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Australian CO2 tax plans 'threaten 1800 cement jobs' 26 July 2011
Australia: The Federal Opposition has claimed that 1800 cement industry jobs will be at risk from Labour's carbon tax and proposed new shipping rules. Nationals leader Warren Truss says the USD2.2bn-a-year industry is facing a 'double-whammy' under the Gillard government, saying that domestic cement manufacturers could be killed off by 'dirtier' imports, made cheaper under the carbon tax.
"The paradox is Australian cement production is a leader in low-emission technology and any shift to imports will force global CO2 emissions to rise," said Truss. He added that the Australian cement industry has the world's second lowest greenhouse gas emissions behind Japan. "The carbon tax will price Australia's cleaner cement out of the market, giving the green light to our international competitors to boost their higher CO2-emitting production and flood Australia with dirty cement. The Australian cement industry will be crushed by competitors who will not be paying a carbon tax."
Mr Truss said Labor was also rewriting the Navigation Act to force businesses that ship products around Australia to use domestic union-dominated vessels. He said 'unionised shipping' in Australia cost significantly more than current international market rates and would be another blow to the cement industry.
"Right now it costs about the same to ship cement from China to Australia as it does to ship it from Adelaide to Port Kembla," he said. "Under the Gillard government's sop to the maritime union, our biggest competitors in cement - China, Indonesia, Taiwan and Thailand - will dramatically undercut Australian suppliers on shipping costs alone."
The Cement Industry Federation (CIF) backed Truss's claims, saying the shipping reforms would impose new cost burdens on the sector. "Australian manufacturing cannot afford adding further cost imposts as a result of regulatory changes to coastal shipping," said a CIF spokeswoman in a statement. "While improving job security and conditions for Australian-based shipping crew is important, this must be weighed against the job security for manufacturing workers in primary production and manufacturing industries."
Meanwhile, Truss said a large section of the cement manufacturing sector would not be compensated under the carbon tax plan. The compensation package would apply only to producing clinker, the first stage of making cement. "The milling stage to make cement receives no compensation," he said.
Truss dismissed federal Treasurer Wayne Swan's comments that predictions of job losses in the manufacturing industry as a result of the carbon tax were 'doom and gloom.' "It is simply a nonsense for Mr Swan to suggest that his tax on Australian industry is not going to affect the competitiveness of Australian producers," he said. "We will be the only cement producers in the world and the only manufacturing industry in the world that pays a carbon tax. It naturally makes Australian products less competitive and will cost Australian jobs."
Cemex reports second-quarter 2011 results 25 July 2011
Mexico: Cemex has announced that its consolidated net sales increased by 9% during the second quarter of 2011 to approximately USD4.1bn compared to the same period in 2010. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 7% during the quarter to USD615m compared to the same period of 2010.
The group attributed the increase in consolidated net sales due to higher volumes mainly from operations in Northern Europe, South/Central America, Mexico and the Caribbean, with infrastructure and residential sectors acting as the main drivers of demand in most markets.
The group's free cash flow (after maintenance capital expenditures) for the quarter was USD18m, compared with USD187m in the same quarter of 2010. Its operating income in the second quarter declined by 12% to USD258m.
Fernando González, Executive Vice President of Finance and Administration, said, "This is the third consecutive quarter of top-line growth in our results. We are pleased with the quarterly performance of our operations in Northern Europe, the South, Central American and Caribbean region and Mexico, which helped mitigate the challenging conditions of the construction sector in the US. We also remain focused on our transformation process, which will reach a run rate of USD400m in recurring improvement in our steady state EBITDA by the end of 2012."
Net sales in Mexico increased by 5% in the second quarter of 2011 to USD968m, compared with USD923m in the second quarter of 2010. Operating EBITDA declined by 4% to USD309m versus the same period of 2010. Cemex's operations in the US reported net sales of USD619m, down by 9% from the same period in 2010. Operating EBITDA was a loss of USD22m.
In Northern Europe, net sales for the second quarter of 2011 increased by a massive 24% to USD1.35bn, compared with USD1.10bn in the second quarter of 2010. Operating EBITDA for the region was USD152m, 52% higher than in 2010. Second-quarter net sales in the Mediterranean region were flat at USD477m. Operating EBITDA decreased 15% to USD125m for the quarter versus the comparable period in 2010.
The group's operations in South/Central America and the Caribbean reported net sales of USD442m, an increase of 23% over the same period of 2010. Operating EBITDA decreased by 3% to USD125m in the second quarter of 2011, from USD128m in the second quarter of 2010.
Conversely, Asia saw a surprise decrease reporting a 9% decrease in net sales for the second quarter of 2011 to USD129m. Operating EBITDA for the quarter was USD22m, down a gigantic 45% from the same period of 2010.
Saudi Arabia: Southern Province Cement Co., which is Saudi Arabia's biggest cement firm by market value, has announced that its second-quarter net operating profit rose by 29.2% compared with the year-earlier period, to USD63.7m. It attributed the increase to higher demand driving sales.
The result was marginally above the USD63.2m predicted earlier by the firm. First-half earnings per share were USD0.88, compared with USD0.71 in 2010.
Indonesia: The capacity of Indonesian cement industries will increase by 5Mt/yr in 2012 to 59Mt/yr. "The capacity hike is needed to respond to increasing demand in the domestic market," said the head of the Indonesia Cement Association (ASI), Urip Trimuryono.
Urip said the additional capacity would come from PT Semen Gresik and PT Semen Tonasa, which each plan expansions of 2.5Mt/yr. In 2013 the installed capacity will increase by 1.8Mt/yr following the completion of the construction of a plant owned by PT Holcim Indonesia.
Investment in the cement industry is excluded from the list of industries banned for foreign investment and Urip said that local cement producers were ready to face competition from foreign investors. "This means anyone may build a cement factory in Indonesia but must be ready for free competition," he said.
Three foreign companies plan to invest in the national cement sector, namely Lafarge Cement Indonesia, which will build a cement factory in Langkat, North Sumatra with a capacity of 1.5Mt/yr with an investment worth USD350-550m. The second company is China Anhui Conch Group, which is investing a massive USD2.35bn in cement factories in the four eastern provinces of South Kalimantan, East Kalimantan, West Kalimantan and West Papua. The third line with the company is China Triumph International Engineering Co., which will invest USD350m to build a 2-3Mt/yr cement plant in Grobogan, Central Java.
Taiwan Cement Corp raises its game in China 20 July 2011
Taiwan/China: Taiwan Cement Corp. (TCC) has made rapid progress in the Chinese market so far in 2011, recently announcing a massive seven-fold increase in first half earnings compared to 2010. TCC took USD138.5m in earnings from operations in China in the first half, which it attributes to higher product prices and successful capacity expansions. TCC's subsidiary in China, TCC International Holding Ltd, registered USD43.3m and USD95.2m in earnings in the first and second quarters respectively.
According to analysts, China's cement industry normally improves in the second quarter. TCC International shipped 7Mt of cement in the first quarter, with investors forecasting the volume to exceed 9.2Mt in the second quarter. If realised, such figures would represent a 30% year-on-year increase.