Global Cement News

South Africa: South African cement sales rose for the first time in four years in 2011.

Sales climbed by 3.2% to 11.2Mt/yr in 2011 compared with 2010, when they fell by 7.8%, according to newly released figures from the Johannesburg-based Cement and Concrete Institute. Sales dipped by 1.8% to 730,000t in December 2011 from a year earlier.

"A long-term recovery in South African cement demand is long overdue and latest industry trends indicate that further decline is unlikely," said Pretoria Portland Cement Co, South Africa's largest cement producer.

Pakistan: The capacity utilisation of the cement sector in Pakistan has reached its lowest point in the last decade. Capacity utilisation sank to 70% in the first half of the fiscal year, which ended on 31 December 2011 for the current fiscal year. Meanwhile exports have continued to decline, offsetting the gains in local consumption.

"The expected turn around in the economy did not materialise as the capacities of the sector continued increasing," said a spokesman of the All Pakistan Cement Manufacturers' Association (APCMA). He said that expansions in the cement sector were planned six years ago when the economy was far stronger. The prolonged recession of recent years and drying up of government development programmes had disrupted the viability of the cement sector.

The APCMA spokesman added that domestic demand in December 2011 was encouraging, showing a growth of over 13% compared to December 2010. This compensated to some extent the 5% decline in local demand in November 2011. However exports remained under pressure during the six months to December 2011, posting a decline in four of the last six months. Exports declined by over 8% in December 2011. The overall decline in exports stood at 5% during the July - December 2011 period.

Total cement output in the country for the first two quarters of the fiscal year reached 15.40Mt, which was 4% higher than the 14.78Mt seen during the corresponding period of 2010. The majority of the capacity is located in the northern part of the country, where the industry posted a modest gain of 6% in domestic market and a lower increase of 3% in exports.

The spokesman for APCMA also pointed out that most of its member companies had been incurring huge losses after substantial increases in the cost of production. Input prices, especially coal, furnace oil, diesel, electricity have significantly increased in recent months forcing up the cost of production for cement producers.

Ireland/Ukraine: Europe Materials, a division of the Irish holding company Cement Roadstone Holdings (CRH,), completed the acquisition of 51% of the shares of LLC Cement in Odessa in southern Ukraine on 5 January 2012.

CRH intends to use the plant, which can produce up to 0.5Mt/yr of cement, for grinding clinker produced at Podilsky Cement in the east of the country.

The purchase follows clearance in December 2011 by Ukraine's Antimonopoly Committee (AMKU) to allow CRH to purchase the company.

Holcim seems to be back on track with its beleaguered Weston plant, with the news of a port deal for an undisclosed amount.

Since the plant was proposed in 2007 a string of delays have occurred. In July 2011 it had been asking contractors to register interest in the project. As reported in October 2011 Holcim put its New Zealand project on hold due to the 'global economic downturn'. Then in November 2011 Holcim reported a staggering 32% drop in income in the third quarter and blamed it on the strong Swiss franc: ideal for a little overseas spending. Even in the current global economic gloom there may be some benefits.

Back in Africa we have a third 'reality' from the local industry of a much more familiar nature: corruption.

With the former board of the East African Portland Cement Company (EAPCC) going to court against the Kenyan government over allegations of corruption and counter-allegations of government strong-arm tactics it puts into perspective why EAPCC might have changed its clinker supplier last week. With current price rises of 25% in Nigeria and even two positive stories from South Africa this week, the gains may be high but so are the risks.

Kenya: Court papers have started to reveal why the Kenyan government may have dismissed the directors of the East African Portland Cement Company (EAPCC) on 22 December 2011. The papers allege that the board spent US$11m on goods without following competitive bidding and in another instance overruled the tender committee to vary the terms of a clinker contract.

"Those purchases were made by direct procurement or restricted tendering," an affidavit by acting Industrialisation Minister Amason Kingi said. "These processes were not authorised by the Public Procurement Oversight Authority."

According to the affidavit, the irregular purchases were made between 15 August 2011 and 30 November 2011. Mr Kingi said that the Kenya National Audit Office had raised a query over the expenditure of US$140,000 that was overpaid to the chairman, Mark ole Karbolo, and the suspended directors.

The affidavit also said that the board changed the terms of a contract to supply 140,000t of clinker after the supplier, Sanghi Industrial, requested to increase the price after supplying only 67,000t. After the company's tender committee rejected the increase, the board granted the variation which ended up costing the company US$850,000.

"The suspended board overruled the tender committee and awarded a price increase for the delivered products as well as for further products to be delivered," said Kingi. The government said that it could not reveal more without jeopardising a forensic audit currently under way.

The ousted directors have previously blamed their removal from office on a multi-million dollar tender that the government wanted swayed in favour of a local supplier. They said that the award of the kiln upgrade contract to South Korean firm, Posco Plantec, in late November 2011 had upset government officials who wanted the tender given to construction firm H Young for US$43m.

EAPCC's directors settled on Posco Plantec on the strength of its financial bid of US$21m. H Young, however, had a superior technical bid. Karbolo and three other directors, Titus Naikuni, Hamish Keith and chief executive Kephar Tande, are seeking to reverse the minister's decision, arguing that EAPCC is not a state-controlled company.