Global Cement News

Switzerland: On 24 November 2013 Swiss voters will decide whether to cap the highest wages given in a company at 12 times the lowest pay. Swiss corporations and the government have joined forces to oppose the '1:12 Initiative', which is forecast to be rejected.

"When you read the text of the proposal, it's very simple, very clever, very misleading. You would never go to the US and think: how much can I pay people now? You pay whatever you need to pay in order to attract them," said Thomas Aebischer, CEO of Holcim. "This is a disaster for this country. It's a real risk and a real danger for Switzerland remaining an attractive place to do business."

The pay scale at Holcim underscores the challenge for multinationals if they were to comply with the proposed rule. Bernard Fontana, Holcim CEO, received a base salary of Euro1.42m in 2012, 35 times the lowest-paid employee.

Executive payouts have ballooned in recent years while company profits have slumped and taxpayers bailed out Switzerland's largest bank, UBS. This has led to calls for a more equal distribution of wealth.

South Africa: The South African Mamba Cement project, jointly funded by China's Jidong Development Group, the China-Africa Development Fund and a South African cement company, inked a deal regarding financing on 20 November 2013.

The project, with an investment of US$220m, is situated in Limpopo Province, South Africa. The capital fund of the project is US$100m, 51% of which is held by Chinese shareholders.

Unlike traditional overseas investment financing, Mamba received US$120m through project financing, which is based on the projected cash flow of the project rather than the balance sheets of its sponsors. This marked China's first successful investment through project financing in Africa. The loans are jointly provided by Nedbank South Africa and Bank of China's Johannesburg office.

Chen Ying, vice-president of China's Jidong Development Group, said that the success of the financing deal meant the South African bank's accreditation to Chinese companies. "Project financing offers Chinese companies a new way to make overseas investments," stated Ying.

The project includes a new cement clinker production line with an output of 1Mt/yr, a waste heat recovery (WHR) system with a generating capacity of 26.8MKW/hr and other supporting facilities. The electricity generation system together with the cement plant makes Mamba the first cement company in possession of WHR technology on the African continent.

Minority shareholders have bowled a googly at Holcim's attempt to simplify its business structure in India.

Or for readers unacquainted with cricket terminology, domestic institutions which hold about 9% in Ambuja Cements have been widely reported in the Indian media as having voted against a move to merge the cement producer with its parent company, Holcim India. The final results of the shareholders vote will be publicly announced on 21 November 2013. The shareholders actions follow Holcim's recent approval by the Indian Foreign Investment Promotion Board for the merger.

That this is bad news for Holcim is not in doubt given that the multinational cement producer has taken a hit in its Asia-Pacific region, particularly in India. Overall for the region its operating profit fell by 32.5% year-on-year to US$333m for the quarter to 30 September 2013.

Specifically, Ambuja Cements managed to maintain its sales volume of cement and clinker year-on-year at 4.89Mt for the third quarter. However, its net profit after tax fell by 45.4% to US$27m. It blamed the decline on subdued demand due to overall economic slowdown combined with higher input costs. Meanwhile, ACC saw its sales revenue from cement fall slightly to US$388m for the third quarter while its profit for cement before costs and tax fell by 57% year-on-year to US$22m.

As mentioned in August 2013 when this column last looked at India, the parallels to cement industry consolidation in China are telling. In China guidelines have been issued to cut overcapacity in the cement industry, with the Ministry of Industry and Information Technology releasing lists of companies that should cut excess production. Alongside this, the country's leading cement producers have reported a return to profit so far in 2013. Who exactly is taking the loss from this production retraction in China, if it is happening, remains unreported and unclear.

In India, much more light has been shone upon an over-producing cement industry. Holcim and its subsidiaries are just some of the companies reporting falling profits at present. Ambuja's minor shareholders look like they have made a decision that is counter to the best interests of the Indian cement industry.

In a recent UK newspaper article, political theorist David Runciman compared the respective merits of democratic and more autocratic modes of government. Unsurprisingly for a British academic Runciman came out in favour of democracies, yet the advantages of more centralised governments were noted, such as the ability to make wide-reaching decisions faster and more comprehensively.

In light of this, comparing the Indian and Chinese cement industries in 2040 will be fascinating. Minor shareholder tussles will likely be forgotten but cement (and hopefully cricket) will be as vital then as they are now.

Germany: Andre Tissen has been appointed manager of the cement business unit at Beumer Group effective from October 2013.

His responsibilities include managing Beumer's cement competency centre at the company's headquarters in Beckum, marketing Beumer's product portfolio, developing Beumer's sales team, optimising the company's sales structure and coordinating communication between the company's factories around the world.

Tissen, aged 43, has previously held various sales positions in the cement industry. Before joining Beumer, Tissen worked as Sales Manager, Europa & Key Accounts, at a conveyor equipment specialist.

Germany: VAS® the IT logistics system from FRITZ & MACZIOL group has won a contract from Cemex in Germany. The Mexico-based multinational cement producer will use a bespoke version of the software and will roll the system out to several Cemex plants starting in Germany. FRITZ & MACZIOL cited VAS®'s ability to cover all requirements towards an IT logistics solution specified by Cemex as a key reason for its selection. At Cemex the implementation of a VAS® workshop is currently being prepared.

"Cemex takes over the role of a trailblazer. At present many firms operating in the raw material sector are thinking about how to standardise their global operations and logistic processes by using a template-based solution in order to replace their older and often isolated systems," said Claus Jordan, the Director of Business Development and Marketing of the FRITZ & MACZIOL Industrial Applications and Services division.

Jordan sees the emergence of Web 2.0 technologies as a reason for this development, as they can be used to simplify the automation of logistic processes within different plants. He added that, "A template-based rollout reduces time, effort and costs on the customers side and as such secures a fast return-on-investment."

Adrian Brown, Sales Director for FRITZ & MACZIOL in UK and Ireland, described VAS® to Global Cement.

This process-orientated software solution for the raw materials industry, forms the entire process chain from delivery via dispatch and loading, right up to departure. As the link between ERP systems and technical systems, VAS® represents the key function for efficient process sequences. In addition, VAS® supports reporting functions and supplies real-time information to further systems, for example for production, sales or controlling. All external technical systems such as the weighing, silo or metering technology are completely integrated into the VAS® logistics system processes.

According to Brown, VAS® is currently used in more than 160 plants worldwide within the raw materials industry. More than 30 of these implementations are within the cement and minerals industries in the UK and Ireland.