Displaying items by tag: GCW76
Has the UK cement market become more competitive?
21 November 2012Back in May 2012 we asked who would buy Lafarge's Hope cement plant in Derbyshire. The answer was, of course, a company with an Indian background: Mittal Investments.
The sale was a condition of the UK Competition Commission in response to the proposed joint venture between Lafarge and Tarmac. It also included 172 ready mix concrete plants, five aggregates quarries, two asphalt plants, one marine aggregates wharf, one rail-linked aggregates depot and the sale of Tarmac's 50% ownership interest in Midland Quarry Products. Mittal has paid Euro339m for the assets, including up to Euro37m dependent on the performance of the assets over the next three years.
At the time we predicted that it might be a company from a fast growth area, with excess cash and a desire for technical knowledge, perhaps from China or the Middle East. Far more fitting for the UK, however, was a company with Indian roots, especially considering the cultural links between the two countries dating back to the colonial era.
Originally from India but based in London, owner Lakshmi Mittal runs steel multinational ArcelorMittal and he frequently tops UK rich lists. The Mittal family even own shares in Premier League football team Queens Park Rangers. The sale follows acquisitions of well-known British brands such as car manufacturers Jaguar Land Rover and British Steel/Corus to the Tata Group.
The sale to Mittal leaves the UK cement market with four companies. Mittal's new plant in the UK joins Lafarge's four plants, Cemex's two plants, Hanson Cement's three plants and Tarmac Buxton, Lime & Cement's single plant, which is soon to join with Lafarge's plants in the joint-venture. Geographically the sale to Mittal breaks up a concentration of three Lafarge and Tarmac plants in Derbyshire in the southern Pennines. Presumably this was the aim of the Competition Commission in the first place.
Selling the Hope plant makes sense for Lafarge and Tarmac. The sale leaves Lafarge's generous spread of plants across the UK in key locations except the south of England. The combined cement production capacity of Lafarge and Tarmac will fall from 4.35Mt/yr to 3.85Mt/yr. The reduction may actually help Lafarge, given its 9% fall in cement sales volumes so far in 2012 and the pessimistic outlook for the UK cement sector in 2013. The reduction in capacity manages this decline closely at 11%.
The UK cement industry has likely become more competitive with the range between the production capacities of the four companies reduced. However the price Lafarge and Tarmac have paid the Competition Commission for their joint venture was almost certainly worth it. Lafarge-Tarmac retains Lafarge's dominant position in a streamlined shape now matching the market reality.
Update: This article was corrected on 27 November 2012. The UK temporarily has five cement producers until the Lafarge-Tarmac joint venture gains approval from the UK Competition Commission. Then it will return to four.
New chairman for PCA
21 November 2012US: The Portland Cement Association (PCA) has announced that its board of directors has elected Cary O Cohrs, current president of American Cement Company, to be its new chairman during the association's autumn board meeting in Washington, DC. Cohrs succeeds Aris Papadopoulos of Titan America. John Stull, president and CEO of Lafarge North America Inc, was elected vice chairman.
"It is not only a pleasure but a great honour to serve as chairman of the board," Cohrs said. "We may be just beginning to emerge from the recession, but the prospects for cement and concrete are incredibly positive. With our shift in leadership from Skokie to Washington comes a greater focus on advocacy and government affairs. But we also must maintain our focus on national and local promotion initiatives and continue to drive gains in both market share and market size."
Cohrs has decades of experience in the cement industry. In 2000 he was appointed vice president of operations for Florida Rock Industries, where Cohrs also served as plant manager and construction manager. He also was a corporate project manager for Essroc Materials Inc, responsible for the installation and commissioning of capital projects in six cement plants and two grinding plants.
Indonesian cement sales rise 10% year-on-year
21 November 2012Indonesia: Cement sales in Indonesia, Southeast Asia's biggest economy, rose by 10.7% year-on-year in October 2012, with the highest growth in the Moluccas and on Papua. Data from the largest cement firm PT Semen Gresik showed that October 2012 sales were up by 0.1% relative to September 2012 at 5.17Mt.
The highest consumption was, as usual, seen on Java, the main island in the archipelago. Sales in the Moluccas and Papua stood at 87,316t, rising by 68.5% year-on-year earlier.
PPC plans US$200m plant in Zimbabwe
21 November 2012Zimbabwe: PPC (Pretoria Portland Cement) plans to spend at least US$200m on a new cement plant in Mashonaland Central Province in Zimbabwe, according to Zak Limbada, the managing director of its Zimbabwe subsidiary Portland Holdings Limited (PHL). The proposed plant will have a capacity of 1Mt/yr.
"We are busy drilling to identify the raw materials in the Rushinga area and some north eastern parts of the country," said Limbada.
PPC currently has a capacity of 1Mt/yr in Zimbabwe. Larfage and Sino Cement produce 400,000t/yr and 250,000t/yr respectively in the country. In November 2012 PPC announced that PHL has been awarded an indigenisation certificate by the government of Zimbabwe.
Bosowa starts US$310m clinker plant in Maros
21 November 2012Indonesia: Cement producer PT Semen Bosowa Maros has officially begun construction on a new US$310m clinker plant in South Sulawesi. The new plant, will be called Kiln Plant Line 2, and the entire site will have a production capacity of 5.2Mt/yr. The existing plant at the site has a capacity of 2.5Mt/yr. The plant is expected to be complete before the end of 2014.
"As of now, our cement production is 3.2Mt/yr, only about 6% of the national demand," said Bosowa Corporation chief executive officer Erwin Aksa. Higher clinker production is expected to help the company meet the country's growing cement demands.
Bosowa Corporation producers 2.2Mt at its Semen Bosowa Maros plant and 1Mt at its Batam-based PT Semen Bosowa Indonesia plant. The group is expected to have a production capacity of around 10Mt/yr in 2015. By then Indonesia's domestic demand is estimated to be 53Mt/yr.
Clinker produced by Kiln Plant Line 2 will be delivered to Bosowa's grinding plants. Semen Bosowa Maros is now developing new grinding plants in Banyuwangi in East Java, Cilegon in Banten, Sorong in West Papua and Amurang in North Sulawesi.
The Banyuwangi grinding plant will have a production capacity of 1.8Mt/yr with an investment of US$103m. It is scheduled to open before the end of 2013. The Cilegon grinding plant will have a production capacity of 1.8Mt/yr with an investment of US$103m. It is scheduled to open in 2014.
US cement consumption recovery threatened by fiscal cliff
21 November 2012US: A forecast from the Portland Cement Association (PCA) expects a 7.5% rise in cement consumption in 2012. However, the association says that these gains could be immediately erased in 2013 if the so-called US 'fiscal cliff' is not resolved. The fiscal cliff refers to tax increases of US$400bn and federal spending cuts of US$200m currently scheduled to come into effect on 1 January 2013.
If the US House of Congress resolves the fiscal cliff during its session in 2012, the PCA expects the economy to continue to grow and cement consumption in 2013 to increase by 6%. Adversely, even if Congress addresses the policies by the first quarter of 2013, this delay will cause significant economic harm and cause a 2.7% drop in cement consumption.
"Because we believe the odds for either outcome are even, we have adopted a forecasting approach that minimises up and downside risk," said Ed Sullivan, the chief economist at the PCA. "Our baseline scenario blends the two possible outcomes and projects a 1.8% increase in cement consumption in 2013."
Sullivan also reported that the longer the US Congress delays in addressing the fiscal cliff, the greater the adverse effect on economic growth and construction activity in particular. "If no action is taken by mid-2013, the country could be headed into a severe recession," said Sullivan.
According to the PCA report, cement consumption from 1 January 2012 to 30 September 2012 had increased by 10% compared to 2011, with 16 consecutive months of growth. Sullivan attributed this growth to the return of consumer confidence, a strong housing market and, most importantly, growth in employment.
Vietnamese imports reignite South African regulation battle
21 November 2012South Africa: The South African National Regulator for Compulsory Specifications (NRCS) has confiscated 'sub-standard' cement imported from Vietnam and is investigating complaints lodged about the quality of two other imported brands.
Daniel Ramarumo, a NRCS spokesman, confirmed that it had received complaints from NPC-Cimpor about Vietnamese cement, which was 'later confiscated by the regulator' in August 2012. The NRCS received a second complaint in September 2012 about Lucky Cement and had instituted an investigation. A third complaint from NPC-Cimpor was lodged on 5 November 2012 about Lucky Cement and Falcon Cement. He said that these complaints were currently under investigation.
PPC (Portland Pretoria Cement) chief executive Paul Stuiver commented that his company had tried to engage with the NRCS about allegedly inferior quality and underweight imports but was 'getting nowhere' because the NRCS had indicated it had tested the cement and it had complied with the standard. Stuiver now plans to raise the issue with the Economic Development Minister Ebrahim Patel.
Stuiver also added that one of the imported cement brands had an elephant on its bags, which resulted in PPC taking them to the Advertising Standards Authority and 'getting them stopped', as PPC also has an elephant on its bags.
Lafarge pushes cement use in road construction for Nigeria
21 November 2012Nigeria: Lafarge Cement WAPCO has called on the Nigerian government to explore more ways of using cement, especially in the construction of roads. Joe Hudson, managing director of the Lafarge subsidiary, made the call at the Lagos International Trade Fair.
"The federal government must be commended for successfully implementing the cement backward integration policy, which has seen cement output in Nigeria soar to unprecedented levels, making the country fully independent in cement production and supply," said Hudson. "Following this great achievement, the next step is for all stakeholders to begin to create more value by seeking other applications for the essential commodity." He added that the Nigerian cement industry is now capable of producing far more cement than the country consumes.
Lafarge named in top 10 list of companies surrendering offsets into EU Emissions Trading Scheme
20 November 2012UK: French multinational cement producer Lafarge has been named in a list of top ten companies surrendering offsets into the European Union's (EU) emissions trading scheme (ETS) by environmental campaign group Sandbag. According to Sandbag's report 'Help or Hindrance? Offsetting in the EU ETS,' Lafarge purchased 181,425 certified emissions reduction (CERs) credits in 2011.
Carbon offsetting by the European cement sector grew by 246% in 2011 compared to 2010 figures. Carbon offsetting by all European companies grew by 85% in 2011. The companies policed by the EU's Emissions Trading Scheme (ETS) submitted a total of 254 million credits to offset 13% of their carbon emissions. Sandbag's report observed that the majority of these offset credits were due to be banned from the scheme in 2013.
Lafarge surrendered 181,425 credits in 2011, HeidelbergCement surrendered 101,314 credits in 2008, Miebach Gruppe surrendered 65,813 credits in 2011, Colacem surrendered 59,756 credits in 2009 and Italcementi surrendered 37,867 credits in 2010. Sandbag did not report the breakdown of so-called 'grey' and 'green' credits for the cement industry.
"Offsetting was supposed to be a price containment measure to ensure that carbon prices didn't rise too high, but carbon prices have remained low due to excess supply in the market. Offsets are contributing significantly to this oversupply and are now depressing prices so low that the EU ETS almost ceases to have a function," said Rob Elsworth, policy officer at Sandbag.
PPC to meet Zimbabwe ‘indigenisation’ requirements
19 November 2012Zimbabwe: South African cement producer PPC (Pretoria Portland Cement) has announced that its Zimbabwe subsidiary Portland Holdings Limited (PHL) has been awarded an indigenisation certificate by the government of Zimbabwe.
Zimbabwe's Indigenisation and Economic Empowerment Act requires that non-indigenous manufacturing companies operating in Zimbabwe must submit an empowerment plan, to satisfy a 51% indigenous Zimbabwean ownership requirement by October 2015. PHL had a pre-existing indigenous shareholding of 21.4%. It will sell an additional 29.6% to four indigenous parties in the country.
"We see the Zimbabwe market as an exciting growth opportunity and expect our operations to approach full capacity over the next two-three years. This opens up further investment opportunities for PPC in Zimbabwe," said PPC chief executive officer, Paul Stuiver.
PHL is the largest cement producer in Zimbabwe. Together the clinker manufacturing plant in Colleen Bawn and the milling depot in Bulawayo can produce over 1Mt/yr of cement. Zimbabwe has experienced a rapid increase in cement demand since 2009. National cement demand is currently estimated at more than 1Mt/yr.