Global Cement News

Vietnam: The Vietnamese Prime Minister Nguyen Tan Dung has approved a proposal of the Vietnam Building Material Association to cancel nine cement plant projects in order to keep in line with market demand.

The nine projects, Ha Tien-Kien Giang, Truong Son- Ro Li, Hop Son, Ngoc Ha, Vinafuji Lao Cai, Thanh Truong, Son Duong, Quang Minh and Cao Bang, will be removed from the country's master plan for cement industry. The prime minister also agreed to extend the deadline for the construction of seven other projects - He Duong II, My Duc, Thanh Son, Tan Thang, Do Luong, Tan Phu Xuan and Nam Dong - to after 2015.

The prime minister, however, added Xuan Thanh 2 cement plant in the northern province of Ha Nam to the list of projects slated for operation before 2015. The government leader asked the Ministry of Construction to cooperate with other ministries and agencies to ensure a balance between the cement supply and demand. He also asked the Ministries of Construction, Finance, Industry and trade, Vietnam Cement Association and Vietnam Cement Industry Corporation (Vicem) to facilitate cement exports, which Vietnam is already heavily involved in.

Local cement makers currently face difficulties due to huge inventory and low domestic demand caused by the frozen real estate market. In addition, high production costs, high lending interest rates and rising input costs have also put a heavy burden on local cement producers. The country is predicted to have a cement inventory of 14-15Mt by 2015, when the country's cement output will reach 90Mt/yr.

Japan: Ube Industries Ltd has announced that it will develop a large limestone mine in Yamaguchi Prefecture in anticipation of a further recovery in domestic demand for cement in Japan. The company will likely invest US$84m in what would be its first mine development in 35 years. Production is slated to kick off around 2017. Ube plans to operate the mine, which has estimated reserves of some 300Mt, for about 40 years.

Of the company's three domestic cement plants, two mainstay facilities in Yamaguchi have been procuring limestone from a mine near the new site. This existing mine, which produces 8Mt/yr of limestone, has been dug as deep as 140m and has been in production since 1948. High costs from deep mining prompted the company to look for a new site.

After sinking at one point to as low as 40Mt/yr, half of 1990 levels, Japanese cement demand has recently rebounded due to the reconstruction of areas devastated by the March 2011 Earthquake and Tsunami disaster. This trend will likely continue for a while, as efforts to repair and update ageing infrastructure are expected to pick up while reconstruction projects go on.

The Japan Cement Association estimates domestic demand in the current year (to March 2014) will grow by 3.4% year-on-year to 46Mt. Taiheiyo Cement Corporation and other cement makers are also gearing up to boost domestic supplies by curbing exports and taking other measures.

Last week's news that Sinoma is considering European acquisitions may seem a little odd considering that Sinoma saw its profit halve in 2012. Yet the Chinese cement equipment builder and cement producer's income (US$3.42bn) puts it level with the likes of European producers, like Italcementi (US$5.75bn) and Buzzi Unicem (US$3.58bn), and the company still made a sizeable profit (US$123m).

Now what really seems odd is the amount by which each of the major Chinese cement producers' profits fell in 2012. Each of the top five producers by capacity, including Sinoma, saw their profits decrease by 40% to 50%. CNBM 'forgot' to report its profit drop but in November 2012 it recorded a 40% fall. Anhui Conch Cement's profit fell by 45.6% to US$1.03bn. Jidong Cement hasn't released any figures but was expecting a 50% drop in late October 2012. China Resources' profit fell by 44.4% to US$300m. Compare that with the diversity of profits reported by the top five European cement producers.

As has been clearly signposted by the Chinese government, the country is overproducing cement. Just how much we can't be sure but the Ministry of Industry and Information Technology declared that 220Mt/yr of 'obsolete' capacity was eliminated in 2012. The country's entire output was placed at 2.18Bt in official figures.

Outmoded capacity is being shut down and industry consolidation encouraged for the main players. Given the state-owned nature of Chinese heavy industry some level of coordination between bad results is to be expected. To give readers an idea of the challenge facing Chinese central planners, Anhui Conch added 28.3Mt/yr of additional cement production capacity in 2012. This is equivalent to the entire capacity of Nigeria or Germany!

Of interest here are China's cement export figures that the government's General Administration of Customs recently released. Exports hit a peak of 33Mt in 2007 and then declined by 68% to 11Mt in 2011. In 2012 they increased slightly to 12Mt. That's 20Mt of cement not leaving the country any more. Plus, the 'Shenzhen sea-sand in concrete scandal' can't be helping the industry's reputation abroad either.

Also of note last week, a Kyrgyzstan minister proposed restricting imports of Chinese cement to his country. Cement produced at Chinese-owned plants will be much harder to block. The next prong of the Chinese plan to tackle its cement industry is direct overseas expansion and this is what we're seeing from the likes of Sinoma and Anhui Conch. Sinoma, as mentioned above, appears to have cash to spend and in 2012 Anhui Conch began its first international project in Indonesia.

Sri Lanka: Philippe Richart, formally responsible for the Ready Mix Concrete business in Holcim Vietnam, has been appointed CEO of Holcim Lanka.

The change of CEO, which was announced in February 2013, was part of a generational change in the company's leadership. Philippe joined Holcim Group Support in 2004 as a Commercial Project Manager for the Aggregates and Constructions Materials function, working on aggregates market development and performance improvement in various regions of the Group.

In 2007 he was appointed RMX director for Holcim Vietnam and successfully brought the division into the leading position in South Vietnam.

Before joining Holcim, Philippe held various roles in construction project management and business development for Lafarge Cement and Metso Minerals in Taiwan, USA, China and France. He holds a Master's Degree in Civil Engineering from Ecole des Hautes Etudes Industrielles (Lille, France) and an MBA from George Washington University (DC, USA).

India: Jaiprakash Associates plans to build a coal-fired 35MW captive power plant as a part of its proposed US$202m greenfield cement plant in Satna in the state of Madhya Pradesh. The captive power plant will comprise steam turbine generating sets with adequately-sized circulating fluidised-bed combustion (CFBC) boilers with air-cooled condensers.

The total coal requirement for the project is estimated at 0.55Mt/yr, according to an environment impact assessment report on the project. The 1.5Mt/yr clinker and 2Mt/yr cement plant proposed by Jaiprakash Associates will require 30MW of power that will all be sourced from the planned captive power plant.