Displaying items by tag: South Africa
South Africa: Several of South Africa’s cement and concrete producers have united to form a joint industry association called Cement & Concrete SA (CCSA). The association consolidates the former Association of Cementitious Materials Producers (ACMP), Concrete Society of Southern Africa (CSSA) and The Concrete Institute (TCI). It said that it aims to create long-term shared value and industry growth in South Africa through driving collaboration, skills development, innovation, and the highest standards in sustainable cement and concrete materials and products.
Chief executive officer Bryan Perrie said, “At a time when many conflicting and ambiguous messages are shared readily on various platforms, and with the proliferation of substandard products and services, the need for authoritative engagement with all stakeholders is critical.” He added, “We are excited about the future of the cement and concrete industry in South Africa. The staff of CCSA are ready to discuss membership options and benefits. We are poised to add value and unlock opportunities for all members, and the industry at large.”
Cement import shortcuts
20 January 2021Cement imports were one of the themes in this week’s news, with stories on the topic from South Africa and Ukraine. The former concerned the latest chapter in that industry’s saga on slowing down imports. The International Trade Administration Commission (ITAC) has started a review on tariffs imposed on cement from Pakistan that were introduced in 2015.
Local producers in South Africa have experienced mixed fortunes since 2015, such as PPC and AfriSam’s failed merger attempt or the introduction of a local carbon tax, and were starting to complain again about imports even before the effects of coronavirus in 2020. This led the Concrete Institute to lobby ITAC in 2019 about rising imports from other nations, principally Vietnam and China.
Back in 2013 cement imports from Pakistan to South Africa were 1.1Mt. This represented the vast majority of all imports to the country. Tariffs of 14 – 77% were imposed on Pakistan-based exporters in mid-2015, initially for six months, but this was then extended. Roughly a year later in mid-to-late 2016, Sephaku Holdings said that imports of cement had ‘significantly’ declined on a year-on-year basis, particularly from Pakistan. By the end of June 2016 approximately 0.16Mt had been imported compared to 0.5Mt in the previous period. However, it noted that 75% of the volume was from China. Since then imports started to creep up. Cement imports reportedly rose by 84% year-on-year in 2018 and then by 11% in 2019. Data from construction industry data company Industry Insight suggests that Vietnam accounted for 70% or 0.47Mt of the 0.68Mt of cement imported into South Africa in the first nine months of 2020. The remaining 30% or 0.20Mt came from Pakistan. In this kind of environment it seems unlikely that ITAC will do anything other than extend tariffs.
Meanwhile in the northern hemisphere, in Ukraine this week a court in Kiev dismissed a challenge by the Belarusian Cement Company to remove cement import tariffs from Russia, Belarus and Moldova that were introduced in mid-2019 for five years. Notably, a law firm representing Dyckerhoff Cement Ukraine, HeidelbergCement Ukraine, Ivano-Frankivsk Ukraine and CRH subsidiary Podilsky Cement commented favourably upon the court’s decision to uphold tariffs. These producers form UKRCEMENT, the association of cement producers of Ukraine. However, the association doesn’t include Russia-based Eurocement, which operates Ukraine’s largest cement plant at Balakleya. Relations have been poor between Russia and Ukraine since a war between the countries that started in 2014. So any trade tariffs implemented upon Russia and/or Commonwealth of Independent States (CIS) members will inevitably carry the whiff of geopolitics. Yet, in Ukraine’s defence, it also started an anti-dumping investigation into cement imports from Turkey in September 2020. Nationalism may be relevant but let’s not discount hard-nosed economics just yet.
Turkey’s involvement in Ukraine leads to last week’s presentation at Global Cement Live by Sylvie Doutres, DSG Consultants on cement and clinker trade in and out of the Mediterranean region. Readers can watch the presentation here but the headline story here was the trend of reducing exports away from southern European countries such as Spain, Italy and Greece, to greater exports from North African countries and Turkey over the last decade. Turkey particularly has pushed its share of exports even more in 2020 despite (or perhaps because of) a tough domestic market. The general trend here away from southern Europe has been blamed on European Union-based (EU) producers becoming less competitive often against newer plants in nearby countries.
Battles between producers and government tariff policies are a perennial feature of any market in commodities such as cement. The ebb and flow of import and export markets cover many factors including production costs, distribution networks, tariff structures and more. Distinctive features of cement trading, for example, are the high cost of transporting heavy building materials over land and the world’s chronic cement production overcapacity. In the EU’s case one reason that often gets blamed is the emissions trading system (EU ETS) and the mounting cost it is imposing upon cement production. For example, today’s story that Holcim España wants to convert its integrated Jerez plant into a grinding unit has been blamed on falling exports and a reduction in ETS credits. It is noteworthy then that the EU ETS rate breached the Euro30/t level in December 2020. This may be good news for the sustainability lobby but the exodus of exports away from Southern Europe tells its own story. What form the EU ETS carbon border adjustment mechanism takes as part of the EU Green Deal will be watched closely by producers both inside and outside the EU.
Global Cement Live continues on 21 January 2021 with Kevin Rudd, Independent Cement Consultants, presenting 'Independent or third party factory acceptance testing of major cement plant equipment and critical spare parts and the challenges of Covid’
South African trade commission starts review of tariffs on cement imports from Pakistan
18 January 2021South Africa: The International Trade Administration Commission (ITAC) started a ‘sunset’ review in December 2020 of import tariffs imposed on cement from Pakistan. The investigation will last up to 18 months, according to Moneyweb. Existing anti-dumping duties, which were first implemented in 2015, will remain in place during proceedings.
The review by ITAC follows lobbying by the Concrete Institute (TCI) in 2019 to add additional protection against imports of cement from other countries like Vietnam. Construction industry data company Industry Insight reports that Vietnam accounted for 70% or 0.47Mt of the 0.68Mt of cement imported into South Africa in the first nine months of 2020. The remaining 30% or 0.20Mt came from Pakistan.
PPC reports increased first half sales and earnings
08 December 2020South Africa: PCC recorded sales of US$332m in the first half of its 2021 financial year, up by 1% from US$328m in the first half of its 2020 financial year. Earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 15% to US$66m from US$58m. Cement volumes fell in South Africa by 5% and in Botswana by 10% due to 35% slump in total volumes in the first quarter. The company said that this was due to muted cement sales in April 2020 and May 2020 as a result of Covid-19-related trading restrictions in South Africa. Cement sales have since recovered with strong year-on-year growth since June 2020. The increase in volumes is primarily retail led. PPC also said that it is beginning to experience the positive impact of increased infrastructure spending.
Chief executive officer (CEO) Roland van Wijnen said, “I am pleased that we are once again able to serve our customers and play our part in keeping the economy going. My gratitude goes to my colleagues who have been working diligently to keep our operations running while observing stringent health and safety protocols. Our business has benefited from a strong recovery in cement sales in all our markets, post the easing of the lockdown restrictions, and this has resulted in improved financial performance for the group. Our efforts to improve cost competitiveness and reposition PPC on a sound financial footing are yielding encouraging results and we are making good progress on our capital restructuring project, which remains a key priority for the group.”
PPC wins immunity in South African competition probe
16 November 2020South Africa: The Competition Tribunal has confirmed an agreement between PPC and the South African Competition Commission granting the company immunity from prosecution in an investigation allegedly involving price fixing and market sharing between local cement producers from 1995 to 2009. The Cape Times newspaper has reported that the ruling additionally granted the company immunity from related fines. PPC has reportedly agreed not to engage in price fixing or prohibited conduct in the future. The Commission said, "In addition, it will have to develop a competition law compliance programme."
AfriSam and Lafarge Industries South Africa paid fines related to the case. However, a case against Natal Portland Cement (NPC) was dismissed.
Lafarge Africa’s sales rise following strong third quarter
03 November 2020Nigeria: LafargeHolcim subsidiary Lafarge Africa recorded sales worth US$471m in the first nine months of 2020, up by 10% year-on-year from US$427m in the corresponding period of 2019. Its recurring earnings before interest and taxation (EBIT) increased by 15.7% to US$108m from US$93m.
Chief executive officer (CEO) Khaled El Dokani said, “Our robust results for the first nine months reflect the strong recovery of the demand in the third quarter and the successful implementation of our ‘Health, Cost & Ccash' initiatives.” He added that this was despite the impact of coronavirus and negative local currency effects.
PPC reports 2020 full financial year results
14 October 2020South Africa: PPC recorded sales of US$618m in the 2020 financial year, which ended 31 March 2020, down by 2.4% year-on-year from US$634m in the 2019 financial year. Earnings before interest, taxation, depreciation and amortisation fell by 17% to US$97.0m from US$118m.
Chief executive officer (CEO) Roland van Wijnen said, “The 2020 financial year was characterised by difficult trading conditions, especially in South Africa. The global Covid-19 pandemic, which emerged during the last month of the financial year, further exacerbated an already difficult trading cycle. While we have seen a decline in our financial performance, we also see that the actions we have taken to reposition PPC to deliver sustainable value for all our stakeholders are beginning to yield results.”
He added, “After the resumption of trading in the 2021 financial year, the performance across all of our core businesses has been encouraging. The group’s capital restructuring remains a key priority. Over the next nine months, we will take the strategic and operational actions needed to improve the group’s financial position and performance. It is encouraging to see how PPC employees have come together to drive performance to sustain our purpose to empower people to experience a better quality of life.”
PPC further postpones 2020 financial year results
01 October 2020South Africa: PPC has announced the postponement of its full year results for the financial year that ended 31 March 2020 “as a result of required restatements and the finalisation of the year-end audit.” The company has twice delayed the results already, most recently to 18 August 2020 due to a “restructuring and refinancing project.”
In a notice to the Johannesburg Stock Exchange, PPC said, “The company wishes to advise shareholders that during the audit process for the year ended 31 March 2020, and subsequent to 18 August 2020, additional prior year errors were identified and corrected.”
PPC updates on finance arrangements
21 September 2020South Africa: PPC says that it has extended existing short-term banking facilities with its two primary South African lenders until at least September 2021 and deferred scheduled interest and capital repayments on long-term facilities until March 2021. The company says that it will “enhance its security position through a security pool arrangement” and “reduce the levels of gearing in South Africa through a combination of a capital raise and asset sales.” It added, “Any capital raise is conditional on the implementation of the other project steps.”
PPC also signed a new working capital facility with its third South African lender, which it says “provides on-going liquidity until December 2021.”
PPC delays publication of annual results for second time
19 August 2020South Africa: PPC has delayed the publication of its annual results for the year to 31 March 2020 for a second time due to a “restructuring and refinance project.” It now expects to publish the results by late September 2020. It previously delayed reporting its financial results when the Johannesburg Stock Exchange allowed it to delay releasing the figures because of challenges created by the coronavrius pandemic. The cement producer also said it has found errors in its financial reporting for the year that ended in March 2019 due to mistakes made in valuing operations in Ethiopia and Zimbabwe and a miscalculation of the accounting of a foreign-exchange transaction in the Democratic Republic of Congo (DRC).
The group expects that revenue for the year to 31 March 2020 will decline by no more than 5% year-on-year from US$605m in the same period in 2019. Earnings before interest, taxation, depreciation and amortisation (EBITDA) are expected to fall by up to 20% from US$113m.
In an operational update for April to July 2020 the group said that it ramped up cement operations in May 2020 following the relaxation of coronavirus-related lockdowns in most of its territories. It attributed strong growth in cement sales volumes in June and July 2020 due to a reduction in imports as well as pent-up demand. Similarly, sales volumes were strong outside of South Africa, particularly in Zimbabwe and Rwanda, and in the DRC to a lesser extent.