Global Cement Weekly
Issue: gcw96 / 17 April 2013
Headlines
King Abdullah bin Abdulaziz Al Saud of Saudi Arabia has issued an urgent edict ordering the import of 10Mt of cement. As one of Global Cement's many followers on Twitter playfully reacted, "that's a bloody big patio."
Humour aside, the Kingdom desperately needs cement for several infrastructure projects. It committed US$373bn for development and infrastructure projects from 2010 to 2014 in its Ninth Development Plan, including building six 'economic cities.' Following this investment, an export ban on cement was introduced in February 2012 and then an import ban was repealed in March 2012. The three Saudi cement firms on whose first quarter financial results we report upon in this week's Global Cement Weekly - Yamama Cement, Arabian Cement Company and Yanbu Cement - all logged increased profits attributed to increased demand and sales.
Back in February 2013, Arab News reported that an estimated 500 trucks had been queuing outside the Yanbu plant near Jeddah. Some of whom said they had been waiting for up to five days in an attempt to receive deliveries! Abdullah Radwan, chairman of the contractors' committee at the Jeddah Chamber of Commerce and Industry, was quoted at the time as saying that the high price of cement in the country was due to a lack of cement plants in the country. The following month in March 2013 the Northern Region Cement Company was forced to halt production due to a road closure.
At the close of 2012, Saudi Arabia's cement product capacity was just over 50Mt/yr. Analysts predict that by the close of 2017 the country's demand will be over 80Mt/yr, with only 25Mt/yr of additional capacity commissioned by the same date. What happens to all that production capacity once the building is done may be giving producers across the Gulf region sleepless nights. On a separate note, Iran also reported this week that it hopes to increase its cement exports by 6Mt in the 2013 – 2014 year. The timing may be right - if regional rivalries can be put aside.
France: Ciments Français, a subsidiary of Italcementi Group, has appointed Jean Paul Méric chairman of the board and Fabrizio Donegà as chief operating officer. Outgoing chairman Yves René Nanot, who has reached the statutory age limit, has been nominated honorary chairman of the company and will continue as a director.
Méric, aged 69, studied at the École Polytechnique and the École Supérieure d'Electricité. He began his career with EDF before moving into the cement industry, first with CERILH (Centre d'Études et de Recherches de l'Industrie des Liants Hydrauliques) then Ciments Français in 1985. He became the executive vice-president for Ciments Français in 1991 and was appointed chief operating officer in 2010.
Donegà, aged 49, is a graduate in Mechanical Engineering from Genoa University and a postgraduate in Corporate Finance from Bocconi University (Milan) and Management Development from Harvard Business School (USA). He started his career with Italcementi, first as Technical Assistance Manager in 1990 then as Plant Manager. In 1999 he was appointed manager in charge of Greece and Bulgaria. Since 2007 he has been the executive vice-president of Ciments Français.
Austria: Pyroprocessing specialist A TEC GRECO has announced two appointments. Peter Schwei will join the company as Sales and Technical Managing Director from 3 June 2013. Christoph Voutsinas joined the company on 2 April 2013 as Global Sales Manager. Both roles will be based in Austria.
Schwei, aged 50, previously worked as the technical managing director for a cement producer in Austria. He holds a mining degree from Montan University in Leoben.
Voutsinas, aged 34, previously worked in account and sales management in the refractory industry. He holds a physics degree from the Technical University Vienna.
Taiwan: Taiwan Cement has said that leading Taiwanese cement makers will benefit from industry consolidation in China because it will boost prices. Due to the mergers, Taiwan Cement's clients in China are no longer demanding the price reductions they did in 2012 said Robert Chen, deputy spokesman of Taiwan Cement, to the Taipei Times.
Average cement prices in eastern and south-western China have risen recently, while prices have stopped declining in the south, said Chen. In addition, cement demand in China's rural areas has increased after the Lunar New Year holiday.
Asia Cement Corp said the problem of oversupply is easing after the Chinese government asked companies to close down inefficient kilns. The cement market in China was severely hit when the Chinese government decided to curb rising house prices, according to an official at Asia Cement. However, the official said that cement prices in China only recovered to the levels of 2011, when the Chinese government decided to open up the cement market and increase the number of suppliers.
China: Tangshan Jidong Cement reported a net profit of US$29.1m in 2012, a drop of 88.2% year-on-year according to a company statement. Operating revenue fell by 7.1% year-on-year to US$2.36bn. Jidong Cement plans to increase its production of cement by 20% in 2013 to 72Mt.
Nigeria: The Cement Manufacturers Association of Nigeria (CMAN) has called for a review of the industry's code of standards. CMAN chairman, Joseph Makoju, made the call at a forum in Abuja on concrete specifications, applications and cement standards.
"We need to have our own relevant code of practices and standards revised taking local conditions into consideration. It is also very important that our codes are robust and standards are robust, practical and uniformly and consistently applied in practice," said CMAN vice chairman Jean-Christopher Barbant. He added the current codes, when reviewed, would ensure uniformity in applications.
Joseph Odumodu, the director general of the Standards Organisation of Nigeria, said that the issue of quality had been a major challenge facing the regulatory agencies. He cited an example of 32 cement trucks from Benin that had been blocked from entering Nigeria as an example that the federal government should emulate.
Saudi Arabia: Yamama Cement has reported that its net profit remained stable year-on-year for the first three months of 2013 at US$73.9m. However its net profit rose by 59% from US$46.4m in the fourth quarter of 2012. The company attributed the increase in net profit from the fourth quarter to an increase in domestic demand.
The Arabian Cement Company reported a net income of US$42m for the first three months of 2013, a rise of 7.7% from US$39m year-on-year. Net income doubled from US$21m for the fourth quarter of 2012. Gross profit fell year-on-year by 3.6% to US$44.9m from US$46.5m. The company attributed the year-on-year rise in net income to a decrease in operating expenses and the increase in other income. The decrease in gross profit was attributed to a decrease in sales revenue.
Yanbu Cement Company reported that its net profit rose by 70% to US$65.9m in the first quarter of 2013 compared to US$38.4m in the same quarter in 2012. Net profit rose by 21.4% from US$54.1m in the fourth quarter of 2012. Yanbu's gross and operating profits rose accordingly. The company attributed the rises in profits to increased sales and as a result of the start of 'Line 5 commercial production from April 2012 and Opex efficiencies.'
Iran: Iran exported over 13.65Mt of cement and clinker in the Iranian calendar year which ended on 20 March 2013. The country exported over 11.85Mt of cement and 1.79Mt of clinker, according to the IRNA News Agency.
1.04Mt of cement and 179,000t of clinker were exported in the last month of this period, from 19 February 2013 to 20 March 2013. In the 2012 - 2013 year Iran exported cement to 24 countries including Iraq, Azerbaijan, Turkmenistan, Afghanistan, Russia, Kazakhstan, Kuwait, Pakistan, Qatar, Turkey, the United Arab Emirates, Georgia, Oman, India and China.
Abdolreza Sheykhan, an official with Iran's Cement Producers Association, said in February 2013 that the country plans to increase its cement output up to 85Mt by the end of the 2013 - 2014 Iranian calendar year. Sheykhan also expressed the hope that Iran's cement exports would reach 18 - 20Mt in the current calendar year.
Uganda: Hima Cement says it has successfully challenged the loss of its limestone mining rights in Kasese, western Uganda.
David Njoroge, the General Manager of the Lafarge subsidiary, stated that the company had challenged the move during an Administrative Review process that was conducted in accordance with the Mining Act. It cited various instances of breach of the requirements of the law in the handover of its mining rights to the third party. Njoroge said the matter went to the High Court and has now progressed to the Court of Appeal.
"A stay of the orders of the High Court has been applied for and the appeal process has been commenced seeking to overturn the ruling of the High Court," said Njoroge. Hima lost the rights in early April 2013 to the East African Gold Sniffing Company following a Ugandan High Court ruling.
Nepal: The Nepalese Ministry of Industry intends to petition the Russian government for a US$11.5m grant to upgrade equipment at the Udayapur Cement Factory, the country's largest state-owned cement plant.
"The loan that we are looking for from the Russian government is solely to replace machine equipment parts," said Uma Kanta Jha, secretary of Ministry of Industry. Previously the ministry asked the Russian government for a grant for the Janakpur Cigarette Factory.
Key problems besetting the Udayapur Cement include a lack of raw materials, ageing machinery, overstaffing and mounting debts. The Nepalese government's procurement policy has been blamed for making it difficult to source raw materials from India, such as coal. Currently the factory has 549 permanent staff on its payroll. The plant incurred a loss of US$10.2m in 2010 - 2011 and has a cumulative loss of US$205m. The company last released audited financial results in 2004 - 2005.
Oman: The Oman Cement Company has reported that a dispute with a contractor has been settled. The company has received a settlement of US$7.81m from an unnamed contractor who was implementing a new clinker production line.
The compensation included US$110,000 towards another contract for an alternate belt conveyor. The clinker plant has been commissioned and commenced commercial production in 2011. The company had raised a compensation claim on the contractor for certain project-related issues. Similarly, the contractor had also raised claim for additional payment for some of the project activities. Oman Cement stated that further details will be disclosed in its next financial statement.
Saudi Arabia: King Abdullah bin Abdulaziz Al Saud has issued an urgent command ordering 10Mt of cement to cope with a local shortage. Additional measures included plans to build three to four new cement plants with a production capacity of 12Mt/yr. US$800m has been approved to support the program for three years.
The Saudi Press Agency announced the urgent directive to address a growing demand for cement in light of rapid urban growth and government infrastructure projects.
China: Output of cement in China reached 417Mt in the first quarter of 2013, a rise of 8.2% year-on-year according to data issued by the National Bureau of Statistics of China. Cement output in March 2013 grew by 6.9% year-on-year to 187Mt.
In a separate formal announcement China's Ministry of Industry and Information Technology informed the provinces that 73.5Mt of obsolete cement production capacity will be eliminated in 2013.
Vietnam: Cement producers in Vietnam lost at least US$80m in 2012 in a bid to undercut each other, according to Tran Van Huynh, Chairman of Vietnam Building Material Association. Huynh made the comment as he warned that producers face 'huge' losses from attempts to clear surplus inventory by exporting cement and clinker. In 2012 local firms incurred losses of between US$8 - 10/t of exports.
Huynh asked local cement producers to cooperate instead of undercutting each other to keep export prices above domestic ones. He also recommended that the Vietnam Cement Association set reasonable export prices as well as help firms penetrate large markets.
Due to cement output exceeding demand, the Ministry of Construction has requested local cement firms to seek further export markets. However, local producers face difficulties in exporting cement due to poor infrastructure, high transport costs and a lack of competitiveness. In addition Vietnam lacks ports capable of docking ships over 50,000t that are necessary to carry goods to distant overseas markets.
Vietnam is predicted to face a huge cement inventory of 14 – 15Mt by 2015. By that time the country's cement output will reach 90Mt whilst demand is estimated to be 75 – 76Mt.
India/China: Sinoma International Engineering (Hong Kong) Co Ltd, part of the National Materials Group (Sinoma), has entered the Indian cement equipment production industry with the acquisition of a major stake in LNV Technology Pvt Ltd, based in Chennai, India for US$23.9m.
According to the agreement, Sinoma International Engineering now has a 68% share in LNV Technology, which has become a member of the Sinoma Group. The earlier joint venture partners V C Rao, managing director of the company and LV Technology Public Co Ltd, retain around 16% equity each. Liu Zhijiang, group chairman of Sinoma said that the Chinese firm would bring in its expertise in research and development, design, manufacturing, installation and after sales service to the Indian joint venture. With the venture, LNV Technology expects to be the leading supplier of cement equipment in India in the next five years.
Rao said that LNV Technology would look at setting up engineering, procurement and construction (EPC) capabilities, which are not prevalent in the Indian cement equipment industry. "Sinoma is the only company in the world to do this kind of EPC in the segment. That model is not available in India now, which will be brought in through LNV Technology," he said. Globally 80% of the cement equipment market is cornered by just four companies: Sinoma International, FLSmidth, Polysius AG and KHD.
About Global Cement Weekly
Global Cement Weekly is the weekly cement industry email newsletter from Global Cement.
To sign up for Global Cement Weekly follow this registration link to PRoIDS Online.
If readers have any news or personnel changes they would like to report in Global Cement Weekly email us at editorial@propubs.com.