Displaying items by tag: PPC
Zimbabwe: PPC Zimbabwe intends to invest US$75m in 2015 on its Harare cement mill to develop its export market. The mill will be commissioned in the first quarter of 2016 according to PPC Zimbabwe managing director Njombo Lekula. The cement producer is also spending US$6.4m on production upgrades at its Bulawayo and Colleen Bawn cement plants.
Lekula told local press that PPC Zimbabwe's export market had been cut by 40% due to the strengthening of the US dollar. However, he expected the export market to improve in the remainder of 2015.
South Africa: The Competition Commission of South Africa has referred Natal Portland Cement (NPC) to the Competition Tribunal. The referral follows the Commission's investigation, between 2008 and 2012, of collusive conduct in the cement cartel against the four main cement producers, NPC, Pretoria Portland Cement Company Limited (PPC), Lafarge Industries South Africa (Lafarge) and AfriSam Consortium (Pty) Ltd (AfriSam).
PPC was granted conditional leniency in terms of the corporate leniency policy of the Commission. AfriSam settled with the Commission and agreed to pay an administrative penalty of US$11.2m representing 3% of its annual turnover in 2010. Lafarge also settled with the Commission and agreed to pay an administrative penalty of US$13m representing 6% of its annual turnover in 2010.
The investigation found that the four cement producers agreed to collude and to divide the cement market by allocating market shares and indirectly fixing the price of cement during a legal cartel in South Africa that ended in 1996. The Competition Commission allege that they subsequently reinforced these collusive arrangements through a series of other agreements, which NPC's representatives were party to, including an agreement to progressively exchange competitively sensitive sales data through the Concrete and Cement Institute of South Africa.
The Commission is pursuing a maximum penalty of 10% of NPC's annual turnover and a Tribunal order that NPC contravened the Competition Act.
South Africa: The board of PPC has been newly-constituted following the company's annual general meeting. Shareholders have elected six new board members. From a reduced list of 10 nominees, shareholders elected former Reserve Bank governor Tito Mboweni, former PPC finance director Peter Nelson, Nicky Goldin, Timothy Leaf-Wright, former Afrisam CEO Charles Naude and Daniel Ufitikirezi. Ufitikirezi is chairperson of PPC's Rwandan business. The appointment of Darryll Castle as CEO was also approved by shareholders and Tryphosa Ramano retained her position as CFO.
South Africa: PPC has named a mining industry veteran as CEO, ending a three-month leadership vacuum that has hit its share price. Darryll Castle will take over as CEO from 12 January 2014. Castle previously worked as chief operating officer (COO) at base metal miner Metorex, which has since been acquired by China's Jinchuan Group. A chartered financial analyst, he has been CEO of Trafigura Mining Group and Anvil Mining. Castle's experience includes projects in Zambia, Angola and Tanzania.
Lafarge and Holcim merger
The year has been dominated by one story: the merger of the two largest European-based cement producers, Lafarge and Holcim. The implications are massive. At a stroke the new company can dispose of less profitable units, clear debts and benefit from new mega-economies of scale. As Europe emerges from the recession, LafargeHolcim will be ready. Worldwide it is a rebuff to the consolidating Chinese cement producers who are poised, if they wish, to emerge from China and dominate international markets. The process has appeared surprisingly smooth so far with considerable forward planning. This week the European Commission has approved the proposed merger.
Lafarge CEO Bruno Lafont described the deal as 'a merger of equals'. What he didn't say is that the merger will leave LafargeHolcim with no equal. However, one question remains. Once the merger is complete will the new company be profitable?
China heads abroad
State planners in Hebei Province revealed plans to move excess cement production capacity outside of China in their usual sparse style. The quiet tone of the announcement failed to match its intentions to move 30Mt of capacity abroad by 2023. It is the next step after becoming the world's biggest cement producer, capturing swathes of the equipment market and consolidating its many local producers. How Chinese cement producers will fare in the wider global market remains to be seen. Yet while its economy remains strong the gobbling up of European utilities by Chinese companies suggests that, if all else fails, money talks.
Coal for India
If you can't fire-up your kiln you can't make clinker. With Indian cement producers reporting falling profits in 2014 the squabbling over coal allocation in the country summed up some of the input cost and infrastructure problems facing the country's cement industry. The coal blocks are due to be auctioned off from January 2015. Meanwhile analysts predict that Indian cement demand is unlikely to grow until 2016.
Sub-Saharan scares and skirmishes
The creation of Lafarge Africa means that three producers are now in a skirmish in Sub-Saharan Africa: Lafarge, Dangote and PPC. All three companies are present in multiple countries and expanding fast. This week, for example, PPC announced proposed merger plans with AfriSam. Given the low cement consumption per capita in this region the benefits of getting in early are immense. Unfortunately, there are many speed bumps along this road to development. One is the on-going Ebola epidemic. Left unchecked it could cause untold economic damage.
ASEAN set to open up
The Association of Southeast Asian Nations (ASEAN) is set to drop import tariffs in 2015 as it establishes a common market. Already in preparation cement producers have started to change their strategies, thinking regionally instead of nationally. Holcim Philippines, for example, announced in February 2014 that it was considering delaying building a new plant as it analysed the situation. The region, including high-growth countries like Indonesia and Thailand, could see its cement industry go into overdrive. However, the benefits may not be uniform as countries like the Philippines may lose out.
The US, fracking and falling oil prices
Of the western economies recovering from the 2007 recession, the US cement industry has rebounded the fastest, due in part to fracking which has brought down the cost of energy. The Brent Crude price hit a low of US$60 per barrel this week and this has consequences for everybody in the cement industry as fuel procurement strategies adapt.
For starters, cement producers gain a fuel bill cut as the cost of fuels fall. Producers in Egypt who have been frenziedly converting kilns from gas to coal may suddenly find their margins improve. Low energy prices also take away financial motivation to co-process alternative fuels in cement kilns. Finally, what of the giant infrastructure projects in Organisation of the Petroleum Exporting Countries (OPEC) like Saudi Arabia? Take away the petrodollars propping up these builds and cement demand may evaporate.
For more a more detailed look at trends in the cement industry check out the Global Cement Top 100 Report.
Global Cement Weekly will return on 7 January 2015. Enjoy the festive break!
South Africa: PPC, South Africa's largest lime and cement maker has said that AfriSam, its competitor, has proposed a merger between the two companies. AfriSam's proposal was conditional and non-binding and prompted PPC's shares to surge on 10 December 2014. This was reported by local media as a sign that the market likes the idea of the merger.
PPC said that its board of directors was currently considering the proposal and would make a further announcement in due course once it has concluded its consideration of the proposal. The firm has been in a state of flux in 2014 due to protracted boardroom wrangling.
South Africa: PPC will reshuffle its board due to shareholder pressure. However, it will not reinstate its former chief executive Ketso Gordhan. In a statement, it said that four of its current directors will step down and be replaced by six new ones, expanding the number of directors to 12, according to Reuters.
Shareholders in PPC were due to vote to remove the board in a resolution put forward by three minority shareholders, who had also backed Gordhan as a director. However, the shareholders have agreed to withdraw that demand in favour of the reshuffling plan. Gordhan was not among the latest set of candidates for new board positions.
PPC shareholders and investors were advised against removing the board to support a return by Gordhan by global shareholder voting research firm Glass Lewis & Company. The US firm told clients in a report that while Gordhan seemed qualified to implement PPC's expansion strategy, he had displayed 'erratic and volatile' behaviour and the company's board had been reasonable in accepting his resignation in September 2014.
South Africa: PPC has concluded an agreement to source waste tyres from the Recycling and Economic Development Initiative of South Africa (Redisa) for use at its De Hoek cement plant in Piketburg, Westerm Cape. PPC is also investigating the possibility of using waste tyres in some of its other plants, according to Azola Lowan, the executive for investor relations and strategy.
Redisa is the only waste tyre management plan approved by the Department of Water and Environmental Affairs and is involved in the collection and processing of waste tyres. Lowan said that the use of the waste tyres in the kilns at the De Hoek plant would be introduced from the middle of 2015 and indications were that the tyres could replace 10% of its coal usage. Lowan also confirmed there was a cost benefit from using the waste tyres instead of coal and a carbon advantage because of the reduced use of coal. Some investment was required in the feeder system to use waste tyres, which meant this initiative would only generate a return over a few years.
Lowan stressed this was one of several environmental and alternative energy initiatives being undertaken by PPC to ensure that PPC is compliant with environmental legislation and regulations by 2020. PPC has already commissioned the use of carbonaceous spent pot liner, a waste material from the aluminium industry, at its Dwaalboom cement plant in Limpopo. "We basically get paid to use that product and again it replaces about 5% of the coal," Lowan said. She added that PPC was also doing a feasibility study on a waste heat recovery (WHR) system at its Dwaalboom plant. PPC also has an agreement with Innowind, which is constructing a 60MW wind farm in the Eastern Cape to provide electricity to PPC's Grassridge quarry.
South Africa: PPC has announced that its full-year profit declined by 9% as its Africa expansion plan failed to offset declining sales in the domestic market. Net income was US$76.7m in the year through November 2014, compared with US$84.1m a year earlier. Sales grew by 9% year-on-year to US$8.13bn. Cement sales volumes grew by 2% year-on-year. "Performance was hampered by industrial action on the platinum belt, which had an adverse impact on trading conditions in South Africa," said PPC.
South Africa: PPC has compiled a shortlist of six candidates to succeed Ketso Gordhan as CEO and will make an appointment after a shareholders' meeting in December 2014, according to chairman Bheki Sibiya.
"We have 85 candidates, of whom six are the cream of the crop," said Sibiya. "We are looking at a person who is going to buy into the board's strategy. We are not looking at anybody who is going to change it."