
Displaying items by tag: GCW330
PPC turns the tables
29 November 2017There are two significant cement producers around the world up for sale at the moment. Last week we dealt with India’s Binani Cement, which has so far attracted 15 separate bids from a number of international and domestic players. Now, we turn our attention to South Africa, where PPC remains the target of approaches by LafargeHolcim and CRH.
This week PPC rejected a partial offer from Canada’s Fairfax Holdings, which it considered neither fair nor reasonable. Like a mutual friend at a party that insists two people ‘really are perfect for each other,’ Fairfax had stipulated in its terms that PPC should merge with AfriSam to create a South African super-producer. It does not appear that this idea went down well and that particular combination now seems further away than ever.
When the news broke that it had rejected Fairfax, we thought that PPC’s stance seemed a little ‘too cool.’ However, looking just at the oversized and import-addled South African market does not give the full picture of what’s happening for PPC at the moment. It has significant and growing activities in the rest of Africa too.
Later this week PPC released its results for the first half of its 2018 fiscal year. Suddenly, its handling of the Fairfax offer made more sense. Over the six months to 30 September 2017, PPC nearly tripled its profit to US$21.1m. Crucially, sales from outside South Africa grew far more rapidly than those at home. While domestic earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 4%, EBITDA from elsewhere increased by 25%. These results bode well for a potential bidding war that now favours PPC.
Even from this greatly enhanced position, PPC was not finished with its announcements for the week. Today it revealed that it plans to build a new ‘mega-factory’ in the Western Cape. Johan Claassen, the interim chief executive of PPC, said there would probably be a formal announcement about new capacity in the Western Cape in 2018. He said that PPC had decided to conduct a feasibility study into a possible replacement for its Riebeeck plant. An Environmental Impact Assessment (EIA) is in progress and the plant is reported to be ‘semi-brownfield.’ Claassen said that the new facility would use around 25% of the current Riebeeck equipment and cost US$200/t of installed capacity.
The news of its results and announcement of the new plant represent a good PR move by PPC given the difficulties faced by the wider South African market. The new information will certainly give cause for CRH and LafargeHolcim to think again about the values of their offers, should PPC also be of the view that these also undervalue the company.
PPC plans Western Cape ‘mega-plant’
29 November 2017South Africa: PPC is planning a ‘mega-plant’ in the Western Cape Province. Johan Claassen, PPC’s interim chief executive, stated that it was looking to replace its Reibeeck plant with a ‘semi-brownfield’ facility that used around 25% of the current plant’s equipment. The company has long planned to expand its Western Cape capacity but domestic demand has not yet been high enough to justify the investment. There has been overcapacity in the market as well as imports from other regions, both of which have depressed cement prices.
Claassen said that the plant would cost around US$200/t of installed capacity, without mentioning the intended capacity. He said that financing was already in place. He added that PPC had been able to increase its selling prices by 2% in the six months to 30 September 2017 and that, even with slow growth, South Africa would need the additional capacity supplied by the new plant by 2020.
Claassen said that a formal announcement would be likely in early 2018.
New CEO for Raysut Cement
29 November 2017Oman: Raysut Cement has appointed Joey Ghose as its new CEO, effective 1 December 2017. Ahmed bin Yousuf bin Alawi Al Ibrahim, the chairman of Raysut Cement’s board, said in a statement to the Muscat bourse that Ghose has extensive experience of managing cement industry companies.
New Director General for Holcim Azerbaijan
29 November 2017Azerbaijan: Frederic Guimbal was appointed director general of Holcim Azerbaijan OJSC. Guimbal took up his duties in October, replaced Rossen Papazov in this post. Prior to this role, Guimbal served as CEO of Holcim India.
Loesche wins Chaudhary Group mill contract
29 November 2017Nepal: The German vertical roller mill (VRM) producer Loeshe GmbH has gained a new customer in Nepal. The cement division of Chaudhary Group, based in Kathmandu, has placed an order for a 25t/hr vertical roller mill for coal grinding for the 3900t/day (1.3Mt/yr) integrated cement plant that it is building in the Palpa region.
Loesche received the order though KHD, the lead bidder at the plant. The LM 26.3 D mill will be in operation during 2018 with a throughput of 50t/hr, 15% R on 90μm.
Lafarge Canada invests in monitoring systems to help fuels bid
29 November 2017Canada: As it awaits industrial approval from the Province to burn tyres at its Nova Scotia cement plant, Lafarge Canada says it has spent US$830,000 to install emissions monitoring systems. The company says its new equipment measures plant emissions such as sulphur dioxide, nitrogen oxides, carbon monoxide, carbon dioxide, oxygen, and total hydrocarbons every 10 seconds.
Rob Cumming, Lafarge's environment director, says the company's proposed one year pilot project at its Brookfield plant will allow it to gather the scientific evidence needed to assure the public that it is safe to use scrap tyres as a replacement for coal.
In October 2017, the Environment Department said it was reviewing the company's application and would make a decision on the project within 60 days. The project has drawn criticism from residents near the plant, environmental groups and Nova Scotia's NDP, which has called on the Liberal government to ban tyre burning.
Cemento Polpaico flips to a loss in first nine months
28 November 2017Chile: Cemento Polpaico has reported losses of US$3.58m in the first nine months of 2017. This compares very unfavourably with the company’s profit of US$6.5m in the same period of 2016.
The firm recorded revenues from ordinary activities of US$151m, a 11.4% reduction compared to the first nine months of 2016 when it took in US$170.4m.
Briones family to increase stake in Cementos Bío Bío
28 November 2017Chile: The Briones family has decided to acquire another 13.1% stake in local cement producer Cementos Bío Bío from Brazil’s Votorantim for US$45.5m. The family thus intends to increase its shareholding to 39.5%. Votorantim would be left without an interest in the company if the deal goes ahead.
Adelaide Brighton to use green power
28 November 2017Australia: Adelaide Brighton will power some of its facilities with electricity from a 278.5MW wind farm owned by Infigen Energy, according to the Australian Financial Review. Adelaide Brighton will use the electricity to supply two of its cement plants near Adelaide, South Australia, and a quarry on Yorke Peninsula.
The two companies have signed a contract that calls for the cement manufacturer to buy power from the Lake Bonney wind farm for a five-year term. Specific terms of the deal have not been provided, while the contracted amount is said to be more than the 88GWh that were contracted in a bulk power purchase agreement (PPA) deal for a wind project in Melbourne earlier in November 2017.
Two more Algerian plants
27 November 2017Algeria: Already an exporter of cement, Algeria is set to gain two further cement plants by 2020. The CEO of GICA Group, Rabah Guessoum, has indicated that his group has already begun construction of a 1Mt/yr plant in Béchar and a 2Mt/yr plant at Sigus, Oum El Bouaghi.
By 2020 the group will reach a cement production capacity of around 20Mt/yr. Regarding exports, Guessoum noted that with the satisfaction of domestic demand, the surplus will be exported to other African countries, in accordance with the guidelines of the public authorities. He said, "Currently we are in discussion with international operators to form possible partnerships to place our products internationally."