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Update on Italy - 2019
Written by David Perilli, Global Cement
10 April 2019
More movement in Italy this week with Buzzi Unicem’s purchase of three cement plants from HeidelbergCement. Buzzi acquired the Testi integrated cement plant at Greve and the Borgo San Dalmazzo and Arquata Scrivia grinding plants in Piedmont. No value for the transaction was disclosed but HeidelbergCement trumpeted that it was ‘well on our way’ to reach its target of Euro1.5bn of disposals by the end of 2020. This follows last week’s purchase of Cemitaly's Spoleto cement plant in Perugia by Colacem. Cemitaly, in case readers don’t know, is another of HeidelbergCement’s Italian subsidiaries.
Upon completion of these deals, Buzzi Unicem will own 10 integrated plants and five grinding plants in Italy. It continues the company’s consolidation drive in Italy from mid-2017 when it bought Cementizillo and two of its integrated plants for the knock down price of up to Euro125m.
The two other leading cement producers are now Germany’s HeidelbergCement with its local subsidiaries (led by Italcementi) and Colacem. HeidelbergCement has 10 integrated plants and 10 grinding plant. Colacem has seven integrated plants and one grinding plant. All three companies have integrated production capacities of around 9 – 14Mt/yr. Since 2012 the market has shifted from six major producers to three. Sacci, Cementir and Cemenzillo have left the field following acquisitions by their competitors. Italcementi was taken over by HeidelbergCement in 2016.
Graph 1: Cement production in Italy, 2006 – 2017. Source: Italian Cement Association (AITEC).
Data from the Italian Cement Association (AITEC) shows that the impetus for this consolidation trend was the reduction in Italian cement production to 19.3Mt in 2017 from a high of 47.9Mt in 2006. Despite this though the country still has a total production capacity of 37.7Mt/yr, according to Global Cement Directory 2019 data, giving it an utilisation rate of just over 50%. Production picked up again in the north and central regions of Italy in 2017 but this was insufficient to counter declines in the south and Italy’s islands. Exports have held steady in this time at around 2 – 3Mt/yr but this represents a doubling share of production from 5% in 2006 to 10% in 2017. Production has been steadily dwindling year-on-year since 2006 but domestic consumption rallied a little to 18.7Mt in 2017.
The Italian government instituted its ‘Industry 4.0’ policy in early 2017 to boost competitiveness. This included modest growth forecasts of 1%. International Monetary Fund (IMF) data shows that the country managed gross domestic product (GDP) growth of 0.9% in 2018. Yet, Buzzi Unicem reported like-for-like net sales contraction of 0.9% in 2018. HeidelbergCement was more circumspect in its reporting on Italy for 2018 but it did describe a ‘moderate’ increase in sales volumes of cement excluding its acquisitions.
With the IMF diagnosing the Italian economy as ‘weak’ and cutting its growth forecast to 0.1% in 2019 the prospects aren’t looking encouraging for the cement sector. AITEC data placed cement consumption at 309t/capita in 2017. This is on the low side for Western European standards suggesting that, although more consolidation could be coming, the market may also be down too. Its not great news for cement producers but the Italian market is edging ever closer to recovery.
Andrey Solovyov appointed general director of Peterburgtsement
Written by Global Cement staff
10 April 2019
Russia: Eurocement has appointed Andrey Solovyov as the director general of its 2.6Mt/yr Peterburgtsement plant. Soloviev, a graduate of the Moscow Mining Institute, holds experience working for other cement companies. He previously ran Eurocement’s Sengileevskiy cement plant in Ulyanovsk. He has been suceeded at this site by Ildus Sagitov, a graduate of the Belgorod State Technological University.
EvoQuip appoints Barry O’Hare as International Sales Director
Written by Global Cement staff
10 April 2019
UK: EvoQuip has appointed Barry O’Hare as its International Sales Director. He holds experience in the crushing and screening industry, having worked in a number of positions for Powerscreen and Terex MPS over the past 11 years, most recently as a Powerscreen Regional Sales Manager. In the new role O’Hare will be responsible for leading the strategic and operational sales activities for EvoQuip in all markets excluding North America, as well as a range of sales supporting responsibilities, including the development and management of territory sales.
Kenya/South Africa: Kenya’s ARM Cement is fighting moves by minority investors in South Africa’s Mafeking Cement to buy it out for a nominal sum. ARM Cement is attempting to sell its 70% stake in the company for around US$3m as part of its administration process, according to the Business Daily newspaper. Mafeking Cement owns limestone reserves in north-west South Africa and ARM Cement originally took a stake in the company to raise investment and eventually build a cement plant.
However, the minority investors have invoked parts of the shareholders’ agreement and filed a court application in South Africa that, if successful, would allow them buy out ARM Cement’s stake for a nominal price less than US$1. ARM Cement’s administrators PricewaterhouseCoopers have taken steps to counter the move.
Aliko Dangote raises import difficulties with Benin 10 April 2019
Benin: Aliko Dangote, the chairman of Nigeria’s Dangote Cement, raised the issue his company has with exporting cement to Benin. He said this company could not export cement to Benin despite its Ibese plant in Nigeria being under 30km from the border, according to the Vanguard newspaper. He alleged that the country was importing ‘more expensive’ cement from China instead.
Dangote made the comments in an interview with Mo Ibrahim at the 2019 Ibrahim Governance Weekend in Abidjan, Ivory Coast. He also said that he looked forward to the Continental Free Trade Area (CFTA) making trade easier in the region.