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Sudan cement industry update
Written by David Perilli, Global Cement
27 January 2016
Sudan made a rare mention in the cement news this week when state plans to increase production capacity were revealed. Minister of Investment Mudathir Abdul-Ghani commented on a visit to a cement plant in River Nile State that the government wants to increase production capacity from 3Mt/yr to 5Mt/yr.
It's likely that the minister meant cement production as opposed to production capacity and that something was lost in translation from the original source via the Sudan News Agency. Global Cement Directory 2016 data places the country's cement production capacity at just under 7Mt/yr from six plants. ASEC and the United States Geological Survey (USGS) have cited similar figures in recent years too. A Global Cement contact reported in June 2015 that only three of the six cement plants were generally operational. These were Atbara Cement, Alshamal Cement and Al Takamol Cement (ASEC). The last available figures from the Bank of Sudan reported cement production was 2.9Mt in 2013, excluding data from one plant.
Regardless, the focus on Sudan is worth attention. The usual African demographic factors and rebuilding potential following the secession of South Sudan in 2011 suggest that the country is ready for increases in cement consumption. In 2009 per capita cement consumption was placed at 65kg/capita, an extremely low figure. After this point cement production leapt up from 0.6Mt/yr in 2009 to 2.91Mt/yr in 2013. This was due to expansion projects and new plant builds such as the Al Takamol (ASEC) cement plant. Using the current 2015 estimate for population this would still keep the country's per capita consumption below 100kg/capita.
Back in its 2012 annual report ASEC described the Sudanese market as one 'plagued' by oversupply and fuel shortages, creating a difficult environment to operate within. Transportation challenges, political instability, economic sanctions and the separation with South Sudan were all mentioned as problems to the local cement industry, hitting utilisation rates. ASEC's stated plan at the time was to reduce costs to stay in business. This all chimes with direct reports to Global Cement placing the utilisation rate at 50%. Demand for cement reportedly fell in January 2016 due to high inflation rates, at about 35%, and a poor economy.
With these kinds of conditions it would take a brave investor to spend their money in Sudan despite the golden demographic trends. State investment or incentives could be instrumental. This makes the Minister of Investment's comments noteworthy. Despite all the problems ASEC reported a 'marked' rise in sales revenue in 2013 to US$70m for its subsidiary Al-Takamol in Sudan.
Qatar National Cement Company profit increases by 10% in 2015 26 January 2016
Qatar: Qatar National Cement Company has reported that its profit rose by 10% year-on-year to US$127m in 2015 compared to US$115m in 2014. Revenue increased by 11% to US$321m from US$288m. Gross profit increased by 6% to US$130m from US$123m.
Sudan: The Minister of Investment Mudathir Abdul-Ghani has revealed state plans to increase cement production capacity from 3Mt/yr to 5Mt/yr. The aim is to achieve self-sufficiency and to build an export surplus according to local media. The announcement was given at a meeting with the managers of a cement plant in River Nile State.
PPC reports 3% drop in sales in first trading quarter of 2016 26 January 2016
South Africa: PPC has reported that its cement sales fell by 3% for its first trading that ran from October to December 2015. Cement sales in its South African business declined by 1.6% while its international businesses recorded an 8% decline, according to a trading update.
The South African cement producer reported that coastal regions in South Africa achieved positive volume growth. However this was offset by declines recorded in Gauteng and inland regions. During this period, average selling prices fell by 4%.
In Zimbabwe the completion of major infrastructure projects in Zimbabwe has led to declines of over 10% in local sales. Cement exports have also reduced due to exchange rate effects. In Botswana cement sales fell due to competition and weak demand. In Rwanda sales fell due to high rainfall and limited exports. However, the company's new 0.6Mt/yr cement plant was reported to be performing 'satisfactorily' and the kiln has passed its performance test for output and heat consumption.
Essroc Cement Speed plant to hold public hearing on waste fuels 25 January 2016
US: The Indiana Department of Environmental Management will hold a public hearing about the use of liquid waste-derived fuel at the Essroc Cement Speed plant. Essroc Cement is applying for a state environmental permit to burn liquid waste-derived fuel in one of its cement kilns in the unincorporated Clark County community of Speed. Residents have expressed concerns about the plants. No date for the meeting has been set, according to Associated Press.
Mike McHugh, the Speed plant's director, said Essroc plans to use products mostly from the petroleum industry, such as paint thinners, antifreeze and acetone. The plant will have to build two small storage facilities for it to start replacing about 25 – 30% of the coal it burns with liquid waste-derived fuel.
Essroc Corporate Environmental Engineer Luis Rodriguez said the company welcomes the public's questions. The company hosted an open house and talked with community leaders in 2014 before it submitted its application. "We actually want it to go to public comment so we can answer some of these questions... We've wanted to be as upfront on this as possible," said Rodriguez.