Displaying items by tag: US
US: Mexico’s Cemex says that the US Department of Justice (DOJ) is investigating whether the cement producer violated the US Foreign Corrupt Practices Act (FCPA) in relation to a new cement plant being built by Cemex Colombia at Maceo in Antioquia. Previously, the cement producer received a subpoena from the US Securities and Exchange Commission in late 2016 as part of a probe also checking whether the FCPA had been breached.
Cemex says it is cooperating with both requests. However, it also said that it does not know how long either investigation will last or what impact the results of either investigation might have upon the company in terms of eventual sanctions.
In late September 2016 Cemex fired several senior staff members in relation to the Maceo project and its subsidiary’s chief executive resigned. This followed an internal audit and investigation into payments worth around US$20.5m made to a non-governmental third party in connection with the acquisition of the land, mining rights, and benefits of the tax free zone for the project.
Kuraray completes acquisition of Calgon Carbon
15 March 2018US: Japan’s Kuraray has completed its acquisition of Calgon Carbon. As a separate subsidiary, Calgon Carbon will be reported as part of the Functional Materials company of Kuraray, along with Kuraray’s Carbon Material business division. The Functional Materials company includes the Methacrylate division and Medical division. Calgon Carbon produces filtration technologies and systems for a variety of industries, including cement.
Roadblocks remain in the US?
14 March 2018The latest data from the United States Geological Survey (USGS) shows that cement shipments rose by 2.4% year-on-year to 95.5Mt in 2017. Readers with elephantine memories may remember that the Portland Cement Association (PCA) revised its forecast for 2017 down to 3.1% from 4.2% in a release made in late 2016. Shipments and consumption are different metrics but the PCA was heading in the right direction. Unfortunately, however ebullient the PCA’s chief economist Ed Sullivan was at the IEEE-PCA in 2017 about growth in the US in 2018 and 2019, the necessary rise required seems quite steep. President Donald Trump may have handed the major cement producers a tax break but until his infrastructure spending materializes the US construction industry is on its own.
Graph 1: Clinker production in the US, 2013 – 2017. Source: USGS.
Viewing the US as a whole is a little unfair given its wide regional variation. As can be seen in Graph 1 clinker production jumped up from 2013 to a high of 76.5Mt in 2015 before taking a dip in 2016 and then rising again to 76.9Mt in 2017. Cement shipments of Ordinary Portland and blended cement show a similar trend over the same timescale except without the decrease in 2016. Interestingly, imports of cement and clinker rose by 18% to 13.6Mt in that year. The major exporters to the US were Canada, Greece, China and Turkey, in that order.
Graph 2: Cement and clinker imported for consumption to the US in 2017 by country. Source: USGS.
From a producer perspective LafargeHolcim described 2017 as a ‘disappointing’ year, with overall net sales down slightly on a like-for-like basis. The group remained optimistic for 2018 though, with its hopes pinned on rising employment and housing construction. HeidelbergCement rode high on its acquisition of Italcementi’s local subsidiary Essroc, which enabled it to grow its business in the northeast and midwest. Its cement sales volumes rose by 2.3% to 4.1Mt. CRH noted similar cement sales volume growth of 3% and attributed this to stronger demand. Its business also benefited from the acquisition of Suwannee American Cement with its 1Mt/yr cement plant in Florida. Further growth to its production base is also expected soon as it completes its acquisition of Ash Grove Cement.
By contrast Buzzi Unicem reported a tougher year with its net sales barely increasing from 2016 to 2017. It blamed a tough first half of the year for this as well as weather-related issues due to Hurricane Harvey and then snow in December 2017. Cemex too reported harder conditions in the US, with cement sales volumes down by 6% for the year. Although on a like-for-like basis with plant sales excluded it reported this as a rise of 2%. Again, it blamed the weather but it did note an increase in residential housing construction as the year progressed.
In this kind of mixed environment for cement producers no wonder the PCA backed or, perhaps more accurately, reminded the President of his pledge to spend US$1.5tn to be invested in infrastructure. As per usual the PCA forecasts fair weather ahead for the US industry once the latest roadblock is overcome. At the last assessment it was inflationary pressure. As ever the government opening its cheque book to build things is exactly what the industry needs to build on its promise. Until then expect more of the same. One more thing to consider though is that the Trump administration is also trying to change the ratio of federal-to-state funding for cross-state infrastructure projects. If the states end up having to pay more money for these kinds of projects these may end up running out of funds, delaying or cancelling them. Counting on that infrastructure spend may be unwise until if or when the cement orders come piling in.
Remote control cement plants for Cemex
13 March 2018Mexico: Cemex has announced that it has become the first company in the cement industry to successfully operate plants by remote control, from its central location in Monterrey, Nuevo León. According to the company, the Cemento Control Center (C3) operates 365 days a year, tracking live data from the operation of 14 cement plants, 25 kilns and 86 mills in Mexico. It also monitors a cement plant in Colombia and another in the US.
In a statement, Cemex said that the continuous monitoring of the system provides information on each stage of the production process, as well as the performance of the equipment installed in the cement plants. It allows the C3 operators to not only monitor the plants, but also to take immediate corrective actions, in coordination with local operations staff and with access to existing intelligent control systems. This helps to minimise any deviation from the objectives of safety, environmental control, efficiency and product quality.
"Cemex created the C3 system to take more effective advantage of the resources and technological innovation available through the company's global operating network," said the statement from Cemex. The company's vice president of operations, Edgar Ángeles, added that the company has applied the most modern technology to develop a unique system in the current cement industry. With the operation of C3, Cemex says that the plants have already seen a 50% reduction in the number of operational accidents as well benefits from immediate sharing of best practice and the generation of shared knowelege and expertise.
US cement shipments rise by 2.4% to 95.5Mt in 2017
12 March 2018US: The United States Geological Survey (USGS) reports that shipments of Ordinary Portland and blended cement rose by 2.4% year-on-year to 95.5Mt in 2017 from 93.3Mt in 2016. Increases of over 5% were reported in Arizona and New Mexico, Kansas, Missouri, Texas and Washington. However, shipments fell by 14% in Illinois. Imports rose by 5.6% to 11.3Mt. Clinker production increased by 1.4% to 76.8Mt from 75.8Mt. Major importers of cement into the US were Canada with 4.4Mt, Greece with 2.3Mt and China with 2Mt.
US: CarbonCure Technologies has appointed Ted Jones as its Vice President of Sales and Marketing. Previously he worked as the sales and marketing lead with Oldcastle Precast, Contech Engineered Solutions, and The Fort Miller.
Jones succeeds Bill Holden as Vice President of Sales. He will be launching and spearheading a new Industry Advisory Council, which is an advisory board made up of concrete industry leaders. He will continue to sit on CarbonCure’s Board of Directors. Jennifer Wagner, the former Vice President of Marketing, has been promoted to the Executive Vice President of Corporate Development.
Cement and taxes
28 February 2018The old saying goes that nothing is certain except for death and taxes. But maybe that should be cement and taxes. Paying your taxes is something most people and companies just get on with, perhaps with some grumbling or perhaps not, but certainly with little press. So two news stories popping up in the same week about cement plants with tax issues is out of the ordinary.
The first concerned Lucky Cement’s battle in Pakistan to keep one of its plants open following accusations of underpaying its taxes. The local tax office tried to shut the Pezu plant down for not paying its property tax. The cement producer hit back with a restraining order from the provincial high court. The second detailed efforts by the Ethiopian authorities efforts to claw back US$10m from a local cement producer accused of deliberately understating its profits. In both cases it’s hard to tell if there is an obvious right or wrong party. Yet if these kinds of stories are hitting the local press headlines then either something has gone wrong or both parties are digging in for a fight.
Looking over a longer time frame two major stories about tax have been doing the rounds over the last year in the industry news. India’s Goods and Services Tax (GST) is a classic example of how cement producers sometimes have to deal with changes to existing regulations. It received another outing this week in the form of the credit agency ICRA’s latest forecast. It explained how the introduction of the new tax, a consolidation of other existing indirect taxes, had slowed production in the second quarter of the Indian financial year in 2017 - 2018.
The other example from a large cement producing country was US President Donald Trump’s cut to federal corporate tax in December 2017. The tax cut was expected to particularly benefit companies that produce materials, like building materials manufacturers. It prompted HeidelbergCement to say in early January 2018 that it expected to see a boost to its profits in 2019. Warren Buffet, the chairman of Berkshire Hathaway and owner of insulation producer Johns Manville amongst other companies, put it bluntly when he said in his 2017 annual report that nearly half the gain of his company’s net worth came from the changes to the US tax system.
Multinational companies, including some cement producers, face issues when dealing with different rules and regulations between the various countries that they operate in. However, sometimes unfairly, sometimes not, large companies also hold a reputation for trying to avoid paying tax.
In this context it’s interesting to look at how LafargeHolcim says it approaches the issue. The company published its tax principles in 2016 where it talks about being responsible and that it, “…accepts tax as a necessary and required contribution to society.” It then talks about the necessity of transparency and good relationships with tax authorities. The same year it declared a total tax bill of Euro726m versus total sales revenue of Euro23bn. By contrast Cemex UK in its tax strategy talks about how it follows the US Sarbanes Oxley Act 2002, which applies a more stringent international accounting and auditing standard. It feels far more honest when it says that it aims to minimise the tax burden upon its shareholders by using methods outlined by the UK government. Taxes may be a certainty but nobody wants to pay a penny more in taxes than they have to.
CarbonCure’s Consortium demonstrates CO2 capture and utilisation technology at Cementos Argos Roberta plant
28 February 2018US: CarbonCure has demonstrated an integrated CO2 capture and utilisation (CCU) process from cement for concrete production in January 2018 at Cementos Argos’ Roberta plant in Calera, Alabama. The consortium - comprising Carbon Cure, Sustainable Energy Solutions (SES), Praxair, Cementos Argos and Kline Consulting - says it is the world’s first project to collect cement kiln CO2 for subsequent utilisation downstream in concrete production and construction.
CO2 emissions from the Roberta cement plant were captured by SES’ Cryogenic CO2 Capture technology, transported by Praxair and reused in Cementos Argos' Glenwood, Atlanta concrete operations equipped with CarbonCure's CO2 utilisation technology. The concrete manufactured with the waste CO2 from the Roberta cement plant was then used in a local construction project in the greater Atlanta area. Design partners and fellow members of CarbonCure’s Carbon XPRIZE team such as LS3P Architects, Uzun + Case Structural Engineering, and Walter P Moore Structural Engineers completed the end to end integrated solution by creating demand for CarbonCure concrete products in the marketplace. Kline Consulting oversaw the commissioning and reporting of the industrial demonstration.
The project was an extension of Team CarbonCure's participation in the US$20m NRG COSIA Carbon XPRIZE Challenge, which incentivises and accelerates the development of integrated CCU technologies and new markets that convert CO2 emissions from coal and natural gas power generation into valuable products.
Elementia’s sales boosted by Mexican cement business in 2017
28 February 2018Mexico: Elementia’s sales benefitted from its Mexican cement business in 2017. Its net sales rose by 35% year-on-year to US$1.37bn in 2017 from US$1.02bn in 2016. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 24% to US$236m from US$191m.
Highlights of the company’s year included integrating Giant Cement’s assets into the company, the start-up and allocation of additional volume from the cement plant in Tula, Mexico and the expansion of the cement division in Costa Rica through the installation of a grinding plant that is expected to start operations towards the end of the first half of 2018.
Elementia’s Mexican cement division sales rose by 44% to US$236m from US$164m. However, the sales of its US division fell by 7% to US$231m from US$249m. The company blamed this on the year being a ‘transitional’ period where it conducted regular maintenance works that interrupted production.
Portland Cement Association supports infrastructure study
22 February 2018US: The Portland Cement Association (PCA) has supported an infrastructure study by the American Council for Capital Formation (ACCF). It liked how the study highlighted the importance of life cycle cost analysis and competition in paving. “If federal and state decision makers took this report as a playbook, America would see tremendous taxpayer cost savings and stronger infrastructure built to last long into the future,” said PCA President and chief executive officer (CEO) Michael Ireland.