Displaying items by tag: GCW332
The world’s quietest cement mega-merger
13 December 2017A member of the Global Cement LinkedIn Group commented this week on the merger between China National Building Material (CNBM) and China National Materials (Sinoma).
“Has the cement world got used to gigantic mergers or have we failed to understand how big this thing is locally, regionally and globally? It is shocking to see how little publicity and media attention is paid to this merger in comparison to the past ones. I find this to be potentially a game changer for the industry. This time, the game will be drawn from a single corner with less integration pains and much more alignment. A big wave coming…”
The comment was posted by Pavel Cech, a managing director of ResourceCo Asia based in Kuala Lumpur. This company is a waste recycling and waste management concern that specialises in alternative fuels for the cement industry. So a focus on the potentially massive drive for co-processing by the Chinese industry is understandable compared to, say, other companies in other continents. However, Cech’s point is valid: why isn’t this merger being talked about more?
CNBM is the largest cement company in the country with a reported total production capacity of around 406Mt/yr. Sinoma is a cement engineering company and the fourth largest cement producer in China with a total production capacity of approximately 112Mt/yr. The companies formally agreed to merge in September 2017 as part of a state-mandated industry consolidation. If these figures are taken at face value then the merger should increase the lead of the self-declared world’s biggest cement producer.
In non-Chinese terms this would be like HeidelbergCement merging with a major equipment manufacturer like ThyssenKrupp or FLSmidth. For these kind of companies, industry commentators and press, such as a Global Cement Magazine, would spend many column inches discussing the twists and turns of the merger as it played out. Just compare the Chinese merger to the debacle that has played out with the proposed acquisition of South Africa’s PPC by Fairfax, where seemingly every development was expounded upon both by PPC and the press.
For Global Cement’s reporting and coverage on China, problems arise from language difficulties, differences with the way Chinese media covers industry, the state-controlled aspect of many of the larger producers, issues obtaining accurate industry data and the sheer size of the sector. All of these impediments make it harder to cover the Chinese market. Add the relative insularity of the sector and it’s often easy to give the Chinese cement industry a special label, separating it out when talking about the global cement industry as a whole.
All this may be about to change as Chinese cement producers start firing up their own kilns outside of the motherland as part of the ‘One Belt, One Road’ initiative, making it easier to see what Chinese companies are doing. Except that Sinoma has already been out there in the rest of world building cement plants in many developing markets and creating competition for the Europe-based equipment manufacturers.
There has been little attention from competition bodies outside of China about the merger. The South Korean Fair Trade Commission approved the deal in November 2017 and that’s been about it. Combining a cement plant builder with a cement producer is a clear example of vertical integration in the cement industry. There is nothing necessarily anti-competitive about this but it could change the market dynamic where non-Chinese multinational and Chinese cement producers compete. If both CNBM and a rival wanted to open build a plant in the same area, then the competitor to CNBM might have less choice when it came to picking their equipment supplier. In addition, news stories such as the alleged pressure by the Chinese embassy in Sri Lanka to try and force a local development agency to choose Sinoma to build a grinding plant doesn’t instil confidence that a merged CNBM-Sinoma would play nice. Although, as today’s fine by the Colombian competition body to Cementos Argos, Cemex and Holcim for price fixing shows, non-Chinese cement producers are just as prone to malpractice.
The merger of CNBM and Sinoma is undeniably big news in the industry. Both within and outside China it is likely to have a pronounced effect. As explained above, for various reasons, the western press can’t cover China in the same way it does other countries. Once the Chinese producers start building more plants outside of China then this is likely to change significantly. Until then we’ll do our best to keep track of this and other Chinese news stories.
Changes to management of Lafarge Spain plants
13 December 2017Spain: Vicente Pedro has been appointed as the new plant manager of Lafarge Spain’s Montcada i Reixac plant near Barcelona. He succeeds José Luis Coleto, who will take over the management of the Sagunto plant in Valencia, according to the Crónica Global newspaper.
Pedro trained as an industrial engineer at the Universitat Politècnica de València. He has worked for LafargeHolcim and its predecessor companies for over 30 years spending time at plants at Spain, Venezuela and Brazil. More recently he has managed the company’s capital expenditure projects in Spain.
Markus Bochynek to leave management board of Aucotec
13 December 2017Germany: Markus Bochynek is to leave the management board of Aucotec in April 2018. His responsibility for sales and marketing will be taken over by fellow board member Uwe Vogt. The other board member, chief executive officer (CEO) Horst Beran, will remain in post. The existing management team below the management board will assume some of the previous responsibilities and tasks of Vogt and Bochynek.
The engineering software company is also planning to build a new head office in 2018.
Colombia: The Superintendent of Industry and Commerce (SIC) has fined Cementos Argos, Cemex and Holcim and six senior managers US$68m for fixing the price of Ordinary Portland Cement. The fine covers behaviour by the companies between January 2010 and December 2012. SIC’s investigation discovered that collusion between the cement producers artificially increased the price of cement by 30% despite inflation being 9% during the period.
Cementos Argos responded to the sanction by saying that it rejected the fine and decision by SIC. Following an earlier statement in October 2017 it once again criticised SIC’s methods. According to Reuters, both Holcim and Cemex disagreed with the finding and they said they would take legal action against it.
Demolition starts of Akranes cement plant
13 December 2017Iceland: Iceland Cement has started demolishing its cement plant at Akranes. The 9 hectare site in the town will be used for housing and other projects, according to the Iceland Review magazine. FLSmidth originally built the plant and it was in operation since 1958 before it stopping manufacturing cement in 2012 when the company switched to imports from Norcem. Germany’s HeidelbergCement is the majority owner of the company.
Carthage Cement wins clinker export contract
13 December 2017Tunisia: Carthage Cement has secured a contract to export 350,000t of clinker to sub-Saharan Africa in 2018. The deal will enable the cement producer to enter this market for the first time. Neither the name of the other company nor the exact destination has been disclosed.
Gebr. Pfeiffer supplies modular grinding plant for Cementos Fortaleza plant in Costa Rica
13 December 2017Costa Rica: Gebr. Pfeiffer is in the process of supplying a Ready2Grind modular grinding plant to Cementos Fortaleza’s new 300,000t/yr plant at Salinas Esparza in Puntarenas. The project is a joint venture between Mexico’s Cementos Fortaleza and fibre cement producer Plycem. Production is scheduled to begin in the first quarter 2018.
The project scope includes: a clinker mill feed system with four hoppers; a MVR 2500 C-4 roller clinker mill with classifier and ancillaries; process filters, hot gas generator and fan; electrical controls and drives; cement transport and three storage silos; packing plant and bulk loading systems; and monitoring and coordination of erection as well as commissioning of the grinding plant.
Cherat Packaging and Mondi hit half-billion cement bag milestone
13 December 2017Pakistan: Cherat Packaging, a producer and supplier of packaging to the cement industry, and Austria’s Mondi have made over half-a-billion cement bags since 2002. The local bag manufacturer has a bag production capacity of 600m/yr. It holds country-specific exclusive rights to use Mondi’s brown sack kraft paper to produce cement bags and has bought only Mondi paper for its use in the last 15 years.
“The bags had to be suitable for rough handling and fast, dust-free filling, and we wanted to deliver further benefits, such as material and cost savings. Mondi’s Advantage Select paper was the perfect choice. The 80/85gsm variant has revolutionised paper bag sales in Asia as it has provided us as well as our customers with high quality, low cost solutions. It has allowed us to use two plies instead of three and to dispense with perforation, which has significantly reduced paper consumption and dust at our clients’ premises. The bags are lighter, yet stronger than the previous three-ply versions,” said Amer Faruque, the chief executive officer (CEO) of Cherat Packaging.
The company’s paper division has exclusive rights from Mondi for procurement of sack kraft paper in Pakistan and supplies two-ply 80/75gsm 50kg bag to Cherat Cement, a sister subsidiary within the Ghulam Faruque Group. In October 2017 Cherat Packaging commissioned a Windmuller & Holscher universal paper sack line.
Fairfax stops bid for PPC
12 December 2017South Africa: Canada’s Fairfax Holdings has stopped its bid for PPC. The investment body made an offer of around US$150m in September 2017 to buy a partial stake in PPC on condition that the cement producer agreed to a merger with AfriSam. The South African cement producer subsequently described the offer as low to its shareholders and said that is was anticipating a higher offer. Rival expressions of interest were also received from CRH, Dangote Cement and LafargeHolcim. Dangote Cement withdrew its bid in October 2017 and CRH decided not to continue its bid in December 2017.
Argentina faces cement shortage
12 December 2017Argentina: Cement plants are reportedly requiring 48 hours notice to process orders due to major growth in the construction sector driven by infrastructure development. Due to this materials such as cement and concrete are facing shortages, according to La Voz newspaper. Prices for building materials have rise by around 40%.
Norberto Ladea, the commercial director of Holcim Argentina, said that the company has expanded its production by approximately 13% year-on-year in 2017 with a cement production capacity of 4.8Mt/yr. It is currently planning its investment to bolster output in 2018.