Displaying items by tag: CNBM
PPC and Sinoma fire up new Slurry kiln
18 April 2018South Africa: PPC and China’s Sinoma Construction have successfully ignited the kiln at the Slurry Kiln 9 project in North West province. The new clinker production line will now undergo a three-month test period, according to the China Economic Daily newspaper. Once testing is finished, the 3300t/day line will be transferred to PPC to start commissioning.
CNBM and Sinoma merger set to complete in May 2018
03 April 2018China: The merger between China National Building Material (CNBM) and China National Materials (Sinoma) is looking likely to be completed in early May 2018. The companies have issued a scheduled timeline for key events of the withdrawal of Sinoma shares and the implementation of a share exchange. This process is expected to be completed on or around 3 May 2018 with CNBM updating its business registration at the Beijing Municipal Administration of Industry and Commerce as soon as possible thereafter. The merger marks the conglomeration of the leading Chinese cement producer and equipment manufacturer.
Update on China in 2017
28 March 2018Many of the Chinese cement producers have released their annual results for 2017 over the last week, giving us plenty to consider. The first takeaway is the stabilisation of cement sales since 2014. As can be seen in Graph 1, National Bureau of Statistics data shows that cement sales grew year-on-year from 2008 to 2014. This trend stopped in 2015 and then government mandated measures to control production overcapacity kicked-in such as a industry consolidation, shutting ‘obsolete’ plants and seasonal closures. Although it’s not shown here, that last measure, also known as peak shifting, cans be seen in quarterly sales data, with an 8% year-on-year fall in cement sales to 578Mt in the fourth quarter of 2017.
Graph 1: Cement sales in China, 2007 – 2017. Source: National Bureau of Statistics.
Looking at the sales revenue from the larger producers in 2017 doesn’t show a great deal except for the massive lead the two largest producers – CNBM and Anhui Conch – hold over their rivals. CNBM reported sales roughly twice as large as Anhui Conch, which in turn reported sales twice as large as China Resources Cement (CRC). With everything set for the merger between CNBM and Sinoma to complete at some point in the second quarter of 2018, that leader’s advantage can only get bigger.
Graph 2: Sales revenue of selected Chinese cement producers. Source: Company reports.
What’s more interesting here is how all of these companies are growing their sales at over 15% in a market where cement sales volumes appear to have fallen by 1.67% to 2.31Bnt in 2017. CNBM explained that its sale growth arose from improving cement prices in the wake of the government’s supply side changes. It added that national cement production fell by 3.1% to 2.34Bnt. CNBM’s annual results also suggested that the cement production capacity utilisation rate was 63% in 2017.
Anhui Conch’s results were notable for its large number of overseas projects as it followed the state’s ‘One Belt, One Road’ overseas industrial expansion strategy. Projects in Indonesia and Cambodia were finished in 2017 with production set for 2018. Further plants are in various states of development in Laos, Russia and Myanmar. The other point of interest was that Anhui Conch is developing a 50,000t CO2 capture and purification pilot project at its Baimashan cement plant. Given the way the Chinese government has been able to direct the local industry, should it decide to promote CO2 capture at cement plants in the way it has pushed for waste heat recovery units or co-processing, then the results could be enormous.
CRC reported its continued focus on alternative fuels. Municipal waste co-processing projects in Tianyang County, Guangxi and Midu County, Yunnan are under construction and are expected to be completed in the first half of 2018. Construction of its hazardous waste co-processing project in Changjiang, Hainan was completed in February 2018.
As ever with the Chinese cement industry, the worry is what happens once the production overcapacity kicks in. The state–published figures and state-owned cement companies suggest that the industry is in the early stages of coping with this. In February 2018 Reuters reported that the Ministry of Industry and Information Technology (MIIT) had banned new cement production capacity in 2018. The detail here is that new capacity is allowed but that it has to follow specific rules designed to decrease capacity overall. This followed an announcement by the China Cement Association that it would eliminate 393Mt of capacity and shut down 540 cement grinding companies by 2020. The aim here is to hold capacity utilisation rates at 80% and 70% for clinker and cement respectively and to consolidate clinker and cement production within the top ten producers by 70% and 60%. If the utilisation rate from CNBM is accurate then the industry has a way to go yet.
China: The China Securities Regulatory Commission (CSRC) has approved the merger between China National Building Material (CNBM) and China National Materials (Sinoma). The approval by the CSRC for the merger between the leading Chinese producer and the equipment manufacturer follows approval by the Anti-monopoly Bureau of the Ministry of Commerce and shareholder approval in December 2017 and approval by the Fair Trade Commission in South Korea in November 2017.
Global Cement & Concrete Association launches
31 January 2018UK: Nine cement and concrete companies have launched the Global Cement & Concrete Association (GCCA), a new association that intends to develop the sector’s role in sustainable construction. The association also wants to build innovation throughout the construction value chain, in collaboration with both industry associations and architects and engineers.
The GCCA will be led by international cement companies and headquartered in London, complementing and supporting the work done by existing associations at national and regional level. Membership of the GCCA is available for cement manufacturers from all over the world that share the organisation’s values, and partnerships will be developed with organisations that share its vision. GCCA’s founding members are Cemex, CNBM, CRH, Dangote, Eurocement, HeidelbergCement, LafargeHolcim, Taiheiyo and Votorantim. They represent 1046Mt of cement production capacity, according to the Global Cement Top 100 Report.
Chinese competition body approves CNBM and Sinoma merger
22 December 2017China: The Anti-monopoly Bureau of the Ministry of Commerce has approved the merger between China National Building Material (CNBM) and China National Materials (Sinoma). Shareholders approved the merger between the leading Chinese producer and the equipment manufacturer in early December 2017 following approval by the Fair Trade Commission in South Korea in November 2017.
2017 in Cement
20 December 2017To mark the end of the calendar year we’re going to round up some of the major news stories from the cement industry in 2017. Like last year this piece also complements the corresponding article ‘The global cement industry in 2017’ in the December 2017 issue of Global Cement Magazine. 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..
Recovery in Europe
2017 was the year that the European cement industry finally had something to shout about after a lost decade since the financial crash of 2007. The good news was led by a revival in cement consumption in 2016 that looks set to have continued in 2017. Prospects in Germany and Spain feel similar and a series of mergers and acquisitions have taken place in Italy suggesting that investors believe that the market is about to recover there too. Sure, Brexit is looming but as contacts have told Global Cement staff throughout the year, if the British want to damage their economy, that’s their business.
Renewal and recrimination at LafargeHolcim
Lafarge’s conduct in Syria during the civil war has cost its successor company LafargeHolcim dear, with the loss of its chief executive officer (CEO) Eric Olsen and potential reputational damage if the on-going investigation in Paris finds fault. At the time of writing Olsen, former Lafarge CEO Bruno Lafont and the former deputy managing director for operations Christian Herraul are all being questioned by the inquiry into the affair as it attempts to determine who knew what and when. LafargeHolcim has drawn a line under the debacle by appointing outsider Jan Jenisch as its new CEO in mid-2017. He has made changes to the group’s management structure that were announced this week but has he done enough? If anything truly ‘explosive’ emerges from the investigation, the question for anyone across the world buying LafargeHolcim’s products may be whether or not they want to finance extremism through their purchase.
US doesn’t build wall but does okay anyway
The US Portland Cement Association (PCA) may keep downgrading its forecasts of cement consumption growth but the local industry is doing fairly well anyway. All sorts of cement producers with a presence in the US have benefited from the market, despite extreme weather events like Hurricane Irma. President Donald Trump may not have delivered on his infrastructure development promises or built his fabled wall yet but his recently-approved tax reforms are likely to benefit the profits of cement producers. The decision by Ireland’s CRH to buy Ash Grove Cement in September 2017 may remove the largest domestically-owned producer from US hands but it shows confidence in the market and heralds the continued creeping growth of the building materials company into an international empire.
South America shows promise… just don’t mention Brazil
Countries like Brazil, Colombia and Venezuela may not be performing to expectations but other countries south of the Darian Gap, have been growing their respective cement industries. The leader here is Argentina that is riding a full-scale construction boom with capital investment chasing it from the producers. Bolivia is following a decade of growth although this may be starting to slow somewhat. Chile appears to be realigning itself to take in more exports. And finally, Brazil may also be starting to return to growth too. Although cement sales were continuing to fall year-on-year in the first nine months of 2017 the rate has been slowing. Local producer Votorantim also reported improved market conditions at home.
India stares into the demand gap
UltraTech Cement finally managed to buy six cement plants and five grinding plants from Jaiprakash Associates for US$2.5bn in 2017. The acquisition marked the end of the long-running deal between the companies and what may be a new phase in further integration in the Indian industry. In September 2017 the Cement Manufacturers Association (CMA) complained that the sector had 100Mt/yr of excess production capacity out of a total 425Mt/yr. The government’s demonetisation policy sank cement production growth in late 2016 and production has struggled to improve since then. Some estimates expect growth to return in around 2020 as the demand gap shrivels. Further merger and acquisition activity can only help until then, although the current government flip-flopping over a petcoke ban and import duties may get in the way.
China restructures with an eye on overseas market
As discussed last week the mind-bogglingly massive merger between China National Building Material (CNBM) and China National Materials (Sinoma) is proceeding with the press equivalent of radio silence. If one trusts the company figures then the largest cement producer in the world will get even bigger following completion. Once the big Chinese producers start building lots of overseas plants then the implications of combining a major producer with a major plant builder may become clear outside of China. Alongside this the buzzword on the Chinese cement company balance sheets this year have been a major rollout of co-processing at plants and a policy of ‘peak shifting’ or simply shutting off production at selected plants in the winter months. Somehow despite all of this the official figures suggest that cement production is still growing in China.
The African mega deal that wasn’t
The prospective bidding war for South Africa’s PPC has turned out to be a bust. A low offer was made in September 2017 by a Canadian investment firm with the aim of merging PPC with local rival AfriSam. Vague expressions of interest from the usual suspects followed over the following months before everything fizzled out. What the dickens was going on? A difference of opinion between the board and shareholders? A poor market in South Africa giving everyone the jitters? If any readers know, please get in touch. PPC’s poor showing at home mirrors Dangote Cement’s travails. Both companies have suffered domestically whilst going full tilt elsewhere in Sub-Saharan Africa.
Indonesia about to pick up?
And finally, a report from Fitch Ratings this week suggests that growth in Indonesia is set to pick up once again. The market dragged down HeidelbergCement’s mid-year financial results as cement consumption dropped in the same period. Like India, Indonesia faces a consumption-capacity mismatch. However, with annual consumption poised to grow at over 6%, the time to close that gap will narrow. Some good news to end the year with.
Global Cement Weekly will return on 3 January 2018. In the meantime Merry Christmas and a have Happy New Year!
The world’s quietest cement mega-merger
13 December 2017A member of the Global Cement LinkedIn Group commented this week on the merger between China National Building Material (CNBM) and China National Materials (Sinoma).
“Has the cement world got used to gigantic mergers or have we failed to understand how big this thing is locally, regionally and globally? It is shocking to see how little publicity and media attention is paid to this merger in comparison to the past ones. I find this to be potentially a game changer for the industry. This time, the game will be drawn from a single corner with less integration pains and much more alignment. A big wave coming…”
The comment was posted by Pavel Cech, a managing director of ResourceCo Asia based in Kuala Lumpur. This company is a waste recycling and waste management concern that specialises in alternative fuels for the cement industry. So a focus on the potentially massive drive for co-processing by the Chinese industry is understandable compared to, say, other companies in other continents. However, Cech’s point is valid: why isn’t this merger being talked about more?
CNBM is the largest cement company in the country with a reported total production capacity of around 406Mt/yr. Sinoma is a cement engineering company and the fourth largest cement producer in China with a total production capacity of approximately 112Mt/yr. The companies formally agreed to merge in September 2017 as part of a state-mandated industry consolidation. If these figures are taken at face value then the merger should increase the lead of the self-declared world’s biggest cement producer.
In non-Chinese terms this would be like HeidelbergCement merging with a major equipment manufacturer like ThyssenKrupp or FLSmidth. For these kind of companies, industry commentators and press, such as a Global Cement Magazine, would spend many column inches discussing the twists and turns of the merger as it played out. Just compare the Chinese merger to the debacle that has played out with the proposed acquisition of South Africa’s PPC by Fairfax, where seemingly every development was expounded upon both by PPC and the press.
For Global Cement’s reporting and coverage on China, problems arise from language difficulties, differences with the way Chinese media covers industry, the state-controlled aspect of many of the larger producers, issues obtaining accurate industry data and the sheer size of the sector. All of these impediments make it harder to cover the Chinese market. Add the relative insularity of the sector and it’s often easy to give the Chinese cement industry a special label, separating it out when talking about the global cement industry as a whole.
All this may be about to change as Chinese cement producers start firing up their own kilns outside of the motherland as part of the ‘One Belt, One Road’ initiative, making it easier to see what Chinese companies are doing. Except that Sinoma has already been out there in the rest of world building cement plants in many developing markets and creating competition for the Europe-based equipment manufacturers.
There has been little attention from competition bodies outside of China about the merger. The South Korean Fair Trade Commission approved the deal in November 2017 and that’s been about it. Combining a cement plant builder with a cement producer is a clear example of vertical integration in the cement industry. There is nothing necessarily anti-competitive about this but it could change the market dynamic where non-Chinese multinational and Chinese cement producers compete. If both CNBM and a rival wanted to open build a plant in the same area, then the competitor to CNBM might have less choice when it came to picking their equipment supplier. In addition, news stories such as the alleged pressure by the Chinese embassy in Sri Lanka to try and force a local development agency to choose Sinoma to build a grinding plant doesn’t instil confidence that a merged CNBM-Sinoma would play nice. Although, as today’s fine by the Colombian competition body to Cementos Argos, Cemex and Holcim for price fixing shows, non-Chinese cement producers are just as prone to malpractice.
The merger of CNBM and Sinoma is undeniably big news in the industry. Both within and outside China it is likely to have a pronounced effect. As explained above, for various reasons, the western press can’t cover China in the same way it does other countries. Once the Chinese producers start building more plants outside of China then this is likely to change significantly. Until then we’ll do our best to keep track of this and other Chinese news stories.
China: Xu Weibing has been appointed as the supervisor and chairman of supervisory committee at China National Building Material (CNBM) following shareholder approval. Her term will last until the end of May 2019. She replaces Wu Jiwei.
Xu, aged 58 years, holds over 30 years of experience in financial accounting and capital operation. She has worked as the chief accountant of CNBM since May 2017 and was its deputy general manager prior to that. She graduated from Liaoning Finance and Economics Institute in 1983 with a bachelor’s degree, majoring in finance, and is a senior accountant.
Shareholders approve merger of CNBM and Sinoma
06 December 2017China: China National Building Material’s (CNBM) shareholders have approved a merger agreement between the company and China National Materials (Sinoma) at an extraordinary general meeting. The two companies formerly entered into a merger agreement in September 2017. The South Korean Fair Trade Commission approved the pending merger in early November 2017.