Displaying items by tag: Syria

As a companion to the trends based article in the December 2016 issue of Global Cement Magazine, here are some of the major news stories from the industry in 2016. Remember this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..

HeidelbergCement buys Italcementi
Undeniably the big story of the year, HeidelbergCement has gradually acquired Italcementi throughout 2016. Notably, unlike the merger of Lafarge and Holcim, the cement producer has not held a party to mark the occasion. Instead each major step of the process has been reported upon incrementally in press releases and other sources throughout the year. The enlarged HeidelbergCement appears to be in a better market position than LafargeHolcim but it will be watched carefully in 2017 for signs of weakness.

LafargeHolcim faces accusations over conduct in Syria
The general theme for LafargeHolcim in 2016 has been one of divestments to shore up its balance sheet. However, one news story could potentially sum up its decline for the wider public. In June 2016 French newspaper Le Monde alleged that Lafarge had struck deals with armed groups in Syria, including so-called Islamic State (IS), to protect its assets in 2013 and 2014. LafargeHolcim didn’t deny the claims directly in June. Then in response to a legal challenge on the issue mounted in November 2016 its language tightened to statements condoning terrorism whilst still allowing some wriggle room. As almost all of the international groups in Syria are opposed to IS, should these allegations prove to be true it will not look good for the world’s largest cement producer.

China and India balance sector restructuring with production growth
Both China and India seem to have turned a corner in 2016 with growing cement production and a generally more upbeat feeling for the industries. Both have also seen some high profile consolidations or mergers underway which will hopefully cut inefficiencies. China’s focus on its ‘One Belt, One Road’ appears to be delivering foreign contracts as CBMI’s recent flurry of orders in Africa attests although Sinoma’s equipment arm was losing money in the first half of 2016. Meanwhile, India may have damaged its own growth in the short term through its demonetisation policy to take high value Indian rupee currency notes out of circulation. In November 2016 cement demand was believed to have dropped by up to half as the real estate sector struggled to adapt. The pain is anticipated to carry on until the end of March 2017.

US industry growth stuck in the slow lane
The US cement industry has failed to take off yet again in 2016 with growth lagging below 5%. The United States Geological Survey (USGS) has reported that clinker production has risen by 1% in the first ten months of 2016 and that it fell in the third quarter of the year. In response, the Portland Cement Association (PCA) lowered its forecasts for both 2016 and 2017. One unknown here has been the election of President-elect Donald Trump and the uncertainty over what his policies might bring. If he ‘goes large,’ as he said he wants to, on infrastructure then the cement industry will benefit. Yet, knock-on effects from other potential policies like restricting migrant labour might have unpredictable consequences upon the general construction industry.

African expansion follows the money
International cement producers have prospered at the expense of local ones in 2016. The big shock this year was when Nigeria’s Dangote announced that it was scaling back its expansion plans in response to problems in Nigeria principally with the devaluation of the Naira. Since then it has also faced local problems in Ghana, Ethiopia and Tanzania. Its sub-Saharan competitor PPC has also had problems too. By contrast, foreign investors from outside the continent, led by China, have scented opportunity and opened their wallets.

Changes in store for the European Union Emissions Trading Scheme
A late entry to this roundup is the proposed amendment to the European Union (EU) Emissions Trading Scheme (ETS). This may entail the introduction of a Border Adjustment Measure (BAM) with the loss of free allowances for the cement sector in Phase IV. Cembureau, the European Cement Association, has slammed the changes as ‘discriminatory’ and raised concerns over how this would affect competitiveness. In opposition the environmental campaign group Sandbag has defended the changes as ones that could put a stop to the ‘cement sector’s windfall profits from the ETS.’

High growth shifts to Philippines and other territories
Indonesia may be lurching towards production overcapacity, but fear not, the Philippines have arrived on the scene to provide high double-digit growth on the back of the Duterte Infrastructure Plan. The Cement Manufacturers Association of the Philippines (CEMAP) has said that cement sales have risen by 10.1% year-on-year to 20.1Mt in the first three quarters of 2016 and lots of new plants and upgrade projects are underway. The other place drawing attention in the second half of the year has been Pakistan with cement sales jumping in response to projects being built by the China-Pakistan Economic Corridor.

Global Cement Weekly will return on 4 January 2016

France: Sherpa and the ECCHR (European Centre for Constitutional and Human Rights), as well as 11 complainants who are former Syrian employees of Lafarge, are taking legal action against Lafarge and its subsidiary Lafarge Cement Syria (LCS) for its actions in Syria. The non-government organisations have accused the cement producer of conducting business with the Islamic State of Iraq and Syria (ISIS), a terrorist group, via its Jalabiya cement plant.

“The Lafarge case highlights once again how multinationals doing business in conflict zones can directly fuel armed conflicts and contribute to grave human rights violations committed therein. Companies like Lafarge must be held accountable,” said Miriam Saage-Maaß, Vice Legal Director at ECCHR.

Sherpa and the ECCHR have accused LCS of entering into arrangements with ISIS in order to maintain production, by paying for passes issued by the jihadist organisation and buying raw materials necessary for cement production such as oil and pozzolana in areas under ISIS’s control. They have also accused Lafarge of reckless endangerment given that the plant continued to operate in the conflict zone. LCS repatriated its expatriate staff in 2012 but it kept its Syrian employees working at the site. Subsequently, when the plant was attacked, Sherpa and the ECCHR say that the local employees were forced to escape on their own.

One fascinating statistic stands out in a study on how the Islamic State of Iraq and Syria (ISIS) pays its bills: cement represented 4% of its revenue in 2015 or around US$100m. The Centre for the Analysis of Terrorism (CAT) came up with this figure as part of its analysis on how the group finances itself. Its data was based on available information such as local sources, internal ISIS documents and reports from governments and institutions.

What’s more, the previous year in 2014, CAT estimated that ISIS brought in US$300m from cement sales. The difference in revenue between 2015 and 2014 came about from the group losing control of territory. In late 2014 it controlled four cement plants: the Lafarge Al-Jalabiya plant in Ayn al-Arabin, the Al-Raqqah Guris Cement plant and Fallujah, Kubaisa and Al-Qa’im plants in Iraq. Altogether it had a cement production capacity of 7.5Mt/yr, a higher capacity than 62% of the cement producing nations that are recognised formally by the United Nations. Briefly it had production parity with countries like Angola, Uzbekistan and Kuwait.

However the loss of the Al-Jalabiya and Kubaisa plants has stifled this revenue stream. At its peak ISIS couldn’t have been selling cement for more than something like US$40/t (capacity / revenue) if the plants were operating at full capacity. Yet it’s much more likely that the plants were chronically under-utilised and prices significantly higher in the heat, dust and confusion of a militant group attempting to form a state in a warzone.

Global Cement Weekly has covered previously the furore that erupted when French media accused Lafarge of cutting deals with ISIS to keep its Jalabiya cement plant during the early stages of the Syrian Civil War. At the time of the revelations in June 2016 LafargeHolcim said that its first priority was the safety and security of its employees at the plant before it eventually closed it, although it did not deny accusations directly.

Since then the plant’s former security manager Jacob Waerness has popped up in an interview with Bloomberg in connection with a book he wrote about the affair. According to Waerness, Lafarge stayed in the country for too long before the plant was finally seized by ISIS in September 2014.

The problem for Lafarge, as other multinational companies left the warzone, was that the US$680m plant had only been operational since late 2010 before hostilities broke out in 2011. Essentially, it tried to wait out the conflict and then got left behind. Pertinent to the start of this column, Waerness says that as the more extreme groups took control of the surrounding area he was offered and declined a meeting with the IS finance chief in Raqqa in the summer of 2013. However else one might describe IS, it was and clearly is well aware of the revenue to be gained from functioning cement plants.

LafargeHolcim has since started an internal review into the reported allegations under the auspices of its Finance & Audit Committee. In September 2016 the Iranian-backed Fars News Agency was reporting that US special forces were using the Jalabiya plant as a base. If and when peace comes to the region it will be intriguing to find out what condition the plant is in. Until then, LafargeHolcim will have to wait and take the loss on its investment.

France: Protest group SumOfUs has demanded that the mayor of Paris Anne Hidalgo drop LafargeHolcim as a corporate sponsor due to alleged links of deals with armed groups in Syria reported in the French media. SumOfUs say that over 37,500 people have signed an online petition calling for LafargeHolcim’s involvement with the Paris-Plages urban beach summer event to be terminated. The event, run by the office of the Mayor of Paris, creates temporary artificial beaches along the river Seine in the centre of Paris and the Bassin de la Villette in the northeast of Paris.

“This is a scandalous partnership with the City of Paris that should have never happened. By partnering with Lafarge for this summer’s Paris-Plages event, the City of Paris is whitewashing the company’s obscene show of corporate greed that profits off the war and violence created by terrorists. It is high time to make Lafarge accountable for its support of terror,” said Eoin Dubsky, Campaign manager at SumOfUs.

Back in 2001 a UK government advisor gained infamy for trying to use the terrorist attacks on 11 September 2001 to bury bad news. This week’s column is trying hard NOT to be about the UK vote to leave the European Union (for more on that try our editorial director’s column in the latest issue of Global Cement Magazine). They’ll be plenty of time for that later on when the repercussions for the cement and construction industries sink in. However, it has inadvertently buried some bad news coverage for LafargeHolcim.

The French newspaper Le Monde reported on 21 June 2016 that Lafarge’s Syrian subsidiary paid money to Islamic State (IS) militants in order to keep its Jalabiya cement plant in operation in 2013 and 2014. The paper said that the plant was kept in operation until September 2014 as the result of ‘agreements with local armed groups, including the Islamic State.’ It added, that Lafarge ‘indirectly financed the jihadist organisation.’

LafargeHolcim issued a statement on the story on same day. However, it didn’t deny the accusations. It stated that the company, as Lafarge, was under control of the plant in Jalabiya between 2010 and September 2014 and that the safety of its employees had always been its first priority. Part of the statement read, “Once the conflict reached the area of the plant, the first priority for Lafarge was the safety and security of the employees, while planning for the eventual closure of the plant. In September 2014, Lafarge stopped operating the Jalabiya plant. After that, all employees were evacuated, put on paid leave and were no longer allowed to access the plant. In December 2015, given the evolution of the situation in Syria, the decision was taken to terminate all employee contracts and, where possible, transfer employees to other parts of the group.”

The company may yet face prosecution for the dealings if it is found to have financed any terrorist organisation. Emmanuel Daoud, a specialist in international law quoted by various media sources, speculated that the outcome of any potential investigation might depend on whether the company was protecting its staff or protecting its profits. Additional complications also arise from the subsequent merger of France’s Lafarge and Switzerland Holcim to form LafargeHolcim.

It should be remembered though that cement plants and their staff are often very real targets in regional conflicts. They can also be held under switching jurisdictions. We reported that a Lafarge Syria plant near Aleppo was attacked and set on fire in 2014. Before the site was abandoned to protect the staff the site was first under the auspices of the Syrian army and then the Syrian Kurdish Democratic Union Party. Paying ‘taxes’ to the loosing side in a civil war might well be interpreted as funding terrorists in the aftermath.

A similar story resolved itself this week with the news that seven quarry workers kidnapped in Nigeria were released. Unfortunately there was one death and injuries sustained in the ambush that trapped them. Sy van Dyk, the chief executive of Macmahon, the company involved, refused to comment to local press on whether his company had paid a ransom to release the workers.

This all links to the wider issue of how multinational companies should deal with armed groups and de-facto governments in unstable areas. For example, the UK and US governments discourage paying ransoms to kidnappers because they say it encourages it as a business. Yet, other European nations notably paid to release their nationals during the earlier stages of the Syrian conflict and elsewhere. This in turn offers insight towards why Lafarge, a French multinational company, might have been more likely to negotiate with armed groups in Syria than say a British or American one. If an official investigation into Lafarge’s dealings follows then more details may emerge but there are no easy answers to these kinds of issues.

Syria: LafargeHolcim has dodged accusations by La Monde that Lafarge entered into deals with armed groups in Syria, including Islamic State (IS), to protect its business interests in the country. In a statement LafargeHolcim said that its first priority was the safety and security of its employees at its Jalabiyeh cement plant before it eventually closed the plant. It did not deny the accusations.

Le Monde reported it had seen letters sent by Lafarge managers in Syria revealing arrangements that Lafarge made with the jihadist group to continue production until 19 September 2014 and to arrange access for staff and supplies. The French newspaper also alleges that Lafarge bought licences from and paid taxes to IS middle-men and oil traders.

Lafarge operated the 3Mt/yr Jalabiyeh cement plant from 2010 to 2014. In September 2014, Lafarge stopped operating the plant. After that, all employees were evacuated, put on paid leave and were no longer allowed to access the plant. In December 2014 Lafarge decided to terminate all employee contracts, and where possible, transfer employees to other parts of the group.

Syria: Most of a group of 300 cement workers kidnapped from the Al-Badiyeh Cement Company have been released. The Syrian Observatory for Human Rights monitoring group said that all the workers had been released with the exception of 30 guards at the plant. The Islamic State-affiliated Aamaq news agency added that the majority of the workers were released after questioning about their religious and political backgrounds. It said that four workers who belonged to the Druse community were killed and 20 other pro-government gunmen were still being held.

Syria: Over 200 workers and contractors from the Al-Badiyeh Cement Company have been kidnapped by a group affiliated to Islamic State of Iraq and Syria (ISIS). The Ministry of Industry said in a statement to the Syrian Arab News Agency (SANA) that the Ministry has been in contact with the company’s administration to inquire about the abductees and to lobby for their release. So far no contact has been made.

SANA also reported that a local reconciliation official in Jeiroud, where the cement plant is located, saw around 125 of the company’s abducted workers being transported on board ISIS vehicles that headed towards Tal Dakweh on the outskirts of eastern Ghouta, a region where ISIS groups are active.

Syria: On 25 September 2014 Islamic State militants seized and set fire to Lafarge's cement plant in northern Syria.

"While advancing on the Kurdish town of Ain al-Arab near the Turkish border, the militants seized the Lafarge cement plant and burnt down part of it," said Rami Abdel Rahman of the Syrian Observatory for Human Rights.

The plant had been closed recently 'as security could not be guaranteed in the area.' Islamic State jihadists had taken over a major city in that part of northern Syria, sparking tens of thousands of mainly Kurdish refugees to flee into nearby Turkey. Once guarded by the Syrian army, responsibility for the plant's security was turned over to the main Syrian Kurdish Democratic Union Party (PYD) in August 2013.