Displaying items by tag: Sinoma

A member of the Global Cement LinkedIn Group commented this week on the merger between China National Building Material (CNBM) and China National Materials (Sinoma).

“Has the cement world got used to gigantic mergers or have we failed to understand how big this thing is locally, regionally and globally? It is shocking to see how little publicity and media attention is paid to this merger in comparison to the past ones. I find this to be potentially a game changer for the industry. This time, the game will be drawn from a single corner with less integration pains and much more alignment. A big wave coming…”

The comment was posted by Pavel Cech, a managing director of ResourceCo Asia based in Kuala Lumpur. This company is a waste recycling and waste management concern that specialises in alternative fuels for the cement industry. So a focus on the potentially massive drive for co-processing by the Chinese industry is understandable compared to, say, other companies in other continents. However, Cech’s point is valid: why isn’t this merger being talked about more?

CNBM is the largest cement company in the country with a reported total production capacity of around 406Mt/yr. Sinoma is a cement engineering company and the fourth largest cement producer in China with a total production capacity of approximately 112Mt/yr. The companies formally agreed to merge in September 2017 as part of a state-mandated industry consolidation. If these figures are taken at face value then the merger should increase the lead of the self-declared world’s biggest cement producer.

In non-Chinese terms this would be like HeidelbergCement merging with a major equipment manufacturer like ThyssenKrupp or FLSmidth. For these kind of companies, industry commentators and press, such as a Global Cement Magazine, would spend many column inches discussing the twists and turns of the merger as it played out. Just compare the Chinese merger to the debacle that has played out with the proposed acquisition of South Africa’s PPC by Fairfax, where seemingly every development was expounded upon both by PPC and the press.

For Global Cement’s reporting and coverage on China, problems arise from language difficulties, differences with the way Chinese media covers industry, the state-controlled aspect of many of the larger producers, issues obtaining accurate industry data and the sheer size of the sector. All of these impediments make it harder to cover the Chinese market. Add the relative insularity of the sector and it’s often easy to give the Chinese cement industry a special label, separating it out when talking about the global cement industry as a whole.

All this may be about to change as Chinese cement producers start firing up their own kilns outside of the motherland as part of the ‘One Belt, One Road’ initiative, making it easier to see what Chinese companies are doing. Except that Sinoma has already been out there in the rest of world building cement plants in many developing markets and creating competition for the Europe-based equipment manufacturers.

There has been little attention from competition bodies outside of China about the merger. The South Korean Fair Trade Commission approved the deal in November 2017 and that’s been about it. Combining a cement plant builder with a cement producer is a clear example of vertical integration in the cement industry. There is nothing necessarily anti-competitive about this but it could change the market dynamic where non-Chinese multinational and Chinese cement producers compete. If both CNBM and a rival wanted to open build a plant in the same area, then the competitor to CNBM might have less choice when it came to picking their equipment supplier. In addition, news stories such as the alleged pressure by the Chinese embassy in Sri Lanka to try and force a local development agency to choose Sinoma to build a grinding plant doesn’t instil confidence that a merged CNBM-Sinoma would play nice. Although, as today’s fine by the Colombian competition body to Cementos Argos, Cemex and Holcim for price fixing shows, non-Chinese cement producers are just as prone to malpractice.

The merger of CNBM and Sinoma is undeniably big news in the industry. Both within and outside China it is likely to have a pronounced effect. As explained above, for various reasons, the western press can’t cover China in the same way it does other countries. Once the Chinese producers start building more plants outside of China then this is likely to change significantly. Until then we’ll do our best to keep track of this and other Chinese news stories.

China: China National Building Material’s (CNBM) shareholders have approved a merger agreement between the company and China National Materials (Sinoma) at an extraordinary general meeting. The two companies formerly entered into a merger agreement in September 2017. The South Korean Fair Trade Commission approved the pending merger in early November 2017.

Tanzania: Industry, Trade and Investment minister Charles Mwijage says that senior officials from the Treasury and Tanzania Investment Centre (TIC) are finalising talks with China’s Sinoma and Hengya Cement about building a US$1bn cement plant in the Mkinga District, Tanga Region. The discussions are focusing on incentives to be offered to the investors and the location of a jetty, according to the Citizen newspaper. The plant will have an initial cement production capacity of 2.5Mt/yr with an eventual target of 7Mt/yr following further investment. Future plans also include generating 1200MW of electricity at the site. The overall cost of the expanded project is forecast to be US$2bn.

Bulgaria/China: Sinoma has won the Luban Prize for its work on the Devnya Cement Plant in Bulgaria. The company won the award for building a 4000t/day clinker production line at the site operated by Italcementi and now owned by HeidelbergCement. The Luban Prize, initiated in 1987, is an award for quality in Chinese construction projects.

South Korea: The South Korean Fair Trade Commission has approved the pending merger of China National Building Material (CNBM) and China National Materials (Sinoma). CNBM and Sinoma formerly entered into a merger agreement in September 2017.

Egypt: Loesche is supplying three vertical roller mills for the Egyptian Cement plant at Sohag. The scope of delivery includes a raw material mill with a capacity of 540t/hr of cement raw meal, a cement mill with an output of 350t/hr as well as a coal mill with an output of 45t/hr. The cement mill is equipped with a COPE (Compact Planetary Electric Drive) drive.

Sinoma subsidiary, the Chinese Chengdu Design & Research Institute (CDI), is the general contractor for the project. Loesche and CDI have worked together previously on projects in Egypt including ones for El Arish Cement and Beni Suef Cement.

China: China National Building Material (CNBM) and China National Materials Company (Sinoma) have entered into a merger agreement. The exchange ratio has been set at 1 Sinoma share to exchange for 0.85 CNBM share. After the merger is completed Sinoma will be absorbed into CNBM. Merger preparations for the two state-owned companies have been on going since mid-2016 when the Assets Supervision and Administration Commission announced the move.

CNBM is the largest cement company in the country with a reported total production capacity of around 409Mt/yr. Sinoma is a cement engineering company and the fourth largest cement producer in China with a total production capacity of approximately 112Mt/yr. The merger is part of the government’s plans to consolidate production domestically and refocus its industries internationally as part of the ‘One Belt, One Road’ initiative.

Uganda: China National Materials Group (Sinoma) has signed an agreement with Tian Tang Group to build a US$500m cement plant at the Mbale Industrial Park. The project is part of a wider investment package to develop the site, according to the Daily Monitor newspaper. Sinoma requires assurances from the government that the site has sufficient reserves of limestone and a research trip has been scheduled for August 2017 to survey the proposed location of the plant.

Angola: Nova Cimangola has inaugurated a new 2.4Mt/yr cement plant at Cacuaco in Luanda. China’s Sinoma International Engineering built the US$400m plant in 21 months, according to the Jornal de Angola newspaper. Investment for the project came from Nova Cimangola and Ciminvest, its main shareholder.

The new unit is intended to repalace Nova Cimangola’s existing cement plant at Kikolo near Luanda, which has limited limestone reserves. The new plant occupies an area of 700 hectares with larger mineral reserves. Following the start-up of the plant Nova Cimangola’s production will rise to 3.6Mt/yr from 1.8Mt/yr. The new plant will also create 200 jobs, 85% of which are expected to go to local workers.

Sri Lanka: A leaked letter from investment body the Agency for Development has revealed Chinese state pressure towards a tender for building a new cement grinding plant in the Hambantota investment zone. In the letter, reported upon by the News First television network, the head of the agency states that the Chinese Embassy asked that a Chinese investor, Sinoma Nanjing, be given priority for the project otherwise it would ‘lose confidence’ in the scheme. He added that the Chinese investors would pull out if other investors were also allowed to produce cement in the zone. The letter also reveals that the agency has proposed that Sinoma Nanjing form a joint venture with Ceylon Steel Corporation.