Global Cement News

India: JK Cement has announced that the Board of Directors has appointed Paul Hugentobler as an additional director in the Board, to hold office until the conclusion of the next Annual General Meeting. Previous to the appointment, Hugentobler served as an advisor to Holcim between 1 January 2014 to February 2014. Between 1999 – 2000 he was the CEO at Siam City Cement and between 1980 – 1994 Hugentobler was a project manager at Holcim Group Support.

Mexico: Cemex has announced that it has promoted its chief financial officer (CFO), Fernando Gonzalez, to chief executive. Gonzalez replaces Lorenzo Zambrano, who died suddenly on Monday 12 May 2014. It also named Rogelio Zambrano, a cousin of the late executive, as its new chairman. Lorenzo Zambrano had been chief executive since 1986 and chairman since 1995.

"We will stay focused on creating value for all of our stakeholders," said Rogelio Zambrano in a statement. "I am very optimistic about Cemex's future." He has been a member of the Cemex board since 1987 and president of the company's finance committee since 2009.

Fernando Gonzalez joined the company in 1989 and held senior positions in a number of regions before being named executive vice president for finance and administration several years ago. "We are encouraged by the positive outlook and the improving business environment in the markets where we operate," he said in the release.

The board's decision to replace Lorenzo Zambrano from within the company is likely to reassure investors of continuity at Cemex, which is seeing a recovery in earnings after the recent economic crisis led the highly leveraged firm to refinance debt, sell assets and lay off around 10% of its workforce. The speed at which the board has responded is also likely to instill confidence.

After taking over the company, Zambrano embarked on a rapid and ambitious international expansion that transformed Cemex from a regional producer into a global supplier of cement and building materials, borrowing heavily to acquire companies and aggressively paying down debt.

The prospects for the East African cement industry have risen this week following the formal agreement to build a new railway line linking the port city of Mombasa and Nairobi in Kenya. The US$3.8bn project will replace the existing 100 year old narrow gauge track with work scheduled to start in October 2014 and a completion date in 2018. The second phase of the project is then intended to extend the line to neighbouring inland countries including Uganda, South Sudan and Rwanda among others.

The bottom line here from Reuters' reporting is that the new line will cut freight costs by more than half to US$0.08/t per km from US$0.20/t per km. Anybody considering sending freight along the 610km line could see their costs drop from US$122/t to US$49/t. With the average cement price in Kenya reported at US$75/t at the start of 2014, these kind of prices seem unlikely to throw the market to the mercy of overseas imports. Moving one tonne of cement along the full length of the line would cost more than half of the selling price. Yet the effect on input costs or transport over smaller distances may have an effect, especially if the inland extension actually gets built.

Kenya has four integrated cement plants with a production capacity of 3.4Mt/yr. Of these three - ARM Cement, Bamburi Cement (Lafarge) and Mombasa Cements are on the coast – and only one plant, the East African Portland Cement Company, is based inland in Nairobi. In addition National Cement and Savannah Cement both run clinker grinding plants near Nairobi.

A number of plants are being built. Most recently, Savannah Cement announced plans in April 2014 to build a clinker production plant. The East Africa Portland Cement Company plans to build a plant in Kajiado for operation by 2016. Nigeria's Dangote Cement has a 1.5Mt/yr cement plant planned to start operation in 2016 in Kitui, between Nairobi and the coast with ARM seeking funding to build a 2.5Mt/yr cement plant in the same region. Cemtech, a company owned by India's Sanghi Group, has plans to build a plant in West Pokot County in western Kenya but the project has been delayed due to issues with land acquisition.

Despite all this development activity Kenyan Bureau of Statistics figures suggest that more cement is being produced in the country than is officially being consumed. In 2013, 4.8Mt of cement was produced but only 3.94Mt was consumed. Yet both production and consumption have more than doubled since 2004 from 1.87Mt and 1.27Mt respectively. With the Kenyan construction sector averaging a growth rate of 6.45%/yr between 2004 and 2012, it looks likely that consumption will continue to rise and all these new cement plants are poised to benefit form this.

The old Ugandan railway, which the new railway seeks to replace, started construction in 1896 and was backed by the British government. It was nicknamed the 'Lunatic Line' given the harsh terrain and the high worker fatalities. The perils facing the project were capped by a pair of man-eating lions who attacked workers as depicted in the book 'The Man-Eaters of Tsavo' and eventually made into a film called 'The Ghost and the Darkness' starring Michael Douglass. Then as today the potential benefits of connecting the African coast to the interior were seen as high.

Switzerland: Onne van der Weijde, Area Manager for India until 25 April 2014, and member of Holcim Senior Management, will leaves Holcim effective from 1 June 2014. The member of the Holcim Executive Committee, Bernard Terver, responsible for the Indian Subcontinent, will take over direct responsibility for the country.

Mexico: Lorenzo Zambrano, CEO of Cemex died on 12 May 2014 in Madrid aged 70. There were no immediate details about the cause of death in a statement released by Cemex and there had been no reports of illness. The company added that it will continue to operate normally.

Founded by Zambrano's grandfather more than a century ago, the company started producing cement in the northern city of Monterrey, which later became one of Mexico's industrial hubs. Zambrano was born on 27 March 1944. He joined the company after graduate school in 1968, when he earned his master degree in business administration at Stanford University. By 1985 the board of directors give him full power as CEO. Then, through a series of acquisitions, Zamrano extended Cemex's reach to five continents with operations in 50 countries.

However a US$16bn acquisition of Australian building materials company Rinker in 2007 subjected Cemex to the subprime housing crisis. At the time, Zambrano put a brave face on it. "We've shown that a company that is born in a developing country can compete in the whole world and we want to keep doing it," he said. Cemex spent the following years coping with large debt obligations, struggling to make deals with lenders and trimming costs by outsourcing and restructuring jobs.

Article updated: 14 May 2014