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News Votorantim Cimentos

Displaying items by tag: Votorantim Cimentos

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President inaugurates Itacamba Cement plant in Bolivia

13 February 2017

Bolivia: President Evo Morales has inaugurated the Itacamba Cement plant in Yacuses in the department of Santa Cruz. The plant had an investment of US$220m and has a production capacity of 0.95Mt/yr, according to Via Empressa. Itacamba Cement is a joint venture between Spain’s Cementos Molins, Brazil’s Votorantim Cement and Camba Cement. The cement producer also operates a grinding plant in Puerto Quijarro and its hopes to produce up to 1.2Mt/yr of cement from both sites. The plant is also expected to create up to 540 direct and indirect jobs.

Published in Global Cement News
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Update on Brazil

25 January 2017

“One of the worst moments in its history.” That’s how Paulo Camillo Penna, the newly appointed president of SNIC - the Brazilian National Union of Cement Industry - described his industry last week. Few people are likely to be envying his position at the moment. As Camillo Penna went on to explain, domestic sales of cement fell by 11.7% year-on-year to 57.2Mt in 2016. He added that following capacity utilisation rates of 70% in 2015 and 57% in 2016 that he expected the rate to fall below 50% in 2017. When he said it was bad he wasn’t kidding.

Graph 1: Brazilian cement sales from 2011 to 2016. Source: SNIC.

Graph 1: Brazilian cement sales from 2011 to 2016. Source: SNIC.

Graph 2: Regional Brazilian cement production from 2014 to 2016. Source: SNIC.

Graph 2: Regional Brazilian cement production from 2014 to 2016. Source: SNIC.

Graph 1 illustrates how stark the decline in cement sales has been since the growth period at the start of the 2010s. Sales have fallen by 15Mt since 2014 in a country that has a production capacity of 88Mt/yr. Graph 2 presents a regional picture of sales. Note in this graph the sharp drops in sales (21%) in the southeast region of Brazil, an area that contains the key cement producing states of Minas Gerais and Rio De Janeiro. The decline in the northeast region including the state of Bahia, another key cement producing state, has been less extreme but it is still over 15%.

Votorantim, the country’s largest cement producer by production capacity, reported that its cement sale volumes fell by 6% to 26Mt in the first nine months of 2016, with declines in Brazil offset by business in other countries like the US. Its sales revenue also fell, by 7% to US$3.03bn. InterCement’s cement and clinker sales volumes fell by 16% to 11.8Mt in the first half of 2016 and its sales fell by 31% to Euro898m. As it described it, ‘the political and economic instability in Brazil in the first half, impacting on unemployment, investment and government spending, ultimately retracted the construction activity, compressing cement consumption.’ To compound these problems newly opened production capacity also ‘intensified’ competition. Later in 2016 InterCement’s parent company Camargo Corrêa was reported to be in talks to sell a minority stake in Argentina’s Loma Negra to pay off its debts from the cement business in Brazil. Finally, from an international perspective, LafargeHolcim’s global results for the first nine months of 2016 were negatively impacted by ‘challenging’ conditions in Brazil amongst other countries. It laid out an environment of reduced sales volumes and falling prices, although it said that it had used cost cutting to fight this.

Politically, the fallout from the Petrobras bribery scandal is continuing to shake out in the construction industry. In October 2016 it was revealed that the Brazilian Development Bank BNDES had frozen loan payments to construction firms involved in overseas projects worth up to US$7bn, including Camargo Corrêa. The Brazilian economy is expected to grow modestly, at a rise of 0.5% gross domestic product (GDP) in 2017 after dropping in 2016 although this forecast was falling towards the end of 2016. More hopeful news came from the São Paulo state construction union, SindusCon-SP, that in December 2016 released a report forecasting that the construction industry’s output could rise by 0.5%. However, this was dependent on economic reforms.

The question for Camillo Penna and the rest of the Brazilian cement industry is: where exactly is the bottom of the curve? SNIC forecast that cement sales will contract by a further 5 – 7% in 2017 and this is below the 11.7% drop experienced in 2016. So, does SNIC think that the industry is starting to hit against a bedrock of demand that economic headwinds can’t shift? In this kind of environment it seems likely to expect increased merger and acquisition activity. The merger of Brazil’s Magnesita and Austria’s RHI refractory companies that was announced in the autumn of 2016 may just be the start.

Published in Analysis
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FCT Combustion report service updates in the Americas

14 November 2016

US: FCT Combustion has reported service updates to its clients in Ecuador, the US and Canada.

Hormicreto in Cuenca, Ecuador is preparing for commissioning of its G-Jet Hot Gas Generator for alternative liquid fuels firing, with a thermal capacity of 5.2MW. The system will provide hot air for the raw and cement swing mill application. FCT is responsible for the complete supply from the waste oil tank to the hot gas generator. Hormicreto is also commissioning a new riser duct natural gas firing system. FCT has also supplied two K-Jet Calciner Burners at the riser.

The Lehigh Cement Leeds plant in Alabama, US has awarded FCT with a new contract for a natural gas firing system for their riser duct. The system, rated at 30MW, will consist of a NPFA 86 Valve Train and K-JetCalciner Burner.

St Marys Cement, part of the Votorantim Group, has ordered, via Arctic Combustion, two K-Jet Calciner Burners for natural gas at the riser for its Ontario, Canada plant. The K-Jet Burner has a cutter block system that adjusts gas velocity on the fly during operation.

The CRH Mississauga plant in Canada has hired FCT to make an audit of several of its pieces of combustion equipment of the plant.

Published in Global Cement News
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Cade ends investigation into anti-competition practices in cement sector

21 October 2016

Brazil: Brazil's antitrust watchdog Cade has decided to end its investigation into 18 companies from the cement sector over alleged anti-competition practices. The allegations were that some of the companies had reached an agreement to refuse to provide three types of cement to competitors outside of an economic group, which would lead to increased prices of the products, according to the Valor Economico newspaper. Cade determined punishments were to be applied to Holcim Brasil, Cimento Tupi and Votorantim Pimentos. However, case leader Paulo Burnier decided that there insufficient evidence to apply sanctions on the majority of companies concerned. He also noted that some of the companies had already been set punishments by Cade for involvement in cartel practices.

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St Marys Cement Charlevoix plant approved for up to US$150m in government funding

30 September 2016

US: St. Marys Cement’s has received inducement resolution approval from the Michigan Strategic Fund (MSF) for up to US$150m in private activity bonds to expand its Charlevoix plant in Michigan. The cement producer will now submit a more detailed plan to the MSF.

“This is great news for St Marys, its employees and customers,” said Senator Wayne Schmidt. “Not only will this project help the company to grow its Charlevoix plant and expand its capabilities to better serve customers, but it will also create new jobs in the community.”

According to MSF, the plant upgrade will expand the plant’s infrastructure to increase productivity. The project is expected to qualify for bond financing as a solid waste disposal and recycling facility. The company currently employs 232 people, and the expansion project is expected to add up to 200 jobs during construction and up to 10 permanent jobs upon completion.

Private activity bonds are a source of financial assistance to economic development projects in the state. They provide profitable firms with capital cost savings stemming from the difference between taxable and tax-exempt interest rates. A bond inducement is the first step in a bond transaction.

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Votorantim obtains environmental product declarations

19 September 2016

Brazil: Votorantim Cimentos has received Environmental Product Declarations (EPD) for five of its products. The company is the first in Brazil to obtain such certifications under the International Organization for Standardisation, according to Jornal Dia Dia. EPDs are comprised of reports about products' environmental impacts from the extraction phase to the final consumer.

Votorantim Cimentos' clients are now closer to obtaining sustainable construction certificates such as AQUA and LEED. According to a World Green Building Trends report, the number of sustainable projects record a two to six-fold increase every three years. In Brazil, the expansion rate for such projects is expected to increase from 6% to 36% over the next three years.

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Gloria Group buys Cementos Otorongo from Votorantim

17 August 2016

Peru: Consorcio Cementero del Sur (CCS), a subsidiary of Gloria Group, has signed a contract to buy all of Brazil’s Votorantim’s shares in Cementos Otorongo for US$4m and those of Votorantim’s subsidiary Corporación Noroeste. Cementos Otorongo is planning to build a cement plant in southern Peru for US$125m, according to the Gestión newspaper. Cementos Otorongo submitted an environmental impact study on the project in 2011 for proposed sites in La Joya, Arequipa and Mollendo, Islay. The planned plant will have a production capacity of 0.65Mt/yr.

This story was corrected on 18 August 2016 following clarification from Votorantim.

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Votorantim Cimentos inaugurates cement plant in Brazil

24 June 2016

Brazil: Votorantim Cimentos has inaugurated a new cement plant at Primavera in Pará state. The US$258m plant has a production capacity of 1.2Mt/yr. It will serve the North and Northeast regions of Brazil.

“This plant in Primavera is part of Votorantim Cimentos’ major investment plan. Despite the challenging situation in Brazil, we are moving forward with our long-term vision and our confidence in the development of the country,” said Walter Dissinger, CEO of Votorantim Cimentos. Construction of the plant also included a social investment programme in the local area that invested US$3m towards a local library, schools and a health centre.

The new operation is part of the company’s expansion plan, which will increase its global capacity to approximately 59Mt/yr by the end of 2018, in line with the company’s plan of geographic diversification. This expansion plan adds to investments of US$3.6bn made between 2007 and 2015, which resulted in a 94% increase in global production capacity.

The investment plan to 2018 also includes expansions at Charlevoix in the US, Sivas in Turkey and a new cement plant at Yacuses in Bolivia. The company is also expanding in the San Luis region of Argentina.

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Update on Brazil

25 May 2016

LafargeHolcim has officially opened a new cement line at its Barossa cement plant in Brail. It is unfortunate timing given that the Brazilian cement industry has not had an easy time of it of late. The wider economy in the country has been in recession since it was hit by falling commodity and oil prices and gross domestic product (GDP) fell by 3.8% in 2015. The International Monetary Fund (IMF) has predicted currently that the GDP will fall by a similar amount in 2016. Alongside this, the Petrobras corruption inquiry has enveloped construction companies and led to the suspension of president of Dilma Rousseff. The Instituto Brasileiro de Geografia e Estatística (IBGE) reported that the national construction industry contracted by 7.6% in 2015.

Brazilian cement production from 2011 to 2015. Source: SNIC.

Graph 1: Brazilian cement production from 2011 to 2015. Source: SNIC.

Graph 2: Brazilian cement production by quarter from 2015 to March 2016. Source: SNIC.

Graph 2: Brazilian cement production by quarter from 2015 to March 2016. Source: SNIC.

Graph 1 summarises, with National Union of the Cement Industry (SNIC) data, what happened to cement production in 2015. It fell by 9.6% to 64.4Mt in 2015 from 71.3Mt in 2014. Unfortunately, as Graph 2 shows, the downward production trend is accelerating into 2016. Production fell by 5.76% year-on-year to 15.6Mt in the first quarter of 2015 from 17.1Mt in the first quarter of 2014. Now, production has fallen by 11% to 13.9Mt in the first quarter of 2016. April 2016 figures also appear to be following the same trend.

Amidst these conditions Votorantim somehow managed to hold its cement business revenue up; increasing it by 6% to US$3.82bn in 2015. Despite this its cement sales volumes fell by 6% to 35Mt. As a result, Votorantim announced plans to temporarily shutdown kilns and plants and sell off selected concrete assets. Cimento Tupi reported that its cement and clinker sales volumes fell by 23% to 1631Mt in 2015 from 2119Mt in 2014. It blamed the fall of the ‘retraction’ of the cement market and a wide-scale maintenance campaign it had implemented on its kilns. Its revenue fell by 26% to US$98.8m from US$134m.

LafargeHolcim pulled no punches when it blamed challenging conditions in Brazil for dragging its financial results down globally in 2015. It didn’t release any specific figures for the country but it described its cement volumes as falling ‘significantly’ with competition and cost inflation adding to the chaos. This has gotten worse in the first quarter of 2016 with volumes further affected. Its cement sales volumes in Latin America fell by 10.7% year-on-year for the period principally due to Brazil. Companhia Siderúrgica Nacional (CSN) has reported an 8% rise in production to 531,000t in the first quarter of 2016 and an 8% rise in sales volumes to 571,000t in the same period. This was partly achieved by the ramp-up of production at its new plant at Arcos in Minas Gerais.

In the wider cement supplier sector the knock-on from falling cement demand has hit refractory manufacturer Magnesita. Its revenue fell by 17% year-on-year to US$66.9m for the first quarter of 2016. This was due to falling steel production in various territories and the negative effects of the construction market in Brazil hurting its cement customers.

It is unsurprising that companies like LafargeHolcim commissioned new capacity in Brail a few years ago given the promise the market seemed to hold. Both the CSN project at Arcos and Holcim’s Barroso project were announced in 2012 near the height of the market. Both are also based in Minas Gerais, the country’s biggest cement producing state. Predicting both the drop in the international commodities markets and a local political crisis would have been hard to predict. All these producers can do now is sit back and wait out the situation with their efficiency gains until the construction rates pick up again. Hopefully the first quarter results for Brazil’s two leading cement producers, Votorantim and InterCement, will not be too depressing.

Published in Analysis
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Votorantim cement sales volumes fall by 6% to 35Mt in 2015

06 April 2016

Brazil: Votorantim’s cement sales volumes fell by 6% year-on-year to 35Mt in 2015 from 37Mt in 2014. However, net revenue from the group’s cement business rose by 6% to US$3.82bn. The Brazilian industrial group blamed the loss of sales volumes on the poor economic situation in Brazil. However, its revenue rallied due to currency variations and growing sales outside of Brazil.

Overall across all business sectors Votorantim reported that its revenue rose by 11% to US$8.57bn. This was supported by higher metal prices in Brazil and positive effects from the consolidation of the group’s foreign operations. Net income dropped by 77% to US$103m

Published in Global Cement News
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