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Taiwan Cement heads to Turkey
Written by David Perilli, Global Cement
31 October 2018
The long expected move by a Chinese cement producer outside of East Asia took a step closer this week with the news that Taiwan Cement is negotiating with OYAK Cement over a joint venture in Turkey. Taiwan Cement says it is prepared to invest up to US$1.1bn in the subsidiary that will operate OYAK Cement’s business in Turkey. In its press release Taiwan Cement said, bluntly, that government peak production limits and market saturation in China had forced it to expand internationally.
This isn’t Taiwan Cement’s first flirtation with a Turkish cement producer. Back in June 2018 local press reported that it had signed a memorandum of understanding and a confidentiality clause with Sanko Holding about potential investment. However, the timing is curious this time because almost simultaneously Brazil’s InterCement announced that it was selling its operations in Portugal and Cape Verde to OYAK Cement. This sale alone deserves more attention given that it is the third by a Brazilian producer since September 2018 but that’s a discussion for another week. Back on OYAK Cement, whilst nothing is certain at this stage, a pledge of US$1.1bn from a foreign investor would certainly come in handy helping to raise the money at the Turkish company.
Whoever, if anybody, Taiwan Cement ends up pairing up with, the level of the investment suggests a multi-plant move. Indeed, the suggested OYAK Cement deal involves a 40% share in 13 integrated cement plants in Turkey with a production capacity of around 12Mt/yr or a 16% local market share. This isn’t far off the regular international price of US$200/t for integrated production capacity.
For a Chinese company to choose Turkey is resonant historically because it is towards the western end of the Silk Road. Marco Polo, for example, travelled from Venice to China via the territory of modern-day Turkey. The modern day version, the Belt and Road Initiative, seeks to evoke this trade route as China attempts to expand internationally.
Pertinent to the cement industry, both China and Turkey are both major exporters. Turkey is the bigger exporter by proportion of production, at 10% in 2017. Both countries were in the top five exporters to the US in 2017 with 2Mt from China and 1.4Mt from Turkey. The commonly accepted wisdom is that the Chinese industry faces major hurdles to exporting its overcapacity. Yet its production base is so large, 15 times larger than Turkey’s, that the little clinker and cement it has the infrastructure to export is still significant. It’s interesting that a major Chinese producer seeking to overcome structural and market obstacles to its expansion at home is targeting a major exporting nation. Typically, when a foreign cement producer buys local companies, one strategy is to use the new assets to ‘naturalise’ its clinker imports as ‘local’ product. Given Turkey’s already large export market this seems unlikely in this case.
The highly public nature of Taiwan Cement’s latest attempt to strike it lucky in Turkey smacks of bolstering investor confidence as much as closing the deal. Normally, this kind of thing gets announced once everything has been agreed, possibly bar the regulatory approval. Putting some money up front may make Taiwan Cement seem serious but OYAK Cement also stands to benefit from its acquisition of the former-Cimpor assets in Portugal and Cape Verde, since it gives it a toehold within the European Union (EU). This one could go either way.
Eurocement appoints new managers at Voronezh and Neviansky plants
Written by Global Cement staff
31 October 2018
Russia: Eurocement has appointed Sergey Lobov as the manager of its Voronezh subsidiary and Vadim Shablitsky as the general director of its Neviansky cement plant. Yaroslav Stoupa, Vice-President of Eurocement Group for production and technical development, introduced the new appointments at a visit to each plant.
Lobov graduated from the Belgorod State Technological Academy of Building Materials with a degree in mechanical engineering. He has been working in the cement industry for 17 years, of which 14 have has been based at the Oskolcement enterprise, where he has advanced from being an equipment repairman to a deputy general director and technical director. From 2015, he worked as the general director of Neviansky Cementnik.
Shablitsky graduated from Belgorod State University of Technology with a degree in chemical engineering and an engineering qualification. He has been working in the cement industry for over 14 years. At the Belgorodsky Cement he worked in various positions from assistant cement mill driver to plant general director, and then he was deputy general director for production at Mordovcement.
RHI Magnesita appoints Jacqueline Knox as EVP General Legal Counsel & Company Secretary
Written by Global Cement staff
31 October 2018
Austria: RHI Magnesita has appointed Jacqueline Knox as EVP General Legal Counsel & Company Secretary. She will join the company on 1 December 2018 and will be part of its executive management team.
Knox was previously General Counsel and Company Secretary at Ophir Energy, a Financial Times Stock Exchange (FTSE) listed upstream oil and gas business with a large portfolio of assets across Africa and Asia, which she helped to take from a private company to a London listing. She holds a dual degree in law and international relations (BA/LLB) from the University of Queensland and is a dual British / Australian citizen.
CNBM’s revenue rises by 21.5% to US$22.5bn so far in 2018 31 October 2018
China: China National Building Material’s (CNBM) revenue rose by 21.5% year-on-year to US$22.5bn in the first nine months of 2018 from US$18.5bn in the same period in 2017. Its net profit nearly doubled to US$1.7bn from US$956m.
Vietnam: China has become the largest importer of clinker and cement from Vietnam in the first nine months of 2018. It imported 6.56Mt with a value of US$235m, according to the Việt Nam News newspaper. The Philippines, Bangladesh and Taiwan were the next largest importers with 4.75Mt, 5.64Mt and 1.23Mt respectively.