Global Cement News

South Africa: The French multinational Lafarge will pay US$19.3m after it was found guilty of involvement in a cement cartel in South Africa. The Competition Tribunal confirmed that the settlement represented 6% of Lafarge's 2010 turnover in the Southern African Customs Union countries (South Africa, Botswana, Lesotho, Swaziland and Namibia). AfriSam, another of the cartel participants, previously agreed to pay an 'administrative penalty' of US$16.1m.

Brazil: Brazil's Camargo Corrêa has launched a bid for the 68.1% stake in Portugal's Cimpor that it does not already own. Camargo Corrêa Cimentos, the Brazil-based cement unit of which is that nation's fifth-largest cement producer, currently controls 32.9% of Cimpor.

It is thought that Camargo Corrêa may be taking advantage of depressed valuations in the troubled Portuguese economy to win control of the company. Cimpor is itself the fourth-largest cement producer in Brazil. In 2010, Camargo Corrêa teamed up with industrial conglomerate Grupo Votorantim to thwart Brazilian steelmaker CSN's bid for full control of Cimpor. Votorantim holds 21% of Cimpor.

This new move may open up the spectre of a lengthly and interesting anti-trust approval if the deal is accepted by Cimpor, especially given that Camargo Corrêa, Votorantim and four other producers were accused of price-fixing in the Brazilian cement market in November 2011.

At the end of 2011 Portuguese media reported that both Camargo Corrêa and Votorantim were preparing to buy Cimpor minority shareholders out. It has now been reported that Votorantim is looking to make use of its option to buy bank Caixa Geral de Depositos SA's 9.6% in Cimpor and thus reach a stake in Cimpor similar in size to that owned by Camargo Corrêa.

UK: Aliko Dangote plans to list his US$11bn cement business, Dangote Cement, on the London Stock Exchange in 2013. Dangote is cited by the Financial Times as saying he intends to free-float a 20% stake in Dangote Cement to finance its rapid expansion.

"We want to list in London next year. By then the upside to our business will be much bigger than today," Dangote is quoted as saying.

Morgan Stanley and JPMorgan have been appointed as co-leads for the London share issue. Dangote is cited as saying the company was on track to meet the corporate governance requirements for a premium listing, and that he would give up his current role as chairman.

Chris Searle, Partner at BDO LLP commented, "If this IPO goes ahead, it will give London a significant credential that will hopefully attract other African companies at a time when Africa is one of the fastest growing regions in the world and will further cement London's status as the most international stock market in the world."

Searle added that the decision reflects a realisation by Dangote that it must improve its corporate governance. He also expressed surprise that the free float was 20%. Under current rules, the UK Listing Authority has set a minimum free float requirement of 25% for companies seeking to obtain a listing on the London Stock Exchange.

China: China intends to implement strict restrictions on the increase of new cement production capacity in 2012 to deal with a capacity surplus, said Liu Ming, an official with the department of industry within the National Development and Reform Commission.

Speaking at an industrial meeting, Liu said the main task for the time being is to contain the rapid increase of capacity. Currently China faces national overcapacity during the period of 2011-2015. Liu said the government will encourage mergers and acquisitions in the national industry, and increase financial support.

China's cement output increased by 11% to 2.09Bt in 2011 with an annual capacity of 2.9Bt. Liu added that China would roughly complete its task of phasing out out-dated capacity by the end of 2012. However, domestic producers remain optimistic about the growth of national consumption in 2012. The performance of China's cement industry will remain optimistic and annual output will reach new high with around 8% of growth, predicted Kong Xiangzhong, secretary general of the China Cement Association.

China's cement industry will see around 5% of growth in 2012 and 2013, said Cui Xingtai, chairman of the China United Cement Corporation. Cui said that the Chinese cement market will shake off its current weak performance from the second half of 2012 with the annual peak season. The decrease of cement demand in the first quarter of 2012 was directly related to the slowdown of construction projects in the railway, road and airport sectors and cement demand would have good performance in the second half, said Cui.

Philippines: Cement producers in the Philippines are raising their prices, as increases in fuel prices have not shown any sign of abating and the peak of the construction season is starting.

Trade and Industry Undersecretary for Consumer Welfare Zenaida C Maglaya said, that based on the Price Monitoring report released on Friday 23 March 2012, prices of two brands of cement Republic (Lafarge) and Rizal (Cemex) had increased. However, the price of Holcim Philippines Inc. dropped by 2.5% from February to March 2012. In June 2011 Holcim raised its prices by 6% in Luzon. The three global firms dominate the Philippine industry.

Cost of power and coal accounts for 40% of a cement company's total production expenses in the Philippines. Most of the cement firms source their coal supply from Semirara Coal Corp. Construction activities are higher during the summer months, normally starting early in the year and peaking in May.

Construction activity was fuelled by private sector spending in 2011, as the government did not spend much on infrastructure projects. However the Aquino administration has started accelerating investments and implementation of major infrastructure projects in 2012. Both infrastructure and private sector investments in property developments, including housing and commercial establishments, are expected to boost demand for construction materials, including cement.