Global Cement News

US: Washington-based news agency InsideEPA has reported that environmentalists may be preparing to sue the US Environmental Protection Agency (EPA) over its revised emissions limits for the cement sector because the rules largely adopt weaker limits and extended compliance deadlines that had been sought by the industry. The agency says that critics warn that the ruling will create more toxic air emissions and criteria pollutant emissions that pose significant risks to public health.

"By the EPA's own numbers, that delay will cause between 1920 and 5000 Americans to die prematurely from exposure to cement plants' soot pollution. The rules will also allow cement plants to pump an additional 15,000kg of mercury into the environment," said one environmentalist quoted by Inside EPA, citing the EPA's data.

The EPA had faced a 20 December 2012 consent decree deadline to issue the rules, which revise its national emission standards for hazardous air pollutants (NESHAP) air toxics limits and new source performance standards (NSPS) criteria pollutant controls for the sector. The rules address a cement sector push for reconsideration of the NESHAP and NSPS as set in 2010, in addition to a federal appeals court ruling partly remanding the 2010 rulemaking to EPA.

In June 2012 the EPA proposed to revise the rules by weakening the particulate matter (PM) limit for new and existing kilns. It also proposed to extend the compliance deadline for the air toxics standards from 2013 to 9 September 2015. Both measures were sought by the cement sector, which argued that the 2010 rules were too stringent.

Environmental groups, including Earthjustice and the Natural Resources Defense Council, filed comments criticising the proposal as unlawfully weak under the Clean Air Act, and opposing the changes.

It now looks likely that the revised cement rules will prompt a lawsuit from these and other environmental groups given their warnings in written comments that the proposed version was unlawful under the Clean Air Act.

In contrast, the Portland Cement Association (PCA) President Greg Scott has welcomed the rules, saying that they, "Will provide PCA members and the cement industry the additional time needed for compliance with the revised standards. Such time is essential to properly complete the planning, engineering, permitting, testing and construction of the various new technologies that will be necessary to implement the revised standards."

He added that the rules, while now achievable, were still 'extremely challenging.' mitigating fears that the industry could sue over their implementation.

Ireland: CRH chief executive Myles Lee has confirmed that the building materials group is interested in expanding its presence in India. The comment follows rumours from the Indian media that CRH and Holcim are both in separate talks with the Shriram Group to buy a stake in Sree Jayajothi Cements (SJJCL).

Lee said that CRH remained interested in expanding its presence in India, but declined to comment on Sree Jayajothi. CRH 'terminated' negotiations with Jaypee Cement Corporation in October 2012 because the parties were unable to agree terms.

"We have been on the lookout for a partner for quite some time and we keep having several discussions with different players both strategic and financial," said T Shivaraman, managing director and chief executive of Shriram Engineering and Procurement Company, which owns SJJCL. He refused to comment on the involvement of either CRH or Holcim. It has been reported that private equity giants Blackstone and KKR are also in separate preliminary talks with Shriram about its stake in the cement manufacturer. SJJCL owns a cement plant with a production capacity of 3.2Mt/yr based in Andhra Pradesh.

The rumours arrived at the same time that CRH announced it had made acquisitions and investments valued at Euro630m in 2012. The bulk of the money was spent in the US, where Euro256m was spent in the second half of the year. In Europe CRH spent Euro119m in the second half of 2012 in acquisitions in Finland and the UK. Lee confirmed that CRH holds between Euro1bn and Euro1.5bn to spend on deals.

Both CRH and Holcim have a combined capacity of around 61Mt/yr in India. Holcim controls ACC and Ambuja Cements while CRH has a venture with Hyderabad-based My Home Industries, which owns a 4.2Mt/yr plant.

Nigeria: Cement manufacturers have hit back at Ibeto Cement Company over its resolve to continue to import cement into Nigeria, despite the capacity of local manufacturers to meet demand.

A statement by Dangote Cement's head of corporate communications Anthony Chiejina said that Dangote and Lafarge WAPCO Cement were worried about the glut created by, according to him, importers.

Cement manufacturers, under the aegis of Cement Manufacturers Association of Nigeria (CMAN), have also said that unless the federal government fulfils its promise of halting importation the cement sub-sector of the economy might go into serious decline, with inventories building up at plants and reduced production. Cement producers are strongly lobbying for the development of concrete roads in Nigeria.

CMAN chairman, Joseph Makoju, said that the domestic cement production level of 18.5Mt/yr was being threatened. "The target of 18.5Mt/yr represents just 65% of the present total installed capacity of the industry," he explained. "Between 2002 and May 2012 a total of US$6bn in new investment was made by local manufacturers, while the ongoing expansion and new plants are estimated to have cost another US$3.5bn. Due to continuous rapid growth the nation no longer requires cement imports as local demand is being effectively met and even surpassed."

The reported oversupply in the the Nigerian market has already forced Dangote to halt production in its 4Mt/yr Gboko plant in Benue State and has prompted Lafarge WAPCO to reduce production. According to the plant manager at Lafarge's Ewekoro cement plant, Lanre Opakunle, 50% of Lafarge's Shagamu plant had been shut down. The Ewekoro plant has reportedly been running on a skeletal staff to prevent it from being closed completely. The manufacturers stress that, if the cement glut continues, it may force 'hundreds of thousands' of Nigerians out of jobs.

China: China Resources Cement (CRC) has announced that it has agreed to acquire a 100% equity stake in Hainan Wuzhishan Dajiangnan Cement Limited at a total of US$8.4m. Hainan Wuzhishan Dajiangnan operates a 0.6Mt/yr cement grinding line in Maoyang Town, Wuzhishan City, Hainan Province.

CRC says that the acquisition will expand the strategic locations of its business and strengthen its market position in Hainan Province.

Just before the end of 2012 Holcim sold shares in companies it owned in Thailand and Guatemala. It reduced its stake in Siam City Cement Company (SCCC) in Thailand from 36.8% to 27.5% and it sold its entire 20% minority stake in Cementos Progreso in Guatemala. For the sale of these two share packages Holcim received approximately Euro310m.

This is interesting given that Asia-Pacific was the Switzerland-based multinational's biggest sales area in 2011 and because sales of cement rose by 6% in Latin America in 2011. Similarly in 2012 from January to September the two regions propped up the group's profits. Why would Holcim sell stakes into two of its most profitable regions?

In its third quarter report in 2012 Holcim repeatedly described Thailand as 'encouraging' following floods in 2011. It added that it had focused increasingly on the cement market in the country and strengthened its position in neighbouring countries that resulted in lower clinker exports.

According to the Global Cement Directory 2013 SCCC has a capacity of 31Mt/yr, 65% of Thailand's total capacity of 48Mt/yr. SCCC predicted in December 2012 that domestic cement demand would increase by 5-10% in 2013. The company is currently planning to build new plants in Indonesia and Cambodia and is considering investing in Myanmar. In Indoniesia Holcim is the third biggest producer after Semen Gresik and HeidelbergCement subsidiary Indocement.

Meanwhile in Central America, Cementos Progreso was the sole producer in Guatemala with 2.5Mt/yr from two plants. This was set to double with the commissioning of a third plant towards the end of 2012. However, Holcim retains seven plants in southern Mexico (12Mt/yr), both of El Salvador's plants (2Mt/yr) and a plant in Costa Rica (1Mt/yr).

With Holcim's strong presence in Central America and the North American market reviving leaving Guatemala makes sense with the group's debt reduction programme in mind. The situation in Thailand is more complex, so unsurprisingly Holcim has reduced its stake rather than leaving completely. SCCC's expansion plans outside of Thailand suggest, that although growing, the market is maturing. In one such potential expansion target, Indonesia, Holcim is already a major producer.

In its press release announcing the sales in Thailand and Guatemala, Holcim attributed the decision to its ongoing debt reduction programme. As part of its 'Leadership Journey' the group intends to save Euro1.25bn by the end of 2014. Other savings in 2012 included reducing management in Europe, layoffs and closures in Australia, a plant closure in Hungary, further delays on the decision to build a new plant in New Zealand and layoffs in Spain. The management changes in Europe alone contributed a Euro99m chunk of Holcim's target saving of Euro124m for 2012.

Yet it's worth considering that a week after the sales of its shares Holcim's subsidiary in India, Ambuja Cements, announced investments of Euro277m in India. Perhaps the best way to save money is to make more money.