Global Cement News

China: Authorities in Hebei Province have revealed a plan to transfer excess capacity from its heavy industries, including cement, abroad by 2023. Hebei intends to move 5Mt of cement production overseas by 2017 and 30Mt by 2023. The initiative also covers excess production in the steel and glass industries.

Chinese cement, steel and glass producers are struggling, with sluggish growth in the world's second-largest economy crippling demand for their products. The local government will encourage cement producers to establish subsidiaries or joint ventures in regions like Africa, Southeast Asia, South America and Central and East Europe to meet local demand.

Hebei is a major source of industrial pollutants blamed for the smog that often spreads to neighbouring regions like Beijing. The smog has prompted the authorities to rethink and change the growth model and to take more stringent measures to fight pollution.

Switzerland: Dominique Drouet, CEO of Holcim Morocco, has been appointed Area Manager for Africa Middle East and member of Senior Management of Holcim with effect from 1 January 2015. He will assume this responsibility in addition to his current role. Drouet will succeed Javier de Benito, who has decided to leave Holcim effective from 1 January 2015, to take up a new challenge outside the group.

Drouet joined Holcim in 1994 as CEO of Holcim Outre Mer and was appointed CEO of Holcim Lebanon in 1999. He took over his current role in 2004. Before working for Holcim, Dominique occupied various engineering, commercial and managerial roles in the construction materials industry. He holds a degree in Engineering from the Ecole des Travaux Publics in Paris and a Bachelor's degree in Mathematics from the University of Toulouse.

Startling news from Hebei, China this week. The northerly province intends to move out its excess capacity in heavy industries, including cement, to other countries by 2023. 5Mt of cement production capacity is planned for transfer by 2017 and 30Mt is planned for transfer by 2023. The larger figure is about the same as the cement production capacity of France or Germany!

Hebei isn't the biggest cement-producing province in China but it has received attention as the authorities have cut down on 'out-dated' production capacity. The region was targeted in a programme to cut emissions from heavy industry due to its proximity to Beijing and that city's smog issues.

The Ministry of Industry and Information Technology (MIIT) set a target of 60Mt/yr in cement production capacity to be cut by 2017. The region was also the site of massive cement plant demolitions in late 2013 and early 2014. 18 cement plants were demolished in December 2013 followed by 17 cement plants in February 2014 alongside the destruction of connected grinding and storage capacity. Overall an incredible 74 cement plants in the area surrounding Shijiazhuang alone were targeted for demolition by March 2014.

Following this massive spate of capacity elimination, the public announcement to actively move abroad marks a stark change to China's general cement industry strategy so far. The country's equipment suppliers like Sinoma have been taking business from European rivals like FLSmidth or KHD for some time now especially in developing markets.

In 2013, FLSmidth reported a cement market order intake of US$575m and KHD reported an order intake of US$216m. In comparison Sinoma's cement equipment and engineering services reported order intake of US$5.59bn. In its annual report for 2013 FLSmidth estimated that the global market for new kiln capacity was 50Mt. At a capacity construction price of US$150/t this suggests that Sinoma took orders for nearly three quarters of the world's required capacity for new cement kilns in 2013. Order intake covers more than just building cement plants, so this quick calculation presents only a rough impression of what's going on.

More recently Chinese cement producers have started building their own cement plants or funding them outside of China. In October 2014 State Development and Investment Corp and Anhui Conch Cement Company announced plans to fund a plant in Indonesia. In September 2014 ground breaking was held for a Chinese-funded plant in Kyrgyzstan. In June 2014, Huaxin Cement invested in Cambodia Cement. This was its second overseas investment following a project in Tajikistan in 2011.

With China's government still attempting to avoid a hard economic landing as its growth slows, moving industrial overcapacity overseas makes sense. International and national players must be worried about the potential scale of this transition. On the plus side, however, those notorious inscrutable Chinese production figures in the cement industry will be far easier to analyse in plants outside of China facing international competition. Today Hebei, tomorrow the world!

France: Lafarge has held its first global supplier competition, which had a total of seven categories, in a ceremony at its headquarters in Paris. With its ADAMS® technology for filling powder-type products into watertight PE bags, HAVER & BOECKER was able to win in the category of 'sustainability.' The jury's reasoning was that the technology showed 'an ability to operate in a sustainable manner, including the deployment of appropriate corrective actions.'

"Suppliers play an important role in our operations, delivering value year after year and pushing the boundaries in terms of innovation and cost competitiveness," said Thierry Metro, senior vice president of Energy and Strategic Sourcing at Lafarge. "The Global Supplier Awards represents a victory for our suppliers, for Lafarge and for our customers."

South Africa: PPC has announced that its full-year profit declined by 9% as its Africa expansion plan failed to offset declining sales in the domestic market. Net income was US$76.7m in the year through November 2014, compared with US$84.1m a year earlier. Sales grew by 9% year-on-year to US$8.13bn. Cement sales volumes grew by 2% year-on-year. "Performance was hampered by industrial action on the platinum belt, which had an adverse impact on trading conditions in South Africa," said PPC.