Global Cement News

Indonesia: It seems that not a week goes past without a forecast, announcement or other report about the continued boom in the Indonesian cement industry. Similarly, there is a steady stream of expansion announcements to accommodate the future demand. In light of another round of impressive cement statistics, what's the story for Indonesia in 2012 and beyond?

In the three months to 31 March 2012 Indonesia produced 12.5Mt of cement, an 18% rise on the first quarter of 2011. In the whole of that year, the cement industry turned out a massive 17% more cement than in 2010. These headline increases are certainly impressive and show that if the first quarter of 2012 was repeated three more times throughout the rest of the year, Indonesia would hit its 53Mt production forecast. This is more than double the cement production of 1998 (22Mt/yr in the midst of the Asian banking crisis) and, while from a low base, the values represent incredible sustained year-on-year demand growth.

But what is the potential of the Indonesian cement industry? This can be assessed by looking one of Indonesia's neighbours, namely Malaysia, and doing a quick thought-experiment. What would the Indonesian cement industry look like if the country were to suddenly develop demands and cement consumption patterns like Malaysia does today? Indonesia has a population 8.3 times higher than Malaysia¹ and a cement consumption/capita rate approximately 2.4 times lower.² Assuming current Indonesian cement consumption to be 50Mt, if all of the people in Indonesia were to suddenly start using cement like Malaysia does today, the country's cement industry would have to be nearly 1000Mt/yr to support demand!

While this is clearly not the case today and is unlikely to be fully realised, Indonesia will continue to develop economically. As it does, the world's fourth most populous nation will need more cement. How much is open to debate, but even if a small percentage of that hypothetical 1000Mt can be realised, it will certainly justify the current rush to add extra capacity. This is now especially likely in light of the December 2011 relaxation of land acquisition rules, which will make it easier to build both cement projects and the large construction projects that need cement.

Click here for much more on the cement industries of Indonesia and Malaysia (as well as Vietnam) from the April 2012 issue of Global Cement Magazine.

1. CIA World Factbook website, https://www.cia.gov/library/publications/the-world-factbook.

2. Cement consumption per capita data for Malaysia taken from Lafarge 2010 Annual Report. (http://www.lafarge.com/04112011-customers_activities-cement_market_2010-uk.pdf). Malaysia is a representative comparison for Indonesia based on its GDP to cement consumption ratio.

US: Henrik Wesseling, the plant manager at the Lehigh Cement Permanente Plant in Cupertino, California, is returning to Germany. Lehigh Cement announced that Wesseling will be leading the global fuel optimisation strategy for its parent company HeidelbergCement. His last day at the Lehigh facility will be on 26 April 2012.

Wesseling took on the plant manager role at Permanente in 2008. In his time there, he worked toward helping the company install emission-reducing technology to meet new environmental regulations. Over the past two years, he led an initiative to install an activated carbon injection system that aims to reduce mercury emissions by more than 90%.

"Henrik has performed admirably as plant manager and I commend him for all he has achieved," Kari Saragusa, Lehigh Western Regional President, said in a statement. Axel Conrads, Lehigh's region west vice president of cement operations, will lead plant operations on an interim basis while a new plant manager is sought. A new plant manager is expected to be in place within the coming months.

US: Lafarge North America will relocate its headquarters from Virginia to Illinois, a move that is expected to create around 100 jobs.

The company, currently based in Reston, already has a presence in Illinois with a facility in South Chicago and about 300 employees in the state. The relocation would move its administrative offices and create around 90 jobs in the first two years. Company officials haven't determined a timeline for the move or the exact location but said the new headquarters would be near Chicago's O'Hare International Airport.

"The location and all of the infrastructure this area offers is very important: the airport, the trains, the rivers, the lakes and the roads," said John Stull, a CEO for Larfarge's cement and aggregate concrete operations. He added that the company does a majority of its business in the Midwest and a Chicago-area location made sense.

In exchange, Illinois is offering about US$6.3m million in tax incentives to the company, which the company only gets if it meets certain job creation and economic targets. Despite this Illinois has come under fire in recent months with some business groups and companies alleging an unfriendly business climate because of high taxes and state budget woes including US$8bn in unpaid bills.

Kazakhstan: Steppe Cement, a construction materials producer in Kazakhstan, has sold 170,080t of cement for US$13.2m in the first quarter of 2012, a fall in sales volume of 9% year-on-year. Yet in the same period in 2011 the producer sold 187,404t for US$11.7m, an increase of revenue of 13%.

Total market consumption in Kazakhstan during the first quarter of 2012 increased by 9% compared to the same quarter in 2011. Its marketshare fell to 18% in the quarter compared with 20% for the whole of 2011. The average price of cement from the producer increased by 25% in the first quarter year-on-year. By share price the company is currently valued at US$68.5m.

Italy: Italcementi has inaugurated its new research centre, i.lab, costing Euro40m near Bergamo in northern Italy. Once complete the centre, which was designed by US architect Richard Meier, will cover 23,000km³ and will employ 1300 researchers.

Italcementi will focus the research on the development of new building materials and on the use of renewable and reusable raw materials. The centre will also research special products such as 'pollution' cement.

In 2010, Italcementi's ITCLab received the European Greenbuilding Award of the European Commission for energy efficient construction and now the centre can also boast Leadership in Energy and Environmental Design platinum certification. The centre allows energy saving of up to 60% compared to traditional buildings, director general Giovanni Ferrari said.