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Update on Mexico
Written by David Perilli, Global Cement
23 October 2019
Interesting news from Holcim Mexico this week with the announcement that it is planning to invest US$40m towards building a 0.7Mt/yr grinding plant in the state of Yucátan. The unit will be supplied with clinker from Holcim Mexico’s Macuspana and Orizaba integrated cement plants. This follows the news in August 2018 that Elementia’s cement company, Cementos Fortaleza, had started to build a new 0.25Mt/yr grinding plant at Merida in Yucatan. That project has a budget of US$30m.
These two projects offer a contrast to comments made by the head of Cemex Mexico, Ricardo Naya Barba, who was lamenting the state of the market to local press at the start of the month. He said that sales volumes of cement, concrete and aggregates had fallen by 12 – 15% in the first seven months of 2019. He blamed the decline partly on falling national infrastructure investment. This marked a slight improvement on Cemex’s Mexican results for the first of 2019 where sales, sales volumes and earnings were all down. At this time as well as slowing infrastructure projects the situation was also attributed to a residential sector hit by the slower-than anticipated start of the new programs.
Elementia’s Mexican cement business, Cementos Fortaleza, reported a similar picture in the second quarter of 2019. Its net sales fell by 6% year-on-year to US65.4m from US$69.7m. This was attributed to a market contraction affecting all of Elementia’s businesses in the country, as well as the redefinition of its core products for the Building Systems business unit. Earnings fell also and this was further attributed to mounting energy and freight costs. Cementos Moctezuma faced many of the same issues. Its cement sales fell by 13% to US$147m in the second quarter of 2019. It is expecting a similar picture for the remainder of the year.
Data from the National Institute of Statistics and Geography (INEGI) shows that the value of cement sales in Mexico fell by 7% year-on-year to US$1.21bn in the first quarter of 2019 from US$1.30bn in the same period in 2018. Cement sales volumes fell by 8.2% to 10.9Mt from 11.9Mt. This was the lowest figure since 2014.
The one larger Mexican cement producer that doesn’t seem to have been overly troubled so far in 2019 is Grupo Cementos de Chihuahua (GCC). Earlier in the year the company was considered to be the Mexican cement producer most at risk from potential US tariffs due to higher reliance on exports than its competitors. Yet Mexico’s National Chamber of Cement (CANACEM) publicly said that that it didn’t consider US tariffs a significant barrier to the local industry. GCC reported growing net sales and cement sales volumes in the second quarter of 2019 due to industrial warehouse construction, mining projects and middle-income housing at the northern cities.
Two new grinding plants in a particular region of Mexico don’t necessarily reflect the state of the country’s industry as a whole. Yucatan may suit the grinding model due to a lack of raw materials or strong shipping links. The region may also be defying the gloomy national state of affairs in the construction sector. Alternatively, producers may be chasing low-cost and low-risk expansion plans in a tough market. The grinding model wins out over the clinker producing one in this scenario. In the wider picture in August 2019 Cemento Cruz Azul ordered two petcoke grinding mills from Germany’s Loesche and Austria’s Unitherm Cemcon said it had been awarded the supply of an MAS DT burner to an unnamed cement plant. These suggest that, although the sector may be having a bad year so far, things are expected to get better.
Zambia Consolidated Copper Mine Investment Holdings appoints new chair
Written by Global Cement staff
23 October 2019
Zambia: The majority government-owned Zambia Consolidated Copper Mine (ZCCM) Investment Holdings has appointed Mabvuto Chipata its chair. ZCCM’s cement division faces the challenge of national overcapacity due to market saturation as it moves ahead with the US$600m construction of a 1.6Mt/yr integrated cement plant and 57MW power station in Masaiti, Copperbelt province. Thierry Charles, speaking on behalf of the Euronext minority shareholders, expressed relief at ‘the definitive turning of a page on several years of hazardous, inconsistent and disastrous investments.’
Anhui Conch Cement boosts nine-month profit by 15% year-on-year 23 October 2019
China: Anhui Conch cement made a net profit of US$3.36bn in the nine months to September 2019, up by 15% from US$2.92bn in the corresponding period of 2018. Sales over the period were US$15.7bn, having increased by 42% from US$11.0bn in the first nine months of 2018. The company explained the disparity between revenue and profit in terms of increased operating costs of 32% compared to 2018, “due to the expansion of product sales and trading business.”
Nine-month production falls by 1.2% year-on-year in Azerbaijan 23 October 2019
Azerbaijan: Azerbaijan’s three cement works of an integrated capacity of 5Mt/yr produced 2.5Mt of cement in the nine months to 30 September 2019, down by 1.2% compared to 2.6Mt over the same term in 2018. Overall sales were low in the period, but exports picked up in the quarter to 30 September 2019, stimulating production levels of 0.9Mt, representing no change year-on-year.
Namibia: The International Organisation for Standardisation (ISO) has recognised Ohorongo Cement’s commitment to quality with ISO 9001:2015 and ISO 14001:2015 certification. The former follows technical auditing of the entire cement-making process to ensure ‘quality at the core of all processes,’ according to New Era, while the latter signifies the attainment of ‘the global standard for an effective environmental management system.’ The company commented that: “Ohorongo ensures that all operations and practices exhibit responsibility towards all stakeholders and the environment.”
Ohorongo Cement’s 69.8% owner Schwenk Namibia failed to sell to Singaporean-based International Cement Group (ICG) in September 2019.