Displaying items by tag: Votorantim Cimentos

Spain: The European Union of Aggregates Producers has granted two Sustainable Development Awards to Brazil’s Votorantim Cimentos for its El Toril quarry restoration plan and cave conservation plan for the Cova Eirós mine, which provided raw materials for clinker produciton at its 0.7Mt/yr integrated Oural plant. Votorantim Cimentos has partnered with the University of Santiago de Compostela to facilitate archaeological study of Cova Eirós, where 50,000-year-old findings have been made. Meanwhile at El Toril, the pit will be filled, levelled and enhanced for fertility so that it may resume its previous use as arable land.

Brazil: Markets in Brazil and North America have supported Votorantim Cimentos’ sales so far in 2019, despite setbacks in Turkey and Latin America. Its sales revenue rose by 2% year-on-year to US$907m in the first nine months of 2019 from US$891m in the same period in 2018. Overall sales volumes of cement fell slightly to 8.4Mt. The cement producer’s adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) decreased by 5% to US$188m from US$199m, with declines reported in all operation regions except North America.

SNIC, the Brazilian national cement industry union, was being cautious this week but signs of improvement were there. Its cement sales data showed a 3% year-on-year rise to 40.5Mt for the first nine months of 2019 from 39.4Mt in the same period in 2018. SNIC President Paulo Camillo Penna was keen to pour cold water over the figures with a reminder that the truck driver’s strike and an economic slowdown in 2018 had unnaturally depressed industry sales. He didn’t want to ruin the party too much though. Comments followed about a National Confederation of Industry (CNI) survey forecasting growth for the next six months and market research supporting growing residential construction.

Graph 1: Cement sales in Brazil for Q1 – 3, 2014 – 2019. Source: SNIC.

As Graph 1 above shows the local industry has been through the wringer in recent years. Cement sales peaked in 2014 before the national economy was hit by falling commodity and oil prices that contributed to a recession as well as the Petrobras political crisis. At the start of 2017 Camillo Penna described the situation as the worst in the industry’s history. From the peak to the trough cement sales plummeted by 27%.

Camillo Penna’s caution now may have something to do with his previous prediction that the industry was going to recover from the second half of 2018. The sales may not have perked up but merger and acquisition activity did, with the European multinationals Buzzi Unicem and Vicat buying stakes in BCPAR (Grupo Ricardo Brennand) and Cimento Planalto (Ciplan) respectively. So far in 2019 it has been quietly optimistic but not without the odd hiccup. There have been a few new plant project announcements from Brennand Group, Votorantim and CSN Cimentos. Yet, InterCement converted its integrated Pedro Leopoldo plant in Minas Gerais to a terminal. Cimento Tupi reportedly ran into trouble with its investors when it tried to merge with its parent company following defaulting on loan payments in 2018. Notably, the country’s two cement associations also released a Cement Technology Roadmap to 2050 in April 2019. It plans to reduce specific CO2 emissions by over 30% from 2014 to 375kg CO2/t of cement in 2050 amongst other ambitions.

On the corporate side, Votorantim’s domestic sales rose by 3% year-on-year to US$771m in the first half of 2019 from US$745m in the same period in 2018. It attributed the growth to improved prices. Other news of note included the acquisition of a mortar plant in Belém, Pará state and plans to upgrade its clinker grinding unit at Pecém in Ceará. InterCement’s cement and clinker sales volumes rose by 6.8% to 4.04Mt from 3.78Mt. It declared that this was way ahead of the industry average of 1.5%. Sales revenue fell slightly, possibly due to high production overcapacity and competition on prices. Earnings were also reported as having improved in the second quarter partly due to a ‘significant’ reduction in its cost structure.

On the supplier side, refractory manufacturer RHI Magnesita reported that its margin recovery was ‘going quite well’ in Brazil during the first half of 2019. Stefan Borgas, RHI Magnesita’s chief executive officer (CEO) forecast that the margin in that country would help drive its business in the second half of 2019 and that the business was returning to the global average. RHI Magnesita also announced a Euro57.1m upgrade to its plant at Contagem, Belo Horizonte in Minas Gerais this week, including building a new regional headquarters for its South American business.

Everything seems to be coming together slowly for Brazil’s cement industry. Yet Camillo Penna and SNIC are right to be careful for another reason. The United Nations (UN) and various analysts are warning about the growing risk of global recession in 2020 based on indicators like the US yield curve. This could be especially devastating for an economy like Brazil’s that is heavily dependent on commodity markets. History may not repeat itself but the strength of that recovery may be tested sooner than anyone would like.

UK: The Global Cement and Concrete Association (GCCA) has launched ‘Innovandi,’ a research network between industry and scientific institutions. The network intends to research the areas of process technology, including the impact of co-processing, efficiency of clinker production and implementation of CCUS/ technologies, and products. This will include the impact of clinker substitutes and alternative binders in concrete, low carbon concrete technology and improve the understanding of CO₂ reduction through re-carbonation.

“Our industry is fully committed to taking action to reduce CO₂ emissions. As such, Innovandi is an industry led initiative and will bring together the best minds from all corners of the cement and concrete world, academia and business. Together we will truly collaborate on a global scale and use our expertise to find new ways of working and developing effective innovations,” said Benjamin Sporton, the chief executive officer (CEO) of the GCCA.

24 companies from the cement and concrete industry, including cement and concrete manufacturers, admixture specialists and equipment suppliers, have committed to the initiative, with scientific institutions and additional companies set to join as its work begins work. These include Buzzi Unicem, Cementir Holding, Cementos Argos, Cementos Molins, Cementos Pacasmayo, Cemento Progresso, Cemex, CNBM, Chryso, CRH, Dalmia Cement, FLSmidth, Grupo Cementos de Chihuahua (GCC), GCP Applied Technologies, Mapei, HeidelbergCement, LafargeHolcim, Nesher Israel Enterprises, SCG Cement, Titan Cement, Refratechnik Cement, Sika Technology, Subote New Materials and Votorantim.

As part of the new initiative, the GCCA also intends to establish an annual Innovandi global conference to promote collaboration on innovation and research in the sector.

Brazil: Votorantim Cimentos has created a business unit to manage and provide services throughout the co-processing chain of alternative materials used in cement production with a five-year investment plan of US$98m. Valor has reported that the unit, named Verdera, will offer waste disposal services to various industries. Votorantim is targeting 80% petrocoke use in future cement production, compared to 25% at present. Its 2018 production used 0.9Mt of alternative materials, corresponding to a reduction of 0.5Mt in CO2 emissions compared with conventional materials.

Brazil: Votorantim Cimentos’ revenue rose by 3.8% year-on-year to US$1.44bn in the first half of 2019 from US$1.39bn in the same period in 2018. Sales growth was driven by ready-mixed concrete and the company’s other businesses as cement sales fell slightly. It reported a profit of US$29.4m compared to a loss of US$72m previously. Its cement sales volumes fell by 6% to 13.8Mt from 14.7Mt.

"In the first half of the year, we achieved net revenue growth and stability in our leverage, even though the Brazilian economy has not yet achieved the anticipated recovery and despite the impact of an atypical seasonality in North America. In this second quarter, we followed our investment plan and inaugurated a new production line of mortar, in Cuiabá, and one of agricultural solutions, in Nobres, both in the Brazilian state of Mato Grosso," said Osvaldo Ayres Filho, Global chief financial officer (CFO) of Votorantim Cimentos. The company added that higher prices in Brazil, growing sales in North America and positive currency effects successfully offset poor results in Turkey.

Brazil: Votorantim Cimentos has announced the conclusion of its acquisition of a mortar production unit from Supermassa. The plant, located in Ananindeua, Belem, in the state of Para, has capacity of 0.15Mt/yr. Votorantim Cimentos notes that the total investment, including the acquisition, modernisation of technology, installation of automation and other improvements, will total US$4.3m.

The acquisition is part of the company's growth and geographical diversification strategy. The purchase is the company's 11th mortar production unit, and brings its mortar production capacity up to 2.5Mt/yr.

The agreement this week by Ciments du Maroc to buy two production projects from Anouar Invest Group marks a consolidation phase in the local market. The subsidiary of Germany’s HeidelbergCement has struck a deal to acquire Atlantic Cement’s 2.2Mt/yr integrated plant project in Settat province and the Les Cimenteries Marocaines du Sud (CIMSUD) 0.5Mt/yr grinding plant at Laâyoune, which was only recently commissioned.

Graph 1: Cement sales and production capacity in Morocco, 2013 - 2018. Source: L’Association Professionnelle des Cimentiers (APC) & Global Cement Directory 2019.

Graph 1 gives an impression of the market conditions the cement producers have faced over the past five years. Cement sales hit of a high of 16.1Mt in 2011 following increasing growth in the 1980s, 1990s and 2000s. Cement sales have since wilted, while production capacity has increased pushing down the capacity utilisation rate. The capacity utilisation dropped below 55% in 2018, using Global Cement Directory 2019 data, although other sources have placed it at around 60%.

Local production is dominated by two multinational producers, LafargeHolcim (LafargeHolcim Maroc) and HeidelbergCement (Ciments du Maroc), and a local company, Ciments de l’Atlas (CIMAT). CIMAT is owned by Addoha Group and it also operates Ciments de l'Afrique (CIMAF) with plants across West Africa. A fourth player, Asment de Témara, run by Votorantim, also operates an integrated plant.

LafargeHolcim Maroc’s turnover fell by 2% year-on-year to US$837m in 2018 along with a drop in consolidated net income of 18% to US$201m. It attributed this to lower sales and growing petcoke costs. Ciments du Maroc’s turnover fell slightly to US$419m but its net profit rose by 3% to US$108m. This followed a generally positive year in 2017 due to a strong second half of the year. It blamed the instability on a poor real estate market. CIMAT managed to raise its sales in 2018 by 6% to US$300m and its income by 1.4% to US$90.7m.

Anouar Invest Group’s decision to sell up may mean that its attempt to break into the cement market has failed. Who can blame it given the market conditions. Although, who knows, HeidelbergCement may have made it a great offer. HeidelbergCement’s gambit is also interesting because, in February 2019, it reduced its stake in Ciments du Maroc by 7.8% to 54.6% signalling less confidence in the country.

Yet, cement sales started to improve in the first quarter of 2019 with consecutive month-on-month improvements. Neither is Anouar Invest Group the last company to try its luck with cement production in Morocco. In June 2019 FLSmdith announced that TEKCIM had ordered a US$45m cement plant from it and Société Générale des Travaux du Maroc. The grinding unit has a production capacity of 1.2Mt/yr. Clearly, despite a market with production overcapacity, companies are sensing opportunities with the cement grinding model.

India: Cement producers and the World Business Council for Sustainable Development (WBCSD) have launched the Indian Cement Sector SDG Roadmap. The planning framework uses the United Nation’s (UN) sustainable development goals (SDG) to set a series of goals in energy and climate, people and communities, the circular economy and natural resource management. It is intended to contribute to the UN’s 2030 Agenda for Sustainable Development.

This initiative has been convened by nine cement companies: ACC, Ambuja Cement, CRH, Dalmia Cement (Bharat), Heidelberg Cement, Shree Cement, Orient Cement, UltraTech Cement, Votorantim Cimentos. It is also partially funded by the Swiss Agency for Development and Cooperation (SDC).

Notable goals from the roadmap include promoting railway and waterway transport networks, improving transport safety, increasing the use of blended cements and encouraging the use of alternative fuels. The framework also plans to increase the number of women in the indsutry workforce at every level from entry to board.

Brazil: Votorantim Cimentos’ revenue rose by 5.5% year-on-year to US$615m in the first quarter of 2019 from US$683m in the same period in 2018. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) more than doubled to US$143m from US$52.2m. Its sales volumes of cement fell by 5% to 6.4Mt from 6.7Mt. It attributed the increase in revenue to its results in Brazil and Latin America, as well as positive currency effects.