Displaying items by tag: China National Building Material

Africa: FLSmidth says that a contract for a cement plant valued at more than Euro100m in an unspecified location in North Africa is now effective. The change in the project’s status follows the completion of carious conditions, including the receipt of a down payment for the work.

The order is in part a result of the partnership between FLSmidth and Beijing Triumph International Engineering Company, a company under the China National Building Material Group Corporation (CNBM Group), which will be responsible for the construction of the cement plant. The plant will mainly supply cement to the North African market. Once completed, the cement plant will have a capacity of 12,000t/day. The includes engineering, equipment supply, construction supervision, commissioning and training.

Saudi Arabia: The Arabian Cement Company (ACC) says that the construction of new cement mills at its Rabigh plant has been delayed to the third quarter of 2018 from the fourth quarter of 2017. The delay has been blamed on, “…the contractor's failure to comply with the timetable.” The second-phase of the project, to build a new clinker production line, is under review. The cement mill order was placed with China National Building Material (CNBM) in 2015.

China: China National Building Materials’ (CNDM) operating revenue rose by 26% year-on-year to US$13.3bn for the first nine months of 2017 from US$10.6bn in the same period in 2016. Its net profit more than doubled to US$588m from US$175m. CNBM and China National Materials Company (Sinoma) formerly entered into a merger agreement in September 2017.

China: Japan’s Mitsubishi Materials has signed an agreement to sell its 66.7% stake in Yantai Mitsubishi Cement in Shandong to a subsidiary of China National Building Material (CNBM). No value for the sale has been revealed, according to Nikkei. Yantai Mitsubishi has a cement production capacity of 1.2Mt/yr. Mitsubishi Materials will also liquidate two of its Chinese cement admixture producers: one in Shandong and the other in Jiangsu.

The materials producer has blamed the decision on cement production overcapacity in the Chinese market and increasing environmental regulations. Mitsubishi Materials was ordered to halt production three times in 2016. It intends to focus on the US market where infrastructure spending is expected to boost the cement market.

China: China National Building Material Company’s (CNBM) sales revenue rose by 1% year-on-year to US$14.8bn in 2016 from US$14.6bn in 2015. Its profit rose by 1% to US$410m from US$406m. The group’s sales of cement and clinker grew by 4.2% to 291Mt in 2016. Despite earlier reporting falls in operating revenue and profit of over 5% for the first nine months of 2016 the cement producer attributed the turnaround to production efficiencies and adherence to state-mandated supply-side reforms. It added that despite a ‘grim’ national economy the cement sector underwent a ‘weak’ recovery as reforms kicked in leading to growth in cement prices.

China: China National Building Material Company (CNBM) has entered into an agreement with the Bank of Communications for finance of around US$1.43bn in the form of direct loans, debt-to-equity conversion and/or capital injection into members of the group. The finance will be used to improve the group’s asset-debt structure, improve production operations and pay for upgrades.

China: China National Building Material Company’s (CNBM) total operating revenue has fallen by 8.6% year-on-year to US$10.4bn in the first nine months of 2016 from US$11.4bn in the same period in 2015. Its net profit attributable to the owners of the company fell by 5% to US$106m from US$112m. No comment has been made regarding the results.

China: China National Building Materials (CNBM) said that it expects a 310 - 360% surge in net profit for 2015 compared with its 2014 net profit of US$22.5m, according to Dow Jones. CNBM said that the rise was due to it having 'cleaned up' asset losses. The exchange rate change between the US Dollar and the Chinese Yuan also contributed to its profit rise.

People matter in cement companies. Just ask Bruno Lafont, the originally proposed CEO of LafargeHolcim before the merger plans between Lafarge and Holcim changed in mid-2015. Another example is Zhang Bin, the chairman of Shanshui Cement. Some of the shareholders at Shanshui Cement are working hard to remove him. The next attempt has been scheduled for 1 December 2015.

Shanshui Cement, one of the biggest Chinese cement producers, called for the liquidators this week possibly in response. It decided to apply for provisional liquidation after determining that it would default on onshore debt payments due on 12 November 2015. Earlier in the month it had announced doubt whether it could pay its debts.

The scale of this liquidation is monumental for the cement industry. It is broadly similar to a producer at least the size of Dangote going bust. Shanshui Cement is one of China's top ten cement producers. It defaulted on a US$314m onshore debt payment on 12 November 2015.

Based on Global Cement Directory 2015 data, Shanshui Cement is the seventh largest cement producer in the country with 15 cement plants and a cement production capacity of 30.5Mt/yr. Shanshui Cement itself reports that it has a production capacity of 102.6Mt/yr making it the country's fourth largest cement producer. In its 2014 annual results Shanshui Cement reported sales revenue of over US$2.4bn. Its net profit was over US$48m. Sales and profits were down year-on-year in 2014 compared to 2013 and its interim report for 2015 reported the same downward trend. Sales revenue fell by a third to US$793m year-on-year for the first half of 2015. In 2014 its total debt was reported to be US$2.5bn with a gearing ratio of 56.9%, a relatively high figure leaving it vulnerable to decreasing profits.

As the Wall Street Journal and others have reported, the situation has as much to do with corporate politics as it does with over-borrowing. Hot on the heels of Shanshui's liquidation announcement came an offer of help to pay the debts from local rival Tianrui Group if its attempts to change the board of Shanshui were finally successful. Tianrui became the largest shareholder of Shanshui in April 2015 when it increased its stake to 28%. In the process it beat China National Building Material Company and Asia Cement Corporation, who hold 16.7% and 20.9% stakes in Shanshui respectively.

The heart of the Shanshui debacle is the 'key man' clause as reported by Reuters. Borrowing to the company is dependent on current chairman Zhang Bin retaining his position. As soon as he leaves it triggers the repayment of offshore bonds worth US$500m. Normally not due for payment until 2020, the bonds contain a clause that forces the company to sell them within 30 days should Zhang Bin depart.

Shanshui seems likely to be able to pay its debts judging from its sales revenue, assets and the strength of its main shareholders. However, it has chosen to default for the moment. The question for analysts watching this from outside China is whether it masks deeper problems in the Chinese economy as growth continues to slow and industrial overcapacity lingers. Shanshui is the sixth mainland Chinese company known to have defaulted on a bond this year, according to Bloomberg. It's also likely to be operating at a cement production utilisation rate of around 50%.

If the Shanshui Cement situation is more to do with markets than personalities, then it may represent an alarming acceleration of the slowdown of the Chinese economy for the cement industry. If personalities matter more, then the situation is a battle comparable to the politics on the television show 'Game of Thrones.'

Saudi Arabia: Arabian Cement Company (ACC) is planning to build a new 10,000t/day brownfield cement line in Rabigh.

In order to increase the cement grinding capacities in phase 1, prior to the completion of the new line in Phase 2, ACC placed an order with China National Building Materials Group Corporation (CNBM) for a grinding plant, including two Loesche vertical roller mills.

The project execution will be done on a fast-track concept, which ensures a project schedule of only 13 months. Loesche will supply two large vertical roller mills of Type LM 63.3+3 with a table diameter of 6.3m and a main drive size of 7400kW. Under the fast-track concept, Loesche will not only supply the mills, but also all process related equipment like process filters, process fans, hot gas generators, as well as the complete basic engineering of the grinding plant to ensure a state-of-the-art plant design.