Displaying items by tag: Taiwan

Vietnam: Phuc Son Cement is under investigation for exploiting minerals. An inspection report by the State Audit Office has accused the cement producer of using mineral volumes higher than the amount it was licenced for in 1996, according to the Viet Nam News newspaper and Dantri. The report has been passed to the prime minister and the chairwoman of the National Assembly. The company has also been accused of causing pollution from its mining activities and not cooperating with the authorities over the investigation.

The State Audit Office estimates that Phuc Son Cement could face a US$11.7m fine for illegally exploiting natural resources and causing environmental damage. Phuc Son Cement, a joint venture between Taiwan’s Lucky Cement and a local partner, operates one of the largest plants in the country.

Taiwan: Protestors have called for the closure of Asia Cement’s quarry in Hualien. The government proposed an amendment to the Mining Act in December 2017 that would require quarries in aboriginal territories to obtain the consent of aboriginal communities, according to the Taipei Times newspaper. However, the quarry has been exempted because the Bureau of Mines extended the company’s mining rights by 20 years in early 2017. Aborigines from the Taroko National Park area said that the government’s approval of the amendment was ‘illegal’ and demanded that their traditional land, which is occupied by the quarry, be returned to them. Asia Cement said it would ensure that the mine is environmentally sound, that water sources near the mine are protected and that mining safety standards meet regulations. It added that it would also work with aboriginal communities and continue talks with them and the government as necessary.

Taiwan: Vice Minister of Economic Affairs Yang Wei-fuu says the government plans to lower the cap on cement exports from over 20% of total output to 15% on environmental grounds. The ministry is also preparing an environmental impact assessment (EIA) policy for the development of the cement industry, according to the Central News Agency. The policy is scheduled to be completed by June 2018 and be submitted to the Environmental Protection Administration. The decision follows public outcry over the alleged expansion of the quarry at Asia Cement’s Hualien plant, which is partly located in a national park.

According to ministry data, Taiwan's cement exports reached 51% of total output in 2009 and 36%, 24%, 24% and 27% from 2013 to 2016 respectively. The ratio was at 25% in the first four months of 2017. Once an amendment to the Mining Act and environmental assessment regulations come into effect, many cement mining projects are expected to be affected. The ministry also intends to find alterative sources for the cement industry’s demand for raw materials.

Taiwan: Asia Cement has denied that it expanded a quarry serving its Hualien plant following accusations by a filmmaker that mining has intensified at the site. Documentary filmmaker Chi Po-lin made the comments in May 2017 whilst filming a sequel to his aerial photographic documentary ‘Beyond Beauty: Taiwan From Above.’ According to the China Post newspaper. Chi subsequently died in a helicopter crash on 10 June 2017 but his aerial footage of the site has caused public outcry.

However, Asia Cement says it has slowly been reforesting the active mining site since 2012. The Ministry of Economic Affairs has also released time-lapse photography supporting the cement producer.

The quarry, which is partly located in a national park, supplies one of the country’s largest cement plants. Its mining lease was set to expire in 2017 but was extended until 2037. The Environmental Protection Administration has also issued assurances that quarry excavations will not occur within the national park area.

Taiwan: Leslie Koo, the chairman of Taiwan Cement, has died from injuries sustained from a fall. Koo, aged 62 years, died on 23 January 2017 following suffering head injuries from falling down stairs at a hotel in Taipei whilst attending a wedding, according to the Tapei Times newspaper. He had led Taiwan Cement since 2003.

Nelson Chang has been appointed as the acting chairman of Taiwan Cement. Chang is Koo’s brother-in-law. He has also been appointed temporary chairman of two subsidiaries: China Synthetic Rubber and Taiwan Prosperity Chemical.

Check out this graph of Chinese cement prices from September 2015. An author at Business Insider attributes it to Larry Hu, the Chief China Economist for Macquarie. It pretty much sums up the mood analysts have at the moment regarding the Chinese cement industry.

Figure 1: China cement prices, 2012 – 2015. Source: CEIC, Bloomberg, Macquarie Research September 2015.

The recent announcement by the Assets Supervision and Administration Commission regarding the merger of China National Building Materials Group Corporation (CNBM) and China National Materials Group Corporation (Sinoma) comes hot on the heels of a series of poor half-year financial returns from China’s major cement producers. Attempts to tackle overcapacity in its local cement industry have been underway for a few years now. Actions taken include demolishing outmoded capacity, merging companies and expanding overseas. However as the construction markets have cooled in the country the scope of what the cement industry is facing has become clear, as revenues and profits have tumbled.

Now that the first half cement sales volume data has become available from the National Bureau of Statistics of China (NBSC) the response of the cement industry to its predicament has emerged. As can be seen in Figure 2 there has been a rough trend of sales decline throughout 2014 and 2015. The first half of 2016 has started to buck this trend as sales volumes have risen year-on-year for both quarters.

Figure 2 – Chinese cement production by quarter, 2014 – 2016. Source: National Bureau of Statistics of China.

Sales revenues have dropped for most of the major companies that have publicly released their results for the first half of the year. The exception is Taiwan Cement, which makes a large proportion of its sales revenue outside of China (People’s Republic of China). Its sales revenue in China barely rose year-on-year in the first half of 2016. However, the cement sales volumes for all these companies have started to show what is happening. They have risen for most of the producers examined. Essentially, each of these producers is producing more cement but making less money. As Digital Cement puts it, the industry is in a 'low-profit position.' Increased market competition and endemic industry overcapacity are causing this.

Mergers and acquisitions have been the big story for the European multinational producers following the economic crash in 2007. Returns from low growth markets have been substituted for efficiencies of scale, knowledge sharing and greater international reach. Lafarge and Holcim merged in 2015 and HeidelbergCement is due to complete its acquisition of Italcementi later this year. However, as LafargeHolcim's disappointing financial returns and its continued slew of divestments show so far, the merger has not worked as well as may have been hoped… yet.

Whether China's version of this works with its large state owned enterprises is uncertain. Mergers are meant to cut out inefficiencies through economies of scale. Yet the question remains: can even larger Chinese cement producers do this when they are state controlled and harangued by pressures outside the normal market, particularly when local regions try to preserve their industries. The last such big deal, between Anhui Conch and China Resources Cement, fell apart in July 2016. The plans for CNBM and Sinoma may fare better but if the price of cement keeps falling then the market may have other ideas.

For more information see the China country report in the September 2016 issue of Global Cement Magazine

Taiwan: Taiwan Cement plans to expand its microalgae unit to boost astaxanthin production from waste CO₂. The cement producer intends to invest US$6.25m towards enlarging its existing microalgae unit into a 20-hectare outdoor microalgae farm with an estimated annual production value of about US$12m, according to the Tapei Times.

The upgraded farm will start operation in 2017 producing astaxanthin, an input for skincare and health food products. The company hopes to make astaxanthin products that meet universal standards, such as the Good Manufacturing Practice standard, eventually becoming the country’s main supplier of the chemical.

To support the upgrade Taiwan Cement has signed a business development contract with the Industrial Technology Research Institute (ITRI). The two organisations have collaborated since 2011 on developing CO₂ capture technology. As part of the new deal Taiwan Cement is expected to decrease its CO₂ emissions by 4800t/yr.

Taiwan: Taiwan Cement Corp has conceded that its business has remained weak since 2015. It hopes to see rise in sales in the second half of 2016 said Taiwan Cement chairman Leslie Koo in comments reported by the Tapei Times.

Cement shipments to China grew by 18% year-on-year to 10.8Mt in the first quarter of 2016 from 9.2Mt in the same period in 2015. Taiwan Cement senior vice-president Edward Huang said that overall demand for cement and clinker in 2016 should remain the same or improve from 2015. He citied transportation infrastructure projects in Taiwan and potential demand in China as measures for growth.

It expects cement production overcapacity to end in 2016 as the Chinese government continues to close cement plants. It also expects cement prices to start to grow again throughout the year based on price rises in the first quarter of 2016. The company plans to build four production lines in 2016. A new cement plant in Shaoguan, China, is expected to start production in the first half of 2017.

Taiwan Cement’s net income fell by 47% to US$178m in 2015 from US$334m in 2014. Sales dropped by 21% to US$2.89bn from US$3.65bn. It blamed the result on falling prices and demand in China due to oversupply of cement.

Taiwan: Taiwan Cement, is purchasing Sichuan Railway Group Cement for US$111m to expand its presence in China. Taiwan Cement made the purchase through its subsidiary TCC International Holdings. The Sichuan company's production site has a cement production capacity of 2Mt/yr.

Prior to the purchase TCC International operated two cement plants in Sichuan: one in Guangan with a cement production capacity of 2Mt/yr and the other in Chongqing with a capacity of 4Mt/yr. Following the purchase TCC International will boost its capacity to 8Mt/yr. Taiwan Cement said that the acquisition is expected to create synergies for TCC International, helping the company cut operating costs to improve its bottom line.

TCC International reported a 79.6% rise in net profit to US$134m for the first half of 2014. In addition to the purchase in Sichuan, Taiwan Cement said that TCC International will also add a new production line in its Guizhou plant later in November 2014 to boost its production capacity by an additional 1.5Mt/yr.

Vietnam: In the first seven months of 2014, Vietnam earned US$563m from the export of 13.1Mt of clinker and cement, a 24% rise year-on-year in value terms and a 20.4% increase in terms of volume. Indonesia, Taiwan and Malaysia were the largest importers of Vietnamese clinker and cement in this period, according to the Vietnamese Ministry of Industry and Trade.

Indonesia imported 1.42Mt of clinker and cement (worth US$69m), Taiwan bought 0.86Mt (US$37.6m) and Malaysia purchased 0.7Mt (US$34.7m). Cambodia was fourth with 0.29Mt (US$15.6m).

Vietnam's domestic cement sales are expected to rise by 9% year-on-year to between 49 - 50Mt in 2014, while cement and clinker exports are likely to hit 16 - 20Mt. The country exported 15Mt in 2013.