Global Cement News

Australia: Construction materials maker Adelaide Brighton has increased its net profit by 3.9% to US$158m in 2012, from US$152m in 2011. The company said that mining and resources projects in South Australia, Western Australia and the Northern Territory had more than offset weakness in residential and commercial construction.

"While net profit increased only modestly in 2012, we see this as a good result considering the challenges facing the industry," said managing director of Adelaide Brighton, Mark Chellew.

The company's revenue rose by 6.9% to US$1.21bn in 2012 from US$1.13bn in 2011. Earnings before interest and tax (EBIT) rose by 1% to US$232 from US$229m.

Although the company didn't provide any specific details on the cement part of its business, it did comment that sales increased overall in 2012 due to increased mining and project demand despite the weak building sector. Energy costs increased by 8%, including the US$3m after tax impact of the carbon tax. Adelaide Brighton said it is employing a number of strategies to mitigate rising energy costs including fixed price energy contracts for a portion of energy requirements, the use of alternative fuels and a continual review of operational improvements.

In December 2012 Adelaide Brighton acquired 30% of an integrated white clinker and cement production facility in Malaysia for US$29.5m. The investment is expected to generate acceptable returns and secure long term supply for Australian markets.

Chellew said the carbon tax, environmental regulations and cost pressures were likely to affect the outlook for 2013 but reaffirmed the company's commitment to reducing its carbon footprint by using imported materials and alternative fuels. The company said the high Australian dollar had enabled it to import more clinker, cement and blast furnace slag at cheaper prices. However, the strong currency and mixed local demand had curtailed domestic price growth.

Tanzania: The Tanzanian government has rejected calls by local cement companies to place trade barriers on imported cement because local production is still insufficient. Tanzania's Minister for Industry, Trade and Marketing, Dr Abdallah Kigoda said that despite the expected progress from cement industries, the government will still allow cement imports until local producers meet domestic demand.

Kigoda admitted that although imported cement is sold at a lower price compared to locally-produced cement, it should stand as an 'eye opener' for local industries to become competitive. Tanzania has three cement factories: Tanga Cement, Mbeya Cement and Twiga Cement. Another four plants are under construction. The country's cement production capacity stands at 3.25Mt/yr with actual demand placed at 4Mt/yr.

"In order to control importation of more cement local factories had to increase production to meet the demand as the country was surrounded by potential market opportunities such as Southern Africa Development Community (SADC) and the East Africa Community (EAC)," said Kigoda. He also mentioned other challenges facing the domestic cement industry such as a unreliable power sources and high distribution costs caused by poor infrastructure.

Spain/Ireland/UK: On 26 February 2013 Irish buildings materials supplier CRH plc announced that it and Spanish cement business Cementos Portland Valderrivas SA (CVP) had reached an agreement, effective immediately, regarding an asset swap in relation to certain Spanish assets.

CRH will transfer its 26% stake in Corporacion Uniland SA to CPV. In return, CPV will transfer its 99% stake in Cementos Lemona SA to CRH. CRH will also acquire Southern Cement Ltd, a cement importation business, based in Ipswich, UK as part of the transaction. As part of the transaction CRH and CPV will terminate all legal disputes with each other.

Kenya: The East Africa Portland Cement Company (EAPCC) plans to expand after returning to profit during the six months ending 31 December 2012. The company said that it was boosted by cost reduction and improved cement sales. EAPCC, Kenya's third largest cement producer, said that it was optimistic of strong full-year results and was exploring expansion into Tanzania. The company already operates in Uganda and South Sudan.

"We are now discussing the financing of these (new) projects," EAPCC's managing director Kephar Tande told investors in Nairobi. The company plans to raise new capital through the Nairobi bourse, with the aim of increasing clinker production to 1.5Mt/yr by 2016 from 0.45Mt/yr at present. Tande also expects EAPCC to double its exports (as a proportion of total production) to 10% by 2014.

EAPCC made a pretax profit of US$4.3m during the six months ending 31 December 2012, compared with a pretax loss of US$2.82m during the same period of 2011. Tande said the business boosted profits by saving about US$9.7m through increased efficiency.

This news is in stark contrast to EAPCC's 2012, which was blighted by boardroom disagreements, strikes, sackings, protests and even a shooting at the plant.

China: Cement output in China increased by 7.4% year-on-year in 2012 to 2.18Bt, according to data released by the Ministry of Industry and Information Technology. Clinker output rose by 1% to 1.28Bt. Obsolete cement production capacity of 220Mt/yr was eliminated.

In other news the China Building Material Federation has released production information for regions in north-western China. Xinjiang Uyghur Autonomous Region produced 41Mt of cement in 2012, a year-on-year increase of 32.8%. Ningxia Hui Autonomous Region saw cement output increase by 10% to 16.1Mt. Shaanxi Province saw cement output increase by 16.3% to 76Mt. Gansu Province saw cement output increase by 32% to 36.7Mt.