Displaying items by tag: Suez Cement Group
Italcementi to upgrade two cement plants in 2015
09 March 2015Egypt: Italcementi plans to upgrade two of its cement plants in 2015 via its Suez Cement subsidiary, following the two plants that it upgraded in 2014, according to Italcementi managing director Bruno Carrè.
"We will invest US$52.4m/yr for four years," said Carrè. "We finished converting two plants two plants in the first year. Now we have another two plants to complete." Italcementi will not disclose any expectations about their investments in 2015, although it expects the market to grow. In January 2015, Carrè said that its 2014 revenues will exceed US$721m, some 20% higher than in 2013, with 2015 revenues projected to grow by 10 - 15%.
Carrè said that the expansion plans are targeting renewable energy in Egpt and the Gulf. He highlighted that 2015 will see the continuation of investments to convert the energy mix and to improve Italcementi's environmental impact to international standards.
Suez Cement reports 11.5% gain in EBITDA for quarter four of 2014
27 February 2015Egypt: For the fourth quarter of 2014, Suez Cement reported a 2.5% year-on-year increase in revenues and 11.5% year-on-year growth in earnings before interest, tax and depreciation (EBITDA). Its net profit after non-controlling interests increased by 15.2% during the quarter.
For the entirety of 2014, Suez Cement's sales increased by 22%, while recurring EBITDA improved by 8.8% compared to 2013. However, higher corporate income taxes coupled with an absence of foreign exchange gains were responsible for an 8.4% drop in net profit after non-controlling interests. EBITDA gains were also driven by Suez Cement's downstream activities in transportation and ready-mix cements, as well as its paper bags subsidiary, which saw an EBITA increase of 26.5%. Cement activities accounted for a gain of 6.3%.
The strong revenue performance was largely due to cement price increases due to an unprecedented surge in production costs and product shortages. Overall, clinker production decreased as a result of severe energy supply issues that impacted each of Suez Cement's plants and subsidiaries differently. The Tourah plant felt the greatest pressure from expensive clinker imports that were necessary to satisfy Egypt's growing demand.
Suez Cement was also negatively affected by energy costs (gas, mazut and electricity) that rose by 25 - 35% in 2014. It did not let the economic pressures, including a 40% drop in industrial production capacity, impact its employment rates or benefits packages. This was partially due to Suez Cement's commitment to the implementation of energy-efficient processes throughout the five plants, as well as further emphasis and utilisation of alternative fuels, which helped mitigate the drop in production as well as limit the impact from growing clinker imports. Suez Cement will go ahead with the deployment of coal power at all five plants over the next two years, a factor that is also expected to put a stop to some importing activities.
Suez Cement believes that the construction industry's recovery will continue to attract new investment. This is in addition to positive economic growth thanks to Egypt's new-found government stability and the future implementation of several large national projects. However, power cuts and fuel shortages are likely to remain major issues for cement producers. Fuel and energy shortages will also prolong challenges to meeting cement production targets.
The recent closure of the Tourah I plant is one example of Suez Cement's continued commitment to reducing its environmental impact. The company remains focused on investing in energy-efficient initiatives and environmentally-sound programs. This includes developing alternative fuel strategies that incorporate waste-derived fuels and coal, which will shift the company's energy mix and improve its production capabilities by reducing dependence on natural gas and mazut.
Suez Cement to convert two cement plants to run on coal
17 December 2014Egypt: Suez Cement plans to spend US$84m in 2015 to convert its Helwan and Tora 2 cement plants to use coal. The move is a response to Egypt's on-going energy crisis.
The company reported a 40.5% rise year-on-year in third-quarter profit in November 2014 after it managed to pass on higher production costs to consumers. However, its nine month profit fell by 14.6% year-on-year due to severe energy shortages that forced the company to cut output by 40% so far in 2014. Suez Cement was one of the companies affected when the government cut natural gas supplies to factories in January 2014 and has had to import clinker at higher cost.
Egypt: Suez Cement has started trial production using coal at its Kattameya plant, with commercial production expected to start in November 2014, according to its chairman. Preparations for coal usage at the company's Suez plant are expected to be completed before the end of 2014.
Suez Cement to close Tourah Factory 1
08 October 2014Egypt: Suez Cement Co has voluntarily agreed to close its Tourah Cement Factory 1 to comply with the local government's policy to reduce the number of facilities that do not meet environmental standards. Suez Cement has instead chosen to invest US$69.9m in environmental mitigation measures at its Tourah Cement Factory 2.
Is Egypt even windy?
03 September 2014Announcements this week have highlighted the situation in the Egyptian cement industry, which has been bearing the brunt of increasing fuel scarcity for a while now. At first glance this appears bizzare in what is an oil-rich country but a government drive to make revenue from exports has constricted supply and led to a massive increase in fuel costs. Since the middle of 2012 Egyptian cement producers have faced a gradual decline in supplies, massive hikes in price due to the curtailment of subsidiaries and a scramble for 'alternative fuels'.... like coal!
While heavy fuel oil prices were on the rise as early as 2012, it is in 2014 that the cement industry has really begun to feel the brunt of supply cuts. January and February saw the Egyptian Natural Gas Holding Company (EGAS) cut its allocation of gas to cement producers by 35%, enough to significantly raise competition for the remaining allocation. By May 2013 this has resulted in interruptions to gas supply that closed some plants and slowed down many more. Producers were trumpeting coal as the big new 'alternative' fuel and conversion projects were announced in quick succession. Worse was to come. In June 2014 saw EGAS cut its supply to cement producers by a further 61%.
This relatively rapid turn around in fortunes has been highlighted by two announcements from the industry this week, both from the Italcementi subsidiary Suez Cement. Firstly, Suez updated the industry on its coal conversion project at its Kattameya plant. Both the timescale (completion by September 2015) and the price tag (US$23m) demonstrate the scale of the upset caused by the strangling of the gas supply. The cost implications of this investment and similar investments at three other Suez Cement plants are significant.
Secondly, Suez has announced that ItalGen (another Italcementi subsidiary) has secured a loan to construct a 200MW wind farm at Gabel El Zeit, near Hurghada, to supply its production sites with electricity. With a future target to produce 400MW (40% of Suez's electrical energy needs), this project (mooted since 2008) is a huge departure from established electrical energy sources in Egypt. It is an even larger project, estimated at US$220m. Assuming a ~US$25m price-tag for each of the four coal conversion projects, this brings Italcementi's total current Egypt 'energy stability spend' to a whopping US$320m. It is betting that the oil price trend is not going to reverse any time soon. As prices continue to rise it will be interesting to see what other solutions Egpytian cement producers come up with. The conversion of plants to take alternative or waste-derived fuels and the use of solar installations for plant electrical needs are other ways forward.
All the while, it is important to remember that Suez's projects (and those of other producers) will not be ready for several months at least. It is also important to remember that the same cement producers that are 'suffering' now have enjoyed the subsidies for many years. This makes casualties as the producers adjust to the new market realities a distinct possibility.
Suez Cement's Kattameya plant to use coal by September 2015
03 September 2014Egypt: The chairman of Suez Cement Group, Omar Mohanna, has announced that his company is planning to start transition processes to use coal in its 3Mt/yr capacity Kattameya cement plant by September 2015. The conversion is set to cost US$23.5m.
Italcementi’s ItalGen to produce 200MW from wind energy
02 September 2014Egypt: An official source in Egypt's Ministry of Electricity revealed that ItalGen, one of Italcementi Group affiliates, plans to build a 200MW wind power plant to increase its production capacity to 320MW. The plant will cost around US$220m. The project will be the first privately-built wind power plant to supply energy to plants of Suez Cement, an Italcementi subsidiary. Production capacity for the first phase would be 120MW, which would increase to 400MW in the future.
Egypt: Suez Cement Group of Companies' (SCGC) board of directors has approved the firm's consolidated financial report for the first half of 2014, which ended on 30 June 2014.
SCGC reported a 32% increase in revenues for the second quarter of the year versus the same period in 2013. Earnings before interest, tax and depreciation (EBITDA) jumped by 18%. However, net profits after non-controlling interest fell by 15%, mainly due to higher corporate income taxes.
SCGC's consolidated revenues for the first six months of 2014 increased by 23% year-on-year, while recurring EBITDA was 6% higher versus 2013. Both positive trends were thanks to company-wide efforts to control costs and preserve jobs. However, higher corporate income taxes coupled with an absence of foreign exchange gains were responsible for a 20% drop in net profits after non-controlling interest.
The company reported that cement demand grew by 1% in the first half of 2014 versus the first six months of 2013. During the same period, overall production capacity fell by 55% due to on-going energy supply challenges. In order to meet market demand, SCGC was forced to import clinker, which resulted in a surge in operational costs. A shortage of cement availability also resulted in market-price adjustments.
SCGC believes that the Egyptian construction industry's recovery will attract new investment in Egypt and help to boost economic output. The company also predicts that newfound government stability and the announcement of several large national projects will boost Egyptian demand for cement.
Egyptian cement producers fight for ‘king’ coal
07 May 2014Egypt's cement producers have taken their fight to use coal to the opposition in recent weeks. Producers like Suez Cement and Titan have started pushing the benefits of using coal including its place as an international mainstay and highlighting the potential savings for the state.
In March 2014 the Minister of Trade and Industry Mounir Abdel Nour announced that cement companies could start using coal from September 2014. However, with pressure from environmental activists and even the Minister of Environment voicing disapproval for coal this seems to be a long way off. Fuel issues continue to bedevil Egyptian cement producers as reports emerged this week that gas supplies to 10 cement plants were cut. The plants, which represent 70% of the country's production base, have been forced to close temporarily. Egypt is one of the largest non-OPEC (Organisation of the Petroleum Exporting Countries) oil producers in Africa and the second largest dry natural gas producer on the continent.
The Egyptian government has been planning a reduction in the use of natural gas by industry. Yet the scale of the reduction has shifted. At first the Ministry of Petroleum intended to reduce supplies to cement plants by 35% in January and February 2014. Reportedly the price of cement then shot up by 30% in March 2014 to offset the rise in energy prices. Then the gas was cut completely, leading to the shutdowns.
In response Egyptian cement producers are investing in converting to using coal. This week Suez Cement announced a planned investment of US$40m to convert two of its four plants to use coal instead of natural gas subject to approval from the Ministry of Environment. Back in November 2013 Suez Cement announced similar plans to spend US$72.5m on converting its plants for coal. Similarly, Lafarge's preparations to use petcoke were also delayed by the ministry in February 2014.
Users of Egypt's gas supplies are caught between the reform of energy subsidies, a shortage in gas supplies and an increase in local demand. Industrial users like cement plants are stuck in a queue behind export markets and power plants. In addition international events such as the political instability in Ukraine might potentially rock the Egyptian gas market if Russian supplies were affected. The European markets would then start scrambling to secure their gas from other places such as Egypt.
In this situation, moving to the use of imported coal makes sense for cement producers. Yet groups like the 'Egyptians Against Coal' campaign argue that the issue is also about Egypt's sovereignty over its energy sources, not just pollution. Despite the optimism of the activists it seems unlikely that they can resist market pressures for long, especially with producers such as Suez Cement and the Arabian Cement Company announcing plans for increased alternative fuels substitution rates alongside their bigger plans for coal. Whether this is more than a sop remains to be seen.
Once dubbed 'King Coal' for its leading place in British industry before the second half of the 20th Century, coal is looking likely to take the crown as the fuel of choice in the Egyptian cement industry. How long it retains its crown though depends on the on-going competition between coal and gas use around the world.