China: China Resources Cement has started a production line at a subsidiary in Hepu County in the Guangxi Zhuang Autonomous Region. The new line has a clinker production capacity of 1.6Mt/yr and a cement production capacity of 2Mt/yr. At present the company has a clinker and cement production capacity of 26.6Mt/yr and 33.2Mt/yr respectively in the region.

Egypt: Khaled Fahmy, the Minister of Environment, has recognised the work by subsidiaries of Suez Cement to reduce air pollution and so called ‘black cloud’ periods. The minister presented certificates of appreciation to the manager of Helwan cement plant, Ahmad Ragae, the manager of Tourah cement plant, Omar Khorshid, the manager of the Environment Department at Helwan cement plant, Ragheb Hammouda and the manager of Environment Department at the Tourah cement plant, Badry Ibrahim.

Canada/France: Pension investment management companies La Caisse de dépôt et placement du Québec (CDPQ) and the Public Sector Pension Investment Board (PSP Investments) have each purchased a minority stake in France’s Fives. CDPQ and PSP Investments will each acquire a ‘significant’ minority stake in Fives, which will remain controlled by its management, to support its next development phase. Ardian, an investment house, will continue to be part of the new shareholding structure, as a minority co-investor. The completion of the transaction remains subject to approval by relevant regulatory authorities. No value for the deal has been disclosed.

“We are very enthusiastic to enter a new phase of our development with CDPQ and PSP Investments. Their long-term approach to investment, their deep valuable industrial insights and their strategic vision aligned with that of the management team make them ideal partners for the group, allowing Fives to take advantage, at a global scale, of the full potential of our diversified operations,” said Frédéric Sanchez, chief executive officer (CEO) of Fives Group.

Founded in 1812, engineering company Fives designs and supplies machines, process equipment and production lines for industries including cement, minerals, aluminium, steel, glass, automotive, aerospace, logistics, energy and sugar. The group is located in over 30 countries and it has nearly 8400 employees.

Poland: BWF Envirotec Group has purchased Orwat Filtertechnik. Based in Mysłowice, Silesia, the company has been producing and distributing filter bags and filter pockets for dedusting and flue gas cleaning technology as well as pockets, cartridges and compact filters for air conditioning and ventilation technology since 1995. The company also has a sales office in Warendorf, North Rhine-Westphalia in Germany giving it a European presence. No value for the acquisition has been disclosed.

"Orwat Filtertechnik, with its technologically outstanding equipment, is an excellent addition to our line-up with a high level of benefit for our customers, particularly for plant builders and operators of flue gas cleaning systems,” said Stefan Offermann and Philipp von Waldenfels, managing partners of BWF Group. They added that the acquisition also strengthens its Offingen-based headquarters.

To mark the end of the calendar year we’re going to round up some of the major news stories from the cement industry in 2017. Like last year this piece also complements the corresponding article ‘The global cement industry in 2017’ in the December 2017 issue of Global Cement Magazine. 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..

Recovery in Europe
2017 was the year that the European cement industry finally had something to shout about after a lost decade since the financial crash of 2007. The good news was led by a revival in cement consumption in 2016 that looks set to have continued in 2017. Prospects in Germany and Spain feel similar and a series of mergers and acquisitions have taken place in Italy suggesting that investors believe that the market is about to recover there too. Sure, Brexit is looming but as contacts have told Global Cement staff throughout the year, if the British want to damage their economy, that’s their business.

Renewal and recrimination at LafargeHolcim
Lafarge’s conduct in Syria during the civil war has cost its successor company LafargeHolcim dear, with the loss of its chief executive officer (CEO) Eric Olsen and potential reputational damage if the on-going investigation in Paris finds fault. At the time of writing Olsen, former Lafarge CEO Bruno Lafont and the former deputy managing director for operations Christian Herraul are all being questioned by the inquiry into the affair as it attempts to determine who knew what and when. LafargeHolcim has drawn a line under the debacle by appointing outsider Jan Jenisch as its new CEO in mid-2017. He has made changes to the group’s management structure that were announced this week but has he done enough? If anything truly ‘explosive’ emerges from the investigation, the question for anyone across the world buying LafargeHolcim’s products may be whether or not they want to finance extremism through their purchase.

US doesn’t build wall but does okay anyway
The US Portland Cement Association (PCA) may keep downgrading its forecasts of cement consumption growth but the local industry is doing fairly well anyway. All sorts of cement producers with a presence in the US have benefited from the market, despite extreme weather events like Hurricane Irma. President Donald Trump may not have delivered on his infrastructure development promises or built his fabled wall yet but his recently-approved tax reforms are likely to benefit the profits of cement producers. The decision by Ireland’s CRH to buy Ash Grove Cement in September 2017 may remove the largest domestically-owned producer from US hands but it shows confidence in the market and heralds the continued creeping growth of the building materials company into an international empire.

South America shows promise… just don’t mention Brazil
Countries like Brazil, Colombia and Venezuela may not be performing to expectations but other countries south of the Darian Gap, have been growing their respective cement industries. The leader here is Argentina that is riding a full-scale construction boom with capital investment chasing it from the producers. Bolivia is following a decade of growth although this may be starting to slow somewhat. Chile appears to be realigning itself to take in more exports. And finally, Brazil may also be starting to return to growth too. Although cement sales were continuing to fall year-on-year in the first nine months of 2017 the rate has been slowing. Local producer Votorantim also reported improved market conditions at home.

India stares into the demand gap
UltraTech Cement finally managed to buy six cement plants and five grinding plants from Jaiprakash Associates for US$2.5bn in 2017. The acquisition marked the end of the long-running deal between the companies and what may be a new phase in further integration in the Indian industry. In September 2017 the Cement Manufacturers Association (CMA) complained that the sector had 100Mt/yr of excess production capacity out of a total 425Mt/yr. The government’s demonetisation policy sank cement production growth in late 2016 and production has struggled to improve since then. Some estimates expect growth to return in around 2020 as the demand gap shrivels. Further merger and acquisition activity can only help until then, although the current government flip-flopping over a petcoke ban and import duties may get in the way.

China restructures with an eye on overseas market
As discussed last week the mind-bogglingly massive merger between China National Building Material (CNBM) and China National Materials (Sinoma) is proceeding with the press equivalent of radio silence. If one trusts the company figures then the largest cement producer in the world will get even bigger following completion. Once the big Chinese producers start building lots of overseas plants then the implications of combining a major producer with a major plant builder may become clear outside of China. Alongside this the buzzword on the Chinese cement company balance sheets this year have been a major rollout of co-processing at plants and a policy of ‘peak shifting’ or simply shutting off production at selected plants in the winter months. Somehow despite all of this the official figures suggest that cement production is still growing in China.

The African mega deal that wasn’t
The prospective bidding war for South Africa’s PPC has turned out to be a bust. A low offer was made in September 2017 by a Canadian investment firm with the aim of merging PPC with local rival AfriSam. Vague expressions of interest from the usual suspects followed over the following months before everything fizzled out. What the dickens was going on? A difference of opinion between the board and shareholders? A poor market in South Africa giving everyone the jitters? If any readers know, please get in touch. PPC’s poor showing at home mirrors Dangote Cement’s travails. Both companies have suffered domestically whilst going full tilt elsewhere in Sub-Saharan Africa.

Indonesia about to pick up?
And finally, a report from Fitch Ratings this week suggests that growth in Indonesia is set to pick up once again. The market dragged down HeidelbergCement’s mid-year financial results as cement consumption dropped in the same period. Like India, Indonesia faces a consumption-capacity mismatch. However, with annual consumption poised to grow at over 6%, the time to close that gap will narrow. Some good news to end the year with.

Global Cement Weekly will return on 3 January 2018. In the meantime Merry Christmas and a have Happy New Year!

Switzerland: LafargeHolcim has changed its management structure to make it more market focused. It has appointed Marcel Cobuz as the head of its European region and René Thibault as the head of its North American division. Two of the group’s global business functions, Performance & Cost and Growth & Innovation, will be merged into a new corporate department, Growth & Performance, under one leadership. Further changes will be made to the reporting of its regions with the addition of Mexico to its Latin America region, the addition of Australia and New Zealand to Asia and its Chinese and Trading divisions will now report directly to the group’s chief executive officer (CEO).

“Establishing a market-focused management organisation is an important step towards generating an attractive growth profile and taking the company to its next level of performance,” said CEO Jan Jenisch. “The strengthening of the profit and loss responsibility of the countries and the simplification of global business functions will create a leaner and more agile operating model. Countries will be fully empowered and accountable for market strategies, cost discipline and results. The new organisation will be complemented by a strengthened performance management system focusing on growth, cash conversion, capital efficiency and people development.”

The group’s 30 largest country organisations will directly report to the Executive Committee and the global business functions will be merged under one leadership. As a result of these changes, the Executive Committee will be reduced to nine members. All of the management changes will take effect from 1 January 2018.

Marcel Cobuz, aged 47 years, has been appointed as Head Region Europe and a member of the Executive Committee. He succeeds Roland Köhler, who has decided to retire. Cobuz, a Romanian and French citizen, joined LafargeHolcim in 2000. He has held various operational roles in six different countries and has been country chief executive officer (CEO) in Indonesia, Iraq and Morocco.

Köhler will retire at the beginning of 2018. He has worked for LafargeHolcim and its predecessors for more than 30 years and has been a member of the Executive Committee since 2010, most recently as the Head of Europe, Trading and Oceania. Köhler will continue to support LafargeHolcim as chairman of the LafargeHolcim Foundation for Sustainable Construction. He will also continue to represent the group as a non-executive director in local subsidiaries of the company.

René Thibault, aged 51 years, was been appointed as Head Region North America and a member of the Executive Committee. He succeeds Pascal Casanova, who has decided to pursue opportunities outside of the group. Thibault, a Canadian citizen, joined LafargeHolcim in 1989 and has held various roles in France and Canada. He has been the CEO of Western Canada since 2012.

Urs Bleisch, currently Head of Performance & Cost and Member of the Executive Committee, has been appointed Head of Growth & Performance. Gérard Kuperfarb, Head of Growth & Innovation, has decided to pursue a career outside the group.

Finally, the group’s new chief financial officer (CFO), Géraldine Picaud, will take over the role on 3 January 2018, earlier than the February 2018 date that was originally announced.

A member of the Global Cement LinkedIn Group commented this week on the merger between China National Building Material (CNBM) and China National Materials (Sinoma).

“Has the cement world got used to gigantic mergers or have we failed to understand how big this thing is locally, regionally and globally? It is shocking to see how little publicity and media attention is paid to this merger in comparison to the past ones. I find this to be potentially a game changer for the industry. This time, the game will be drawn from a single corner with less integration pains and much more alignment. A big wave coming…”

The comment was posted by Pavel Cech, a managing director of ResourceCo Asia based in Kuala Lumpur. This company is a waste recycling and waste management concern that specialises in alternative fuels for the cement industry. So a focus on the potentially massive drive for co-processing by the Chinese industry is understandable compared to, say, other companies in other continents. However, Cech’s point is valid: why isn’t this merger being talked about more?

CNBM is the largest cement company in the country with a reported total production capacity of around 406Mt/yr. Sinoma is a cement engineering company and the fourth largest cement producer in China with a total production capacity of approximately 112Mt/yr. The companies formally agreed to merge in September 2017 as part of a state-mandated industry consolidation. If these figures are taken at face value then the merger should increase the lead of the self-declared world’s biggest cement producer.

In non-Chinese terms this would be like HeidelbergCement merging with a major equipment manufacturer like ThyssenKrupp or FLSmidth. For these kind of companies, industry commentators and press, such as a Global Cement Magazine, would spend many column inches discussing the twists and turns of the merger as it played out. Just compare the Chinese merger to the debacle that has played out with the proposed acquisition of South Africa’s PPC by Fairfax, where seemingly every development was expounded upon both by PPC and the press.

For Global Cement’s reporting and coverage on China, problems arise from language difficulties, differences with the way Chinese media covers industry, the state-controlled aspect of many of the larger producers, issues obtaining accurate industry data and the sheer size of the sector. All of these impediments make it harder to cover the Chinese market. Add the relative insularity of the sector and it’s often easy to give the Chinese cement industry a special label, separating it out when talking about the global cement industry as a whole.

All this may be about to change as Chinese cement producers start firing up their own kilns outside of the motherland as part of the ‘One Belt, One Road’ initiative, making it easier to see what Chinese companies are doing. Except that Sinoma has already been out there in the rest of world building cement plants in many developing markets and creating competition for the Europe-based equipment manufacturers.

There has been little attention from competition bodies outside of China about the merger. The South Korean Fair Trade Commission approved the deal in November 2017 and that’s been about it. Combining a cement plant builder with a cement producer is a clear example of vertical integration in the cement industry. There is nothing necessarily anti-competitive about this but it could change the market dynamic where non-Chinese multinational and Chinese cement producers compete. If both CNBM and a rival wanted to open build a plant in the same area, then the competitor to CNBM might have less choice when it came to picking their equipment supplier. In addition, news stories such as the alleged pressure by the Chinese embassy in Sri Lanka to try and force a local development agency to choose Sinoma to build a grinding plant doesn’t instil confidence that a merged CNBM-Sinoma would play nice. Although, as today’s fine by the Colombian competition body to Cementos Argos, Cemex and Holcim for price fixing shows, non-Chinese cement producers are just as prone to malpractice.

The merger of CNBM and Sinoma is undeniably big news in the industry. Both within and outside China it is likely to have a pronounced effect. As explained above, for various reasons, the western press can’t cover China in the same way it does other countries. Once the Chinese producers start building more plants outside of China then this is likely to change significantly. Until then we’ll do our best to keep track of this and other Chinese news stories.

Spain: Vicente Pedro has been appointed as the new plant manager of Lafarge Spain’s Montcada i Reixac plant near Barcelona. He succeeds José Luis Coleto, who will take over the management of the Sagunto plant in Valencia, according to the Crónica Global newspaper.

Pedro trained as an industrial engineer at the Universitat Politècnica de València. He has worked for LafargeHolcim and its predecessor companies for over 30 years spending time at plants at Spain, Venezuela and Brazil. More recently he has managed the company’s capital expenditure projects in Spain.

Germany: Markus Bochynek is to leave the management board of Aucotec in April 2018. His responsibility for sales and marketing will be taken over by fellow board member Uwe Vogt. The other board member, chief executive officer (CEO) Horst Beran, will remain in post. The existing management team below the management board will assume some of the previous responsibilities and tasks of Vogt and Bochynek.

The engineering software company is also planning to build a new head office in 2018.

FLSmidth revealed this week that Cooperativa Boliviana de Cemento, Industrias y Servicios (COBOCE) has ordered a cement mill for its Irpa Irpa plant near Cochabamba. The Danish engineering firm was pleased to note that with the sale it has now delivered mills to three of the country’s five producers. Other recent orders include supplying an OK 36-4 mill to Sociedad Boliviana de Cemento’s (SOBOCE) Viacha cement plant, announced in early 2016, and a sale of a complete integrated production line at Sucre to Fábrica Nacional de Cemento (FANCESA) in late 2016.

These order reveal slow but steady growth in the local industry in recent years. However, a slowdown so far in 2017 suggests that the market is changing. National Institute of Statistics of Bolivia (INE) data shows that sales in the local market broke down in 2016 into a 42% sales share for SOBOCE, 25% for FANCESA, 19% for COBOCE, 8% for Yura and 6% for Itacamba. This changed somewhat in the first quarter of 2017 with a reduction in the sales of SOBOCE and Yura. Sales in the country are concentrated in the departments of Chuquisca, La Paz and Cochabamba, which held 70% of cement sales in 2016.

Graph 1: Cement production and sales in Bolivia, 2012 – 2017. Source: National Institute of Statistics of Bolivia.

Annual cement sales in Bolivia have been growing consistently since 2001. Financial services company Pacific Credit Rating placed average annual sales growth at 7.72% from 1998 to 2016. In 2016 sales reached 3.7Mt. Graph 1 shows a continuation of this trend although the first half of 2017 has been weaker than 2016. COBOCE blamed the reverse in 2017 on reduced local government spending on infrastructure projects and poor weather. The producer was expecting sales to grow by 6 – 8% as a whole for 2017. However, on the basis of the figures for July and August 2017 this is not looking likely. Sales for the two months dropped by 2.5% year-on-year to 0.64Mt. A representative of FANCESA later blamed the market change on a reduction in sales supporting the construction of tall buildings in the country’s key markets as customers switched to buying ‘random’ volumes.

Sure enough local producers have started to complain about foreign exporters damaging their trade. A union head in Chuquisaca called for cement and clinker imports by Yura from Peru to be banned and concerns have been raised about concessions offered to Itacamba, a joint venture between Spain’s Cementos Molins, Brazil’s Votorantim Cement and Camba Cement. President Evo Morales inaugurated this company’s new plant in Yacuses, Santa Cruz in early 2017. The niggles about foreign exports to Bolivia seem counter-intuitive given that the country is landlocked and it has the world’s highest capital city above sea level. Usually, markets with nearby ports are most at risk from clinker and cement imports. Yet, Itacamba was planning exports to Argentina in November so the import and export markets via road and river links can’t be discounted.

Cement sales may be down so far in 2017 but overall the wider economy appears to be in rude health. After a strong decade of growth the national Gross Domestic Product (GDP) growth rate has fallen each year since 2014, but it was still 4.3% in 2016, one of the highest in South America. If that kind of growth persists it seems unlikely that the cement industry will have trouble for long.