Displaying items by tag: OYAK

Turkey: Steel company Erdmir has received the Turkish Competition Board (TCB)'s approval for its acquisition of a 100% stake in refractory and magnesia producer Kümaş Manyezit Sanayi. Erdemir's parent company is OYAK Group, an industrial conglomerate with interests in cement alongside other industries. Thus, the TCB considered the deal's competition impacts on the cement industry. The board ruled that the vertical merger would not have a negative effect on competition because it does not give rise to horizontally affected markets, hence neither creating nor strengthening any dominant market position.

There have been a couple of news stories worth noting in the Turkish market this week. First, it was revealed that Medcem had chosen Sintek Group to build a new production line at its integrated plant in Mersin. Second, Çimko Çimento agreed to buy two integrated plants and a grinding plant from Çimsa.

The Medcem upgrade project will see the subsidiary of Eren Holding add a second production line, with a clinker capacity of 9000t/day. Sintek Group reportedly has agreed to do this for US$128m. This follows an announcement from Medcem in late May 2021 that it was intending to invest over US$200m towards increasing its plant’s overall production capacity to 6.5Mt/yr from 3.5Mt/yr. The plan at this point was to start construction work in August 2021 with eventual commissioning of the second line in the first quarter of 2023. In addition the cement producer said at the time that it was going to open a new terminal in the US shortly. This was intended to join the company’s existing grinding plants in Cameroon and Tunisia and terminals in Russia and Northern Cyprus. On a side note, Medcem likes to point out that the 11,500t/day clinker production capacity on its existing line at its plant is the biggest in Turkey and Europe.

The Çimko Çimento deal with Çimsa was for US$127m. It includes the Nigde Kayseri integrated plants, the Ankara grinding plant and seven ready-mix concrete plants. As would be expected, the transaction is subject to the approval of the local competition authority.

Graph 1: Domestic and export cement sales in Turkey, January – June 2017 – 2021. Source: Türk Çimento.

Graph 1 above gives an idea why some cement producers might have decided that it’s time to expand either through upgrades or acquisitions. The general Turkish economy suffered a jolt in mid-2018 when the value of the Turkish Lira dropped and interest rates rose. The coronavirus pandemic hit in 2020 but after a slowdown at the start of that year the economy managed to grow. The growth has continued so far in 2021 but inflation rates have also soared. In the cement sector, annual domestic sales fell consecutively from 2017 to 2019. They started to recover in 2020 and so far in 2021 it looks like they are continuing to grow. As domestic sales fell the sector focused on exports and they have grown steadily on an annual and half-year basis since 2018. Annual exports hit a high of 16Mt in 2020 or 23% of total sales.

Despite this, in June 2021 the Turkish Cement Manufacturers' Association, Türk Çimento, was warning that input costs were mounting, particularly in the last year. It reported that the price of petcoke had nearly tripled in this period. It also warned of mounting production overcapacity, estimated at over 20Mt/yr in 2019 although down to 7Mt/yr in 2020. Coupled with a fall in annual domestic sales from 2017 to 2019, in its words, “The contraction in domestic consumption during that period steered our companies toward exports.” Some of the larger cement producers, including Oyak, Akçansa and Çimsa all reported healthy rises year-on-year in revenue and operating profit in the first half of 2021. They also reported mounting costs which have risen by 35 – 80%.

The other recent stories from Turkey to note are a two week strike organised by the Building Contractors Confederation (IMKON) in September 2021 due to high costs, particularly cement. The confederation claimed that the price of cement had tripled over the last year. Earlier, in late April 2021, the Turkish competition authority Rekabat Kurumu launched a probe into alleged collusion by nine cement producers including Oyak, Çimsa and Limak. We are not saying these two stories are connected. The current state of the Turkish economy is more than enough to cause input costs for cement producers to spike. Yet headlines like this cannot be reassuring to builders wondering why the cost of cement is going up.

In summary, it’s an uncertain time for the Turkish cement industry. Sales are recovering but this has been achieved by pushing exports more than a rally at home. Alongside this, currency instability and high inflation rates are raising costs for cement producers and end-users. This hasn’t been enough though to stop growth activity from a couple of producers in the last week.

For more on the Turkish cement sector read ‘Cement in Turkey’ in the October 2021 issue of Global Cement Magazine

Turkey: Batıçim has appointed Akif Geçer as its general manager and as a member of its executive board. Arif Alp Dündar has also been appointed as chief financial officer and as a member of the executive board.

Geçer was the general manager of construction company Türkerler Holding from 2011 to 2015. Prior to this he held management positions at Çimko Cemento and Şanlıurfa Çimento and production roles at OYAK and Denizli Cement dating back to the early 1990s. He is a graduate in chemical engineering from the Middle East Technical University in Ankara.

The latest piece of China-based Huaxin Cement’s global ambitions slotted into place this week with the news that it is preparing to buy plants in Zambia and Malawi. Its board of directors has approved plans to spend US$150m towards acquiring a 75% stake in Lafarge Zambia and US$10m on a 100% stake in Lafarge Cement Malawi. The move will gain it two integrated plants with a combined production capacity of 1.5Mt/yr in Zambia, and a 0.25Mt/yr grinding plant in Malawi.

This latest proposed acquisition represents the next step for Huaxin Cement in Africa following its purchase of African Tanzanian Maweni Limestone from ARM Cement in mid-2020. The company has also been busy along the more traditional Belt and Road Initiative land routes in Asia. It started up the kiln at its new 2Mt/yr Jizzakh cement plant in mid-2020. Elsewhere in Central Asia it runs two plants in Tajikistan and one plant in Kyrgyzstan via various indirectly-owned subsidiaries. While in South Asia it runs a plant in Nepal and in South-East Asia it runs one in Cambodia. If the plans in Zambia and Malawi pay off then it will give the Chinese producer a growing presence in East Africa, with plants in three countries.

The China Cement Association ranked Huaxin Cement as the country’s fifth largest clinker producer in 2021 with an integrated capacity base of just under 63Mt/yr. Domestically, the company operates 57 cement plants and most of these are based in the Yangtze River Economic Belt region. In 2020 it reported cement and clinker sales of 76Mt, a small decrease from 2019. Its operating income fell by 6.6% year-on-year to US$4.58bn and profit dropped by 12% to US$1.2bn. This performance was blamed on the emergence of Covid-19 at the start of 2020 and then floods later in the year.

Compared to the other larger Chinese cement producers, Huaxin Cement roughly appears to be holding rank with its overseas expansions. The leaders, CNBM and Anhui Conch, hold subsidiaries with plants in South-East and Central Asia and CNBM’s engineering wing, Sinoma, has a far bigger reach, building plants all over the place. Information has been scarce since mid-2020 on the long heralded 7Mt/yr plant in Tanzania due to be built by Sinoma and local subsidiary Hengya Cement. At that time local residents in Mtimbwani, Mkinga District were reportedly being compensated for their land. Other than this, one of the other big players internationally is Taiwan Cement. In 2018 it invested around US$1.1bn for a 40% stake in Turkey-based Oyak Cement. As well as a presence in Turkey this also gave it a share of plants in Portugal in 2019 when Oyak completed its acquisition of Cimpor.

Elsewhere this week, carrying some of the themes above with expansion in Central Asia, two new integrated cement plant projects were announced in Kyrgyzstan and Turkmenistan respectively. Meanwhile, Italcementi said it will invest Euro5.0m to restart clinker production at its Trentino cement plant in Sarche di Madruzzo, Italy. The unit has been operating as a grinding plant since 2015. This might be viewed as an unexpected decision considering the high local CO2 price but it shows some level of confidence in the local market by Italcementi and its parent company, HeidelbergCement. The next step will be when or if a European producer decides to build a brand new integrated plant in Italy or elsewhere.

Turkey: The Turkish competition authority Rekabat Kurumu has launched a probe into alleged collusion by nine cement producers. The authority said that it is investigating AS Çimento, Bastas Baskent Çimento, Çimsa, Golas Goller Bolgesi Çimento, Konya Çimento, Kupeliler Endustri, Limak Çimento, Oyak Çimento and Brazil-based Votorantim Cimentos.

Cameroon: Aumund France has won a contract to supply three BWZ type bucket elevators with central chain, three BWG type belt bucket elevators and three Samson material feeders to Oyak Çimento’s upcoming plant near Kribi. When commissioned in September 2022, the plant will grind 100t/day of cement and 720t/day of calcined clay. ThyssenKrupp Industrial Solutions (France) is responsible for the overall design, supply and installation of equipment to the plant.

Last week’s financial results from Çimsa contained a glimmer of hope for the Turkish cement market. Its net sales grew by 27% year-on-year to Euro175m in the first nine months of 2020 and operating profit more than doubled. Crucially, the balance between domestic and export sales tilted back a little toward the local market at a 55/45 ratio rather than 40/60 for the same period in 2019. Oyak Cement, another of the larger local producers, reported a similar rise in sales also. Akçansa Çimento, the joint venture between Sabancı Holding and HeidelbergCement, saw its sales fall slightly so far in 2020 but its profit grew. These financial results are all surprising given the currency and debt crisis the country faced in 2018 and now coronavirus in 2020.

Graph 1: Domestic and export cement sales in Turkey, January – July 2017 – 2020. Source: Turkish Cement Manufacturers’ Association (TÇMB)

Graph 1 above shows the general picture of the Turkish cement industry for the first seven months of each year to put the data so far in 2020 into context. The general Turkish economy faced problems in the middle of the year when the value of the Turkish Lira dropped sharply in mid-2018 and interest rates rose sharply. Subsequently, annual cement sales fell by over 20% year-on-year to 56.5Mt in 2019. A couple of weeks ago the Turkish Cement Manufacturers’ Association (TÇMB) said that the sector started 2020 optimistically with a recovery in January 2020. Coronavirus then hit, causing a contraction in the domestic market for the next four months. However, the construction market picked up again in June 2020 and this is expected to have continued into August 2020.

The cement sector previously pivoted to exports strongly with nearly a 50% bump up in exports to 11Mt in 2019. 2020 has been similar so far for the export market with a 40% rise year-on-year from January to July 2020 to around 9Mt. Much of these exports have gone to the US with local media and the Turkish Statistical Institute (TurkStat) reporting that the North American country took 18% of Turkey’s Euro840m cement exports from January to September 2020. Focusing on international trade has not come without a price though. In September 2020 the Ukrainian government started an investigation into alleged dumping of cement by Turkish producers. Following a complaint by local producers, the Interdepartmental Commission for International Trade (ICIT) determined that: “imports were made to an extent and under conditions such that they may cause material injury to the domestic producer.” The results of the investigation remain to be seen, but Ukraine had no qualms in 2019 about slapping tariffs onto cement imports from Russia, Belarus and Moldova.

All of this leaves the Turkish cement producers relying, much as previously, on the export market to hold up sales while the domestic market recovers to 2018 levels. This is becoming riskier, given the growing number of rivals exporting cement around the world, particularly from around the Mediterranean, and with more countries like Egypt hoping to do likewise. Yet as long as favourite destinations like the US and Israel keep buying, Turkey should be okay. At home, the question remains whether the growth seen post-coronavirus measures in the spring is a sign of economic recovery or merely pent up demand. The country’s initial coronavirus response was praised internationally but signs of a second wave are present. Meanwhile the International Monetary Fund (IMF) confirmed in October 2020 its earlier forecast of a 5% drop in gross domestic product (GDP) for Turkey in 2020. Much of the rest of the world is facing similar contractions in output or worse in 2020 but starting the year from a poor economic position is not enviable.

Turkey: Sabancı Holding has appointed Umut Zenar as the general manager of Çimsa following the departure of Ülkü Özcan. Zenar’s previous role as the general manager of Akçansa, a joint venture between Sabancı and HeidelbergCement, will be filled by Mehmet Zeki Kanadıkırık. The changes will take effect from the start of September 2020.

Zenar holds a Master of Business Administration (MBA) from Boğaziçi University in Istanbul. He started his professional career in 2003 as a Business Development Specialist at Zorlu Holding before joining Akçansa in 2004. After working in sales, marketing and business development roles he moved to Oyak Cement Concrete Paper Group in 2016 as a general coordinator before returning to Akçansa as its general manager in 2018.

Kanadıkırık holds a degree in mechanical engineering from Middle East Technical University in Ankara. He started his career worked for Çukurova İthalat, Brisa, Lubrekip, Kordsa and Tekstil Servis. In 2006 he became the Production Manager at Kordsa Turkey and subsequently became the Manufacturing Director of Kordsa Turkey, the Operations Director of Thai Indo Kordsa and the Chief Operating Officer (CEO) of Asia Pacific for Kordsa in 2015.

Portugal: Cimpor has won a contract to supply cement for a new 80km railway line linking Elvas to Évora. It expects to delivery up to 0.14Mt of cement for the project, according to the Dinheiro Vivo newspaper. Cement will be supplied from its Alhandra integrated plant and ready-mixed concrete from other sites. The project is expected to be completed in early 2023.

Cape Verde: Turkey’s OYAK is planning to invest in pozzolan extraction following a meeting between OYAK's Cement Concrete Paper Group chairman Suat Çalbiyik and prime minister Ulisses Correia e Silva. Mining activity has remained muted since Cabocem, an Italian company, closed in 2013, according to Sapo. OYAK has operations in the country via Portugal’s Cimpor, which it acquired in 2019.