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Spare a thought for your fellow cement workers this week as reports emerge of plant employees being forced back to work at gunpoint in Kenya and Chinese workers being kidnapped in Egypt.

The news that workers have been coerced with bullets is just one horror story from the ongoing soap opera that is the East African Portland Cement Company. Since the Kenyan government dismissed the directors in December 2011, over allegations of alleged mismanagement, progressively more murky disclosures have emerged. Although the latest reports suggest that all the 1200 permanent employees have now returned to work, the situation remains volatile. Anyone who thought that a judge could simply order the plant back to work because he said so has underestimated the situation.

On one side sit the directors who have already been sacked and reinstated by the government following accusations of non-competitive tenders and rampant expenses claims in December 2011. Running scared of their own employees, they now have to face the Maasai elders who supporting the directors by ordering the closure of the gypsum, limestone and pozzolana mines. On the other side is the Kenyan government which was legally forced to return the directors they dismissed. In the middle remain the workers, at work for now but for who knows how much longer.

By contrast the 25 mostly Chinese cement factory workers who have been kidnapped in Egypt's Sinai Peninsula may have had the best management in the world. Yet working internationally can bring risks such as political instability that are hard to predict.

Elsewhere in this issue of Global Cement Weekly, you can read about new plant plans in Indonesia, rampant overcapacity in Vietnam, soaring profits in Saudi Arabia and the news that Italcementi is likely to have to sack 7.5% of its workforce.

Egypt: Bedouin in Egypt's Sinai Peninsulas kidnapped 25 mostly Chinese cement factory workers on 31 January 2012. They demanded that authorities free fellow tribesmen from prison, sources from the tribe said.

"We will not release the Chinese until our demand for the release of these sons of Sinai are met," said one of the Bedouin who wanted to remain anonymous.

The workers were kidnapped on their way to a Sinai Cement plant and were being held in a tent near a road that the Bedouin had blocked for the past three days to press their demand, the sources said. They said their jailed tribesmen were arrested between 2004 and 2006 as part of an investigation into bombings at the Taba resort on Sinai's Red Sea coast in which 31 people were killed.

Malaysia: Lafarge Malayan has appointed Bradley Peter Mulroney as its president and chief executive officer and Malaysian Chen Theng Aik as its executive director.

Mulroney, aged 49, is a British national. He holds a Bachelor of Arts from the University of London and he initially started his career with Redland plc, where he rose to the rank of a general manager. Redland was acquired by Lafarge SA in 1996.

Aik, aged 45 is a Malaysian who was previously the senior vice-president, finance and chief financial officer of Lafarge Malayan.

Vietnam: The Vietnamese cement industry continues to suffer the effects of overcapacity and is struggling to export enough cement. The industry faced many difficulties in 2011, in part due to its stagnant real estate market. In 2012, however, eight new cement plants will go into operation with a combined capacity of 6.9Mt/yr. This will bring the total capacity of the country to 73Mt/yr, worsening the oversupply situation.

According to the Vietnamese Cement Association, the total demand for cement in 2012 will be about 60Mt/yr, of which 53Mt/yr will be for domestic consumption. Currently cement is exported to China, India and a number of Asia Pacific nations. Africa is also becoming a promising market. While China is reporting soaring consumption, India itself is facing overcapacity as demand weakens, threatening this export market for Vietnam.

Vietnam currently faces difficulty in supplying cement overseas. Its domestic infrastructure is poor and input costs, like those around the world, are increasing. There is also a poor perception of Vietnamese cement exports, which may be damaging trade.

Indonesia: PT Indocement Tunggal Prakasa has reported that it will build a US$500m cement factory with a production capacity of 3Mt/yr in the regency of Pati, Central Java.

Sahat Pangabean, Indocement's corporate secretary, said that the company was hoping that the process of licensing the plant would be completed within 2012 and that construction would start immediately afterwards. Sahat added that the company was currently in the process of conducting an analysis of the plant's potential environmental impact.

The project will be run by Indocement's subsidiary PT Sahabat Mulia Sakti and is expected to be operational in 2015.

Saudi Arabia: Cement producers in Saudi Arabia have announced improved profits for 2011 and the fourth quarter of 2011. Companies have cited increased demand for cement and higher selling prices as reasons for their improved profits.

Yanbu Cement Company posted a net profit of US$40.9m for the fourth quarter of 2011 compared to US$26.6m for the same quarter of 2010, an increase of 54%. The company posted a profit of US$33.3m for the previous quarter. The company's net profit for the whole of 2011 was US$141.2m compared to US$114.8m in 2010, an increase of 23%. The 12 month gross profit was US$148.1m, up by nearly 20% compared to 2010. Yanbu's operational profit over the same period was US$139.8m, a year-on-year increase of 19.5%.

Meanwhile, Saudi Cement Company has announced that its net profit jumped by nearly 40% in the fourth quarter of 2011, rising to US$56.6m. The company said that the increase from a net profit of US$40.5m in the same period of 2010 was due to higher production and demand. It should also be noted that the company has added new production lines in the past year, which boosted the company's output and profit.

Eastern Province Cement Company (EPCC) also reported strong results, with a net profit for 2011 of US$97m, compared to US$91.5m for the same period of 2010. This is an increase of 6%. In the fourth quarter of 2011 the company's net profit was up to US$28.7m compared to US$22.1m for the same quarter of 2010, an increase of 28%. The net profit was up by 41% compared to the quarter ending 30 September 2011.

Kenya: All the 1200 permanent employees of the East African Portland Cement Company (EAPCC) have reported to work, formally ending a two-week strike. The move follows reports of strong-arm tactics forcing employees to work.

It is estimated that the company lost US$9m during the strike period after union members demanded the resignation of two directors: board chairman Mark Karbolo and managing director Kephar Tande. The government had suspended the duo alongside six other board members over alleged mismanagement.

The workers went on strike after the government installed the same directors after a landmark court ruling ordering them to return to office. Following the ruling, Tande and Karbolo were instructed to open up the plant and normalise operations. Staff refused to work under the two top officials.

Tande said all the staff had resumed work and that money would not be deducted from their January salaries for the days they were on strike. "At least we have managed to bring all the staff on board and what remains now is the mammoth task of talking to Maasai elders from Kajiado county who had ordered the closure of all mines for gypsum, limestone and pozzolana that are used to manufacture cement," said Tande. The Maasai elders ordered all the mines closed and gave the government an ultimatum to return the suspended directors whom they claimed had been "victimised unnecessarily."

The return occurs after employees complained that armed police officers had forced them to work at gunpoint. Raising their concerns in court, a representative for some 778 employees told Justice Cecilia Githua that General Service Unit officers were forcibly removing them from their homes and taking them to the plant to work, even at night.

Pakistan: The State Bank of Pakistan (SBP) has stated that "cement prices remain inexplicably high," in its State of Pakistan's Economy report published on 28 January 2012.

Expressing concerns over an increase of 17.3% in cement prices from July – November 2011 compared to the same period in the previous financial year, SBP has highlighted that this increase arose despite "a reduction on cement taxes and only a 10.7% increase in coal prices during the period."

The high prices of building materials and the strain of sales tax are expected to dent the growth of the manufacturing sector during the current financial year.

The large scale manufacturing (LSM) sector has registered growth of 2.1% in the first quarter, compared to a 2.9% decline over the same period last year. Lower duties on cement, beverages, automobiles and air conditioners have provided fiscal support to this sector according to SBP.

Yet SBP has warned that growth in the LSM sector may not be sustainable in coming months as the low base effect brought on by floods in 2011 withers away in subsequent periods.

Afghanistan/Pakistan: Exporters from Pakistan have raised cement prices in the Afghan market by 25%.

Cement exports to Afghanistan currently represent 50% of the total exports from Pakistan where major quantities are shipped by the companies close to the north-west border between the neighbouring countries. According to Shagufta Irshad, a senior analyst of KASB Securities, Pakistan exported 4.7Mt to Afghanistan during the year 2010-2011 and 2.5Mt during the first half of 2011-2012. This increase will have a positive impact on the earnings of exporting companies in the current financial year, as well as to the country as a whole.

Currently Pakistani cement dominates in the central and north regions of Afghanistan where major reconstruction activities are underway. The Pakistani companies with the most exposure to the Afghan market include Lucky Cement, Bestway, Cherat, Lafarge Cement, Fauji Cement and DG Khan Cement. DG Khan Cement has a higher exposure to the Afghan market than Lucky Cement because both its plants are located in the northern region.

Pakistan's exports to Afghanistan currently contribute 30% of DG Khan Cement's total exports, compared to 20-25% for Lucky Cement. Shagufta noted that this increase will bring a rise of 16% and 3% in the earnings for DG Khan Cement and Lucky Cement respectively in the year 2011-2012.

Italy: An on-going personnel crisis at Italcementi has prompted the company to request unemployment subsidies from the Ministry of Labour and Social Policies.

Following a statement from the company on 11 January 2012 that up to 265 workers would be made redundant, Italcementi sought out the Extraordinary Redundancy Fund, a specialist Italian fund designed to help ailing industries.  This loss represents approximately 7.5% of the company's Italian workforce.

In the statement Italcementi announced that layoffs would affect a total of 265 existing employees: 80 at the headquarters of Italcementi, 60 at Group Technical Centre in Bergamo, 115 (out of a total of 1651 employees) in 18 Italian plants and 10 in the company's commercial network.

Outside of Italy the restructuring of the group will include changes in Spain, Belgium, Egypt and the US. 22,000 employees work for Italcementi worldwide, with 3500 in Italy. In November 2011 the company reported a 51.7% drop in third quarter profits despite the sale of its Turkish assets.

Italcementi has not responded to requests for further information from Global Cement.