
Displaying items by tag: GCW150
Railroad to African riches
14 May 2014The prospects for the East African cement industry have risen this week following the formal agreement to build a new railway line linking the port city of Mombasa and Nairobi in Kenya. The US$3.8bn project will replace the existing 100 year old narrow gauge track with work scheduled to start in October 2014 and a completion date in 2018. The second phase of the project is then intended to extend the line to neighbouring inland countries including Uganda, South Sudan and Rwanda among others.
The bottom line here from Reuters' reporting is that the new line will cut freight costs by more than half to US$0.08/t per km from US$0.20/t per km. Anybody considering sending freight along the 610km line could see their costs drop from US$122/t to US$49/t. With the average cement price in Kenya reported at US$75/t at the start of 2014, these kind of prices seem unlikely to throw the market to the mercy of overseas imports. Moving one tonne of cement along the full length of the line would cost more than half of the selling price. Yet the effect on input costs or transport over smaller distances may have an effect, especially if the inland extension actually gets built.
Kenya has four integrated cement plants with a production capacity of 3.4Mt/yr. Of these three - ARM Cement, Bamburi Cement (Lafarge) and Mombasa Cements are on the coast – and only one plant, the East African Portland Cement Company, is based inland in Nairobi. In addition National Cement and Savannah Cement both run clinker grinding plants near Nairobi.
A number of plants are being built. Most recently, Savannah Cement announced plans in April 2014 to build a clinker production plant. The East Africa Portland Cement Company plans to build a plant in Kajiado for operation by 2016. Nigeria's Dangote Cement has a 1.5Mt/yr cement plant planned to start operation in 2016 in Kitui, between Nairobi and the coast with ARM seeking funding to build a 2.5Mt/yr cement plant in the same region. Cemtech, a company owned by India's Sanghi Group, has plans to build a plant in West Pokot County in western Kenya but the project has been delayed due to issues with land acquisition.
Despite all this development activity Kenyan Bureau of Statistics figures suggest that more cement is being produced in the country than is officially being consumed. In 2013, 4.8Mt of cement was produced but only 3.94Mt was consumed. Yet both production and consumption have more than doubled since 2004 from 1.87Mt and 1.27Mt respectively. With the Kenyan construction sector averaging a growth rate of 6.45%/yr between 2004 and 2012, it looks likely that consumption will continue to rise and all these new cement plants are poised to benefit form this.
The old Ugandan railway, which the new railway seeks to replace, started construction in 1896 and was backed by the British government. It was nicknamed the 'Lunatic Line' given the harsh terrain and the high worker fatalities. The perils facing the project were capped by a pair of man-eating lions who attacked workers as depicted in the book 'The Man-Eaters of Tsavo' and eventually made into a film called 'The Ghost and the Darkness' starring Michael Douglass. Then as today the potential benefits of connecting the African coast to the interior were seen as high.
Bernard Terver appointed area manager of India
14 May 2014Switzerland: Onne van der Weijde, Area Manager for India until 25 April 2014, and member of Holcim Senior Management, will leaves Holcim effective from 1 June 2014. The member of the Holcim Executive Committee, Bernard Terver, responsible for the Indian Subcontinent, will take over direct responsibility for the country.
Cemex CEO Lorenzo Zambrano dies
13 May 2014Mexico: Lorenzo Zambrano, CEO of Cemex died on 12 May 2014 in Madrid aged 70. There were no immediate details about the cause of death in a statement released by Cemex and there had been no reports of illness. The company added that it will continue to operate normally.
Founded by Zambrano's grandfather more than a century ago, the company started producing cement in the northern city of Monterrey, which later became one of Mexico's industrial hubs. Zambrano was born on 27 March 1944. He joined the company after graduate school in 1968, when he earned his master degree in business administration at Stanford University. By 1985 the board of directors give him full power as CEO. Then, through a series of acquisitions, Zamrano extended Cemex's reach to five continents with operations in 50 countries.
However a US$16bn acquisition of Australian building materials company Rinker in 2007 subjected Cemex to the subprime housing crisis. At the time, Zambrano put a brave face on it. "We've shown that a company that is born in a developing country can compete in the whole world and we want to keep doing it," he said. Cemex spent the following years coping with large debt obligations, struggling to make deals with lenders and trimming costs by outsourcing and restructuring jobs.
Article updated: 14 May 2014
South Africa: Investors have confirmed that construction has started on a new 1Mt/yr cement plant by Mamba Cement in Northam, Limpopo. Nedbank Capital and the Bank of China Johannesburg are providing US$107m of debt capital to fund Mamba, according to Business Day. Equity was provided by majority shareholder Jidong Development Group, the China-Africa Development Fund and by Women Investment Portfolio Holdings.
Nedbank Capital's infrastructure, energy and telecommunications head Mike Peo said that construction had already started and the project was expected to be completed by 2016.
"We obviously had a very hard look at the South African cement market. This plant is very close to Johannesburg, a primary market, so the transport costs and the actual cost point at which it can compete is going to be very attractive," said Peo. He added that the outlook for cement demand was 'extremely good' driven by government's infrastructure plans and the provision of housing.
Nigeria approves new cement standard
14 May 2014Nigeria: Final approval for a new national cement standard has been given by Olusegun Aganga at the Federal Ministry of Industry, Trade and Investment. Following a short grace period all cement manufactured locally or imported must meet the approved standards and will be tagged 'NlS 444-1'. The implementation of a new standard for cement follows a battle between cement industry stakeholders regarding whether poor quality cement had been to blame for building collapses.
The highest grade - CEM I 52.5R, 52.5N, or 52.5 - will now be used for the construction of bridges. The second highest grade - CEM II 42.5R, 42.5N or 42.5 grade – will be used for the casting of columns, beams, slabs and for block moulding. The lowest cement grade - CEM I & II 32.5R, 32.5N or 32.5 cement grade – will be used only for the plastering of buildings.
According to the ministry, the new guidelines would, "Enable the end users make the right choice; help to avoid unethical application of the different types of cement; enhance proper identification of the different cement classes and enhance traceability as well as guide users." The ministry added that the standards were reviewed because they had attained the five-year mandatory period for review, as well as concerns over the quality of cement in the Nigerian markets.
Iran exports 18.8Mt in 2013 – 2014 calendar year
14 May 2014Iran: Iran exported 18.8Mt of cement clinker in the Iranian calendar year that ended on 20 March 2014 according to the Ministry of Industries, Mines and Trade. The figure was a 38% increase from the 13.7Mt exported in the 2012 – 2013 year. The ministry added that 69.7Mt of cement was produced in the country in the 2013 – 2014 period. Of this total 79% was consumed domestically.
Cement consumption to double in India by 2025
14 May 2014India: A study by management consultants AT Kearny, in association with the Confederation of Indian Industry, has said that the per capita consumption of cement is expected to grow to 385 - 415kg in 2025 from 185kg at present. According to the study, cement demand is likely to increase by 2.5 to 2.7 times to 550 – 660Mt/yr over the same time period. While the infrastructure segment would lead the growth, the residential segment will continue as the largest consumer, constituting 42 – 45% of the total demand.
Lafarge Republic launches ash-based cement
14 May 2014Philippines: Lafarge Republic and the Global Business Power Corporation (GBPC) has launched an initiative aimed to lower the costs of rehabilitation projects, such as the rebuilding efforts for Yolanda and the Bohol earthquake-affected areas, through the introduction of a ash-based cement called called Kapit-Balay cement.
Kapit-Balay cement is a result of the Total Ash management partnership between Lafarge Republic and GBPC. Under this collaboration, Lafarge uses the fly ash from GBPC's power generation processes to produce blended cement. Under the partnership, the two companies worked on optimising the cost of producing the ash-cement, which enables them to contribute in lowering the overall cost of rebuilding with the additional support from Lafarge's packaging partner and a direct sales distribution model to rehabilitation projects.
Egypt: South Valley Cement (SVCC) has said that the investments needed to use coal as an energy source will accost US$19.8m. Subsequently, the company is preparing other energy options.
SVCC said that it would be 'indifferent' if the government decided not to follow through with the coal usage plan, as it could rely on mazut, a low quality fuel oil, in addition to gas, in order to produce cement. The company added that the availability and sustainability of energy sources remains the biggest challenge it faces.
SVCC company officials said that the application of alternative energy sources suggested by the government will take at least 12 months. "The use of coal will allow the company to reach 100% of its production capacity," SVCC's Samar Abd Al-Gawad said. She added that despite the fact that the use of agricultural wastes is 'great,' its percentage in the energy mixture cannot exceed 15 - 20%. "The challenge that the company faces in the use of agricultural wastes is that the market is not consistent and the products that are used as wastes, such as the linen seeds and corn cobs, are seasonal."
SVCC has applied for licences for coal usage and agriculture waste and is awaiting approval from the Ministry of Environmental Affairs. Investing in the usage of agricultural wastes could cost around US$283,000.
The company is seeking to double its production capacity and is currently constructing two new cement plants, which are expected to be complete within 17 months. "The first plant will increase the production capacity by 1.5Mt/yr," said SVCC's consultant Ashraf Salman. "When the company receives its coal license it will increase its production to reach 3Mt/yr."
The company plans to increase its production capacity to reach 3.75Mt/yr by 2017. "The expansion will not only be in increasing the production lines but in looking for acquisition deals of parts or full shares of other cement companies," Salman added. SVCC operated at 70% of its full production capacity in 2013 'due to the energy shortages and the applied curfew.' The company exported around 80,000t of cement during the year.
Successful launch of PT Loesche in Jakarta
13 May 2014Indonesia: Loesche has set up a full service hub in Jakarta, Indonesia. The office has been in full operation since January 2014 and focuses on plant modernisation and spare part supply, as well as on site support with all kinds of services for audits, maintenance, installation and commissioning activities in the entire Indonesian region.
Loesche has been present in the Indonesian market for more than 40 years and can now focus on closer client relationships and faster reaction times for the benefit of the local market. A one-day seminar took place in the Le Meridien Hotel in Jakarta on the 27 March 2014, introducing the Group's portfolio and activities. Apart from Indonesian cement producers, a wide audience from the coal mining sector attended. In addition to well-known technology for the cement sector, Loesche also introduced the newly patented coal enhancement process, which attracted much interest, especially as Indonesian miners are looking for a professional solution for coal upgrading.