Displaying items by tag: Infrastructure

Kenya: Growth in consumption of cement has slowed to 5.3% in the third quarter of 2016 from 11% in the same period of 2015. The slowdown in growth mirrors a fall in growth in the construction sector, which grew by 9.3% in the third quarter of 2016 compared to 15.6% in the same period of 2015, according to data from the Kenya National Bureau of Statistics. It attributed the fall in growth in part to a ‘considerable’ reduction in civil work on the Standard Gauge Railway from Mombasa to Nairobi as it nears completion.

UK: The Mineral Products Association (MPA) has welcomed the government’s publication of new procurement guidance including construction materials like cement. The government plans to use local construction materials in infrastructure projects across 18 separate projects by 2020, including rail and roads, and construction such as building and housing refurbishment.

This announcement also follows the new National Infrastructure and Construction Pipeline, which set out nearly Euro600bn worth of planned private and public investment, and changes to procurement guidance announced by the Department for Business Energy and Industrial Strategy to make it easier for UK producers to plan and bid for upcoming government contracts.

The MPA is working with the Department for Business, Energy and Industrial Strategy and the Crown Commercial Service to develop government guidance for local procurement for cement and concrete. This will extend beyond the current guidance for designers which advises the use of BES6001 to specify responsibly and ethically sourced concrete and masonry.

“Cement and concrete are essential for UK infrastructure development and housing, and contribute significantly to the UK economy. We welcome this announcement from Greg Clark MP, which re-confirms the government’s commitment to infrastructure capital expenditure, and supports the future of a local cement industry. The cement and concrete industries employ 18,179 people across the regions, including in rural areas, and are key enablers for the Industrial Strategy,” said Nigel Jackson, chief executive of the MPA.

Pakistan: Tax bodies are expecting to see a jump in revenue in the 2016 – 2017 financial year from cement producers as Chinese-funded infrastructure starts to be built. The Large Taxpayers Unit (LTU) in Karachi, the largest revenue-collecting arm, estimates that it will tax producers US$114m in the 2016 – 2017 financial year, according to the News International newspaper. A study by the LUT said that growth would arise from increases in sales tax and federal excise duty following the start of projects worth US$46bn from the China-Pakistan Economic Corridor.

Cement sales have risen by 8.3% year-on-year to 8.98Mt in the first quarter of the local financial year. This follows a 17% rise in domestic sales to 33Mt in the 2015 – 2016 financial year.

Philippines: Cement sales have risen by 10.7% year-on-year to 13.2Mt in the first half of 2016 due to increased government spending on infrastructure and improved private sector involvement in construction. Ernesto Ordoñez, president of the Cement Manufacturers Association of the Philippines, also cited good weather as helping drive up sales, in comments made to the Philippine Daily Inquirer. Private sector construction constitutes 76% of cement sales, while public construction projects use the remaining 24%.

Canada: The Cement Association of Canada has congratulated the province of British Columbia on the release of its Climate Leadership Plan. The plan describes how industry can assist the government in meeting its 2050 targets. The association welcomes the commitment of the provincial government to mandate the use of Portland-limestone cement (PLC) in concrete used in the construction of public infrastructure projects. Using PLC is expected to deliver a 10% reduction in greenhouse gas emissions compared to the use of ordinary Portland cement.

“With today's release of the Climate Leadership Plan, the province of British Columbia has laid out a framework to work collaboratively with individuals, local governments, business and industry in finding ways to address climate change,” said Michael McSweeney, President and CEO of the Cement Association of Canada.

Back in the May 2016 issue of Global Cement Magazine we asked key people at the Portland Cement Association how they thought the US presidential election might affect the local cement industry. Wisely, for an advocacy organisation with offices in Washington DC, no one would be drawn, citing a lack of information. At that point it was still unclear who was going to be on the final ticket. However, we all missed a trick because one candidate, Donald Trump, had been talking about building ‘a border fence like you have never seen before’ since at least mid-2014. And that fence could potentially require a lot of cement.

Researchers at market analysts Bernstein’s sent a note to clients last week ahead of the Republican National Convention looking at the implications of if Donald Trump became president of the US and actually set out to build his 40ft high concrete wall between the US and Mexico. The result would be a 2.4Mt boost in demand for cement from cement producers near to the border. In terms of market demand Bernstein concluded that this would add over 1% to cement demand in both 2018 and 2019, a healthy ‘shot in the arm’ to the already pepped-up US cement industry, which is currently growing at around 5%/yr.

Map 1: Map of cement and ready-mix concrete plants near to the US - Mexico border. Source: Bernstein Materials Blast. Note – Bernstein does not show the Capitol Cement plant in San Antonio.

Needless to say, Bernstein’s calculations pile-drive assumptions into assumptions, atop of Trump’s political rhetoric. It bases its calculations on a border wall similar to the Israeli West Bank barrier built out of precast concrete panels. It also tries to model how much concrete and cement would be required depending on the differing height’s Trump has trumpeted at his rallies.

The kicker to this tongue-in-cheek analysis is that the construction company that stands to benefit the most from this infrastructure project is Mexican!

Cemex has significantly more cement plants and ready-mix concrete plants than any other company within a 200-mile zone either side of the border. Looking at integrated cement plants alone, it has six plants in the regions near to the proposed wall from the east and west coasts. Its nearest competitors, CalPortland with four plants and Grupo Cementos de Chihuahua with three plants, are more regionally based in the western US and Chihuahua state in Mexico. Clearly Cemex didn’t rate the chances of Donald Trump’s wall actually happening when it agreed to sell its Odessa cement plant to Grupo Cementos de Chihuahua in May 2016.

All of this goes to show that, wherever you stand on the Donald Trump presidency bid, if you manufacture cement near the US-Mexican border you might be working overtime if he (a) actually becomes president, (b) actually manages to start building his wall and (c) actually decides to make it using cement. Yet before anybody starts popping champagne corks consider this: there might also be unintended consequences for the cement sector. Restricting current legal and illegal migration trends from Mexico to the US might have a greater negative effect on the US cement industry, and the overall economy, than ordering one large infrastructure project. Working that one out is harder than a guesstimate of how much cement a border wall might consume. Probably best not to ask at this stage who might actually pay for the Great Wall of Donald Trump.

Colombia: Cement producers are reacting to a boom in infrastructure projects in Colombia by increasing production and upgrading existing production capacity. Demand for ordinary Portland cement is expected to grow in the short-term due to the government's 4G roads programme and the growth of the housing sector. Current expansion projects in the country include Cementos Argos’ new 1.4Mt/yr plant at Sogamoso in Boyaca and Cemex’s 1Mt/yr cement plant at Maceo in Antioquia.

Philippines: The Cement Manufacturers Association of the Philippines (CEMAP) has asked the government to use more blended cement in its infrastructure projects to meet its emissions targets. “In the Philippines, the private sector uses more than 80% of blended cement. The government, on the contrary, does the opposite. It uses 80% Portland cement,” said CEMAP president Ernesto Ordoñez in an interview with local press.

In October 2015 the Philippines submitted to the United Nations its initial commitments to address climate change that included a 70% reduction of carbon emissions by 2030. The reduction is targeted to come from the energy, transport, waste, forestry and industry sectors.

India: Government plans to increase spending on infrastructure projects will benefit LafargeHolcim according to Moody's Investor Service. The second largest cement producer in India will gain from uneven regional demand, with a much larger scale and more prominent operations in northern India, where it sells almost 42% of its local cement volume.

LafargeHolcim and other European cement manufacturers with a presence in India are likely to benefit if the Indian government's plans to ramp up infrastructure spending happen in the next 12 to 18 months. The 2016 Union Budget contained plans to hike public infrastructure spending, especially on roads, which could revive stagnant cement demand in the country.

According to the government's 12th Five Year Plan (2012 - 17) investment in infrastructure should increase from 7.6% of gross domestic product (GDP) in 2014 to 9% in 2017. However, cement demand for government-funded projects has been weak in the last four years with many construction schemes delayed or put on hold. As a result, while infrastructure investment will be a key growth driver, the timing of such investment remains uncertain.

However, Moody’s also noted that European multinational cement producers based in the south of the country with limited geographical spread would be more exposed to local overcapacity in this region. This included HeidelbergCement, Italcementi and CRH.

Norway: Norcem, the Norwegian subsidiary of HeidelbergCement, and Acciona Ghella JV have signed an agreement for the cement supplies to the Follo Line Project in Oslo. The supply of 280,000t of cement over a three-year period is Norcem’s largest contract ever.

“This is a milestone for HeidelbergCement in Norway and will put great demands on both production and logistics,” said Bernd Scheifele, chairman of the managing board of HeidelbergCement. “Our subsidiary Norcem made the best offer and it has the necessary production capacities and logistics to supply the required volumes to this outstanding project in Norway.” The cement supplies will start in mid to late April 2016.

The Follo Line Project is currently the largest transport project in Norway and includes the country’s longest double track railway tunnel at 20 km. The new railway track runs between Oslo Central Station and the new station in the municipality of Ski in the Follo district, south of Oslo. It will enable a 50% reduction in journey time between Oslo and Ski.The project is scheduled to be finalised at the end of 2021.