Displaying items by tag: GCW658

Kenya-based East African Portland Cement (EAPCC) made the news this week with the reopening of the company’s Athi River cement plant after a month-long shutdown. The closure was conspicuous because the company is gradually working towards increasing the integrated plant’s production capacity. The first phase of the maintenance and upgrade project saw the replacement of the production line’s kiln shell in September 2022. The current aim is to increase the unit’s cement production capacity to 1Mt/yr by mid-2026. The recent shutdown appears to have been a more normal annual renewal and repair job but EAPCC has used it as a promotional opportunity. Notably, a spokesperson for EAPCC described clinker as the “new gold” in a recent video explaining what was going on.

It’s an improvement on the financial trouble EAPC found itself stuck within in the late 2010s before the government ended up taking a controlling share in the cement producer. On this front local media reported in July 2023 that the government had found a 'strategic investor' to buy a 30% stake in the company. Nothing more has been said on this topic since then though.

The highlighting of the recent shutdown is likely to be a public relations exercise intended to project stability, but that focus on clinker is telling given that the government introduced its Export and Investment Promotion Levy in July 2023. This legislation imposed a 17.5% fee on imported clinker in order to encourage the local industry. Cement producers that rely on imported clinker - including Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot - attempted to lobby against the levy but it remains in place. This business environment helps to explain EAPCC’s renewed focus on clinker production.

One company that stands to benefit from the levy is National Cement, producer of the Simba Cement brand and a subsidiary of Devki Group. It made the news at the start of April 2024 when its subsidiary Cemtech commissioned a 6000t/day clinker plant at Sebit in West Pokot. National Cement already operates an integrated plant near Athi River, south of Nairobi. However, hot on the heels of the West Pokot plant, it is already considering building another integrated plant in the north of Kitui County, to the east of Nairobi. As reported in the local press this week, Cemtech has submitted an environmental impact assessment for the project to the local authorities.

The country has two other clinker producers: Holcim subsidiary Bamburi Cement and Mombasa Cement. The former company announced at the end of 2023 that it had signed a contract to build solar plants at its integrated plant in Mombasa and its grinding plant in Nairobi. The deal was framed as a money saver but additionally it may have been in response to a less than reliable local grid. It also said that it was removing Ordinary Portland Cement (OPC) from its product line from the start of 2024. This move challenged expectations about sustainability initiatives outside of richer countries. Yet, considering how Bamburi Cement argued against the clinker levy, there might have been some commercial thinking here too in order to sell products that use less clinker. Finally, despite completing its divestment of Uganda-based subsidiary Hima Cement for US$84m in March 2024, Bamburi Cement reported a loss of US$2.99m in 2023 compared to a profit of US$1.36m in 2022. Although it reported a rise in turnover and operating profit, it appears that taxes and legal costs related to the sale of Hima dragged the company into a loss.

Graph 1: Rolling annual cement production in Kenya, 2019 - September 2023. Source: Kenya National Bureau of Statistics (KNBS).

It’s been a difficult business environment in Kenya over the last decade given the number of companies that have faced serious financial difficulties. This list includes ARM Cement, EAPCC and Savannah Cement. The last of these companies, Savannah Cement, is currently in administration and is trying to sell its integrated plant. Yet, rolling annual cement production in Kenya has remained above 9.5Mt/yr since early 2022. The government is sticking to promoting local clinker production, and companies like Bamburi Cement, EAPCC and National Cement are making investments of varying scales. The focus, for now at least, is on clinker production in Kenya.

Oman: The Financial Services Authority has reconstituted the board of directors of Raysut Cement. It has appointed Shabib Mohammed Al Darmaki as its chair with Naser Jumaa Al Zadjali, Badr Awad Al Shanfari, Ali Rashid Ali Al Shuhi and Abdulhameed Ahmed Al Balushi as members. The new board is intended to follow the role of the previous board by completing the “reorganisation and restructuring of the company and fine-tune its governance to ensure stability of its financial and operational positions to correct its path to ensure sustainable performance and protect the interest of all the shareholders and enhance the stability of the market.”

In December 2022 the Capital Market Authority (CMA) replaced the board of directors of Raysut Cement and appointed a temporary one following a financial audit. This followed the CMA publicly questioning the validity of the company’s third quarter results in 2022 when it detected ‘material misrepresentation.’

Morocco: The Moroccan Cement Association (APC) has elected Said El Hadi as its president. He succeeds Khalid Cheddadi in the role, according to Les Echo newspaper. El Hadi is the president of LafargeHolcim Maroc. The APC represents cement producers in the country including Asment Temara, Atlas Cements, Ciments du Maroc, LafargeHolcim Maroc and Novacim. The members of the association operate 14 plants with a production capacity of over 24Mt/yr.

Nigeria: Mathew Philip retires as the Deputy Group Managing Director of Dangote Cement. He has also left the company’s board of directors. He spent two years in the post. No successor has been announced.

Philip holds over 35 years of experience in the cement industry. Prior to working for Dangote Cement, he was Head of Cement Manufacturing Excellence for LafargeHolcim APAC region. He also worked as the Chief Manufacturing Officer for India-based ACC in the late 2010s. Before this he worked for Lafarge in a variety of roles and countries including Director - Performance and Progress in Kuala Lumpur and Relations Director in China. He originally started his career working as a process engineer for ACC. He is a chemical engineer from the Indian Institute of Technology (IIT) in Madras.

Nigeria: BUA Cement has appointed Chikezie Ajaero as its Acting Chief Financial Director (CFO). He succeeds Jacques Piekarski in the full post of CFO.

Ajaero has worked as the Finance Director of BUA Cement’s Obu plant since 2020. He is an accountant with a master’s of business administration from the University of Lagos. He is a fellow of the Institute of Chartered Accountants of Nigeria and holds over 25 years of experience in financial reporting and control.

Ireland: Ecocem has appointed Sally Anne Sherry as the Managing Director for its UK and Ireland business operations. She succeeds Susan McGarry in the post, who has become the group’s Director of Public Affairs and Sustainability.

Sherry holds around two decades of experience in the property sector and has worked as a non-executive director for several companies. Notably she worked as a Director and General Counsel for property development and investment company Bartra from 2015 to 2023. She holds legal qualifications from the University of Galway.

Germany: Buzzi Unicem subsidiary Deuna Zement plans to invest €350m to install a carbon capture system at its cement plant in Deuna, having completed two feasibility studies. The Thüringer Allgemeine newspaper has reported that, when operational in 2029, the system will capture 620,000t/yr of CO₂. This will make the Deuna cement plant carbon neutral. The company has applied for government funding for the project.

Buzzi Unicem said that its subsidiary is ‘Doing pioneering work on the path to decarbonising the cement industry.’ It added “The system will be efficient and take all relevant environmental considerations into account.”

India: Jaiprakash Associates has defaulted on loans worth US$553m, including principal of US$210m and interest payments of US$343m. The Deccan Chronicle newspaper has reported that the producer has total borrowings of US$3.57bn, repayable by 2037. The borrowings are comprised of fund-based working capital, non-fund-based working capital, term loans and foreign currency convertible bonds.

Jaiprakash Associates will now transfer US$2.27bn to a special purpose vehicle as part of a scheme of arrangement, subject to the approval of the National Company Law Tribunal.

Ukraine: CRH has invested €465m in Ukraine since entering the country in 1999, €74.5m of it since the start of Russia’s invasion in February 2022. CRH Central and Eastern Europe president Guillaume Cavalier noted the double role of locally-produced cement in generating employment and state revenues.

Cavalier said "Investing in the expansion of production now is crucial to ensure the potential growth of the Ukrainian cement market following its integration into the EU."

Nigeria: Finland-based Wärtsilä has signed a 10-year operations and maintenance (O&M) agreement for a captive power plant that provides the energy for Mangal Industries’ cement plant located in Kogi State. The cement plant has limited access to the local electricity grid and its power plant operates with five Wärtsilä 34DF dual-fuel engines delivering an output of 50MW. The O&M agreement is designed to ensure that the facility can reliably maintain its cement production target of 3Mt/yr.

The 10-year agreement starts immediately as the unit commences operations in the second quarter of 2024. It will run on liquid fuel initially but then switch to gas operation when a natural gas pipeline is commissioned. The power plant’s dual-fuel engines can be operated both on liquid fuel and natural gas. They could also be potentially converted to operate with low- or zero-carbon fuels in the future subject to availability.

Patrick Borstner, Director, Operations Africa at Wärtsilä Energy said, “Wärtsilä now has more than 400MW of installed capacity for the cement industry in Nigeria, and we are operating three captive power plants in three different states. This successful track record clearly indicates our capabilities and highlights the added value we can deliver to our customers through our experience and expertise in supporting their operations.”

Mangal Industries signed a contract with China-based Sinoma International Engineering in 2021 for the construction of a 3Mt/yr new integrated cement plant. Construction at the site commenced in mid-2022.