Displaying items by tag: Huaxin Cement

Malaysia: Lafarge Malaysia has appointed Yeoh Khoon Cheng as its interim chief executive officer (CEO).

Yeoh started his career with Deloitte Kassim Chan in 1979. He joined Lafarge Malaysia in 1987 as finance manager and has held various positions involving business development, mergers and acquisitions and corporate finance activities and acted as company secretary from 1990 to 1998. He was appointed as executive director and chief financial officer (CFO) in 1999. From mid-2011 to the end of 2015, he was the CFO for Lafarge Cement China. Latterly, Yeoh was the CFO of Huaxin Cement in China from 2016 to mid-2017. He is a member of the Malaysian of Institute of Accountants and the Malaysian Institute of Certified Public Accountants.

China: Huaxin Cement’s sales rose by 27% year-on-year to US$1.75bn in the first half of 2018 from US$1.38bn in the same period in 2017. Its net profit nearly tripled to US$304m from US$107m. Its cement and clinker sales volumes grew by 1.13% to 32.2Mt.

The cement producer said that it had been challenged by raw materials and fuel price rises and kiln suspensions due to government-mandated peak shifting production during the reporting period. However, measures such as higher alternative fuels co-processing rates and efficiency gains helped to bolster its financial performance. Its kiln waste processing volumes increased by 18.4% to 0.68Mt.

The company added that its Tibet Shannan 3rd Phase 3000t/day clinker production line was ‘proceeding smoothly’ and was scheduled to start operation by the end of August 2018. Its 4000t/day Yunnan Luquan clinker line and 2.85Mt/yr Huangshi clinker replacement line projects have started construction. In Nepal a 2800t/day clinker line is scheduled to start construction by the end of the year. It is also working on municipal solid waste (MSW) projects in Wuhan Changshankou and Lijiang.

Nepal: Huaxin Cement has signed a project investment agreement with the Investment Board Nepal (IBN) to build a US$140m plant. Xu Gang, vice-president of Huaxin Cement signed the deal with Maha Prasad Adhikari, the chief executive (CEO) of IBN, during a visit by Nepalese Prime Minister KP Sharma Oli to Beijing, according to the Kathmandu Post. The unit will have a production capacity of 3000t/day. The local subsidiary, Huaxin Cement Narayani, has already acquired a limestone mine at Panikharkha in Dhading. The IBN will also support the project by assisting the government to build a transmission line to supply 18MW of electricity to the unit.

KP Sharma Oli also signed an agreement with the Chinese government to build a cross-border railway between Kathmandu and Kerung in Tibet.

Many of the Chinese cement producers have released their annual results for 2017 over the last week, giving us plenty to consider. The first takeaway is the stabilisation of cement sales since 2014. As can be seen in Graph 1, National Bureau of Statistics data shows that cement sales grew year-on-year from 2008 to 2014. This trend stopped in 2015 and then government mandated measures to control production overcapacity kicked-in such as a industry consolidation, shutting ‘obsolete’ plants and seasonal closures. Although it’s not shown here, that last measure, also known as peak shifting, cans be seen in quarterly sales data, with an 8% year-on-year fall in cement sales to 578Mt in the fourth quarter of 2017.

Graph 1: Cement sales in China, 2007 – 2017. Source: National Bureau of Statistics.

Looking at the sales revenue from the larger producers in 2017 doesn’t show a great deal except for the massive lead the two largest producers – CNBM and Anhui Conch – hold over their rivals. CNBM reported sales roughly twice as large as Anhui Conch, which in turn reported sales twice as large as China Resources Cement (CRC). With everything set for the merger between CNBM and Sinoma to complete at some point in the second quarter of 2018, that leader’s advantage can only get bigger.

Graph 2: Sales revenue of selected Chinese cement producers. Source: Company reports.

What’s more interesting here is how all of these companies are growing their sales at over 15% in a market where cement sales volumes appear to have fallen by 1.67% to 2.31Bnt in 2017. CNBM explained that its sale growth arose from improving cement prices in the wake of the government’s supply side changes. It added that national cement production fell by 3.1% to 2.34Bnt. CNBM’s annual results also suggested that the cement production capacity utilisation rate was 63% in 2017.

Anhui Conch’s results were notable for its large number of overseas projects as it followed the state’s ‘One Belt, One Road’ overseas industrial expansion strategy. Projects in Indonesia and Cambodia were finished in 2017 with production set for 2018. Further plants are in various states of development in Laos, Russia and Myanmar. The other point of interest was that Anhui Conch is developing a 50,000t CO₂ capture and purification pilot project at its Baimashan cement plant. Given the way the Chinese government has been able to direct the local industry, should it decide to promote CO₂ capture at cement plants in the way it has pushed for waste heat recovery units or co-processing, then the results could be enormous.

CRC reported its continued focus on alternative fuels. Municipal waste co-processing projects in Tianyang County, Guangxi and Midu County, Yunnan are under construction and are expected to be completed in the first half of 2018. Construction of its hazardous waste co-processing project in Changjiang, Hainan was completed in February 2018.

As ever with the Chinese cement industry, the worry is what happens once the production overcapacity kicks in. The state–published figures and state-owned cement companies suggest that the industry is in the early stages of coping with this. In February 2018 Reuters reported that the Ministry of Industry and Information Technology (MIIT) had banned new cement production capacity in 2018. The detail here is that new capacity is allowed but that it has to follow specific rules designed to decrease capacity overall. This followed an announcement by the China Cement Association that it would eliminate 393Mt of capacity and shut down 540 cement grinding companies by 2020. The aim here is to hold capacity utilisation rates at 80% and 70% for clinker and cement respectively and to consolidate clinker and cement production within the top ten producers by 70% and 60%. If the utilisation rate from CNBM is accurate then the industry has a way to go yet.

China: Huaxin Cement’s sales revenue grew by 54% year-on-year to US$3.33bn in 2017 from US$2.15bn in 2016. Its net profit more than tripled to US$331m from US$72m. Cement production rose by 33% to 66.1Mt from 50Mt.

In 2017 Huaxin Cement obtained permission for upgrade projects including 3000t/day at Tibet Shannan, 3000t/day at Shigatse, 4000t/day at Yunnan Luquan and 2.85Mt/yr at Huangshi. Work at Tibet Shannan and Shigatse started in 2017. Construction at Yunnan Luquan and Huangshi is due to start in 2018.

The cement producer reported that an unnamed pilot plant was the first to adopt a co-processing rate of 100% of alternative fuels at the ‘head and end’ of the kiln. It also said that all of its domestic cement plants have been licenced for pollution discharge.

Nepal: Investment Board Nepal (IBN) and Huaxin Cement have signed a Project Investment Agreement (PIA) for the Chinese company to build a cement plant. The agreement follows the Department of Mines and Geology’s decision to award a limestone mine in Dhading district to the Chinese cement producer, according to the Xinhua news agency. Huaxin Cement plans to spend US$140m towards building a plant with a cement production capacity of 3000t/day. The deal follows an agreement between the IBN and Hongshi Cement finalised in September 2017 to build a new plant for around US$360m.

Nepal: Huaxin Cement is in discussions with the Investment Board Nepal (IBN) to build a cement plant. The Chinese cement producer is considering investing US$140m towards a project investment agreement (PIA), according to the Kathmandu Post newspaper. Obtaining a PIA will allow the company to work with the Nepalese government on the project.

The announcement follows a US$359m PIA with Hongshi-Shivam Cement that was signed in September 2017 for a cement plant at Sardi in Nawalparasi. The 6000t/day plant is scheduled to start commercial production in May 2018.

China: Huaxin Cement’s sales revenue rose by 63% year-on-year to US$1.43bn in the first half of 2017 from US$874m in the same period of 2016. It attributed the growth to an increase in the price of cement. The cement producer also benefited from its acquisition of Lafarge China Cement’s plants in Yunan, Guizhou and Chongqing. During the reporting period its cement and clinker sales rose by 33% to 31.8Mt.

China: Huaxin Cement’s sales revenue rose by 1.9% to US$1.96bn in 2016 from US$1.93bn in 2015. Its cement and clinker sales rose by 5% to 52.7Mt and its net profit rose sharply to US$65.6m from US$14.9m. It attributed its result to following government-promoted supply side reforms such as cutting production costs. The cement producer noted that its had increased its usage of alternative fuels in the second half of the year following an increase in the cost of coal.

During the reporting period Huaxin Cement put its 3000t/day Tajikistan Sughd clinker production line into operation. It also purchased 15 cement plants from LafargeHolcim, including four grinding plants, located in Yunnan, Chongqing and Guizhou provinces. Altogether the new cement and clinker production capacity is expected to reach 10Mt and 15Mt respectively. The company also added that it had 25 alternative fuels co-processing projects operating or under construction with a capacity of 5Mt/yr.

China: Ron Wirahadiraksa and Hu Chao have resigned from Huaxin Cement. Wirahadiraksa has resigned as a director of the company citing other commitments. Chao has resigned as he has left the company. Both departures take immediate effect.

Wirahadiraksa, the current chief financial offer of LafargeHolcim, was proposed as a director of Huaxin Cement in September 2016. Huaxin Cement is an association company of LafargeHolcim. As of 31 December 2015, the group held 41.8 % of the voting rights in the associate company.