
Displaying items by tag: GCW82
Nigeria’s overly neat cement industry
09 January 2013Nigeria's Minister of Trade and Investment, Olusegun Aganga brought together warring parties from Dangote and Ibeto Cement this week to discuss their very public spat about the state of the country's cement industry.
Claims that Nigeria is facing a 'glut' of cement have been building since the Cement Manufacturing Association of Nigeria (CMAN) declared that Nigeria was 'self-sufficient' in cement in late 2012. So when leading cement importer Ibeto Cement questioned this narrative, leading cement producers Dangote and Lafarge hit back. Aganga then announced a review of the country's industry.
Despite Nigeria's potential to consume cement, something is stopping it. Yet, as Ibeto Cement rightly asked, if Nigeria is producing too much cement why isn't the price falling?
Hard facts about the Nigerian cement industry are elusive. This is what we know. Nigeria's population is apparently 170m. Its cement industry has the capacity to produce 28Mt/yr (Global Cement Directory 2013). Its production level was 18.5Mt/yr in 2012 according to CMAN. However figures compiled by the United States Geological Survey placed production much lower at 11.6Mt in 2011. Consumption is believed to be 17-20Mt/yr. In 2011 it was 17Mt. Ibete Cement, the sole importer into the country, is allowed to import up to 1.5Mt/yr.
Nigeria's main producers include Dangote (19Mt/yr capacity, 70% of the market), Lafarge WAPCO (4.6Mt/yr, 17%), Unicem (2.5Mt/yr, 9%) and Ashaka Cement (2Mt/yr, 7%).
Hype about Nigeria's potential as a cement-producing nation hinges upon its low per capita consumption (110kg) compared to some of its African neighbours and indicators of expected growth such as a housing deficit of 16 million homes.
CMAN boss Joseph Makoju addressed this head-on, blaming the high cost of haulage and energy. He said that the energy cost accounts for over 35% of the production cost and that the price of low pour fuel oil (LPFO) had risen by over 300% from US$0.16/l in 2009 to US$0.69/l in November 2012. It should be pointed out that Makoju is also the special adviser to the president of Dangote Group, Aliko Dangote. Unsurprisingly he has advised the Federal Government to impose higher taxes on imported cement to discourage imports.
The production boom of recent years has been threatened by a weakening increase in demand. The gap between production and lower consumption estimates is around 1.5Mt. Dangote and Lafarge WAPCO's combined unsold stock at the end of 2012 was also just below 1.5Mt. Both figures are suspiciously close to the amount Ibeto is allowed to import annually. As usual, the easiest target is the cement importer. Dangote's political clout as a key Nigerian company, large-scale employer and all round African success-story will doubtless help its argument.
Yet if imports are really more competitive than Nigeria's domestic product how can the country possibly hope to export cement? Also this week Liberia announced it has relaxed its tariffs on cement. As luck would have it Dangote is building a new cement plant in the country. Sounds ideal for tricky import negotiations.
Gregory Scott becomes president and CEO of PCA
09 January 2013US: Gregory M Scott has become the president and chief executive of the Portland Cement Association (PCA), effective from 2 January 2013. Scott joined the PCA in January 2012 as the senior president of government affairs and was promoted to president in September 2012.
Scott holds a background in trade association leadership with legislative campaigns on federal transportation, environmental and energy issues. Most recently he served as executive vice president and general counsel for the National Petrochemical and Refiners Association (NPRA) in Washington, DC. Prior to joining the NPRA, Scott served as vice president of National Strategies, Inc, a trade association representing CEOs of Fortune 100 firms on corporate finance and tax issues.
He began his career serving on the staff of Senator Timothy E Wirth. From 1991-2008 Scott was a partner/member of Kelley Drye Collier Shannon, where he gained extensive expertise in petroleum refining and motor fuel marketing as well as legislative and regulatory issues.
Scott received his Bachelor of Arts degree from Colorado College in Colorado Springs and a law doctorate from the American University's Washington College of Law in Washington, DC.
Joint venture for Lafarge and Elementia in Mexico
09 January 2013Mexico: The French building materials giant Lafarge has announced a joint venture with new Mexican cement player Elementia, only a day after announcing that its UK joint venture with Tarmac received competition commission approval. The new joint venture formed will be held 47% by Lafarge and held 53% by Elementia, which will fully consolidate the venture's financial results.
The deal, announced on 8 January 2013, will see Lafarge contribute its two Mexican plants at Vito and Tula, which have a combined capacity of just under 1Mt/yr. Elementia will contribute its cement plant project, a 1Mt/yr installation, which is currently undergoing construction in central Mexico.
A Lafarge press release stated that the combination between Lafarge and Elementia would 'significantly' strengthen its position in Mexico. The transaction, which involves no cash and is subject to regulatory approvals, is expected to close in the second half of 2013, pursuant to the start up of the new Elementia plant.
ABG to sell stake in cement business
09 January 2013India: Private sector ship builder ABG Group is in talks with private equity and financial firms to sell a minority stake in its cement business for about US$150m. According to Dhananjay L Datar, director of ABG Group, a potential deal is at a preliminary stage with several parties showing interest in the cement unit.
The group's cement business, ABG Cement, has a 6.5Mt/yr plant in Kutch, Gujarat, which is expected to be commissioned by the end of January 2013. India media has linked equity firms Blackstone and KKR to the deal. ABG Group originally announced its plans to enter the cement sector in 2008 with an initial investment of US$328m.
TCC makes US$13.7m from sale to CNBM
09 January 2013China: TCC International Holdings has reported that it has signed an agreement with Southwestern Cement, a subsidiary of China National Building Material Group Corp (CNBM), to 'increase cooperation on several businesses'.
According to agreement, TCC will buy cement assets in Sichuan Province from Southwestern Cement for US$8.52m to expand its share of the local market, while TCC will sell its cement assets in Guizhou Province to Southwestern Cement for US$17.8m. TCC will earn US$137m in profit from the deal and will use the profit to replenish working capital and fund future acquisition projects.
Liberia drops tax on cement
09 January 2013Liberia: President Ellen Johnson Sirleaf of Liberia has suspended tariffs on cement. The government cited that the move was in the interest of national reconstruction and development.
Under Executive Order No. 46, titled 'Re-Instituting the Suspension of the Protective Tariff on Cement,' the Liberian government has repealed a US$2 protective tariff per 50kg bag of Portland cement imposed under the Revenue Code of Liberia, tariff No. 25.23. The mandate added that the need still exists to encourage local industries to supply cement to the general public at reasonable prices.
Liberia currently has one cement grinding plant, the Liberia Cement Corporation, a subsidiary of HeidelbergCement which employs 63 people. In 2012 Nigerian cement producer Dangote announced plants to build a US$35m plant in the country.
More cement testing labs join Cement Manufacturers Association of the Philippines programme on product safety
09 January 2013Philippines: A total of 38 laboratories that conduct proficiency tests on cement products have participated in the fourth round of the Cement Manufacturers Association of the Philippines' (CeMAP) proficiency testing programme. Twelve of the laboratories were from the Department of Public Works and Highways (DPWH), 15 from CeMAP members and 11 were non-member or private laboratories. These laboratories are subjected to proficiency test as a requirement for the renewal of their DPWH certificate of accreditation.
"Participation in the proficiency testing programme is a crucial component in our responsibility to ensure that only quality cement products are available in the market," said CeMAP president Ernesto Ordoñez.
Ordoñez disclosed that the programme's first round in 2006 only had CeMAP member laboratories, while rounds two and three involved both CeMAP member and DPWH laboratories. Round four was significant as all the private laboratories involved were required to seek DPWH accreditation. Ordoñez added that this proficiency testing is the first and only one in Southeast Asia. CeMAP intend to conduct the testing annually to monitor the competency and performance of the laboratories.
Nigerian minister announces industry review
09 January 2013Nigeria: Nigeria's Minister of Trade and Investment, Olusegun Aganga has announced that he will conduct an independent assessment of the country's cement industry to make it more competitive. The move follows a dispute between importer Ibeto Cement Company and leading producer Dangote Cement.
According to Aganga, at a meeting for stakeholders from the cement industry held on 7 January 2013 in Abuja, by the end of the entire review the Federal Government will draw up with a new strategy for the industry with three goals. The first is to bring down the price of cement in the country, the second is increase consumption of cement and the third is work on policies to open up the export market.
Aganga defended Nigeria's 10-year implementation of the Backward Integration Policy (BIP). According to Aganga the BIP has resulted in about US$6bn of investment in the sector, with a growth from 2Mt/yr to 28Mt/yr, and it has saved the country foreign exchange of about US$1.4bn/yr. The Nigerian cement industry provides direct and indirect employment for about two million people.
"We have achieved everything we set for ourselves 10 years ago when the BIP was introduced; we want to take the next step as part of our strategy on the way forward," said Aganga.
Pakistan exports fall by 5% for first half of 2012-2013
09 January 2013Pakistan: Cement exports from Pakistan have fallen by 5.28% to 4.22Mt, according to figures on the first six months of the 2012-2013 financial year from the All Pakistan Cement Manufacturers Association (APCMA). However domestic cement sales increased by 7.61% to 11.7Mt in the same period. The Pakistan financial year runs from 1 July until 30 June.
A statement from the APCMA revealed that cement plants in the south of the country grew by 7.98% in the local market but posted even higher declines of 16.3% for exports. In the north, where the majority of the country's cement capacity of located, the industry posted a growth of 7.52% in domestic sales whilst exports declined by 1.31%.
The APCMA added that hype created on trade with India has so far not materialised and export in that market was only 0.209Mt during the last six months, a decline of 40.41% and a result well below the expectation of the cement sector. The APCMA spokesman blamed 'stringent non tariff barriers' from India.
During the last six months, the adjacent Afghanistan market remained stable and cement sector exported 2.41Mt. Exports to other destination through sea excluding India also remained stable in comparison with the last six months of 2011-12.
Saudi producers report profit growth in 2012
08 January 2013Saudi Arabia: Two of Saudi Arabia's largest cement producers, Yamama and Yanbu, have reported a growth in their profits in 2012.
Yanbu Cement announced a net profit of US$192m for 2012, an increase of 36.1% compared to 2011. The company said that such a performance had been made possible as a result of improved sales and the opening of a fifth production line part way through the year. The company also saw a 32.7% year-on-year increase in its fourth quarter sales to US$54.1m.
Yamama Cement revealed that its full-year net profits for 2012 increased by 11% to US$218m. However in the fourth quarter of the year its profits fell by 9% year-on-year to US$46.4m. The company blamed the lower sale prices achieved during the fourth quarter before the decline was reached.
A recent report by the National Commercial Bank (NCB) said that demand for cement in Saudi Arabia remains strong, with ongoing projects set to sustain growth for several years to come. It forecasted growth in market demand with a rate of 8.2% predicted in 2013 as demand reaches 56Mt. In the longer term NCB predictions expect continued demand growth of 6.3%/yr until 2015.
Yanbu is likely to benefit from any significant growth in demand, as it has three lines with a combined capacity of 1.3Mt/yr currently sitting idle. Predictions that this growth in demand will be disproportionately stronger in the western region could well yield another successful year to come in 2013.