Global Cement News

Ethiopia: The Development Bank of Ethiopia (DBE) has approved a loan of USD90m for Habesha Cement. This represents 70% of the estimated USD120m that the company requires to build the first cement plant to be owned by an Ethiopian company.

Habesha Cement secured the first 30% by selling shares up until 2009 and from a USD79m deal with Northern Heavy Machinery Industries (NHI) Group in October 2010 for the provision of a turnkey cement plant. Habesha Cement was hoping to secure the rest from DBE in 2010.

However the devaluation the Ethiopian Birr by 20% in August 2010 prevented the loan being secured. The board was forced to recommend floating more shares at its second general assembly. Now Habesha Cement has raised a total of USD32m, which is still short by 8.4% of the 30% equity it needs to receive the loan.

"We are confident that we will raise the remaining funds as there are still lots of people asking to buy our shares," said Mesfin Abi, general manager of Habesha Cement. "Our worry was getting the 70% loan approved from the DBE."

The construction of the cement factory, which is to be located in Holeta, west of the capital in Oromia regional state, is to start once NHI is paid 10% (USD7.9m) of the agreed-upon amount, according to the agreement signed in 2010. The advance payment is to be paid in US dollars.

As Habesha Cement does not have access to foreign currency, it has to wait for DBE to grant it the loan so that the bank can make the payment in dollars on its behalf. Once the advance has been paid, NHI is expected to finish the construction of the factory within 20 months according to the agreement.

Habesha Cement expects to produce 85% and 95% in its first two years of production and 1.2Mt at full capacity in its third year, according to its prospectus. Once it starts to produce at full capacity, Habesha Cement will be the third largest producer of cement in Ethiopia next to Mugher Cement and Messebo Cement, which produce 1.9Mt/yr and 1.7Mt/yr respectively.

The total production of cement in the country is expected to reach 27Mt over the five years to 2016, according to the government's draft economic plan. There are currently 11 companies with a combined production of 5.4Mt/yr.

Mexico: Lorenzo Zambrano, the chairman and chief executive of Cemex, has announced that he expects the company to raise USD1bn from asset sales by the end of 2012. This is part of a continuing strategy to lower its debt, including USD180m in 2011.

In a webcast meeting with investors Zambrano said that the highly leveraged Cemex doesn't want to own assets that produce less than a 10% return on capital. "We will only sell assets that will improve our return on capital and help us to deliver our balance sheet," he stated.

Cemex's heavy debt load, USD18.4bn in total debt plus perpetual notes as of 30 June 2011, coupled with a slow recovery in key markets has contributed to investor pessimism that has knocked Cemex's share price down sharply. Zambrano added that Cemex hadn't anticipated the extent of the effects of the recession in the US, one of its largest markets along with Mexico, but that he expects Cemex's US operations to be profitable in 2012.

Oman: Oman Cement Company has obtained two loans totalling more than USD67m from BankMuscat to finance a series of upcoming modernisation projects.

The first loan of USD38m will be used to finance its kiln upgrade project and pollution control equipment improvements. The company announced in March 2011 that this would be carried out by two Chinese companies. The second loan of USD30m will pay off an existing loan of the same amount the company currently has with Bank Sohar. A statement released to the Muscat Securities Market (MSM) explains that these loans would 'hopefully reduce the cost of financing its projects.'

Outlining the reasons behind the loans the company's chief financial officer, Deepak Dikshit, stated that the loan to pay off the Bank Sohar loan will be paid back in semi-annual instalments over five years. Dikshit said that the loan for the modernisation works has a two-year moratorium and is also payable in semi-annual instalments over a period of 'effectively seven years.'

Anticipating completion by February 2012, the company will be employing CNBM International Engineering to carry out a USD30m contract to modernise the 29 year old plant, extending its life by another 25 years and increasing its capacity from 2000t/day to 2700t/day.

Oman Cement Company also signed a USD8.5m deal with Sino Environment Engineering Company to modernise the company's pollution control systems to ensure that emissions fall below 10mg/nm³, with work expected to be completed by the end of January 2012.

Indian firm ERCOM Consulting Engineers has been appointed the consultants to the projects.

Ecuador: Holcim expects to increase production capacity at its plant in the capital Guayaquil by 54% by 2012. The company will spend USD120m on expansion work and new machinery to boost cement production to 5.4Mt/yr from 3.5Mt/yr.

The machinery includes a new mill with production capacity of 250t/hr. The company is also building two warehouses for clinker and cement storage. The expansion project is currently 85% complete and will be ready to operate by the start of 2012.

Holcim decided to carry out the project based on the steady growth of public and private infrastructure projects in the country during the last few years, according to administrative manager Giancarlo Muñz. Current demand for cement in Ecuador is around 5Mt/yr, which is supplied by Holcim, Lafarge, Guapá and Cementos Chimborazo.

Romania: Cement production in Romania were up by 8.1% year-on-year in the first half of 2011 to 3.18Mt. Domestic cement sales increased by 2.4% to 2.95Mt according to data released by the Romanian Association of Cement Producers (CIROM). Romania's cement market is dominated by the local units of Lafarge, Holcim and HeidelbergCement.