Global Cement News

Indonesia: PT Indocement Tunggal Prakasa has reported that it will build a US$500m cement factory with a production capacity of 3Mt/yr in the regency of Pati, Central Java.

Sahat Pangabean, Indocement's corporate secretary, said that the company was hoping that the process of licensing the plant would be completed within 2012 and that construction would start immediately afterwards. Sahat added that the company was currently in the process of conducting an analysis of the plant's potential environmental impact.

The project will be run by Indocement's subsidiary PT Sahabat Mulia Sakti and is expected to be operational in 2015.

Saudi Arabia: Cement producers in Saudi Arabia have announced improved profits for 2011 and the fourth quarter of 2011. Companies have cited increased demand for cement and higher selling prices as reasons for their improved profits.

Yanbu Cement Company posted a net profit of US$40.9m for the fourth quarter of 2011 compared to US$26.6m for the same quarter of 2010, an increase of 54%. The company posted a profit of US$33.3m for the previous quarter. The company's net profit for the whole of 2011 was US$141.2m compared to US$114.8m in 2010, an increase of 23%. The 12 month gross profit was US$148.1m, up by nearly 20% compared to 2010. Yanbu's operational profit over the same period was US$139.8m, a year-on-year increase of 19.5%.

Meanwhile, Saudi Cement Company has announced that its net profit jumped by nearly 40% in the fourth quarter of 2011, rising to US$56.6m. The company said that the increase from a net profit of US$40.5m in the same period of 2010 was due to higher production and demand. It should also be noted that the company has added new production lines in the past year, which boosted the company's output and profit.

Eastern Province Cement Company (EPCC) also reported strong results, with a net profit for 2011 of US$97m, compared to US$91.5m for the same period of 2010. This is an increase of 6%. In the fourth quarter of 2011 the company's net profit was up to US$28.7m compared to US$22.1m for the same quarter of 2010, an increase of 28%. The net profit was up by 41% compared to the quarter ending 30 September 2011.

Kenya: All the 1200 permanent employees of the East African Portland Cement Company (EAPCC) have reported to work, formally ending a two-week strike. The move follows reports of strong-arm tactics forcing employees to work.

It is estimated that the company lost US$9m during the strike period after union members demanded the resignation of two directors: board chairman Mark Karbolo and managing director Kephar Tande. The government had suspended the duo alongside six other board members over alleged mismanagement.

The workers went on strike after the government installed the same directors after a landmark court ruling ordering them to return to office. Following the ruling, Tande and Karbolo were instructed to open up the plant and normalise operations. Staff refused to work under the two top officials.

Tande said all the staff had resumed work and that money would not be deducted from their January salaries for the days they were on strike. "At least we have managed to bring all the staff on board and what remains now is the mammoth task of talking to Maasai elders from Kajiado county who had ordered the closure of all mines for gypsum, limestone and pozzolana that are used to manufacture cement," said Tande. The Maasai elders ordered all the mines closed and gave the government an ultimatum to return the suspended directors whom they claimed had been "victimised unnecessarily."

The return occurs after employees complained that armed police officers had forced them to work at gunpoint. Raising their concerns in court, a representative for some 778 employees told Justice Cecilia Githua that General Service Unit officers were forcibly removing them from their homes and taking them to the plant to work, even at night.

Pakistan: The State Bank of Pakistan (SBP) has stated that "cement prices remain inexplicably high," in its State of Pakistan's Economy report published on 28 January 2012.

Expressing concerns over an increase of 17.3% in cement prices from July – November 2011 compared to the same period in the previous financial year, SBP has highlighted that this increase arose despite "a reduction on cement taxes and only a 10.7% increase in coal prices during the period."

The high prices of building materials and the strain of sales tax are expected to dent the growth of the manufacturing sector during the current financial year.

The large scale manufacturing (LSM) sector has registered growth of 2.1% in the first quarter, compared to a 2.9% decline over the same period last year. Lower duties on cement, beverages, automobiles and air conditioners have provided fiscal support to this sector according to SBP.

Yet SBP has warned that growth in the LSM sector may not be sustainable in coming months as the low base effect brought on by floods in 2011 withers away in subsequent periods.

Afghanistan/Pakistan: Exporters from Pakistan have raised cement prices in the Afghan market by 25%.

Cement exports to Afghanistan currently represent 50% of the total exports from Pakistan where major quantities are shipped by the companies close to the north-west border between the neighbouring countries. According to Shagufta Irshad, a senior analyst of KASB Securities, Pakistan exported 4.7Mt to Afghanistan during the year 2010-2011 and 2.5Mt during the first half of 2011-2012. This increase will have a positive impact on the earnings of exporting companies in the current financial year, as well as to the country as a whole.

Currently Pakistani cement dominates in the central and north regions of Afghanistan where major reconstruction activities are underway. The Pakistani companies with the most exposure to the Afghan market include Lucky Cement, Bestway, Cherat, Lafarge Cement, Fauji Cement and DG Khan Cement. DG Khan Cement has a higher exposure to the Afghan market than Lucky Cement because both its plants are located in the northern region.

Pakistan's exports to Afghanistan currently contribute 30% of DG Khan Cement's total exports, compared to 20-25% for Lucky Cement. Shagufta noted that this increase will bring a rise of 16% and 3% in the earnings for DG Khan Cement and Lucky Cement respectively in the year 2011-2012.