Global Cement News

UK: The Office of Fair Trading (OFT) has published a market study into cement, ready-mix concrete and aggregates. It proposes to refer these key sectors of the construction industry to the Competition Commission for more detailed investigation.

Key issues that the OFT study covered featured the high barriers to entry in these sectors due to the difficulty of obtaining planning permission and the level of investment required. It was noted that high and increasing concentration dominated the market with five major players accounting for over 90% of the cement market and 68% of ready-mix concrete production.

The study picked up on the effects of vertical integration pointing out that the major firms are integrated across ready-mix concrete and cement. The OFT had also received complaints about vertically integrated firms refusing to supply or discriminating against non-integrated competitors through their pricing. Multiple contacts and information exchanges across the markets were mentioned, with major firms supplying each other with both aggregates and cement and engaging in joint ventures and asset swaps.

Lastly the study noticed an apparent squeeze between rising cement prices and stable or falling ready-mix concrete prices, affecting independents that both buy cement from vertically integrated majors and compete against them in the ready-mix concrete market.

John Fingleton, OFT Chief Executive, said, "We are concerned that competition is not working well in these sectors, with underlying features of the market giving rise to persistent concerns."

Cement, ready-mix concrete and aggregates sectors had a combined turnover in 2009 of up to Euro3.86bn and are vital inputs in the construction sector, which represents 7% of UK GDP. Some 40% of construction expenditure is in the public sector, for schools, hospitals, roads and other physical and social infrastructure, with central government being the biggest customer.

The OFT will consult until 30 September 2011 on its proposal to refer the market to the Competition Commission. Key parties will be contacted directly but parties wishing to make a submission are invited to contact the OFT in writing.

Egypt: In collaboration with the Egyptian Environmental Affairs Agency (EEAA) Suez Cement Group of Companies (SCGC) has begun the implementation of a new integrated alternative fuel (AF) system at its Kattameya plant in New Cairo.

"As part of the activities to enhance our sustainability, this project will realise environmental returns through the application of advanced technologies for using AFs in cement production operations, a matter which will maximise our competitiveness and reduce the use of traditional energy sources thus helping the country," said Carlo Foroni, technical director of the SCGC. "This will also relieve the community from the need to treat their waste materials and will also limit CO₂ emissions," Foroni added.

According to Mohamed Aymen, SGCC environment affairs manager, following EEAA's 2009 approval of burning agricultural and municipal wastes at the company's Kattameya and Helwan plants, industrial testing started at Kattameya through a pilot feeding line. "All of these products will be recycled and used as an alternative fuel by being safely burnt at cement kilns," said Aymen.

While the environmental impact assessment for using alternative fuel systems at the Suez plant is underway, the project's feeding line will already be applied as planned at the company's Helwan plant later in 2011.

Japan: Taiheiyo Cement Corp has announced a net loss of USD67.7m from sales of USD2.14bn in the three months to 30 June 2011. The company's net loss was less than half the loss that it suffered in the same quarter of the previous fiscal year, which was USD140.6m. The closure of three domestic factories in the previous quarter and smaller payrolls boosted its bottom line.

While sales at the firm's mainstay cement operations were nearly unchanged from 2010, its operating loss totaled USD15.6m, far better than the USD49.5m operating loss logged in the same quarter of the previous fiscal year.

Cement demand in the Tohoku region fell in the wake of the massive earthquake that hit north east Japan in March 2011, but demand from construction of condominiums and commercial facilities rose in the Tokyo metropolitan area in particular, leading to the rise in sales.

Taiheiyo Cement expects its net profit through to the end of the current fiscal year (ending 31 March 2012) to jump by 150% to USD141.3m. The firm has also forecast that sales will drop by 2% to USD9.15bn and that operating profit will surge by 64% to USD351.5m for the full year.

UK: Plans to burn used tyres and plastics for energy at Lafarge's Aberthaw works in South Wales have been submitted to the Environment Agency for approval. Lafarge's comes after it sent out 5000 letters to residents explaining the latest proposals and held two public consultations. The proposal has previously sparked concerns among some residents and environmentalists.

The plant's management team says that the move would cut costs and reduce coal burning and CO₂ emissions. The proposal comes six years after the Lafarge meat and bone meal (MBM) from cows and sheep as a sustainable waste-derived fuel at the plant. If the move is approved by the Environment Agency, the used Solid Recovered Fuel (SRF), including papers and plastics, and end-of-life car and van tyres, could save up to 15,500t/yr of coal and reduce carbon dioxide emissions by up to 20,000t/yr.

James Kirkpatrick, manager at the Aberthaw works, which has an integrated capacity of 0.55Mt/yr, said the plan had been prompted by increased competition in the cement market and a serious downturn in demand for construction products. "Since it was introduced in 2005, we have used 50,000t of MBM which has significantly reduced our consumption of fossil fuels," he said. "Extending the range of sustainable waste-derived fuels we can use offers us a good way to keep a check on our costs which have been escalating."

Keith Stockdale, secretary of Barry and Vale Friends of the Earth, said, "The Environment Agency will have to impose strict conditions on the burning of this potentially hazardous waste."

Kenya: Investors behind the US$148m plant in the Pokot region of Kenya have pledged to go ahead with construction, which has failed to take off 14 months after the ground-breaking ceremony. Directors have blamed the delay on various studies required before the investment.

“The Chinese contractors will be on the site soon,” said project director Rajeshkumar Rawal. “A general manager is already on the ground.” He rebuked industry talk that Indian plant builders Sanghi Cement had approached a local cement industry player insisting that local investors still held 26% of the stake with the Indian group taking the balance. Mr Rawal, a shareholder in the project, was in the thick of the battle to secure rights and licences for the project but he could not give a specific time frame promising more details in late August 2011 when Sanghi chiefs visit Kenya.

Some industry players have doubted the viability of setting up a factory in the remote area with poor infrastructure despite its proximity to the South Sudan which has strong potential for cement consumption.