Displaying items by tag: McInnis Cement

Canada: Production has stopped at the McInnis Cement plant at Port-Daniel–Gascons in Quebec due to an unspecific mechanical issue. Maintenance is expected to take place until the end of January 2019, according to the Le Soleil newspaper. The cement producer refused to confirm whether that problem had been caused by the drive shaft overheating and damaging its metal shell. However, the company said that the repairs would only extend a planned maintenance period by a few weeks. No cost for the repairs have been disclosed.

Germany’s ThyssenKrupp Industrial Solutions (USA) was originally awarded the contract to build the plant in 2014. After a protracted building phase the plant produced its first cement in mid-2017 and was then inaugurated a few months later.

A couple of long-running news stories popped up this week, led by the Portland Cement Association’s (PCA) latest forecast for the US market. Chief economist Ed Sullivan and the Market Intelligence Group predict slowing cement consumption growth to 2020 as the recovery period ends following the financial crash in 2008. The background to this is an expected rise in interest rates dragging on the construction market, a limited boost from the Trump administration’s tax cuts and rising debt levels hitting federal infrastructure spending.

This marks an abrupt turnaround from the PCA’s April 2018 forecast in which potential federal infrastructure spending was anticipated to kick in towards the end of 2019 creating 4% growth in 2020. To give the PCA credit, it did say at the time that this was contingent on a couple of key steps, including passage of an infrastructure bill, federal and state paperwork, bid letting and review and finally, contract awards leading to construction. Following the US mid-term elections in early November 2018 the prospect of an infrastructure bills seems remoter than before given the political differences between the US House of Representatives and the Senate. This may have been the final straw for the PCA and it adapted its forecast accordingly.

Graph 1: Cement shipments in the US, January – August 2013 - January – August 2018. Source: Portland Cement Association (PCA).

It is also worth reflecting on the third quarter financial results of the multinational cement producers over the last few weeks. CRH may have been crowing this week about how its US performance was driving its business in the wake of its acquisition of Ash Grove Cement and other assets, but many of the other multinational cement producers weren’t. HeidelbergCement, Buzzi Unicem and Titan all blamed the weather in the US for dragging on their results. LafargeHolcim said it suffered less with a ‘soft’ first quarter in 2018 followed by recovery.

The other story this week with relevance to the US was the continued speculation in the Canadian press about the future of the McInnis Cement plant in Quebec. The latest update is that the plant’s shareholders have asked the provincial government if they can swap the debt the province holds in the venture for equity. This has been seen as a potential bid to keep the company operational while it continues to hunt for a buyer. Rumours of a sale have swirled around since the start of 2018, with the Global and Mail newspaper naming HeidelbergCement as being potentially interested. Three bids have been reportedly made by unnamed parties but they were rejected for being too low. A slowing US cement market is particularly bad news for McInnis Cement. The plant is situated on the Atlantic Coast of Canada and exports to the US have been seen as a major part of its business. To this end it officially opened its marine terminal in the Bronx, New York in October 2018.

The main US market needs to find an alternative to the ‘fabled’ infrastructure bill if it wants better growth. Yet, reduced US cement consumption growth won’t help McInnis’ shareholders recoup the money they have sunk in the project. Somebody seems certain to lose in this situation and, with a protectionist incumbent in the White House, it seems likely to be somebody north of the border.

Canada: Quebec's Ministry of Economy and Innovation has confirmed that it has received a request from the shareholders of McInnis Cement to swap the debt the province holds in the venture for equity. A request has been made to the ministry and to Investissement Québec, the provincial government's investment arm, to convert almost US$200m of debt into shares in the cement producer, according to the Globe and Mail newspaper. The newspaper speculates that an arrangement of this kind could be part of a potential deal with creditors to reduce the company’s liabilities and enable it to continue to operate.

McInnis Cement’s plant at Port-Daniel–Gascons was inaugurated in mid-2017. Construction at the site started in mid-2014. However, cost overruns saw the government-backed project delayed and then taken over by an investor, the Caisse de dépôt et placement du Québec (CDPQ), a pension and insurance fund manager. The CDPQ was reportedly considering options including selling the plant or securing more investment in early 2018. Three bids were made for the cement producer but were rejected as being too low, according to reporting by the Globe and Mail. Interested parties in the company included Germany’s HeidelbergCement.

US: Canada’s McInnis Cement has officially opened its terminal in the Bronx, New York. The terminal can store up to 44,000t of cement and most of this will be delivered by ship. City Council Member and Land Use Committee Chair Rafael Salamanca, Bronx Community Board 2 Chair, Bobby Crespo and members of several Bronx organisations and the local business community joined McInnis Cement executives to celebrate the opening of the unit, the first new industrial maritime project built on the South Bronx waterfront in more than half a century.

Canada: Hervé Mallet, the president and chief executive officer (CEO) of McInnis Cement, is leaving the company. He has been in post since November 2016. He will be replaced, with immediate effect, by Jean Moreau, chief financial officer, who will assume the role of president and CEO on an interim basis

Moreau joined McInnis Cement in the spring of 2017. He holds experience in company, finance and operations management, and has held leadership positions within private and public entities in the finance and operations management sectors. McInnis Cement said that, “Moreau is familiar with McInnis and will ensure business continuity.”

US: The first ship from McInnis Cement’s plant in Canada has docked at the company’s terminal in the Bronx, New York. The NACC Alicudi docked at the terminal in mid-June 2018. The event follows the start of commercial production at McInnis Cements’ plant in Port-Daniel–Gascons, Quebec in June 2017.

Canada: Caisse de dépôt et placement du Québec (CDPQ), the owner of McInnis Cement, has hired advisors to consider options for the cement producer including a sale or bringing in a new investor. No final decision has been made and the pension investment management company may decide to keep McInnis Cement, according to sources quoted by Bloomberg. CDPQ took control of the McInnis Cement project in 2016 following cost overruns and delays. The plant eventually opened in mid-2017.

Canada: McInnis Cement has appointed Hervé Mallet as its president and chief executive officer. Other new appointments include the assignment of Gaétan Vézina as Vice-President, Cement and Sustainable Development and Alexandre Rail as Vice-President, Operations – Port-Daniel–Gascons.

Previously Mallet was the Executive Vice-President – North America for Dynacast. He is a graduate of the University of Wolverhampton and Brunel University in the UK.

The McInnis Cement plant at Port-Daniel-Gascons in Quebec, Canada must be the most famous cement plant that hasn’t been built yet. Every single step of the project’s list has seemed dogged with infamy. Public money it seems comes with public scrutiny. This week, one of the principal investors took control of the plant following allegations of massive budget overruns and the disappearance of the company’s president.

To start with the money, the plant was originally budgeted at US$1bn for a 2.2Mt/yr facility. This has always seemed like an inflated figure given that the general cost of a new or greenfield cement plant is up to US$200/t. The original price tag for McInnis is double this figure. Throw in the need for infrastructure at the site and the requirement of a marine terminal and the cost starts to become a little more realistic with government backing. The importance of the sea links can’t be under stressed given that the plant is targeted at the US market. No port: no cement plant.

This then leads to the quagmire of criticism the project has found itself stuck within. American cement producers took exception to a foreign government-backed plant trying to eat their lunch so they went legal. When the government-subsidised project bypassed the normal environmental clearances Lafarge Canada backed a challenge in 2013. Then in 2014 the provincial opposition in Quebec attacked the local government’s financial involvement in the project describing it as a ‘sinkhole’ in return for a minority stake.

Once these hurdles were overcome, work on building the plant began until the Globe and Mail newspaper revealed in late June 2016 that the project was ‘massively’ over-budget by up to US$350m and that the Quebec government was not prepared to provide any more money. The budget over-run alone is enough to build a cement plant in a more conventional location! Six weeks later and the project has most likely had its chief executive fired and one of the investors has stepped in to run things.

So, some combination of the legal fees, the wrangling over the plant’s unique environmental clearance, the difficulties of the underdeveloped location and potential mismanagement by the company itself have led to the additional costs. This in turn has led to the Caisse de dépôt et placement du Québec, a pension fund firm, taking charge. It, like the previous management, also has no experience in building cement plants. Although it clearly knows how to calm investors. The first thing it did after announcing the new financing was to reassure everybody on the plant’s potential. Best not to consider at this stage what happens if the US bans Canadian cement.

McInnis Cement could be compared to other provincial industrial follies such as the closed Gaspésia paper mill in Quebec that also received over US$350m of government money. Yet if there is a project one might compare it to it is London’s Millennium Dome. Conceived as a national exhibition space to celebrate the start of the new millennium in 2000 the UK government of the time backed the project to much derision from the press as the costs spiralled and the visitors stayed away. However, today the venue has become a popular music and events venue. Flop or triumph: all those investors of McInnis Cement must be wondering what their fate will be. If nothing else perhaps renaming the plant once the dust settles (in an environmentally approved way) might be a good idea. Today, the Millennium dome is known as the 0₂.

Canada: Christian Gagnon, the president and chief executive officer of McInnis Cement, has left the company. The board of directors announced the departure and said that the cement producer is currently recruiting his replacement. A new executive committee has been put in place to take over the management of the company until the vacancy has been filled. It is composed of the following members: Louis Laporte, Chief of Operations; Ronald Bougie, Executive Vice-President, Engineering, Construction and Operations; and Marc Baillargeon, Management Advisor acting on behalf of la Caisse.

In other changes to the company’s executive team, Ronald Bougie has been appointed with immediate effect as the Executive Vice-President, Engineering, Construction and Operations. Bougie has experience in the construction of large industrial projects including the Stornoway site, a project in which Caisse de dépôt et de placement du Québec invested. Until a new president and chief executive officer is appointed, Bougie will report directly to McInnis Cement’s Executive Committee. Bougie will have direct access to the Board of Directors to provide progress reports. The board will closely monitor the final stages of the site’s construction.