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India: UltraTech Cement Ltd is in talks to buy cement assets from Jaiprakash Associates Ltd. The two companies are in discussions about projects, including Jaiprakash's Rewa cement plant in central India, which has a 7Mt/yr cement production capacity.
Selling additional assets would help Jaiprakash to reduce its debt, which jumped more than four-fold in the five years through March 2014 to US$10.3bn. In 2013 UltraTech agreed to buy a Jaiprakash cement unit based in Gujarat State.
Jaiprakash is also looking for buyers for cement assets in Himachal Pradesh State, where it owns two plants with a combined production capacity of 3.5Mt/yr. Jaiprakash sold its 74% stake in Bokaro Jaypee Cement Ltd, a joint venture with the Steel Authority of India Ltd, to Dalmia Bharat Ltd for US$194m in March 2014.
After its recent divestments, Jaiprakash has a cement production capacity of 26.4Mt/yr, according to a company presentation in May 2014. The company plans to sell assets valued at about US$1.35bn by March 2015.
Kenya: East Africa Portland Cement Company (EAPCC) is set to construct a US$9.13m power plant that is expected to reduce its annual power bill by about US$5.70m. The 4MW power plant will run on waste gases generated by the company's Athi River cement plant via waste heat recovery (WHR) system. Construction is scheduled to start in September 2014 and is expected to take one year.
"The new power plant will have a huge impact on our operational costs because its output will translate to about 40% of our current total energy requirements," said EAPCC's managing director Kephar Tande.
Around 20 - 25% of the project costs will be funded from internal savings with the rest of the funds coming from commercial loans. EAPCC also hopes to permanently address the problem of frequent power outages, which have posed major problems at its clinker plant. EAPCC currently consumes about 13MW of power supplied from the national grid to run its main installations, including a 1700t/day capacity kiln.
Tande said that the new power plant would help to stabilise the company's operations as it eyes expansion of its overall cement production capacity to 2Mt/yr by 2017 from the present 1.3Mt/yr. EAPCC plans to begin procurement for a new clinker plant near Bisil, Kajiado Country, Kenya in September 2014 at an estimated cost of US$171m. "We hope to conclude the feasibility study on the new clinker plant in Bisil by end of July 2014 and move to the next stage," said Tande.
Also on the cards is the construction of a second cement plant in the Nooleleshuani area of Kajiado County by 2016. The proposed plant site is next to the limestone-rich Maasai Plains, which are the major source of raw material for the five cement companies based in Athi River.
Kenya's power shortage has held back industrial expansion for decades despite the availability of huge energy reserves such as wind, coal and geothermal. The energy sector, though critical in uplifting the country's development, has registered slow growth due to the high initial capital requirements and inability to mobilise adequate financial resources to undertake large-scale investment.
Nigeria: The management of Lafarge Nigeria has urged stakeholders in the cement sector to cooperate on the need for proper product labelling by manufacturers.
The company's general manager (Industrial Performance), Lanre Opakunle, said that the step was necessary to address the issue of incorrect cement application in the Nigeria. Opakunle said that there is a need to review how cement products are labelled in order to educate end users on the basic steps necessary for the correct application and results.
"We discovered that labelling is not adequate and we made some proposals," said Opakunle. "However, those proposals have not been taken on board. We will keep making efforts to see that they are." Opakunle added that correct labelling would help to ensure that people have the right information at their disposal.
"Lafarge is the only cement manufacturer in the market that puts the uses and specifications of cement on their bags," said Opakunle. "In our technical submission to SON we said that we want to do more than that; we want to put it in a way that the layman can understand." He noted that issues of cement application should not dwell on the cement grades; rather it should be about knowing the right mix.
"The most widely used individual application of cement in the world is 32.5 grade," said Opakunle. "It is important that the user understands how to use whatever grade of cement that is available on the shelf because of certain risks which may maybe associated with these grades, whether it is 32.5 or 42.5 grade. The information should be properly labelled on the bags."
Angola: The Nova Cimangola cement plant will get US$116m from the Angolan government to boost its cement production capacity, as per a presidential decree. The funds will be transferred by the Finance Ministry and will ensure a greater cement supply to the Angolan market and reduce cement prices.
The presidential decree described the importance of cement in the process of repairing and building manufacturing and social infrastructure in Angola, as well as for execution of house building programmes. The shareholders of Nova Cimangola are Ciminvest (49%), the Angolan State (40%) and the state bank Banco Angolano de Investimentos (10%). The remaining 1% is in the hands of individual shareholders.
EAPCC staff suspended after cement theft probe 09 June 2014
Kenya: Three employees of East Africa Portland Cement Co (EAPCC) have been suspended while three more have been put under further investigations in the ongoing forensic audit into the theft of cement. The six are said to be mid-level managers in the company's procurement and supplies department.
Another two employees have been cautioned following the audit of EAPCC sales and procurement books. "A number of staff who were found culpable were disciplined according to the gravity of their offences," said EAPCC. "Three people were interdicted, three were asked to explain their actions and why disciplinary action should not be taken against them and another two were cautioned."
The investigations into suspected theft by staff at EAPCC revealed massive manipulations of sales records leading to the fraudulent shipment of large consignments of cement from the factory premises in Athi River. Sources at EAPCC said that the audit revealed rampant manipulation of product quotations and Local Purchases Order (LPO) prices, rendering the company's products more expensive in the market hence depressing sales. This has had a direct impact on the business and raised the cost of production.
"We are not relenting on this one," said an EAPCC spokesperson. "A lot of dirty things have been going on here and we have resolved to kill the illegal deals once and for all."
EAPCC expects its profits to dip by more than 25% over the financial year that ends in June 2014. The company attributed the expected dip in profit to reduced sales and rising costs. EAPCC also attributed the outlook to reduced export sales and loss of market share in Kenya.