Displaying items by tag: GCW295

Lots of fascinating information has been emerging in recent weeks about changes in the Chinese cement industry as the larger producers have published their annual financial results. One example is the focus on using alternative fuels to fire up kilns. As explained below, the spotlight on co-processing is state-mandated and this is why the producers are now keen to promote their adherence. Even so, as ever with China, the scale of the change is staggering.

For example, Anhui Conch reported that it had completed 15 waste treatment projects and one sludge treatment project in 2016. In addition it had three projects still undergoing construction at the year-end. The group said that it co-processed 600,000t of domestic waste in its cement kilns in 2016. All of this was achieved by a company that says it only started co-processing municipal waste from its first project in 2010. China Resources Cement’s (CRC) progress was slower but it managed to start a co-processing project at its plant in Binyang County, Guangxi in December 2015 and a sludge project in Nanning City, Guangxi in July 2016. New projects at Tianyang County, Guangxi and Midu County, Yunnan are being built at present, with completion expected by the end of 2017.

Long held rumours about production overcapacity in China came to head in 2015 with the National Bureau of Statistics in China (NBSC) reporting that sales dropped in 2015 following a decade of steady growth. Then the results of most of major producers followed this by falling in 2015. CRC presented a good history of what happened next in the Chinese cement industry in its results report [LINK]. In brief, in 2016 the Chinese government implemented supply-side structural reforms focusing on production efficiency, reiterating attempts to stop new production capacity being built and pushing environmental reforms. Throughout the year various government offices released guidelines to encourage market consolidation, cut obsolete production capacity, increase co-processing rates and decrease the energy needed to produce each tonne of clinker.

Graph 1: Cement sales in China, 2012 – 2016. Source: National Bureau of Statistics in China.

Whether or not any of this has helped the Chinese cement industry to overcome the problems it faced in 2015 is unclear. As Graph 1 shows, Chinese cement sales started to rise again slightly to 2.35Bnt in 2016 from 2.31Bnt in 2015. Sales revenue from some of the major cement producers presents a more varied picture as can be seen in Graph 2. Anhui Conch’s revenue rose by 9.7% year-on-year to US$8.12bn in 2016, China National Building Material Company’s (CNBM) revenue rose by 1% to US$14.8bn and CRC’s revenue fell by 4.2% to US$3.3bn. CRC may have suffered here from its relative business concentration in southeast China. Both Anhui Conch’s and CNBM’s results seemed to look patchy in mid-2016 when they released their half-year reports, but both sales and profits seemed to pick up sharply in the second half of the year.

Graph 2: Sales revenue from selected major Chinese cement producers. Source: Company annual reports.

As the current set of structural reforms kick in within the Chinese cement industry it will be interesting to see what happens next. From plans to cut 10% of local clinker production capacity by 2020 to ambitious environmental aims the sector barely has time to catch its breath. The question is whether the major producers balance sheets are being helped more by a recovering local market or by the reforms. Either way the uptake of alternative fuels is encouraging.

Australia: Adelaide Brighton has appointed Zlatko Todorcevski as a non-executive director. He has a Bachelor of Commerce (Accounting) and holds an MBA. He has worked for more than 30 years in the oil and gas, logistics and manufacturing sectors in Australia and overseas and has a background in finance, strategy and planning. He has previously held the position of Chief Financial Officer with BHP Billiton’s Energy business, Oil Search Limited and most recently at Brambles.

UK: Laurence Millington has been appointed the managing director of Vortex’s operations based from Darlington in the UK. He succeeds Travis Young, who managed the company’s international operations in Europe, the Middle East and Africa (EMEA) and Asian markets since 2008. Young will become the Executive Vice President of Marketing and Global Strategy at Vortex’s corporate headquarters in Kansas, US.

Millington has been employed with the company since 2009 and was promoted to the role of Sales Director, EMEA and Asia, in 2015. Young has been with the company since 2004. Founded in 1977, Vortex designs and manufactures valves and dustless loading equipment for handling dry bulk material in the mineral, chemical and food industries.

US: The Portland Cement Association (PCA) has supported President Donald Trump’s executive order (EO) on energy independence. The EO instructs federal agencies to review and either revise or withdraw a number of actions taken by the Obama administration, including the Environmental Protection Agency’s (EPA) Clean Power Plan. The EO also immediately rescinds other federal policies, such as the social cost of carbon figures developed by the Interagency Working Group on Social Cost of Greenhouse Gases.

“The PCA applauds President Trump for revisiting regulations that have a significant impact on the nation’s cement manufacturers, such as those in the EO issued today,” said PCA Executive Vice President Todd Johnston. He added that the EPA’s Clean Power Plan had ‘exceeded’ the agency’s statutory authority and that the social cost of carbon figures were developed without necessary transparency and public input.

Despite supporting measures that rollback environmental policy in the US the EPA said that it and its members were committed to manufacturing products with a ‘minimal’ environmental footprint.

Croatia: The proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk is set to be blocked by the European Commission according to sources quoted by Reuters. The commission started investing the deal in October 2016 following plans by HeidelbergCement and Schwenk to buy Cemex Croatia via their jointly owned subsidiary Duna Drava Cement (DDC). The deal would see the largest producer in the area merged with the largest importer. However, a final decision on the transaction has not been made yet and the European Competition Commissioner Margrethe Vestager could still rule in favour of it. The commission is expected to make a final decision by 18 April 2017.

Cameroon: Cimencam, a subsidiary of LafargeHolcim via LafargeHolcim Maroc Afrique (LHMA), has announced that it will build a 0.5Mt/yr cement grinding plant at Nomayos, near Yaoundé with a budget of Euro42.6m. The plant will be the cement producer’s third in the country, according to the Échos Quotidien newspaper. Cement from the new plant will be sold locally as well as elsewhere in Central Africa. LHMA owns a 54.74% share in Cimencam.

Haiti: The government has held talks with a Belgian engineering company about plans to build a 2Mt/yr cement plant at Gonaives. The senator for the region, Carl Murat Cantave reported the meeting to the Le Nouvelliste newspaper. Everything is reportedly ready for the launch of the project and the engineering company is set to deliver a schedule of activities shortly. The US$300m cement plant was originally announced in 2015 and the Belgian companies TSE and TPF were lined up to build it.

Uzbekistan: China’s Anhui Conch has met with representatives of the Umar Corporation to discuss building a 2Mt/yr cement plant in Samarkand. Delegates from Anhui Conch visited proposed sites to build the unit in late March 2017, according to the Nezavisimaya Gazeta newspaper. Representatives from Umar plan to visit China in April 2017 to complete the negotiations. The expansion plans by the Chinese cement producer are part of its country’s government-sponsored plans to expand its industries internationally.

Afghanistan: A Czech company plans to invest US$70m towards building a cement plant in Zenda Jan district of Herat province. A deal is expected to be signed in early April 2017, according to a Sirus Alaf, an Afghan presidential adviser on the economy, quoted by the 1TV Afghanistan television channel. Local companies are also expected to match the foreign investment. The planned plant will have a cement production capacity of 1600t/day.

US: HarbisonWalker International (HWI) plans to build a new monolithic refractories plant at the Point Industrial Park in South Point, Lawrence County, Ohio. The site is subject to completion of the company’s due diligence and finalisation of one additional grant application that is in process. HWI announced in February 2017 that it was spending US$30m on building a new 80,000t/yr refractory plant to start operation by early 2018.