Global Cement News

Saudi Arabia: Southern Province Cement Co., which is Saudi Arabia's biggest cement firm by market value, has announced that its second-quarter net operating profit rose by 29.2% compared with the year-earlier period, to USD63.7m. It attributed the increase to higher demand driving sales.

The result was marginally above the USD63.2m predicted earlier by the firm. First-half earnings per share were USD0.88, compared with USD0.71 in 2010.

Indonesia: The capacity of Indonesian cement industries will increase by 5Mt/yr in 2012 to 59Mt/yr. "The capacity hike is needed to respond to increasing demand in the domestic market," said the head of the Indonesia Cement Association (ASI), Urip Trimuryono.

Urip said the additional capacity would come from PT Semen Gresik and PT Semen Tonasa, which each plan expansions of 2.5Mt/yr. In 2013 the installed capacity will increase by 1.8Mt/yr following the completion of the construction of a plant owned by PT Holcim Indonesia.

Investment in the cement industry is excluded from the list of industries banned for foreign investment and Urip said that local cement producers were ready to face competition from foreign investors. "This means anyone may build a cement factory in Indonesia but must be ready for free competition," he said.

Three foreign companies plan to invest in the national cement sector, namely Lafarge Cement Indonesia, which will build a cement factory in Langkat, North Sumatra with a capacity of 1.5Mt/yr with an investment worth USD350-550m. The second company is China Anhui Conch Group, which is investing a massive USD2.35bn in cement factories in the four eastern provinces of South Kalimantan, East Kalimantan, West Kalimantan and West Papua. The third line with the company is China Triumph International Engineering Co., which will invest USD350m to build a 2-3Mt/yr cement plant in Grobogan, Central Java.

Taiwan/China: Taiwan Cement Corp. (TCC) has made rapid progress in the Chinese market so far in 2011, recently announcing a massive seven-fold increase in first half earnings compared to 2010. TCC took USD138.5m in earnings from operations in China in the first half, which it attributes to higher product prices and successful capacity expansions. TCC's subsidiary in China, TCC International Holding Ltd, registered USD43.3m and USD95.2m in earnings in the first and second quarters respectively.

According to analysts, China's cement industry normally improves in the second quarter. TCC International shipped 7Mt of cement in the first quarter, with investors forecasting the volume to exceed 9.2Mt in the second quarter. If realised, such figures would represent a 30% year-on-year increase.

Russia: HeidelbergCement has officially opened its new plant TulaCement in the presence of numerous prestigious guests. The plant, which is located approximately 150km south of Moscow in the city of Novogurovsky, Tula region, has a cement production capacity of 2Mt/yr. Construction of the plant began in April 2009. The investment costs for the new plant, which employs around 400 people amounted to approximately Euro300m.

"We are very pleased that we are today able to inaugurate our state-of-the-art cement plant, TulaCement, which is one of the largest in Russia," explained Dr Bernd Scheifele, Chairman of the Managing Board. "In the future, the new plant will primarily supply the rapidly growing market in Greater Moscow with high-quality cement. We have thus reached another milestone in the expansion of our cement capacities in attractive growth regions and have increased our capacity in Russia to around 5Mt/yr."

The cement will be produced in a dry process in the highly-automated plant, which is equipped with environmentally-friendly technology. The entire production site including the quarry spans over 100 hectares. To ensure optimum logistics for delivery and cement shipments, HeidelbergCement has constructed several kilometres of road and railway lines. Four modern apartment buildings have been erected so that the employees can live on site.

"Russia is an attractive market for HeidelbergCement," added Dr Scheifele. "The demand for cement is rapidly increasing. It is anticipated that cement consumption will rise from 50Mt/yr in 2010 to around 70-90Mt/yr in the next 10 years."

HeidelbergCement has been active in Russia since 2001. Amongst other activities, the Group operates a cement plant near St. Petersburg and is the majority shareholder of a building materials company in Bashkortostan, one of the richest republics in Russia. The cement is imported to important growth regions via import terminals in Murmansk, Archangelsk and Kaliningrad.

Ireland: The Irish cement industry stands to make windfall profits of up to Euro50m 'at the taxpayers' expense,' according to sources familiar with the EU's emissions trading scheme (ETS). The sources estimate that companies such as CRH, Quinn Cement and Lagan Cement have made Euro26m over the past five years from the over-allocation of carbon credits by the government.

The sources estimate that the cement industry stands to make a further Euro25m when the next round of carbon credits is allocated under the ETS. The government allocates a certain amount of emission permits to companies for free. The idea is that polluting companies would buy credits in the market if they exceeded the permitted amount of emissions.

This system is known as 'cap-and-trade' but an initial over-allocation arose, partly because of the construction bust which meant that firms did not produce as much cement as expected. The sources said the transfer was a waste of public funds at a time when the exchequer was financially stressed. They also argued that the effect was to distort the market in favour of making cement.

The estimate of the scale of the subsidy comes after the Economic and Social Research Institute (ESRI) noted earlier in 2011 that the current EU ETS provided potentially large windfall gains for certain industries, such as electricity generation and cement production. The ESRI argued that such windfall gains should be recaptured by society through the tax system.

A spokesman for Cement Manufacturers Ireland did not dispute the figures, saying that the industry had invested millions of Euros in new technology upgrades to become one of the most efficient in Europe. "The current recession was not predicted when allowances were allocated under rules proposed by the Commission," he said.