Global Cement News

Eurasian Economic Union: The Eurasian Economic Union (EEU) produced 12Mt of cement in the first quarter of 2019. Armenia produced 68,000t and imported 47,200t. Belarus produced 0.84Mt, imported 79,500t and exported 0.26Mt. Kyrgyzstan produced 0.35Mt, imported 38,600t and exported 0.15Mt. Kazakhstan produced 1.47Mt, imported 0.11Mt and exported 0.33Mt. Russia produced 9.3Mt, imported 0.18Mt and exported 0.17Mt. Usually production in the first quarter represents 16 – 19% of annual production. Consumption of cement in the EEU region is expected to grow by 2.5% year-on-year in 2019.

Morocco: Denmark’s FLSmidth has won a contract to deliver a greenfield cement plant to a new customer in Morocco. The contract is worth US$45m.

The contract was signed by FLSmidth, together with Société Générale des Travaux du Maroc (SGTM) on 19 July 2019 signed a contract with TEKCIM S.A. to co-deliver a 3600t/day (1.2Mt/yr) cement plant. The plant will be built in Ouled Ghanem in Morocco’s El-Jadida Province and is scheduled to be fully operational during the third quarter of 2022.

This is the first business cooperation between FLSmidth and TEKCIM. The process leading to the agreement has involved the African Development Bank as well as local commercial banks, and the parties involved have set very high standards in terms of quality and sustainability.

“The project includes state-of-the-art equipment that will provide TEKCIM with a very efficient cement plant,” said Jan Kjaersgaard, FLSmidth’s President of Cement. It also demonstrates FLSmidth’s ability to support customers where financing is involved, which has been a key aspect to be awarded this project. The plant will fulfil strict international standards, which is a clear statement that we as a premium player in the industry are following suit on our agenda of delivering sustainable productivity.”

The contract scope includes engineering, supply of a full range of equipment from crushing to packing and load-out, supervision, commissioning and training of a local workforce. The order is effective immediately and has been recognised in the order intake for the second quarter of 2019.

Tourah Cement in Egypt took the tough decision last week to temporarily stop production. It blamed this on an acute financial crisis rendering it unable to pay its running costs. The subsidiary of Germany’s HeidelbergCement was reported in the Global Cement Directory 2019 as already being partly closed. This latest news is regrettable but not surprising.

Graph 1: Cement consumption and production in Egypt. Sources: Industrial Development Agency, Global Cement Directory 2019, Cement division of the Building Materials Chamber of the Federation of Egyptian Industries.

As Graph 1 shows that the backdrop here is of a local cement sector rife with overcapacity. Capacity utilisation rates have hovered around 70% in recent years. The sector breaks down into about a quarter of production capacity under state control and the remainder owned by private companies. Overall, about half of the production capacity is run by multinational companies like Greece’s Titan, France’s Vicat and Germany’s HeidelbergCement.

The country hosts some of the largest cement plants in the world as well as several very big plants by European or North American standards anyway. The whopping 13Mt/yr government/army-run El-Arish Cement plant at Beni Suef opened fully in 2018. It seemed likely that there were going to be losers in the industry following that kind of disruption from a state-owned player. Indeed, Medhat Istvanos, head of the cement division of the Building Materials Chamber of the Federation of Egyptian Industries, explicitly blamed the El-Arish Cement plant for making the situation worse in September 2018. He said that the decision to build the plant was ‘not based on precise information’ and that it had harmed local production.

In the wider picture, the cement sector started to move away from subsidised natural gas and heavy fuel oil to coal instead in the mid-2010s. Tourah Cement mentioned this in its statement about halting production. The government has supported the cement industry through large-scale infrastructure projects and a state-sponsored compensation system under the Contractors Compensation Act that offset the loss prompted by the Egyptian pound’s floatation in 2017.

However, overcapacity has consistently been a problem and this was clear when the El-Arish Cement plant was approved. Exports of cement crept up to 1Mt/yr in 2017 from 0.1Mt/yr in 2015. Yet, as the Low-Carbon Roadmap for the Egyptian Cement Industry pointed out, Egyptian FOB exports of cement cost US$20/t higher than regional competitors such as Turkey. At this kind of disadvantage Egypt lacks the traditional escape route for an overproducing cement sector.

In these kinds of conditions, consolidation appears to be crucial while organic or government-backed demand plays catch-up with the production base. Certainly Egypt has the population and the development potential as its economy grows in the medium to long term. The government stabilising the economy after recent troubles is crucial for the construction industry. In the meantime all is not lost as the focus is on efficiency gains and cost cutting. The growth of alternative fuels as the sector’s fuel mix continues to adjust to the new normal following the abolition of subsidies on natural gas is one example of this.

Belgium: Cembureau, the European cement association, has appointed Raoul de Parisot, advisor to the chairman and chief executive officer (CEO) of Vicat, as its new president. He will succeed Gonçalo Salazar Leite, the Vice-Chairman of SECIL. Isidoro Miranda Fernandez, CEO of LafargeHolcim Spain, will assume the position of Vice President.

Philippines: Eagle Cement says that the opening of its new Malabuyoc integrated 2Mt/yr plant in Cebu has been delayed by six months to mid-2021. The new unit had been scheduled to start operation in late 2020, according to the BusinessWorld newspaper. The holdup has been blamed on delays in obtaining permits for the project. However, the company intends to start selling cement in the Visayas region by the end of 2020 as originally promised.

John Paul L Ang, the president and chief executive Officer (CEO) of Eagle Cement, made the comments at the cement producer’s annual stockholders' meeting. Work on the new plant started in late 2017. Once complete the new line will bring the company’s total cement production capacity to 9.1Mt/yr. The project also includes port facilities and cement terminals that will serve markets in Visayas and Mindanao. Eagle Cement also operates an integrated plant at San Ildefonso, Bulacan and a grinding plant at Bataan.