakistan: Rising coal prices have reduced the profit at Fecto Cement in the half-year to 31 December 2018. Its profit after tax nearly halved to US$0.75m from US$1.63m. Its net turnover rose slightly to US$17.8m. Local cement sales volumes dropped by 9% to 0.32Mt from 0.35Mt and exports declined by 33% to 29,500t from 44,300t.


Kenya: The East Africa Portland Cement Company (EAPCC) made a loss of US$12m in the half-year to 31 December 2018 compared to a loss of US$9.7m in the same period in 2017. It blamed the loss on a ‘difficult’ market and production issues, according to the Standard newspaper.


Malaysia: Cahya Mata Sarawak’s (CMS) sales from its cement division rose by 7% year-on-year to US$137m in 2019 from US$128m in 2017. Its operating profit fell by 11% to US$22.2m from US$24.9m. CMS attributed the drop in profit on repair costs from maintenance to its integrated plant at Kuching. Rising international clinker prices were also blamed.


Saudi Arabia: Saudi Cement Company’s revenue fell by 5.5% year-on-year to US$299m in 2018 from US$316m in 2017. Its net profit decreased by 11.7% to US$107m from US$121m. It blamed the loss of profit on poor domestic sales, rising selling and marketing costs and an increase in Islamic finance costs.


Turkey: Akçansa’s sales revenue grew by 13% year-on-year to Euro285m in 2018 from Euro252m in 2017. Its net profit increased by 21% to Euro29.8m from Euro24.7m. The joint venture between Sabancı Holding and Germany’s HeidelbergCement attributed its sales growth to continued efforts to protect its domestic market against competition and its growth overseas. Umut Zenar, Akçansa General Manager, said that the company started exporting products from Ambarlı Port in 2018. The cement producer aims to double its exports during 2019.


Uzbekistan: Akhangarancement, part of Russia’s Eurocement, has installed a new Wikov gearbox on the rotary kiln at its plant in Akhangaransky as part of a US$1.5m upgrade project. Other work included upgrades to the clinker conveyors, the sludge line, the cooler, the heat exchanger and other equipment. A new production line is currently being built at the 2Mt/yr plant. It is scheduled for commissioning in 2020.


Bolivia: Sacyr Industrial and Imasa Ingenieria y Proyectos have awarded a contract to Claudius Peters for a packing and palletising system for the Potosí cement plant. The scope of delivery consists of a 12 spout Pacpal Roto Fill with a capacity of 3600bags/hr, an automatic bag applicator with cassette magazine as well as a palletizing system Pacpal Palletiser 5000. The palletiser is designed for 50kg bags and suitable for a five-bag layer type on slip sheets. The plant is operated by the state-run cement producer Empresa Publica Productiva Cementos de Bolivia (ECEBOL). No value for the order has been disclosed.


Bolivia: The Lower House of the Plurinational Legislative Assembly has approved a bill allowing state-owned cement producer Empresa Publica Productiva Cementos de Bolivia (ECEBOL) to buy land at Chiutara in Potosi to build a future plant. ECEBOL will buy 39.8 hectares for a project with an investment of around US$240m, according to the El Potosi newspaper. The new plant will have a production capacity of 1.3Mt/yr.


Australia: Boral Australia’s revenue grew slightly to US$1.31bn in its half year to 31 December 2018. This was supported by growing revenues from its cement, quarry and asphalt businesses. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 8% year-on-year to US$194m from US$210m. This was blamed on lower concrete sales volumes and rising fuel costs.

“Boral’s half year results reflect strong underlying businesses, which were impacted by adverse weather, particularly in North America, as well as project-related volume delays in Australia. We expect to deliver growth in the second half,” said chief executive officer (CEO) and managing director Mike Kane. Overall, the group’s revenue rose but its EBITDA fell.


India: FCI Aravali Gypsum and Minerals India plans to start operations at its new 0.3Mt/yr white cement plant to be built at Nohra Dhar, Sirmour district in Himachal Pradesh by 2022. A memorandum of understanding has been signed between Aravali and the state government, according to the Press Trust of India. The project has an investment of US$85m and it is expected to create 150 jobs. Aravali operates 15 gypsum mines in Rajasthan.


Vietnam: The Ministry of Construction says that demand for cement and clinker is expected to increase slightly to up to 99Mt in 2019. This will consist of 70Mt locally and 29Mt of exports, according to the Vietnam News Agency. Demand grew by 19% year-on-year to 96.7Mt in 2018, with growth driven by a 55% rise in exports to 31.6Mt. It shipped 9.8Mt to China in 2018. The main export markets in 2019 are expected to be the Philippines, Bangladesh, China, Taiwan and Peru.


The Gambia: Sherif Faye, the operations manager of Jah Oil, says that the company has enough cement to supply The Gambia. He made the comment at a press event held in response to public outcry over a local cement shortage, according to the Point newspaper. The company has experienced delays to its inbound shipments due to poor weather in Europe. However, he confirmed that two ships carrying cement had recently arrived in the country.

The subsidiary of Jah Group sells its Tiger Cement 42.5 grade brand product in 50kg bags. The cement is imported from Spain and Algeria and bagged locally. Jah Oil has a bagging capacity of 108,000 bags/day.


Ghana: Ghacem has linked its Kumasi terminal to the Data One server, a logistics product, to centralise sales and ordering processing. It follows requests by distributors following a survey, according to the Ghanaian Times newspaper. Sales and orders at the terminal will now use a similar system to that at the company’s plants at Tema and Takoradi. Plans are now being prepared to link the company’s other terminals – at Tamale, Buipe, Techiman and Dwenase – to the system.


South Africa: The Concrete Institute says that the International Trade Administration Commission (ITAC) should impose a temporary ban on cement imports to protect the local industry. The institute is preparing an application to the commission, according to the Business Daily newspaper. Bryan Perrie, its managing director, said that imports from Pakistan dropped in 2016 after tariffs were introduced. However, this has been replaced by imports from China and Vietnam. He added that prices have dropped ‘drastically,’ especially in coastal areas, that this is starting to effect jobs and cement producers are delaying expansion plans. The Concrete Institute represents PPC, AfriSam, Lafarge Africa, Sephaku and Natal Portland Cement.


UAE: Ras Al Khaimah (RAK) Cement has purchased the Newtech cement plant and the Al Banna quarry from Mohammed Ali Omar Saleh Al Buraiki for around US$123m. RAK Cement operates an integrated plant at Ras Al Khaimah.


Oman: Raysut Cement has signed a letter of intent with the shareholders of Sohar Cement to buy all of its shares. The terms of the acquisition are being discussed, according to the Oman Daily Observer newspaper. Sohar Cement runs a 240t/hr grinding plant at the Suhar Industrial Estate. Sohar Cement holds a 70% stake in the business, with UAE-based Fujairah Cement Company owning the remaining share.


Russia: Eurocement is spending around Euro5m on upgrades to its Maltsovsky plant as part of its winter repair schedule. The unit is planning to increase its production output and modernise three of its four kilns. Work is also planned for raw and cement grinding mills. The plant has a cement production capacity of 4.7Mt/yr.


France: LafargeHolcim has been awarded contracts worth Euro110m as part of the Euro38.5bn Grand Paris Express (GPE) project. The GPE will improve transport infrastructure in Paris in preparation for the 2024 Olympic Games. It will require around 200km of new railway line and 68 new stations.

LafargeHolcim will deliver 600,000t of aggregates and 260,000t of cement to produce 650,000m3 of ready-mix concrete. To support the project’s schedule, the company has added mobile ready-mix concrete plants to its existing Parisian ready-mix concrete network, enabling an average production of 300m3/hr for the GPE. It will remove and treat at least 3Mt of earth from the construction site, then use the excavated material to re-landscape its nearby quarries. For the transportation of both aggregates coming from nearby quarries situated in the Seine valley and the excavated earth, LafargeHolcim will use barges on the River Seine. The company aims to work on the GPE over the next 15 years.

“We are proud to be a key partner on this historic project. With this partnership we are demonstrating our leadership in the building materials industry, making a lasting contribution to improving the transport experience of the people living and working in the Paris area. The project once more shows our capacity and reliability in delivering a large amount of high-quality concrete and our ability to provide efficient logistics and supply solutions,” said chief executive officer (CEO) Jan Jenisch.


Morocco: HeidelbergCement has sold a 7.8% share of its stake in Ciments du Maroc to an unnamed local investor for around Euro140m. Following the transaction the German building materials producer retains a controlling share of 54.6% in its subsidiary. It has reduced its stake in Ciments du Maroc as part of its action plan to optimise its portfolio and improve cash generation. The group has a target of Euro1.5bn of asset divestments by the end of 2020.

“HeidelbergCement is fully committed to remain the long-term majority shareholder of Ciments du Maroc, a key strategic asset within the group’s portfolio,” said Bernd Scheifele, chairman of the managing board of HeidelbergCement.


Angola: Nova Cimangola says that it is not being nationalised by the government. It has made the statement in response to local media reports that a state-led takeover is being considered as part of decree by President João Lourenço, according to the Jornal de Negócios newspaper. The cement company asserted that it is a private company with no public funding and that its financial, contractual and legal states are all in order. The company operates a 2.4Mt/yr integrated plant in Luanda.


Armenia: Tigran Khachatryan, the Minister of Economic Development and Investments, plans to implement tariffs on imported cement to protect local producers. A rate of around US$45/t will be imposed, according to the Arkan News Agency. In a cabinet session Khachatryan said that imports of cement had increased three times in the last year due to a ‘significant’ fall in the price of electricity in neighbouring countries and state subsidies to cement plants. He added that, subsequently, two local cement plants, with a combined production capacity of 2Mt/yr, were unable to sell even a third of their products.


India: The Cement Manufacturers' Association (CMA) of India has signed a four-year wage settlement agreement with federations of major central trade unions, giving a raise of around US$70/month and other benefits. The agreement was signed with Indian National Trade Union Congress (INTUC), All India Trade Union Congress (AITUC), Bharatiya Mazdoor Sangh (BMS), Hind Mazdoor Sabha (HMS), Centre of Indian Trade Unions (CITU) and Labour Progressive Federation (LPF), according to the Press Trust of India. It will last from 1 April 2018 until 31 March 2022 and it is expected to apply to around 20,000 workers in the sector. The CAM represents 21 cement companies and it covers 60% of the country's total cement production capacity.


Trinidad: Austria’s Unitherm Cemcon has been awarded the contract for a rotary kiln burner for kiln 3 at Trinidad Cement’s 1230t/day plant. The burner for the wet process unit will be designed for natural gas and liquid alternative fuel. No value for the order has been disclosed.

The scope of supply includes: one MAS/5/EGSO model rotary kiln burner; a flame monitoring device for the rotary kiln burner; a gas electric ignition burner with control box and touch screen; kiln burner trolley engineering and main components for local manufacturing; primary air fan with sound protection housing; and an emergency cooling air fan.

Other recent projects from Unitherm Cemcon include the commissioning of a firing system for BUA Cement’s new plant in Edo State, Nigeria and delivery of firing equipment for a project in Argentina in late 2018.


Jamaica: Caribbean Cement’s revenue rose year-on-year by 6% to US$133m in 2018 from US$125m in 2017. Its profit more than doubled to US$18.7m to US$8.4m.


Philippines: Holcim Philippines has completed an upgrade at its La Union cement plant in Bacnotan. The unit now has a cement production capacity of 1.8Mt/yr from 1Mt/yr previously, according to the Manila Times newspaper. The improvements have been completed two months ahead of schedule. The upgrade is intended to support the development of North Luzon.

The expansion is part of a US$300m production capacity drive at its plants in the country. It plans to increase its national production capacity by 30% to 13Mt/yr by 2020. The second phase of the project involves installing new kilns, mills and a waste-recovery system at its plants in Bulacan and Misamis Oriental provinces.


India: JK Cement has invested nearly US$65m towards building two new grinding plants at Balasinor in Gujarat and Aligarh in Uttar Pradesh. The Balasinor plant will have a production capacity of 0.7Mt/yr, according to the United News of India. It will cost US$35m to build. The Aligarh plant will have an investment of US$30m.


UAE: Fujairah Natural Resources plans to build a clinker plant at a cost of US$150m at Habbab in Fujairah. Production at the site will start in December 2019, according to Emirates News Agency. The project is intended to boost the cement industry in Fujairah.


US: ZAG has reached a US$506,250 settlement with the US Department of the Treasury's Office of Foreign Assets Control (OFAC) over breaches on trade sanctions with Iran. Between mid-2014 and early 2015 OFAC says that ZAG purchased 263,563t of Iranian produced clinker via a company based in the UAE. The government body added that ZAG knew that the clinker came from Iran although it was assured at the time by the supplier that it was not subject to US sanctions. The clinker was then sold to a company in Tanzania. However, OFAC said that since ZAG voluntarily disclosed its violation of sanctions to the office it viewed the case as a so-called a ‘non-egregious case‘ and the resulting fine was far below the maximum.


Europe: Cemex has signed a deal to sell its assets in the Baltic and Nordic countries to Germany’s Schwenk for Euro340m. The transaction is expected to complete within the first quarter of 2019, subject to regulatory approval.

The Baltic assets being divested consist of one 1.7Mt/yr integrated cement plant in Broceni, Latvia, as well as four aggregates quarries, two cement quarries, six ready-mix concrete plants, one marine terminal and one land distribution terminal in that country. The assets divested also include Cemex’s approximate 38% indirect interest in a 1.8Mt/yr cement plant in Akmene in Lithuania. In addition, the exports business to Estonia is also included as part of the divestment.

The Nordic assets being divested consist of three import terminals in Finland, four import terminals in Norway and four import terminals in Sweden.


Kazakhstan: Dal Holding plans to build a 1.8Mt/yr cement plant in Aktobe region for around US$270m. The project will be a joint venture with the Aktobe Civic-Entrepreneurship Company (CEC), according to Interfax. The joint venture has been created and a road map has been signed. Construction at the site is scheduled to start in April 2019. Dal Holding is an engineering company that undertakes projects in the cement, mining and energy sectors. Previously, in 2016, China’s Huaxin Cement was linked to cement projects in the region.