Displaying items by tag: Government

US: Eagle Materials reported sales of US$2.1bn in 2022, up by 15% year-on-year from 2021 levels. The producer's earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 19% to US$782m. Its cement sales rose by 7% to US$1.1bn due to increased prices, despite a drop in volumes. Throughout the year, the company increased its production of Portland limestone cement (PLC).

President and CEO Michael Haack said "Looking ahead, we anticipate continued attractive fundamentals in our markets, despite headwinds relating to higher interest rates and affordability constraints in single-family residential construction. Among the favourable demand factors we expect will affect our results in future periods are projected funding increases for infrastructure projects and healthy demand for heavy industrial projects and multi-family residential construction. We remain well-positioned to capitalise on these conditions, given our geographical footprint across the (Central) US Heartland and fast-growing Sun Belt (Southern US) and our financial strength and flexibility."

India: Ramco Cements' sales were US$987m during the 2023 financial year, up by 36% year-on-year from US$726m during the 2022 financial year. The producer sold 15Mt of cement and dry mortar products, up by 36%. The Times of India newspaper has reported that the producer's profit after tax declined by 62% to US$41.5m from US$108m.

The producer expects that anticipated infrastructure investments and a 'normal' monsoon will maintain strong cement demand in India in the full-year 2023 financial year. It forecast growth in its profit margins from the second quarter of the 2024 financial year (July - September 2023) onward.

India: The municipal corporation of Kolkata, West Bengal, has enacted regulations requiring landowners to send construction waste from projects on their property to construction and demolition waste recycling facilities. The Telegraph newspaper has reported that the new regulations apply to all construction, demolition and repairs work on plots of land larger than 0.24 hectares. The city authorities have built a 183,000t/yr recycling plant in New Town, Greater Kolkata, to support the increased volumes.

South Korea: The Korea Trade Commission (KTC) has launched a probe into imported white cement from Egypt. The commission will investigate the possible necessity of anti-dumping duties on imports of the product. Yonhap English News has reported that the KTC is responding to a complaint from domestic white cement producer Union Corporation. The producer accuses International Cement Trading and Egypt-based Royal El Minya Cement of damaging its business through cement dumping. The KTC will complete its preliminary investigation before 1 September 2023.

Eagle Materials announced this week that it had completed the acquisition of Martin Marietta’s cement import business in the north of California. A key part of the deal includes the sale of a cement terminal at Stockton. No value for the transaction has been disclosed.

The agreement prompts discussion for two immediate reasons. Firstly, it continues the enlargement of Eagle Materials’ cement business with its second terminal in California. The company operates its cement business in a band running almost right across the US. It runs seven cement plants in seven different states and jointly operates, with Heidelberg Materials, a plant in Texas too. It also runs a network of 25 cement terminals, including the new acquisition, stretching from California in the west to Pennsylvania in the east.

Eagle Materials’ focus on the cement sector also harks back to its previous plans to separate its various businesses. In 2019 it approved a plan to split its heavy materials and light materials businesses into two publicly-traded entities. The decision was made in response to pressure by shareholder Sachem Head Capital Management to make the company, in its view, more valuable. A strategic portfolio review followed but the planned separation was subsequently delayed due to the Covid-19 pandemic and poor market conditions, amongst other reasons. The board of the company then cancelled the proposed separation in 2021 citing the financial benefits of a diversified business, opportunities for strategic growth and the divestment of its oil and gas proppants business.

The other talking point is that the Eagle Materials transaction follows a positive response by the Federal Trade Commission (FTC) in response to the abandonment of CalPortland’s attempt to buy the Tehachapi cement plant in southern California and two related terminals from Martin Marietta. CalPortland’s parent company Taiheiyo Cement said in late April 2023 that it had terminated the acquisition agreement originally announced in mid-2022 due to its inability to obtain approval from the FTC in a timely manner. Whilst the FTC did not say if it had directly tried to block the proposed deal it did say, “The abandonment is a victory for consumers and preserves competition for a key component of Southern California’s construction and infrastructure industries.”

The FTC argued that the transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market, and was “presumptively illegal.” It noted that the Tehachapi plant was only about 20km away from CalPortland’s Mojave cement plant. It went on to say that, if the deal had gone ahead, CalPortland was poised to own half of the cement plants serving the Southern California market. It added that it would have been well-placed to raise its prices and that, “the transaction would have also increased the likelihood for coordinated action between the remaining competitors in this concentrated market.”

The de-facto block by the FTC of the Tehachapi sale now opens up the question of who Martin Marietta might try to sell it to next. Cemex, Mitsubishi Cement and National Cement (Vicat) are the obvious contenders given that they each also run integrated plants in the state. Of course another company, especially one with some form of existing distribution network, may express interest. Given its enlarged presence in Northern California, Eagle Materials springs to mind. Other potential buyers are, of course, available.

Tanzania: The government has defended its support for the acquisition of a majority stake in Tanga Cement by a subsidiary of Heidelberg Materials. In 2021 Scancem International, a subsidiary of Heidelberg Materials, agreed to buy a 68% share of Tanga Cement from AfriSam for around US$59m. The Fair Competition Commission (FCC) provisionally approved the deal but the Fair Competition Tribunal (FCT) blocked it in late 2022 following lobbying by Chalinze Cement and the Tanzania Consumer Advocacy Society on the grounds that it would potentially reduce market competition, according to the Citizen newspaper. However, Scancem International applied again to the FCC in December 2022 to push through the agreement. This motion was then approved in February 2023.

During a parliamentary debate on the issue in early May 2023 Ashatu Kijaji, the Minister for Industry and Trade, defended the decision to re-approve the deal on the grounds that the approved merger application was different from the one rejected by the FCT. However, other members of parliament were sceptical about the decision.

Cape Verde: Portugal-based Cimpor has signed a deal with the government of Cape Verde to develop and exploit a pozzolan deposit over the next 30 years. Exploration of the site is expected to begin by late 2024. The immediate location has reserves of around 0.5Mt in an area of 108 hectares. However, the scheme also has the option to expand the site to 790 hectares, increasing the estimated pozzolan reserves to 4Mt. The project has an investment of Euro3m and is expected to create around 80 jobs.

Cimpor’s parent company OYAK Cement previously said in 2019 that it was planning to invest in pozzolan extraction in Cape Verde.

India: The state government of Assam signed memoranda of understanding (MOUs) worth over US$974m on 9 May 2023. The MOUs include three new planned cement plant projects. Agreements have been signed with Calcom Cement India, Star Cement and Taj Cement Manufacturing.

The Economic Times newspaper has reported that the government said “There are another US$852 - 974m investment proposals in the pipeline. Investors are touring Upper and Lower Assam, scanning for locations for investment projects.”

US: CalPortland and Martin Marietta Materials have cancelled a deal under which CalPortland was set to acquire the Tehachapi cement plant and other assets worth US$350m in Southern California. The US government's Federal Trade Commission (FTC) described the cancelled deal as 'presumptively illegal.'

FTC Bureau of Competition director Holly Vedova said “Following an in-depth investigation by FTC staff of the Mergers Division and Bureau of Economics, along with the California Attorney General’s Office, CalPortland and Martin Marietta have announced that they have abandoned their planned transaction. The transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market." Vedova concluded "The abandonment is a victory for consumers and preserves competition for a key component of Southern California’s construction and infrastructure industries."

India: The state government of Assam has issued Purbanchal Cement with a notice to vacate illegally occupied land in Saraturi. The Sentinel newspaper has reported that the cement producer reportedly used a ‘duplicate registration paper’ to occupy 100 hectares of land in the South Kamrup Tribal Belt.

The All Assam Tribal Sangha (AATS) welcomed the authorities’ action, and called for the closure of Purbanchal Cement’s ‘main plant,’ in order to ‘free’ the tribal belt.