Displaying items by tag: Debts

Mexico: Cemex has reviewed its global sustainability and financial performance during 2022 in its Integrated Report 2022. During the year, the group reduced its specific CO₂ emissions by 9% from 2020 levels and by 30% from 1990 levels. It achieved a target of US$1bn-worth of investment in strategic projects over a period begun in 2020. Projects included the execution of water optimisation plans at 20% of Cemex sites in high-water stress areas. Cemex co-processed 27Mt of waste as alternative fuel (AF) in its global cement production - 67 times greater than its own non-recyclable waste footprint - and achieved an AF substitution rate of 35%. Meanwhile, the group also reduced its cement's clinker factor to 74%. Its Vertua reduced-CO₂ concrete range accounted for 33% of its concrete sales. During the year, Cemex launched the world's first net zero, fully electric heavy concrete mixer truck.

In 2022, Cemex recorded sales of US$15.6bn, down by 12% year-on-year, and reduced its debt to US$408m.

India: Adani Group told investors that it repaid a US$500m bridge loan for its acquisition of ACC and Ambuja Cements on 7 March 2023. The deal was completed in September 2022, and payment on the loan was due by 9 March 2023 at the latest. UK-based Barclays and Standard Chartered and Germany-based Deutsche Bank underwrote the loan.

Business Today Online News has reported that Adani Group is seeking to pre-pay its loans in order to allay investor concerns about its debt.

National Cement is preparing to open its new integrated West Pokot plant in September 2023. Readers may recall that the long-running project was taken over by Devki Group from Cemtech and Sanghi Industries after the Competition Authority of Kenya (CAK) gave it permission to do so in 2019. The original feasibility report by the Kerio Valley Development Authority dates back to 2010. The new plant will have a production capacity of 2.5Mt/yr.

However, this isn’t the only new clinker production capacity that Devki Group, which sells cement under the Simba Cement brand, is preparing to commission. Local media also reports that the company is also preparing to restart the former Athi River Mining Cement integrated plant at Bondora in Kaloleni, Kilifi County. After five months of trial runs the unit should be ready for full operation from April 2023. Devki Group also picked up this plant in 2019 following the long breakup of ARM Cement, after the latter producer entered financial administration back in mid-2018.

Devki Group started out in the steel sector but it has been steadily carving out a presence in the cement industry. The group opened its first cement grinding plant in 2013 and then built a 1.95Mt/yr integrated plant in Kajiado County, south of Nairobi, in 2018. Once the West Pokot plant is commissioned, the company will reportedly have a clinker production capacity of 7.5Mt/yr from three plants.

This kind of growth is making waves in the local cement sector. Since Global Cement Weekly covered the situation in September 2022 (GCW576), an argument has been brewing in Kenya over whether the country should import clinker or manufacture more of its own. This has moved to lobbying the government on whether the duty on imports of clinker should rise from 10% to 25%. Unsurprisingly, the country’s largest clinker producer, National Cement, even before the new plants are operational, has been a major advocate for putting up the import tariff. This carried over into 2023, when local press revealed the minutes of a meeting between the State Department of Industry and the Kenya Association of Manufacturers (KAM), with input from the cement producers. Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot were all against raising the tariff, saying that it would enable the largest clinker producers, National Cement and Mombasa Cement, to dominate the market. However, unlike the last such meeting, Mombasa Cement was said to be non-committal on the proposal to increase the duty. Despite the disagreement over the tariff, all of the cement companies imported clinker in 2021.

Graph 1: Rolling annual cement production in Kenya, 2019 - October 2022. Source: Kenya National Bureau of Statistics (KNBS).

Rolling annual cement production in Kenya peaked at just over 10Mt in May and June 2022. Data from the Kenya National Bureau of Statistics (KNBS) shows that monthly production started to fall on a year-on-year basis from July 2022. This is likely to be connected to the elections that took place in August 2022, although wider economic trends such as inflation and high input material prices may not have helped either. Despite this, cement production rose by 5% year-on-year to 8.02Mt in the first 10 months of 2022 from 7.65Mt in the same period in 2021.

Other recent news of note in Kenya includes the restart of clinker production at East African Portland Cement’s (EAPC) Athi River Plant in mid-2022. The upgrade was conducted as part of a general five-year upgrade and expansion campaign by the company. The next steps were announced in January 2023 with a stated intention to consider entering markets in the Democratic Republic of Congo and Rwanda. The other story of note was in December 2022, when China-based Sinoma International Engineering announced that it had signed a deal with Savannah Cement to build a new 8000t/day clinker production line with a 2400t/day cement grinding unit, a 35MW captive power unit and a 13MW waste heat recovery unit. As is standard for Sinoma’s new contract releases, it said that the contract would become active once an “advance payment guarantee” had been received. Later in December 2022 the Kenya High Court intervened to stop two creditors from seizing assets from Savannah Cement and putting it into administration, although the court did acknowledge the company’s debts and a loan repayment default. In January 2023 Mauritius-based Barak Asset Recovery, another related creditor, was approved by the competition regulator to buy a majority stake in Savannah Cement. The current state of that new production line is unknown.

As the two stories above show, it is not just National Cement that is trying to move towards increased clinker production in Kenya. The whole situation is reminiscent of the time before Nigeria declared itself self-sufficient in cement in the early 2010s. Local producers became prominent and the market battle between producers and importers became public. Kenya’s range of different cement companies seem to be more diverse than Nigeria’s were, but a similar type of national interest argument may be rolled out by one side. The other parallel to note with Nigeria is that Dangote Cement is said to have attempted to buy National Cement previously and has also been trying to build its own plant in the country since the mid-2010s. Kenya’s demographics and location make it a prime place for this kind of producer-importer tussle. Let’s wait and see how much the situation has changed when the new plants open over the next six months.

Kenya/South Africa: The liquidators of Kenya-based ARM Cement have written off the company’s investment in South Africa-based Mafeking Cement due to a legal dispute with the minority shareholder. Representatives of PricewaterhoueCoopers said in an update to creditors that there was unlikely to be any residual value in Mafeking Cement as the underwriter of the mining business, Lombard insurance Company, had withdrawn its guarantee, according to the East African newspaper. The move has increased the loss by creditors in ARM Cement to around US$99m or around 66% of the total claims.

ARM Cement was put in liquidation in October 2021. It owns a 70% stake in Mafeking Cement, a company that owns limestone mining rights in north-west South Africa. The remaining 30% share is owned by local communities and trusts.

Tunisia: Carthage Cement recorded a turnover of US$119m during 2022, up by 13% year-on-year from US$105m. The producer invested US$8.17m in capital expenditure projects during the year, up by 18% from US$6.95m. Africa Manager News has reported that Carthage Cement's debt fell by 8% year-on-year to US$123m at the end of 2022.

Germany: Heidelberg Materials has placed a Euro750m sustainability-linked bond as part of a Euro10bn medium-term note programme. Interest on the bond is linked to group CO₂ emissions reduction, according to key performance indicators up to 2026 and 2030. Heidelberg Materials is committed to reducing its emissions per tonne of cementitious product by 30% between 2021 and 2030, to 400kg/t.

Heidelberg Materials' chief financial officer René Aldach said "The placement reinforces our aspiration to achieve the most ambitious climate targets within the industry and to increase the share of sustainable financial instruments to over 70% by 2025. With the denomination of Euro1000, we are the only company on the capital market to date to also offer retail investors the opportunity to invest in sustainability-linked bonds."

Belarus: The Belarusian government has granted reimbursement of cement producers’ interest payments on loans from state-owned Belarusbank and Belarus Development Bank. PrimePress News has reported that banks will fund the payments from the 2023 national budget.

Belarusian Cement Plant will receive US$47.1m-worth of reimbursement for interest payments on three loans from Belarusbank worth US$42.8m, granted between 2009 and 2011. Krichevtsementnoshifer will receive reimbursement of US$137m on two loans from Belarusbank worth US$116m, granted in 2012. Krasnoselskstroymaterialy will receive reimbursement of US$1.1m on a loan worth US$211,000 from Belarus Development Bank. Additionally, it will receive reimbursement of US$72.1m for five loans worth US$34.9m from Belarusbank in 2009 – 2012.

Kenya: The Supreme Court of Kenya has ordered lenders Absa Bank and KCB Group to not seize Savannah Cement's assets or appoint administrators or receivers for it after the producer defaulted on its debts. The producer's debts include US$2.41m in interest and US$110,000 in penalties. The temporary block will stand until the court issues further directions. Business Daily News has reported that the court has ordered Savannah Cement to pay US$81,200 to Absa Bank by 28 December 2022.

Savannah Cement director Benson Sande Ndete alleged that lenders coerced the company into repaying US$40.6m-worth of debt. The law forbids interest payments greater than the principal sum of a loan.

Ndete said, "The firm is working to complete the funding of its Kitui clinker plant project, which will allow it to get all the funds necessary to clear the debts."

Spain: FCC subsidiary Cementos Portland Valderrivas has completed its acquisition of global investment company KKR's Andalusian business, including its subsidiary Surgyps. Surgyps operates an 800,000t/yr grinding plant in Jerez de la Frontera, Cádiz. The business filed for bankruptcy in 2010, but continued to operate the plant under a government concession, lasting until 2031.

The El Economista newspaper has reported that Cementos Portland Valderrivas said "With this operation, the group complements its position in Andalusia by taking a decisive step in our commitment to reduce the carbon footprint of cement."

The group controls six integrated cement plants across Spain, with a total capacity of 9.9Mt/yr.

Italy: Buzzi Unicem's board of directors has elected to exercise an option of early repayment on a Euro500m bond loan. Italian Collection News has reported that the producer will make the payment on 28 January 2023. The bonds have a coupon of 2.1% and will mature on 28 April 2023.