Global Cement News

Kenya: Dangote Cement has released plans to build a US$400m cement plant in Kenya, according to the president's office of Kenya. Dangote's CEO Alhaji Aliko Dangote was part of a three-day state visit by Nigerian president Goodluck Jonathan to the east African country to build bilateral trade agreements. No further information on timescales or production capacity was released.

Iraq: ASEC Cement and Iraq's Qemmet El-Iraq have won a 14-year contract to renovate and manage the Muthanna Cement Plant in Muthanna Province, Iraq.

Abulla Hussein of Qemmet El-Iraq and ASEC Cement Chairman and CEO Giorgio Bodo attended a signing ceremony in Baghdad with Southern Cement, the state holding company that controls Muthanna Cement, on 28 August 2013. The value of the contract was not released.

"Iraq has embarked on a robust plan to rebuild and modernise its infrastructure and has launched major housing, industrial, and community projects. The rehabilitation of Muthanna is an important part of Iraq's investment in bridging the supply gap, particularly in the south," said Bodo.

Muthanna Cement is located in southern Iraq, between Najaf and Basra. Built in the 1980s, the plant has a total clinker production capacity of 1.92Mt/yr and 2Mt/yr of cement. Due to economic sanctions placed on Iraq in the 1990s, the company's current production capacity is around 20%. Work on the plant will start in the second quarter of 2014 with a plan to reach the plant's original cement production capacity of 2Mt/yr in August 2016.

Tunisia: Carthage Cement, the cement plant confiscated after the 2010 – 2011 Tunisian Revolution, has restarted its precalciner kiln ahead of a resumption of production. According to its Director General Riadh Ben Khalifa, the cement plant plans to sell at least 2.2Mt/yr.

Cemex's decision to head deeper into eastern Europe as part of the Cemex-Holcim asset swap announced this week suggests some nerve. Cement production levels started to fall in the region from 2012, according to Cembureau figures, with continued problems reported so far by the multinational cement producers in 2013. Cemex seems likely to lose money from the start with its new assets in the Czech Republic.

In more detail, Cemex will acquire all of Holcim's assets in the Czech Republic, which include a 1.1Mt/yr cement plant, four aggregates quarries and 17 ready-mix plants. In return Holcim will give Cemex Euro70m and Cemex will give Holcim its assets in western Germany including one cement plant and two grinding mills that encompass a total capacity of 2.5Mt/yr, one slag granulator, 22 aggregates quarries and 79 ready-mix plants.

Cemex must believe that it can wait out the recovery of the construction sector in eastern Europe or make savings from having a more easterly spread of assets. Certainly Cemex said in its press release on the asset swap that its earnings before interest, tax, depreciation and amortisation (EBITDA) would start to rise from US$20m to US$30m from 2014.

The question for the buyers at Cemex who considered this deal is whether the construction market has bottomed out in the Czech Republic yet. According to World Bank figures, following the 2008 financial crisis Czech Gross Domestic Product (GDP) fell to a low of US$197bn in 2009, rose again until 2011 but then fell to US$196bn in 2012. Currently the Czech National Bank is anticipating a further fall in growth in 2013. Meanwhile, data from a third quarter 2013 Czech construction sector analysis by CEEC Research reported that a drop of at least 4.7% was expected in 2013 with a follow-on decline of 2.7% in 2014.

Possibly one deal-maker for Cemex was the prospect of combined operations with Holcim in Spain across cement, aggregates and ready-mix. Similar to the Lafarge-Tarmac joint-venture in the UK, the move offers reduced risk in a declining western European market. How the Spanish competition authorities will respond remains to be seen. Elsewhere on the continent this week the decision by the Belgian Competition Council to fine the Belgian cement sector shows an example of behaviour the Spanish authorities will want to avoid.

UK: Bill Brett has been appointed as the chairman of the Mineral Products Association (MPA) for the next two years to 2015. He will succeed Dyfrig James. Brett, the chairman of Brett Group, has a wide range of commercial interests and industry involvement.

"Members have appreciated Dyfrig's inclusive approach and the efforts he has made to engage with all parts of the MPA, particularly in the regions and of course his beloved Wales," said Nigel Jackson, chief executive of the MPA. "The MPA would like to thank Dyfrig for all his efforts and wish Bill Brett every success for his two year tenure."