Global Cement News

France: On 1 June 2011 Lafarge announced that it would close its plant in Frangey, northern France, by the end of 2012. The site, which employs 74 people, is struggling due to overcapacity and high production costs. The workers will be offered alternative positions within the group. Workers at 10 cement plants and four grinding facilities in France staged a one-day strike on 6 June 2011 in protest at the closure.

Indonesia: China National Building Material Co Ltd (CNBM) plans to invest USD 350m in the construction of a 16,000t/day cement plant in the next two years on Indonesia's main Java island. Indonesia is looking to overhaul dilapidated infrastructure and domestic cement firms are also ramping up output to meet growing demand. Indonesia's largest cement maker Semen Gresik aims to boost its output by 50% by 2015.

India: India Cement Ltd announced its standalone and consolidated annual results for the year ending 31 March 2011 on 30 May 2011.The company registered a decline in its net sales by 7.17% to US$778.9m for the year ended 31 March 2011 from US$839.1m registered in the previous fiscal year. Total expenditure (excluding depreciation) increased by 4.15% and for the 2011 fiscal year it stood at US$682.4m, up from US$6.552m. The rise in expenditure was attributed to increases in power and fuel charges. In line with this company posted a net profit of US$15.15m, down from US$78.83m in the preivous fiscal year, a tremendous decline of nearly 81%.

The cement industry, which recorded impressive double-digit growth in the last four years, entered a phase of decelleration with the demand slackening during the year under review and registered a growth of 'only' 4.7%. An analysis of the demand reveals that while the growth in the west of India was 11.7% followed by the east at 10.3%, the central region at 9.7% and the north at 3.1%, the south registered a contraction of 3.4%. Within the south, Andhra Pradesh registered a significant decline of 17.1% in demand. With substantial increase in the capacity in the southern region, this negative growth had put pressure on cement prices, which reached their lowest level in the past five years during the second quarter of the period under review.

Over all capacity utilisation for the industry fell to 76% and in the south capacity utilisation was at just 66%.

Nigeria: BUA Group has embarked on the building of a USD 500m cement plant at Okpella community in Edo. When completed the plant will produce 2.5Mt/yr of cement. Executive Chairman of BUA Group, Alhaji Abdulsamad Rabiu, announced at the contract signing ceremony for the building of the plant on 2 June 2011 in Abuja that the building of the Edo Cement Plant would be completed by August 2013.

"The building of the Edo Cement Plant will take 28 months to be completed and it is expected to offer jobs to 4000 skilled workers and over 20,000 indirect jobs to Nigerians," Rabiu stated. He explained that the management of BUA Group had signed a contract for FLSmidth to build the plant, saying that the establishment of the facility was to assist the country to attain self-sufficiency in cement production. The project will be financed by FLSmidth and a consortium of banks led by EcoBank, which has so far provided an initial US$50m to initiate the project. Other banks in the consortium include First Bank, Diamond Bank, Fin Bank and Bank PHB.

The President of the Cement Manufacturing Association of Nigeria, Mr Joseph Makoju, lauded the management of BUA Group for the investment, saying that the plant would contribute significantly to the quest of the Federal Government to make Nigeria a net cement exporter. He lauded the government for its back-integration policy in the cement sector, saying that the policy would assist in efforts to reduce the high cost of cement and other building materials in the country. He expressed delight at the involvement of FLSmidth, saying that the company had already been involved in a number of successful cement plants in Nigeria.

The Vice President of FLSmidth, Mr Per Mejnert Kristensen, gave an assurance that his company would complete the building of the plant on schedule while commending the Federal Government for providing the atmosphere for foreign direct investment. He said his company would build a facility Nigerians would be proud of.

Brazil: Votorantim's overall operating performance improved in the first quarter of 2011 compared to the same period of 2010, with cement sales increasing. The group's consolidated net revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) amounted US$3.53bn and US$851m, an increase of 11% and 1% respectively. Ebitda margin declined from 26.5% to 24.0%, impacted by its cement and steel businesses.

The groups cement interests were negatively impacted in Brazil, as a result of the exchange of certain production plants for Cimpor shares in the third quarter of 2010. Nevertheless, sales volume increased by 1% in the country and by 2% in North America. Net revenues went up by 6% to total US$1.16bn, supported by a price increase in Brazil. EBITDA decreased from US$412m to US$312m mainly due to the exchange of certain production plants for Cimpor shares. In addition, EBITDA was also impacted by higher electricity and petcoke costs in Brazil and increased inventory in North America. Votorantim's total debt decreased by 1% by the end of the first quarter of 2011 compared to the first quarter of 2010, from US$14.06bn to US$13.93bn.

Capital expenditure amounted to US$690m, mainly for expansion projects and investment in cement accounted for 47% of the total.