Displaying items by tag: Brazil

Buzzi Unicem beefed up its presence in Brazil this week with the announcement that it is buying CRH’s local cement plants through its Companhia Nacional de Cimento (CNC) joint-venture with Grupo Ricardo Brennand. The deal covers CRH Brazil’s three integrated plants at Cantagalo in Rio de Janeiro, and, Arcos and Matozinhos in Minas Gerais. It also throws in two grinding plants including the Santa Luzia Plant in Minas Gerais for a total of US$218m, although the final figure may change depending on conditions such as the net financial situation at the closing date.

The purchase brings up two trends. Firstly, it’s a continuation of CRH’s refocus on safe havens in Europe and North America. The Ireland-based building materials producer originally picked up these plants in the wake of the formation of LafargeHolcim in 2015 as part of a package deal for Euro6.5bn in its ‘bolt-on’ acquisition expansion phase. Most of the assets in that deal were in Europe and North America, although it did see CRH also build a presence in the Philippines.

Since late 2019 reports have emerged in the press about plans to sell up in Brazil and the Philippines. Whether CRH has made any profit on its sale in Brazil is hard to tell given the scale of its purchases from Lafarge and Holcim in 2015. The focus was likely on those key markets closer to home. Yet cement sales in Brazil peaked in 2014 before the national economy were hit by falling commodity and oil prices that contributed to a recession as well as the Petrobras political crisis. Sales bottomed out in 2018 and have been building steam since. Now is certainly the time to consider departure with a good price given the National Cement Industry Union’s (SNIC) glowing data for September 2020.

For Buzzi Unicem, the proposed acquisition represents the next step on its multinational ambitions, pushing Brazil into its fifth biggest territory in terms of cement production capacity after Italy, the US, Mexico and Germany. Its timing was good in September 2018, when it agreed to buy a 50% stake in the Brazilian company BCPAR from Grupo Ricardo Brennand for Euro150m, because local sales were finally starting to pick up. Once again Buzzi Unicem has also picked up cement production assets for a capacity price just below US$100/t. This time it faces a similar balance of uncertainty with the Brazilian cement industry reporting continuing growth but facing an uncertain future from the economic effects, locally and worldwide, from the coronavirus pandemic.

One point to note here is that as part of its deal with Grupo Ricardo Brennand in 2018, Buzzi Unicem had the right to buy the remaining 50% of BCPAR from Grupo Ricardo Brennand until 1 January 2025. Presumably, though, the option to buy Grupo Ricardo Brennand out of BCPA remains valid. This makes it interesting that Buzzi Unicem chose further expansion over consolidation of its existing business. Four years remain for it to buy the rest of BCPAR if it wants to.

Given the concentration of the Brazilian business in the south-east of the country it seems unlikely that the acquisition would be turned down since the enlarged BCPAR will hold a production base behind larger producers like Votorantim or InterCement. However, Cimento Nacional’s Sete Lagoas plant and CRH Brazil’s Matozinhos plant are both close in Belo Horizonte and this may cause concerns. Now it’s over to the Brazilian regulators to approve or decline the deal and the various parties to finalise.

Brazil: Ireland-based CRH has agreed to sell its Brazilian business to Companhia Nacional de Cimento (CNC), a joint venture between Italy-based Buzzi Unicem and Grupo Ricardo Brennand, for US$218m. The related assets include three integrated cement plants and two grinding plants. The sale is subject to approval by the Brazilian Competition Authority (CADE). CRH Brazil sold approximately 2.5Mt of cement in 2019.

In 2019 CRH sold its 50% stake in India-based My Home Industries for US$354m. Outside of Europe and North America it retains subsidiaries in the Philippines and China.

There’s no single theme this week, just a few news stories of note that may have wider significance.

Firstly comes the news that Semen Indonesia subsidiary Semen Padang has been exporting 25,000t of cement to Australia. This follows a consignment of 35,000t of clinker to Bangladesh. The company is hoping to hit a cement and clinker export target of 1.58Mt in 2020 in spite of the on-going coronavirus pandemic. It reached 1.09Mt (about 70%) of this by mid-September 2020 through exports to Bangladesh, Myanmar, Philippines, Australia, Sri Lanka and Maldives.

The wider picture here is that local sales in Indonesia fell by 7.7% year-on-year to 27.2Mt in the first half of 2020 from 29.4Mt in the same period in 2019, according to data from the Indonesian Cement Association (ASI). Cement and clinker exports are up by 32.8% to 3.7Mt from 2.8Mt. Semen Indonesia’s revenue is down but it has managed to hold its earnings up so far. During press rounds in late August 2020 its marketing and supply chain director, Adi Munandir, told local press that he expected domestic demand to fall by up to 15% in 2020 due to effects of coronavirus on private construction and government infrastructure plans. Analysts reckon that the worst of the demand slump hit in the second quarter of 2020 when government-related coronavirus restrictions were implemented, so Semen Indonesia’s third quarter results will closely scrutinised.

One of Semen Padang export targets is the Maldives. This chimes with another story this week because Oman-based Raysut Cement has just bought a majority stake in a cement terminal from Lafarge Maldives for US$8m. The 9000t capacity Thilafusi cement terminal is located on the island of Thilafusi, Kaafu and was expanded in 2015. Raysut Cement has tended to stick to markets in the southern Arabian Peninsula and the east coast of Africa, with projects planned in Madagascar and Somaliland. Yet expansion plans in places further away such as India and Georgia have also been mentioned publicly. A greater presence in the Maldives is a solid step towards Raysut heading eastwards. This would also mirror the plans of the country’s gypsum sector to dominate African and Asian markets and a general longer term shift in global markets from west to east.

One place west that has been doing well in cement though is Brazil. National Cement Industry Union (SNIC) data for September 2020 show a 21% year-on-year boom in cement sales to 5.8Mt and a 9.4% year-on-year increase to 44.6Mt for the first nine months of 2020. Earlier in the year the country’s limited coronavirus suppression methods were attributed for letting the recovering cement sector grow. Now, SNIC has directly thanked government support for civil construction. However, Paulo Camillo Penna, the president of SNIC said. “The results are surprising so far, but that doesn't give us security in the long run,” due to a bubble of real estate and commercial activity that already appears to be declining. Given the slump in cement demand from 2015 to 2018 it’s understandable that SNIC is taking the recovery cautiously.

And to finish we have two connected stories about Cemex. Following the release of its resilience strategy in September 2020, the company has now declared that its integrated Rüdersdorf cement plant in Germany will be the centrepiece of its CO2 reduction plans as part of ‘Vision Rüdersdorf.’ Details are light at present but we expect some kind of carbon capture and storage or usage project. An addendum to this – or perhaps it’s the other way round (!) – is that Cemex has also just announced further credit amendments but with sustainability-linked metrics. Cemex’s chief financial officer (CFO) Maher Al-Haffar said, “We are especially proud that this transaction represents one of the largest sustainability-linked loans in the world.” The teeth of this arrangement remain to be seen but the integration of finance and sustainability has serious implications generally.

Watch out for a research and development themed interview with Cemex and Synhelion in the December 2020 issue of Global Cement Magazine

Brazil: Cement sales rose by 21% year-on-year to 5.8Mt in September 2020 from 4.8Mt in September 2019. Data from the National Cement Industry Union (SNIC) shows that sales increased by 9.4% year-on-year to 44.6Mt in the first nine months of 2020 from 40.8Mt in the same period in 2019. Particular gains for the year to date were noted in the North-East and Central-West regions. SNIC has attributed the sales growth to government support for civil construction.

“The results are surprising so far, but that doesn't give us security in the long run,” said Paulo Camillo Penna, president of SNIC. “Sales are being sustained, in the great majority, by real estate construction, the maintenance of the pace of works and small residential reforms and also in the commercial activity that already presents a decline in consumption due to its operation,” However he also noted that activity had been, “subjected to a huge and unexpected pressure of demand, especially since June 2020.” As such SNIC has called for resumption of infrastructure work to stabilise demand.

Brazil: Aumund Brazil will supply a type BZB bucket apron conveyor to Votorantim’s Xambioá integrated cement plant in Tocatins. It will replace a pan conveyor being used to transport clinker from the cooler to the silo. The new conveyor will have a centre distance of 92m and a conveying capacity of up to 170t/hr. The upgrade is expected to reduce dust levels at the site. Supply and commissioning of the new bucket apron conveyor in Xambioá is due to take place in October 2020. The order follows a previous order to Aumund for a similar project at Votorantim’s at Vidal Ramos plant in Santa Catarina.

Brazil: RHI Magnesita plans to spend Euro30m towards building a rotary kiln in its mining site at Brumado, Bahia. The upgrade is expected to increase the production at the unit by more than 30% as the kiln is designed to process up to 140,000t/yr. The announcement follows a planned investment of nearly Euro40m towards the construction of a new headquarters for its South American operations in Contagem, Minas Gerais that was revealed in 2019.

“This investment in the construction of a rotary kiln with innovative technology will enable us to develop a new portfolio of raw materials, in addition to those already available on the market. The new raw materials include noble sinters at very competitive costs on the international market. This will bring operational flexibility, the ability to offer differentiated value-added products to our customers in the Brazilian market, and will put us in an even more competitive position in the global environment,” said Francisco Carrara, president of RHI Magnesita in Brazil and South America. He added that the group was seeing a ‘considerable’ recovery in the steel and cement segments in Brazil.

Ireland: CRH recorded a profit of US$406m in the first half of 2020, down from US$602m in the first half of 2019. Sales fell by 4.9% year-on-year to US$12.2bn from US$12.8bn. Price rises in many markets offset the general reduction in cement volumes caused by coronavirus lockdown, while volumes grew in Germany, the Benelux countries, Brazil and the US.

Chief executive officer (CEO) Albert Manifold said, “We took swift and comprehensive action in response to the Covid-19 crisis, and our ability to flex our cost base and deliver improved profitability, margins and cash generation in a rapidly evolving environment demonstrates the strength and resilience of our business. The outlook for the rest of the year and into 2021 remains uncertain and is dependent on an improving health situation across our markets.” Though the group provided no full-year guidance for 2020, it said, “The longer-term prospects for CRH remain positive, benefiting from significant financial strength and resilience together with a portfolio of high-quality assets in attractive markets.”

Brazil: Votorantim Cimentos recorded a loss of US$94.0m in the first half of 2020, up by 99% year-on-year from US$47.2m in the first half of 2019. Sales fell by 8% to US$680m from US$739m. During the period Votorantim Cimentos and its subsidiary St Mary’s Cement increased the balance withdrawn from credit facilities by US$247m, in order to “strengthen liquidity as protection within the current crisis context due to the Covid-19 pandemic and to cope with the seasonality that recurrently affects North America.” The group says that it will reduce the value of its 2020 investments by 25% to US$545m from a planned US$726m, down by 6.3% year-on-year from US$581 in 2019.

Brazil: InterCement has appointed Wilson Nelio Brumer as the chairman of its board of directors. He succeeds Franklin Feder, who has resigned after nearly three years in the position.

Brumer has held chief executive officer (CEO) roles at large companies including Vale, Acesita and Usiminas. He has also been the chairman or on the board of directors at organisations such as BHP Billiton, Cemig, CCR, Direcional Engenharia, Embraer, Localiza, Metso and Fundação Renova. Currently, he is the president of the board of the Brazilian Mining Institute (IBRAM) and, since April 2020, chairman and CEO of InterCement’s controlling shareholder, Mover Participações.

France: Falls in sales in India, France and Italy since the end of the first quarter of 2020 have negatively affected Vicat’s half year results. However, it noted a rebound at the end of the period, particularly in France, and reported earnings growth in the US and Brazil. Its consolidated sales fell by 2.7% year-on-year to Euro1.30bn in the first half of 2020 from Euro1.34bn in the same period in 2019. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) decreased by 6.7% to Euro213mm.

“We kept our production activities running at almost all our sites to keep pace with market trends and seize any commercial opportunities by remaining close to our customers, which has helped to mitigate the impact of the crisis,” said Guy Sidos, the group’s chairman and chief executive officer (CEO). He added that, “In this unprecedented environment, visibility on our full-year performance remains limited.”