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Egyptian cement producers fight for ‘king’ coal
Written by Global Cement staff
07 May 2014
Egypt's cement producers have taken their fight to use coal to the opposition in recent weeks. Producers like Suez Cement and Titan have started pushing the benefits of using coal including its place as an international mainstay and highlighting the potential savings for the state.
In March 2014 the Minister of Trade and Industry Mounir Abdel Nour announced that cement companies could start using coal from September 2014. However, with pressure from environmental activists and even the Minister of Environment voicing disapproval for coal this seems to be a long way off. Fuel issues continue to bedevil Egyptian cement producers as reports emerged this week that gas supplies to 10 cement plants were cut. The plants, which represent 70% of the country's production base, have been forced to close temporarily. Egypt is one of the largest non-OPEC (Organisation of the Petroleum Exporting Countries) oil producers in Africa and the second largest dry natural gas producer on the continent.
The Egyptian government has been planning a reduction in the use of natural gas by industry. Yet the scale of the reduction has shifted. At first the Ministry of Petroleum intended to reduce supplies to cement plants by 35% in January and February 2014. Reportedly the price of cement then shot up by 30% in March 2014 to offset the rise in energy prices. Then the gas was cut completely, leading to the shutdowns.
In response Egyptian cement producers are investing in converting to using coal. This week Suez Cement announced a planned investment of US$40m to convert two of its four plants to use coal instead of natural gas subject to approval from the Ministry of Environment. Back in November 2013 Suez Cement announced similar plans to spend US$72.5m on converting its plants for coal. Similarly, Lafarge's preparations to use petcoke were also delayed by the ministry in February 2014.
Users of Egypt's gas supplies are caught between the reform of energy subsidies, a shortage in gas supplies and an increase in local demand. Industrial users like cement plants are stuck in a queue behind export markets and power plants. In addition international events such as the political instability in Ukraine might potentially rock the Egyptian gas market if Russian supplies were affected. The European markets would then start scrambling to secure their gas from other places such as Egypt.
In this situation, moving to the use of imported coal makes sense for cement producers. Yet groups like the 'Egyptians Against Coal' campaign argue that the issue is also about Egypt's sovereignty over its energy sources, not just pollution. Despite the optimism of the activists it seems unlikely that they can resist market pressures for long, especially with producers such as Suez Cement and the Arabian Cement Company announcing plans for increased alternative fuels substitution rates alongside their bigger plans for coal. Whether this is more than a sop remains to be seen.
Once dubbed 'King Coal' for its leading place in British industry before the second half of the 20th Century, coal is looking likely to take the crown as the fuel of choice in the Egyptian cement industry. How long it retains its crown though depends on the on-going competition between coal and gas use around the world.
HeidelbergCement India’s CEO quits
Written by Global Cement staff
07 May 2014
India: Ashish Guha, chief executive officer (CEO) and managing director (MD) of HeidelbergCement India has resigned.
"Ashish Guha, CEO and MD of the company has notified the board at its meeting held on 2 May 2014 that he had tendered his resignation to HeidelbergCement Group," said HeidelbergCement.
US: Titan America has announced that it has recently formed ST Equipment & Technology LLC (STET), in order to further expand the development of its separation technology in fly ash and mineral applications worldwide. STET will be based in Needham, Massachussetts, US.
Mike Allen, who recently joined the Titan family of businesses, will serve as STET's President. His experience spans 30 years in international mining and minerals equipment and operations, most recently as Komatsu America Corp's Vice President of International Sales. He reports to current Titan America CEO, Aris Papadopoulos, who will become STET's Executive Chairman on 1 August 2014.
US: Vulcan Materials has reported that it made a first-quarter profit, helped by a recent asset sale and improved revenues. Vulcan reported a profit of US$54m. This compares to a loss of US$54.8m in the first quarter of 2013.
Vulcan's revenue for the quarter climbed by 6.7% year-on-year to US$574.4m. Net sales were up by 9% to US$44m and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) came in at US$39m, compared to US$26m in the first quarter of 2013.
The latest reporting period included a gain of US$1.04/share related to the sale of the company's Florida-area cement and concrete assets in March 2014 to Colombia's Cementos Argos. Excluding that benefit and other items, the company had a first-quarter loss of US$0.28/share compared to a loss of US$0.47/share in the same period of 2013.
Don James, Chairman and CEO of Vulcan Materials said, "We continue to experience strengthening demand in each of our end markets and across most of our footprint. Our operations and sales teams continue to deliver strong incremental margins."
Germany: HeidelbergCement has announced that its revenue and sales volumes increased in the first quarter of 2014, although it still made a loss for the period.
Revenue was up by 5.7% year-on-year for the quarter at Euro2.75bn, compared to Euro2.60bn in the first quarter of 2013. Operating income before depreciation (OIBD) was Euro229m, a 15.6% increase from Euro198m. The German multinational reported successful price increases and improved cost control as reasons behind the improved takings. Despite this, the group still reported a net loss of Euro108m for the period, although this constituted an improvement on the Euro187m that it lost in the first quarter of 2013.
HeidelbergCement reported that sales benefitted from warmer than usual weather in Europe. In North America sales volumes were adversely affected by the extremely low temperatures seen as the result of the polar vortex weather phenomenon. Elsewhere, the group reported that Asian and African markets 'continued to develop positively.' Across all of its markets, cement and clinker sales volumes rose by an average of 10% with Europe and Central Asia both reporting double-digit growth.
"Business development in the first quarter has strengthened our confidence in the outlook for the 2014 financial year," said HeidelbergCement's CEO Dr Bernd Scheifele. "Deleveraging in order to regain investment grade rating remains the highest priority for us. To this end, we will continue to be very disciplined in our spending in 2014 and focus more intensively on the sale of the building products business line in the United Kingdom and North America as well as other assets that do not belong to our core business. At the same time, we will remain on course with our successful strategy of targeted expansion of our cement capacities in growth markets."
Going forward, HeidelbergCement expects that North America will see a continuation of its economic recovery and some stabilisation in Eastern Europe. Further rises in demand are expected in Central Asia. In Western Europe, the group expects healthy growth in demand based on the strong fundamentals in Germany, the UK and Benelux.