Displaying items by tag: Brazil

Here are the major stories from the cement industry in 2015 as the year draws to a close. Remember this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..

Will the year of the mega-mergers pay off?
2015 showed a global cement industry that was consolidating. Amongst the multinational producers Lafarge and Holcim finished their merger and HeidelbergCement announced that it was buying Italcementi. Yet alongside this international trend the large Chinese cement producers, who represent over a quarter of the world's production capacity, have continued their own-government-favoured consolidation. The on-going boardroom scuffles at Shanshui have been a lively example of this.

Where this will leave the cement industry as a whole in 2016 is uncertain but mergers and consolidation are no 'magic bullet' for difficult market conditions. After the fanfare subsided from the launch of LafargeHolcim the first quarterly report emerged in late November 2015 reporting falling net sales, net volumes and profit markers.

BRICing it – growth stalls in Brazil, Russia, India and China
The economies of the BRIC nations – Brazil, Russia, India and China – have all suffered in 2015. Brazil and Russia are enduring recessions. Growth in China and India is slowing down. All of this has a knock on in their respective construction sectors.

Over in China, we report today that production capacity utilisation is estimated to be 65% and that cement companies lost US$2.63bn in the first nine months of 2015. The same source says that at least 500Mt/yr of production capacity needs to be eliminated. That represents nearly a third of Chinese total production capacity or about an eighth of global cement production capacity.

Multinationals African plans accelerate
One consequence of all these international mergers is the transformation of the situation in Africa. Suddenly LafargeHolcim has become the biggest cement producer on the continent, followed by HeidelbergCement, Dangote and PPC. Africa becomes the big hope for the multinationals as established markets continues to flounder and growth in Asian and South American markets slackens. Perversely though, should African development growth slow it may cast a poor light on the mega-mergers of 2015 in the coming years.

Dangote Cement is growing fast and it may overtake HeidlebergCement soon as the second largest cement producer in Africa. Yet it may not be plain sailing for the Nigerian company. As we report today, sources in Gambia say that Dangote's plans to open a cement plant are on hold in part to protect its domestic suppliers.

The Gambian government has denied a licence to Dangote to open a cement plant. Dangote has built its empire in recent years by forcing out cement importers from Nigeria. As it expands in other countries in Africa it may now be facing a backlash to playing the nationalist card at home as other countries too desire 'self-sufficiency' in cement production.

Iran shakes off the sanctions
In July 2015 Iran and the P5+1 countries agreed to lift trade sanctions from Iran. The implications for the local cement industry are immense given that the country was the joint-fourth largest producer in 2014, based on United States Geological Survey data. Remove the sanctions and, in theory, the local economy should boom leading to plenty of construction activity. Notably, at the launch of LafargeHolcim the new CEO Eric Olsen was asked for the new group's position on Iran. It didn't have one but this will change.

China expands along the Silk Road
China's cement industry may be suffering at home but it has been steadily expanding in Central Asia. Notably Huaxin Cement has plants in Kazakhstan and Tajikistan and it has new projects in the pipeline. Business may be down at home but steady advancement abroad may offer the Chinese cement industry the lifeline it needs.

Cop out at COP21?
And finally... The 2015 Paris Climate Conference announced a diplomatic coup d'etat in December 2015. However, it apparently forgot to include any binding targets. The Cement Sustainability Initiative (CSI) pre-empted the decision by announced its aim to reduce CO₂ emissions by clinker producers by 20 - 25% by 2030... Provided the entire cement industry follows its lead. Cement plants burning vast swathes of dirty fossil fuels may not have to worry quite yet.

For more a more detailed look at trends in the cement industry check out the Global Cement Top 100 Report in the December 2015 issue of Global Cement Magazine.

Global Cement Weekly will return on 6 January 2016. Enjoy the holidays if you have them.

Nine-month financial results from the major Brazilian cement producers have been reported this week and they are not looking good. The local construction market is weak and cement sales volumes are down. This has been blamed on a 30% shrinkage of real estate financing and a 20% decrease in infrastructure works.

Votorantim has seen its cement sales volumes drop by 4% year-on-year to 26.7Mt for the first nine months of 2015. InterCement has seen its cement and clinker sales volumes drop by 7.2% to 21.1Mt. LafargeHolcim has reported unspecified declines in its cement sector in its disappointing third quarter results.

Overall, the Sindicato Nacional Da Indústria Do Cimento (SNIC) - Brazil's cement industry body, has reported that domestic cement sales fell by 7.7% to 49.2Mt for the period. Particular sales drops by region have been observed in the Midwest (5.8Mt, -11.2%) and the Southeast (22.8Mt, -9.4%). That last region, Southeast, is pertinent given that it contains the country's biggest cement producing state, Minas Gerais.

Votorantim has been pointing out all year that its costs are soaring due to issues in Brazil. Maintenance costs, energy-related costs and the impact of the depreciation of the Brazilian Real on petcoke were all hitting costs. Net revenue has grown so far in 2015, with a growth of 5% to US$2.75bn, mainly due to the company's geographic spread outside of Brazil.

InterCement has noted that new cement production capacity in north-eastern and southern markets have reduced its sales volumes and prices by 1.7%. It too has experienced a rise in energy costs, pegged to the US Dollar. To act against this InterCement is implementing adjustment measures including suspending production at two grinding units and the closure of concrete units.

Alongside this Camargo Corrêa, the Brazilian construction group that owns InterCement, has been planning to sell a stake in InterCement to pay off debt since at least mid-2015. At the time local media reported that Camargo Corrêa planned to sell 10 – 18% of Intercement for between US$648m and US$1.17bn. CEO Vitor Hallack confirmed this week that Camargo Corrêa is still looking for a buyer. In the meantime it has extended US$536m of its short-term debt.

All of this is mirrored by wider economic woes in the country. In October 2015 the International Monetary Fund projected a 3% drop in real Gross Domestic Product (GDP) in 2015. The situation has been blamed on a wider world economy, the slowing Chinese economy and internal factors.

Back on cement, in July 2015, SNIC announced that domestic cement demand could contract by 10 - 15% in 2015 and that consumption could fall to around 60Mt in 2016. Brazil's cement production capacity currently stands at 70.75Mt/yr. Perhaps not coincidentally LafargeHolcim announced a 'portfolio optimisation' in its third quarter results with asset sales of US$3.5bn in 2016. Brazil may be on that list.

For more information on the Brazilian cement industry look out for our report in the December 2015 issue of Global Cement Magazine

Brazil: Votorantim Industrial, Brazil's largest industrial conglomerate, has posted a net loss for the third quarter of 2015 due to the impact of a deep economic recession and rising US Dollar debt-servicing costs after a currency plunge, according to Reuters.

Votorantim posted a net loss of US$22m, down sharply from a profit of US$155m a year earlier. Earnings before interest, taxes, depreciation and amortisation fell by a third to US$429m from a year ago, when Votorantim booked one-time earnings from an energy auction. The Brazilian Real fell to an all-time low in the third quarter of 2015, driving up Votorantim's gross debt by US$1.88bn to US$8.06bn at the end of September 2015.

Chief Executive Officer João Miranda highlighted investments outside of Brazil as the country suffers its sharpest economic contraction in 25 years. "In the face of Brazil's economic recession, our diversified business and international presence become even more important in delivering consistent results," said Miranda. Votorantim's capital spending rose by 55% to US$246m in the quarter, half of which was intended to expand capacity, particularly at cement plants outside of Brazil.

Brazil: Brazilian construction group Camargo Corrêa is prepared to sell assets to help reduce its US$6.38bn debt, according to CEO Vitor Hallack.

"We put up US$2.41bn to acquire cement manufacturer Cimpor in 2012, which became InterCement. It was a strategic option to double our size in Brazil and increase our international presence," said Hallack. Brazil's economy, however, has negatively impacted the company's plans.

To resolve matters, Camargo Corrêa has extended US$536m of its short-term debt. After negotiating with banks, its obligations have been extended to 66 months from 12 months. Moreover, assets in two companies could be sold off if the price is right and the opportunities arise. The company could sell off textile group São Paulo Alpargatas and seek partners for InterCement, according to Hallack, who reiterated that the company's energy firm CPFL Energia and transportation infrastructure arm CCR will not be sold.

Portugal: Cimpor has reported that its net loss grew by 52.5% year-on-year to Euro26.7m in the third quarter of 2015. The quarterly loss follows a general trend for the year as a whole. Sales volumes, revenue and profit are all down for both the third quarter and the year. The InterCement subsidiary has blamed the result on the slowdown of the Brazilian economy.

Cement and clinker volumes fell by 9.7% year-on-year to 7.07Mt in the third quarter of 2015. Sales revenue fell by 11.8% to Euro625m. Earnings before interest, taxes, depreciation and amortisation fell by 32.5% to Euro116m. For the first nine months of 2015, cement and clinker volumes fell by 7.2% to 21.1Mt. Sales revenue fell slightly by 1.2% to Euro1.93bn. EBITDA fell by 14.2% to Euro396m. Net loss grew by 90.2% to Euro33.7m.

By geographical area, Cimpor suffered from reduced demand for cement in Brazil due to the poor economy, along with increased competition and higher thermal costs. Elsewhere, some slowing has been observed in Africa in the third quarter as a result of one-off situations in Egypt, where an intensification of competition has lead to a fall in market prices, and Mozambique, where profitability was restricted by local energy limitations and the increase of costs pegged to the dollar.

Brazil: Votorantim Cimentos has inaugurated a 206,000t/yr mortar plant at the Camacari industrial hub, in Salvador, north-eastern Brazil. This is Votorantim's sixth unit in operation in north-east Brazil and it received US$6.48m in investment. The plant will generate 80 direct and indirect jobs.

Brazil: Portugal's Secil plans to upgrade its production capacity in Brazil by 2Mt/yr by the end of 2015. The move results from the addition of a new US$149m plant by its local division, Supremo, in Adrianopolis, Parana. Supremo also runs another plant in Pomerode, Catarina. The new plant will increase Secil's total cement production capacity from 7.65Mt/yr to 9.65Mt/yr, a 26% rise.

Brazil/Turkey: Votorantim Cimentos has announced investment plans of up to US$158m to expand its business in Turkey. As well as tripling the output of its cement plant in Sivas, Votorantim may set up or acquire a new plant to tap the growth potential of Turkey's construction sector, according to company officials.

"The investment in our Sivas plant will boost production capacity to 1.8Mt/yr, up from its current level of 600,000t/yr. Following the upgrade, the Sivas plant will account for 42% of Votorantim's cement production capacity in Turkey," said Sefik Tuzun, Votorantim Turkey's CEO. "Votorantim sees the potential of Turkey's construction sector and this investment shows our commitment to reinforcing our presence in Turkey. Sivas' expansion will bring a crucial dynamism and competitiveness to the company in the Turkish cement market."

The capacity upgrade will be completed by April 2017. The construction works for the extension will create employment for 700 people. Votorantim Turkey is active in cement production as well as concrete and aggregate businesses in the country, accounting for a share of about 29% of Votorantim Cimentos' total production capacity, excluding China.

India: Brazilian cement major Votarantim Cimentos, InterCement Austria Holding and Camargo Corrêa have settled a case with the Securities and Exchange Board of India (SEBI) for alleged violation of takeover protocols regarding Shree Digvijay Cement. They have paid over US$115,000 in settlement charges.

SEBI had initiated adjudication proceedings against the three companies over the violation of provisions Substantial Acquisition of Shares and Takeovers (SAST) regulations. It was alleged that the entities failed to comply with certain provisions of the SAST regulations while making an open offer for acquisition of 36.7 million shares, representing a 26% stake in Shree Digvijay Cement.

Brazil: Cement group LafargeHolcim has announced the launch of a new promotional campaign for its Maua cement brand in Brazil. The campaign, launched in Rio de Janeiro with the concept 'Orgulho de Fazer Bem Feito' or 'Proud of doing things well', will include radio spots and outdoor advertising in addition to point-of-sale material. The campaign also includes a radio competition that will award smartphones to eight winners.