Displaying items by tag: Government

Paraguay: Jorge Mendez, the chief executive officer (CEO) of Industria Nacional de Cemento (INC), has said that the Senate has passed a bill for the use of domestically-produced cement in road works carried out by the government. The bill now needs final approved from the government, according to La Nacion newspaper. If approved, the Ministry of Public Works and Communications is expected to build 15% of its works with locally produced cement from 2018, before gradually increasing this to 30% subsequently.

The cement producer has assured the government that it can meet the demand. It also expects to be able to double its cement production in October 2017 with the launch of a new cement grinding plant at Villeta.

Saudi Arabia: The trade ministry has cut the export duty on cement by 50%. It has also cancelled all export tariffs on steel for two years to encourage local producers, according to Reuters.

Congratulations are due to India’s UltraTech Cement this week for finally completing its US$2.5bn asset purchase from Jaiprakash Associates. The deal has been around in some form or another since at least 2014 when UltraTech arranged to buy two cement plants in Madhya Pradesh for around US$750m. That deal, publicly at least, became a victim of the 2015 amendment to India’s Mines and Minerals (Development and Regulation) (MMDR) Act. The Bombay High Court eventually rejected it in early 2016 after a period of delays. However, the deal bounced back in a much larger form around the same time and since then everything has gone relatively smoothly.

As chairman Kumar Mangalam Birla put it in his letter to shareholders in the company’s 2016 – 2017 annual report the, “move is essentially for geographic market expansion.” He then went on to mention all the usual keywords like ‘synergy’ and ‘economies of scale’ that you expect from an acquisition. Quite rightly he finished with, “It is with great pride that I record, that UltraTech is the largest cement player in India and the fifth largest on the world stage.” On that last point he meant outside of China but UltraTech does have a small number of assets outside of India, notably in the UAE, Bahrain, Oman and Bangladesh, hinting at an international future for the cement producer.

Map 1: UltraTech Cement’s plants in India. Source: UltraTech Cement Corporate Dossier, January 2017.

To give a scale of the deal, UltraTech has increased its number of integrated cement plants in India to 18 from 12 and its cement grinding plants to 21 from 16. Its overall cement production capacity will increase by nearly 40% to 91.4Mt/yr from 66.3Mt/yr. The new assets are in Himachal Pradesh, Uttar Pradesh, Uttarakhand, Madhya Pradesh and Andhra Pradesh. The main regions that will benefit are the North, Central and South zones. In particular the Central Zone will see its capacity jump to 21.1Mt/yr from 6.2Mt/yr. This area also includes a new 3.5Mt/yr plant at Dhar in Madhya Pradesh that is scheduled for commercial production in late 2019.

The completion of the Jaiprakash Associates deal was followed by the introduction at the start of July 2017 of the Goods and Services Tax (GST), a rationalisation of some of the country’s central and state taxes. UltraTech promptly said it had reduced its product prices by 2 – 3% in light of tax reductions under the new regime. Some producers were warning of a rise in cement prices in the run-up to the introduction of the GST and the Cement Manufactures’ Association said that the new tax rate was insufficient. However, UltraTech said that the new tax rate of 28% was better than 30 – 31% previously. Other Indian producers also reduced their prices this week following the introduction of the GST.

UltraTech’s expansion and the start of the new tax scheme auger well for the Indian cement industry in 2017. Demonetisation knocked cement production at the start of the year and it may have lowered UltraTech’s capacity utilisation rate as well as reducing domestic sales by cutting housing demand. However, sector rationalisation and a simpler tax approach should help to remedy this. Not all government interaction has been helpful to the cement industry in recent years as the MMDR amendment and demonetisation show but the signs are promising.
Roll on the next set of financial reports.

Vietnam: Trinh Dinh Dung, the Deputy Prime Minster, has inaugurated the second production line at the Thanh Thang Cement plant at Thanh Nghi, Ha Nam. The new line has a production capacity of 1.3Mt/yr and it will raise the plant’s total capacity to 1.75Mt/yr, according to the Viet Nam News newspaper. The company has invested US$220m in the upgrade project.

Trinh Dinh Dung also said at the event that the Ministry of Construction would have to review the master plan for the cement industry in the 2017 - 2025 period with a vision towards 2035, and the master plan for exploration, exploitation and use of minerals for cement production by 2025. He urged domestic cement manufacturers to comply with environmental protection requirements, and invest in new technology to improve the quality of their products and protect the environment.

India: Odisha’s State Level Single Window Clearance Authority (SLSWCA) has approved a proposal by Ambuja Cements to build a 1.5M/yr cement grinding plant at the Industrial Growth Centre, Jharsuguda. The proposed unit will use an area of 125 acres, according to the Press Trust of India. It is expected to create 300 direct and indirect jobs. Once complete the plant will join the company’s five integrated cement plants and eight grinding plants.

Bolivia: Cement producers have called for a ban of cement imported from Peru. The producers met and then asked government for the measure in order to protect the local industry, according to the El Mundo newspaper. They have also suggested that import tariffs be raised at the very least as well as other measures.

Germany: HeidelbergCement and Aachen University of Applied Sciences (RWTH Aachen) have started a three-year research project ‘CO2MIN’ that started on 1 June 2017 examining the absorption of CO₂ from flue gas by olivine and basalt. The intention is that the carbonised minerals could be used as a value-added additive in the production of building materials. HeidelbergCement and RWTH are supported by the Potsdam Institute for Advanced Sustainability Studies (IASS) and the Dutch start-up Green Minerals. The Federal Ministry of Education and Research (BMBF) is funding the project with Euro3m.

"We are already reducing the CO₂ emissions of our plants very successfully by using alternative fuels and raw materials and by optimising the efficiency of our kilns," said Jan Theulen, Director of Alternative Resources at HeidelbergCement. He added that binding CO₂ in minerals was one approach the company was exploring to reduce its emissions further.

In the first year the research project will focus on the investigation of different minerals in small-scale experiments. The carbonation of the most suitable minerals will then be tested under process conditions in the second year. The experiments will be conducted by the institute of Process Metallurgy and Metal Recycling (IME), which is the coordinator of the RWTH group. Life-cycle assessments (RWTH) as well as analyses of economic aspects and social acceptance (IASS) complete this project phase. In the third year, marketability and acceptance will be further optimised through intensive cooperation with customers.

India: The Tamil Nadu state Industries Minister M C Sampath says that the Tamil Nadu Cements Corporation (Tancem) upgrade project is 60% complete at its Ariyalur cement plant. The US$116m upgrade at the government-owned plant is being undertaken by Larsen & Toubro with FLSmidth, according to the Press Trust of India. US$24m has been spent on the project so far. Construction is expected to be completed in 2018 and the upgrade will increase the plant’s production capacity to 1.5Mt/yr from 0.5Mt/yr.

Ethiopia: Dangote Cement has threatened to stop its operations at its Mugher cement plant in Oromia if the local government doesn’t cancel an order forcing the cement producer to give control of some of its business to local young people. Oromia state's East Shewa Zone administration has asked the Nigerian cement company to allow cooperatives of unemployed young adults to run part of its mining businesses or face ‘any problems’ that may arise, according to the Star newspaper. The state scheme is intended to reduce youth unemployment and to relax local social tensions following riots in 2016. Dangote Cement was one of several businesses that were attacked in the unrest.

However, Dangote Cement’s executive director Edwin Devakumar warned that any ‘mismanagement’ of its mining business could undermine its entire business. The cement producer intends to write to the federal government to ask for intervention otherwise it will consider shutting its Mugher plant as a last resort.

India: The state government of Telangana plans to help reopen the 0.9Mt/yr Bheema Cements plant at Bhavya. Following the recommendations of a committee the government intends to revive the plant subject to certain conditions and payments, according to the Press Trust of India. The plant was closed due to financial losses in 2014. Mining leases allocated to the plant have also expired.