Displaying items by tag: GCW400

Good news for Cemex Colombia this week with an agreement reached to open its Maceo cement plant in Antioquia. Local media was reporting that the cement producer has struck a government-brokered deal with CI Calizas y Minerales to lease the land it built its plant on. Finally, the new(ish) US$350m integrated plant can start operation.

For those unfamiliar with the debacle, Cemex has been fighting the fallout publicly since 2016, following a dodgy land deal at the site. The 1Mt/yr integrated Maceo plant was originally announced in 2014 with full operation scheduled for late 2016. Then, in October 2016 Cemex fired several senior staff members in relation to the project and its subsidiary’s chief executive resigned. This followed an internal audit and investigation into payments worth around US$20m made to a non-government third party in connection with the acquisition of the land, mining rights and benefits of the tax free zone for the project. Other irregularities are also alleged to be linked to the project. As well as the Colombian authorities being involved, the US Department of Justice is also running its own investigation into the affair with wider implications for Cemex’s operations in other Latin American countries. Some of the sacked staff members and others have since been investigated on corruption charges.

Graph 1: Cement production in Colombia, 2010 – 2018. Source: DANE.

Looking at the wider Colombian market though, it does make one wonder whether the long-delayed plant is really necessary. As Graph 1 shows, cement production rose steadily year-on-year to 2015 before it hit a downturn. It reached a high of 13Mt in 2015 before declining. Production in 2018 grew slightly compared to 2017 but not at the same rate seen previously. In Antioquia specifically despatches increased by 1.3% in 2018, above the national average of 0.2%. Despatches now appear to have continued into January and February 2019.

Cemex Colombia started to benefit from an improved fourth quarter in 2018 as the general economy picked up. Despite this its overall net sales and operating earnings fell in 2018. However, it did flag its earnings margin as a concern with higher freight and energy costs in the fourth quarter of 2018, although it partially offset this with higher prices. Cementos Argos, the other big producer in Colombia, reported a similar picture to Cemex, although in a better position. Its cement volumes fell slightly for the year in 2018 but picked up fast in the fourth quarter. Annual revenue was down slightly, as were adjusted earnings. In its opinion the construction industry improved in the second half of 2018 due to an improved housing market and infrastructure projects.

Given the downturn in production since 2015 the thought does occur whether the opening of the Maceo plant being delayed accidentally helped Cemex or not. It has probably been losing money by not running the plant but if, for example, the company had some sort of insurance to protect it against unexpected delays it might still benefit. However, if evidence of serious wider misconduct in both Colombia and other Latin American countries are found by the US authorities, then things could get expensive. This would be unfortunate, particularly in Colombia, given that the market looks set to recover.

Saudi Arabia: Tabuk Cement has appointed Saud Suliman Al Juhani as its new chairman. It follows the resignation of Saeed Obaid, who has left the position due to other business commitments but will retain a seat on the board. Tareq Khalid Al Angari has also been appointed as the Vice Chairman. Both positions will last until 25 January 2020.

US: US Concrete has appointed Ronnie Pruitt as its president and chief operating officer. Pruitt will continue to report to chairman and chief executive officer (CEO) William J Sandbrook and, in this expanded role, will take over many corporate functions that support the company's operational business units.

Pruitt, aged 48 years, has been with US Concrete since 2015 and has over 25 years of industry experience. Prior to joining US Concrete, he served as Vice President of Martin Marietta Materials and as Vice President of Cement Production and Vice President of Sales and Marketing of Texas Industries (TXI).

Germany: Michael Lambert has been appointed to the management board of Vecoplan. He has been responsible for the company’s commercial operations since 2014 and is the manager of its European subsidiaries. In this capacity he supports Werner Berens, who has been chief executive officer (CEO) of Vecoplan since 2012 and is in charge of Vecoplan’s divisions and supply chain activities.

Lambert, aged 40 years, has a degree in business administration and has held a number of management positions. In 2008 he assumed the post of commercial director in the Saar-Gummi Group and he became manager of the group’s non-automotive business in 2011. In January 2014 Lambert went to Vecoplan, where he was appointed chief financial officer (CFO).

India: Private equity company True North has purchased a 54% stake in Shree Digvijay for a reported US$17m from Brazil’s Votorantim Cementos. Other companies bought the rest of Votorantim’s 75% share in the business, according to Bloomberg. True North signed a deal to buy the cement producer in late 2018. Shree Digvijay operates an integrated cement plant at Jamnagr in Gujarat.

Pakistan: Maple Leaf Cement has commissioned a new 7300t/day production line at its Iskanderabad plant. The upgrade will increase the unit’s total production to 18,000t/day. The line was supplied by Denmark’s FLSmidth. The total cost of the project was US$184m. Commercial production on the new line is scheduled to start in late April 2019.

Iraq: Pakistan’s Attock Cement has commissioned its new grinding plant in Basra. Civil, mechanical and electrical construction work on the unit was finished in January 2019.

Saudi Arabia: Arabian Cement says that the National Electricity Transmission Company plans to complete an expansion to a high-voltage plant in Rabigh by the third quarter of 2021. The project has been delayed but the cement producer said that this will have no financial impact, according to Mubasher. Arabian Cement originally signed an agreement with the National Electricity Transmission Company to supply electricity to its Rabigh plant in 2015. In November 2018 it said that an upgrade to its cement mills was 80% complete.

Rwanda: Raymond Murenzi, the director general of the Rwanda Bureau of Standards (RBS), says that cement imported from Uganda in March 2019 was blocked because it did not meet minimum quality requirements. The imported product was found to be below the designated weight of 50kg, according to the New Times newspaper. Three trucks with 30t loads of cement from Hima Cement were prevented from crossing the border.

Previously, similar issues have occurred dating back to 2015 and the RBS has notified the supplier on each occasion. The company is then given 14 days to re-export the goods.

Poland: Data from the Cement Producers Association (SPC) shows that cement production grew by 12% year-on-year to 18.9Mt in 2019. Concrete production rose by 6.8% to 25.3Mm³. This was attributed to a growing construction sector, according to the Polish News Bulletin. Both cement and concrete production is expected to continue growing in 2019 to 19Mt and 26.2Mm³ respectively.