Displaying items by tag: National Cement

Rwanda: Kenya-based Devki Group subsidiary National Cement signed a deal to acquire CIMERWA from International Holdings Proprietary Limited, a subsidiary of South Africa-based PPC, and minority shareholders on 17 November 2023.

KTPress News has reported that CIMERWA’s chair, Regis Rugemanshuro, said “We look forward to welcoming National Cement as our new shareholder. We are confident that they have the financial and technical resources required to support CIMERWA’s growth and expansion in line with our vision and their ambitions in the region.”

Narendra Raval, chair of Devki Group, said “We are committed to a long-term strategic partnership with CIMERWA. We believe in the potential for this business and its people and are excited by the opportunity to support infrastructure development in the region in line with our strategic expansion ambitions.”

US: The Portland Cement Association (PCA) has announced the winners of its 2023 Safety Innovation and Chairman's Safety Performance Awards.

The Safety Innovation Award Program recognises companies that have developed innovative practices, projects and programs that improve safety at cement plants in the US. Entries are judged in five areas: innovation, ease of use and ease of construction, effectiveness and risk prevention. The recipients were:

• Distribution: Continental Cement, Continental Port Allen Terminal, Chesterfield, Missouri
• Quarry: CalPortland Company, CalPortland Oro Grande Plant, Oro Grande, California
• Pyroprocessing: GCC of America, GCC Tijeras Plant, Tijeras, New Mexio
• General Facility: Mitsubishi Cement Corporation, Mitsubishi Cushenbury Plant, Lucerne Valley, California

The Chairman’s Safety Performance Awards are given to member cement plants that did not have a reportable injury or illness during the year. Fifteen plants achieved this in 2023, which represented more than 10% of all active cement facilities in the US and its territories. The recipients were:

• Argos USA, Atlanta, Georgia
• Argos USA, Newberry, Florida
• Argos Puerto Rico Corp, Dorado, Puerto Rico
• Ash Grove Cement Company (CRH), Durkee, Oregon
• Ash Grove Cement Company (CRH), Midlothian, Texas
• Buzzi Unicem USA, Chattanooga, Tennessee
• Buzzi Unicem USA, Maryneal, Texas
• CalPortland Company, Rillito, Arizona
• GCC of America, Odessa, Texas
• Heidelberg Materials, Bellingham, Washington
• Martin Marietta Materials, New Braunfels, Texas
• Martin Marietta Materials, Midlothian, Texas
• Martin Marietta Materials, Tehachapi, California
• National Cement Company of California, Kern, California
• St Marys Cement (Votorantim), Detroit, Michigan

Kenya: Parliament's Finance and National Planning Committee has rejected a petition from the Kenya Association of Manufacturers (KAM) for the removal of the 10% customs duty on imports of clinker. Business Daily News has reported that KAM member Rai Cement said that the duty will force cement plants to shut due to high costs. The committee, however, concluded that the levy aims to encourage local manufacturing, promote exports and create jobs for Kenyans.

National Cement, which operates the 1.95Mt/yr Kajiado cement plant in Merrueshi-Mbirikani, opposed the KAM line by submitting its own petition for an increase in the clinker import duty to 25%.

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.

National Cement is preparing to open its new integrated West Pokot plant in September 2023. Readers may recall that the long-running project was taken over by Devki Group from Cemtech and Sanghi Industries after the Competition Authority of Kenya (CAK) gave it permission to do so in 2019. The original feasibility report by the Kerio Valley Development Authority dates back to 2010. The new plant will have a production capacity of 2.5Mt/yr.

However, this isn’t the only new clinker production capacity that Devki Group, which sells cement under the Simba Cement brand, is preparing to commission. Local media also reports that the company is also preparing to restart the former Athi River Mining Cement integrated plant at Bondora in Kaloleni, Kilifi County. After five months of trial runs the unit should be ready for full operation from April 2023. Devki Group also picked up this plant in 2019 following the long breakup of ARM Cement, after the latter producer entered financial administration back in mid-2018.

Devki Group started out in the steel sector but it has been steadily carving out a presence in the cement industry. The group opened its first cement grinding plant in 2013 and then built a 1.95Mt/yr integrated plant in Kajiado County, south of Nairobi, in 2018. Once the West Pokot plant is commissioned, the company will reportedly have a clinker production capacity of 7.5Mt/yr from three plants.

This kind of growth is making waves in the local cement sector. Since Global Cement Weekly covered the situation in September 2022 (GCW576), an argument has been brewing in Kenya over whether the country should import clinker or manufacture more of its own. This has moved to lobbying the government on whether the duty on imports of clinker should rise from 10% to 25%. Unsurprisingly, the country’s largest clinker producer, National Cement, even before the new plants are operational, has been a major advocate for putting up the import tariff. This carried over into 2023, when local press revealed the minutes of a meeting between the State Department of Industry and the Kenya Association of Manufacturers (KAM), with input from the cement producers. Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot were all against raising the tariff, saying that it would enable the largest clinker producers, National Cement and Mombasa Cement, to dominate the market. However, unlike the last such meeting, Mombasa Cement was said to be non-committal on the proposal to increase the duty. Despite the disagreement over the tariff, all of the cement companies imported clinker in 2021.

Graph 1: Rolling annual cement production in Kenya, 2019 - October 2022. Source: Kenya National Bureau of Statistics (KNBS).

Rolling annual cement production in Kenya peaked at just over 10Mt in May and June 2022. Data from the Kenya National Bureau of Statistics (KNBS) shows that monthly production started to fall on a year-on-year basis from July 2022. This is likely to be connected to the elections that took place in August 2022, although wider economic trends such as inflation and high input material prices may not have helped either. Despite this, cement production rose by 5% year-on-year to 8.02Mt in the first 10 months of 2022 from 7.65Mt in the same period in 2021.

Other recent news of note in Kenya includes the restart of clinker production at East African Portland Cement’s (EAPC) Athi River Plant in mid-2022. The upgrade was conducted as part of a general five-year upgrade and expansion campaign by the company. The next steps were announced in January 2023 with a stated intention to consider entering markets in the Democratic Republic of Congo and Rwanda. The other story of note was in December 2022, when China-based Sinoma International Engineering announced that it had signed a deal with Savannah Cement to build a new 8000t/day clinker production line with a 2400t/day cement grinding unit, a 35MW captive power unit and a 13MW waste heat recovery unit. As is standard for Sinoma’s new contract releases, it said that the contract would become active once an “advance payment guarantee” had been received. Later in December 2022 the Kenya High Court intervened to stop two creditors from seizing assets from Savannah Cement and putting it into administration, although the court did acknowledge the company’s debts and a loan repayment default. In January 2023 Mauritius-based Barak Asset Recovery, another related creditor, was approved by the competition regulator to buy a majority stake in Savannah Cement. The current state of that new production line is unknown.

As the two stories above show, it is not just National Cement that is trying to move towards increased clinker production in Kenya. The whole situation is reminiscent of the time before Nigeria declared itself self-sufficient in cement in the early 2010s. Local producers became prominent and the market battle between producers and importers became public. Kenya’s range of different cement companies seem to be more diverse than Nigeria’s were, but a similar type of national interest argument may be rolled out by one side. The other parallel to note with Nigeria is that Dangote Cement is said to have attempted to buy National Cement previously and has also been trying to build its own plant in the country since the mid-2010s. Kenya’s demographics and location make it a prime place for this kind of producer-importer tussle. Let’s wait and see how much the situation has changed when the new plants open over the next six months.

Kenya: National Cement Company expects to commission its upcoming West Pokot clinker plant in September 2023. The cement company says that the plant will produce clinker for export to neighbouring countries in Central and East Africa. A previous survey by the Kerio Valley Development Authority proved reliable reserves of 1.2Mt/yr of limestone in the area. When commissioned, National Cement Company expects the new plant to generate 2000 direct jobs.

Kenya: Five cement producers are opposing an increase in import taxes on clinker that has been championed by National Cement owner Narendra Raval Guru. They claim that he has ‘been given the ear’ of the country’s current administration and is using his position as a domestic clinker manufacturer to disadvantage cement companies that grind imported clinker. The company is reportedly seeking an increase on the duty from 10% to 25%.

The five cement companies - Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot – argue that this would create an unfair playing field in the local cement sector. The say that two manufacturers, National Cement and Mombasa Cement, would dominate due to their clinker manufacturing plants. Mombasa Cement has not stated a position in the dispute.

Derba MIDROC Cement signed a contract with Sinoma International Engineering in recent weeks to build a US$282m upgrade at its integrated Derba cement plant in Oromia. The move is the latest in a steady stream of projects that have been announced in Ethiopia over the last few years. Other recent developments include a deal in July 2022 by businessman Getu Gelete to buy PPC’s stake in Habesha Cement and plans in August 2022 by investor Worku Ayetenew to build a US$1bn cement plant with a production capacity of 12,000t/day. Alongside these capital intensive projects, the government has been trying to regulate the price of cement through measures such as setting fixed prices, limiting the volumes that individuals can buy and asking producers to cut distributors out of the supply chain.

To summarise some of the plant projects over the last couple of years, the Derba MIDROC Cement upgrade project intends to double the production capacity of the integrated Derba cement plant in Oromia to 15,000t/day. The other big ongoing project was announced in early 2021 when East African Holding and China-based West China Cement agreed to build a 10,000t/day plant at Lemi in Amhara Region. East African Holding is the parent company of National Cement, one of the larger producers in the country. Then in July 2021 Sinoma International Engineering’s subsidiary Suzhou Sinoma signed an initial deal with Western International Holdings, West China Cement’s international arm, to build the plant. Prime Minister Abiy Ahmed visited the construction site in March 2022 to lay the foundation stone but no commissioning date has been disclosed so far. Based on Sinoma’s assessment when it signed the contract, construction would take around 20 months, so a commissioning date by late 2023 seems reasonable. There are also a number of other projects that have been announced in the local press such as Abay Industrial Development Share Company plant at Dejen. FLSmdith said that the contract to build the 5000t/yr plant became effective in late 2020. However, not much more has been released publicly. Another project at Berenta in Amhara is also reportedly under construction.

The Global Cement Directory 2022 places the country’s production capacity at around 12Mt/yr. This compares to 15Mt/yr from 13 companies as reported by a local news source although this figure is likely to also include grinding plants. Yet the same source also placed the actual working capacity at 6Mt/yr due to old machinery and poor maintenance. As for the market in Ethiopia, Dangote Cement said that the sales from its Mugher plant rose by 1.8% year-on-year to 1.7Mt in the first nine months of 2022 and that the unit was running at full capacity in the third quarter. It reckoned that it held a 42% market share during this period, out of a total market of around 4.2Mt. Previously it said that the total market for the whole year was 7Mt in 2021.

Unfortunately it also mentioned issues with security in the region. This became a live issue this week with news that at least 30 employees of Dangote Cement were reportedly kidnapped in early December 2022 by an armed group that calls itself the Oromo Liberation Army. This is particularly sad for the company given that its country manager was shot dead in 2018. Two employees of the Mugher Cement plant were also taken hostage by the same group in October 2022 although thankfully they were later freed.

A number of projects have been announced in Ethiopia over the last few years but they appear to be taking a while to materialise. This time though a couple of the projects do seem to be on the way and the change in ownership of Habesha Cement seems to suggest a renewed vigour to the local construction market since the government opened up investment. Unfortunately, security concerns are pressing as demonstrated by what happened to some of Dangote Cement’s staff this week.

Nigerian billionaire Aliko Dangote was spotted attending the inauguration ceremony of Kenyan President William Ruto earlier in September 2022. This is relevant because Dangote’s cement company previously announced plans in 2016 to build two 1.5Mt/yr plants in Kenya, near Nairobi and Mombasa respectively. They were intended to become operational by 2021. Unfortunately, Dangote himself allegedly described Kenya as being more corrupt than Nigeria to Kenyan broadcast journalist Jeff Koinange a few years later and nothing more happened. Back in 2014 Ruto visited Dangote Cement’s Obajana plant in Kogi state in Nigeria when the politician was the Deputy President of Kenya. Dangote’s attendance at the presidential inauguration this month suggests at the very least that his relationship with Ruto remains active. Maybe more news on those planned plants will follow.

Graph 1: Cement in Kenya, 2018 – June 2022. Source: Kenya National Bureau of Statistics (KNBS).

The reason why the owner of Africa’s largest cement company might be interested in the Kenyan market can be seen in its latest cement production figures. Data from the Kenya National Bureau of Statistics (KNBS) shows that production for the first half of 2022 grew by 20% year-on-year to 4.95Mt in the first half of 2022, from 4.12Mt in the same period in 2021. Cement production was broadly similar in 2018 and 2019 at around 6Mt. It then increased by 25% to 9.25Mt in 2021 from 7.41Mt in 2020. On a rolling annual basis, production picked up at the start of 2020 and has risen consistently since then each month, peaking at over 10Mt in May 2022.

However, the elections in August 2022 probably slowed this growth trend, despite being much more peaceful than those in 2007, although the KNBS is yet to release the data. Bamburi Cement said in its outlook for the second half of 2022 that it expected markets to recover after the ballot. The subsidiary of Holcim reported increasing turnover in the first half of 2022, due to mounting sales volumes and price rises, but its profit fell sharply. It blamed this on fuel and logistics inflation, growing clinker import costs as well as negative currency exchange effects.

That last point about imported clinker is worth noting given that a government report in late 2021 found that the country had a clinker shortage of up to 3.3Mt/yr. Yet, the KNBS data in recent years shows that cement production and consumption are broadly similar, suggesting that the shortfall in clinker is being imported. The report added that 59% of the imported clinker originated from Egypt, tariff free, due to a free trade agreement. Local producers were reported to have been operating at a 65% capacity utilisation rate. Egypt and the UAE accounted for most of the imported clinker followed by Saudi Arabia. An interview in the Standard newspaper at this time with Bamburi Cement’s managing director Seddiq Hassani revealed that, despite locally produced clinker being cheaper than imported clinker, some producers were reluctant to hand control of a key input material over to their local competitors. Other producers, predictably, were trying to persuade the government to raise the duty on imports of clinker from 10% to 25%. Tariff discussions have continued in 2022.

So far in 2022 the other big stories in the sector have included Bamburi Cement’s plans to build two solar power plants and a major repair to the kiln shell at East Africa Portland Cement’s (EAPCC) Athi River cement plant. The solar plants will be built next to Bamburi Cement’s integrated Mombasa plant and its Nairobi grinding plant. Once operational in 2023 they are anticipated to supply up to 40% of the cement producer’s total power supply. Devki Group, the owner of National Cement, also announced plans in August 2022 to set up a wind farm near Mombasa. However, this seems more like an attempt to diversify the group into electricity production rather than to supply its own plant near Nairobi. EAPCC’s upgrade project has completed this week after about a month and half of work. It is intended to increase the plant’s cement production by 50%.

Cement production started in rise in 2020 but the Covid-19 pandemic may have constrained this. Production (and consumption) then jumped up in 2021 and looks set to do similar in 2022 bar a possible blip from the elections in August 2022. This is despite the global market issues arising from the end of Covid-19 and the war in Ukraine. These may be uncertain times but the fundamentals for the Kenyan cement market look positive despite rising end prices. Unsurprisingly, it looks likely that Dangote Cement remains keen to extend its business to Kenya.

Congratulations are due to the National Cement Company of Alabama and Vicat for the inauguration of the new production line at the Ragland cement plant in Alabama. The event took place on 21 July 2022.

The US$300m project was originally announced in late 2019. It then took two years to build with construction starting in January 2020. Key features include a raw vertical grinding mill, a new roller mill, a five stage preheater tower, an automatic clay storage system, a 78m tall homogenisation silo, an alternative fuels storage area for tyre-derived fuel, sawdust and wood chips, a laboratory and a new control room. The new kiln was previously reported to have a clinker production capacity of 5000t/day and it will add up to 2Mt/yr of cement production capacity to the plant. ThyssenKrupp signed up as the principal equipment supplier in 2019 and H&M was the main contractor. The production line is expected to reduce energy consumption by one third. Further change is scheduled with a switch to production of Portland limestone cement (PLC) from Ordinary Portland cement (OPC) by the start of 2023.

Vicat has repeatedly noted its affection for the plant as it was the first cement plant the group purchased outside of France, back in 1974. Indeed, Vicat’s group chair and chief executive officer Guy Sidos personally managed the Ragland plant in 2001. However, rather more prosaic reasons may also have been behind the decision to expand Ragland. According to United States Geological Survey (USGS) data, Alabama, Kentucky and Tennessee’s cement shipments grew by nearly 5% year-on-year to 7.1Mt in 2019 from 6.8Mt in 2018. Shipments are up by 3% year-on-year to 2.5Mt in the first four months of 2022 and the three states were the fifth largest region in the US for cement shipments in April 2022. A shortage of cement was also reported in Alabama in April 2022.

The other big US-based cement plant expansion is Lehigh Hanson’s US$600m upgrade to its Mitchell plant in Indiana. It also celebrated a milestone this week with a ‘topping out’ ceremony to mark the placement of the final section of steel for the stack. Another recent achievement here was the completion of a 169,000t storage dome supplied by Dome Technologies. The supplier says that the 67m diameter and 48m tall dome is the second largest clinker storage facility in Europe and North America, after one it previous built in Romania in 2008.

The Mitchell K4 project was announced in mid-2018 and then ground breaking began in late 2019. However, the start of the coronavirus pandemic delayed construction in early 2020 before it restarted in September 2020. The revised commissioning date was then moved back about half a year to early 2023. The key part of this project is that it will replace the plant’s three current kilns with just one. The new production line will increase the site’s production capacity, reduce energy usage and decrease CO₂ emissions per tonne of cement. It was reported by local press back in 2018 that the project would increase the plant’s cement production capacity to 2.8Mt/yr. The project has been linked to supplier KHD with CCC Group as the contractor.

It’s fascinating to see two major new upgrades to cement plants emerging in a mature market like the US and during an unprecedented event like the emergence of coronavirus. No doubt compelling tales will emerge of how both teams coped with managing nine-figure capital expansion projects as a global public health emergency unfolded. The US market has been on a roll in recent years, despite all the uncertainty in the world, and so far it doesn’t seem to be slowing down. With luck both of the projects feature above have timed their opening right.