This week Donal O'Riain, the Irish chief executive of Ecocem, cried out for an 80% tax on cement producers in Ireland. His reason? In his words, Irish producers are making profits from an over-allocation in the European Union (EU) Emissions Trading Scheme (ETS) despite demand dropping in the Irish industry. The tax was his suggestion to address this 'anomaly' and give the Irish Exchequer a boost.

The timing of his comments are interesting given that the EU ETS entered its third phase at the start of 2013. Towards the end of 2012 environmental campaign group Sandbag questioned in a report whether the scheme was actually helping the environment or not. As Sandbag pointed out generally, not just for the cement industry, carbon prices in the scheme had remained low due to an excess supply in the market. Due to the oversupply, prices were so low that the EU ETS has ceased to function.

The European Commission conceded this failing of the EU ETS in November 2012 by announcing that it was taking steps to address the supply-demand imbalance of emission allowances in the scheme. Firstly 'back-loading' action volumes, revising the auction time profile and delay of the auctioning of 900 million allowances, came into effect from 1 January 2013. Secondly the Commission launched a debate on broad structural measures with a report on the carbon market.

Any emissions trading scheme can distort the market in unexpected ways. With regards to the cement industry, if O'Riain is correct, then parts of the Irish cement industry are making profit on carbon credits despite demand falling. Or, to put it as O'Riain did, the EU ETS may be subsidising environmentally-unfriendly plants at the expensive of more environmentally sensitive ones. Such as Ecocem we must presume. What would be really interesting here is to find out whether other European cement producing countries are also benefitting from over-allocation as demand falls, specifically in Portugal, Spain, Italy and Greece.

Another distortion is that in the EU ETS, offsets generated from developing countries can be surrendered by companies in competing sectors in the EU, giving, in effect, a subsidy to competitors outside the EU. For example, as ETS schemes spread then staying outside of such regulation could prove profitable for cement exporters.

Koen Coppenholle the chief executive of CEMBUREAU, the European Cement Association, tackled this in his response to the European Commission's report, "It is essential that any further reduction of CO₂ emissions above the targets agreed should remain conditional upon the conclusion of an international agreement between all major greenhouse gas emitting countries. This should be undertaken with a view to establish a global crediting scheme, characterised by a comparable methodology to measure greenhouse gas emission reductions and equivalent monitoring and reduction efforts." Hence the interest in regional Chinese ETS schemes such as the emissions trading schemes that were launched in Beijing, Shanghai and Guangdong in 2012. China currently plans to introduce its own national scheme in 2015.

Despite the bureaucrats' efforts to improve emissions trading schemes, Petroleum Review summed up their effect in June 2012, "Carbon trading appears to have pulled off the noteworthy achievement of uniting oil and gas producers and environmentalists in their appraisal of its shortcomings." We could add cement producers to that list.

Australia: Ross Harper has been appointed the Executive General Manager of the Cement division of Boral following a restructuring initiative. The new role includes his previous responsibilities as Operations Manager because Boral's cement business is set to decrease in size following the divestments of Boral's Asian Construction Materials businesses along with the planned closure of clinker manufacturing at the Waurn Ponds cement plant. Harper replaces Divisional Managing Director Mike Beardsell who will leave the organisation by the end of January 2013.

Previously National Operations Manager, Boral Cement, Harper joined Boral in January 2006. He has over 30 years experience with industrial process industries including the energy, pulp and paper and building material sectors. He held the role of General Manager, Golden Bay Cement with Fletcher Building before joining Boral as General Manager NSW, Blue Circle Southern Cement. Ross holds a Doctorate in Chemistry from Victoria University of Wellington, New Zealand.

Ukraine: The supervisory board of HeidelbergCement Ukraine (Dnipropetrovsk region) has dismissed acting board chairman David von Lingen and appointed Silvio Tide as the company's board chairman. Tide was elected to chair the board for three years until 2016. Previously he was a HeidelbergCement manager in Northern Russia.

Von Lingen took up the office of acting board chairman on 1 January 2013 in a position to last until 28 February 2013. Previously he had been a board member and the chief financial officer at the company.

HeidelbergCement began operations on the Ukrainian market in 2001. The company produces cement at two plants, one in Kryvyi Rih, Dnipropetrovsk region south-west of Kieve region and the other in Amvrosiyivka, Donetsk region in eastern Ukraine.

Spain: The board of directors at Spanish construction group FCC will propose in the following days the appointment of Juan Bejar CEO to replace Baldomero Falcones who occupied the position for five years, according to Spanish business newspaper Expansion.

At present Bejar is a chairman at FCC's subsidiary Cementos Portland Valderrivas and Globalvia, in which FCC is a partner of Bankia. He was also a chairman at Citigroup Infrastructure Management and CEO at Ferrovial Infraestructuras and Cintra.

The new CEO will take his position in a moment when FCC is focused on a restructuring process, aimed at meeting the fall of the traditional business, the difficulties of the cement subsidiary and Austrian unit Alpine as well as the need to repay Euro1.6bn debt.

Nigeria's Minister of Trade and Investment, Olusegun Aganga brought together warring parties from Dangote and Ibeto Cement this week to discuss their very public spat about the state of the country's cement industry.

Claims that Nigeria is facing a 'glut' of cement have been building since the Cement Manufacturing Association of Nigeria (CMAN) declared that Nigeria was 'self-sufficient' in cement in late 2012. So when leading cement importer Ibeto Cement questioned this narrative, leading cement producers Dangote and Lafarge hit back. Aganga then announced a review of the country's industry.

Despite Nigeria's potential to consume cement, something is stopping it. Yet, as Ibeto Cement rightly asked, if Nigeria is producing too much cement why isn't the price falling?

Hard facts about the Nigerian cement industry are elusive. This is what we know. Nigeria's population is apparently 170m. Its cement industry has the capacity to produce 28Mt/yr (Global Cement Directory 2013). Its production level was 18.5Mt/yr in 2012 according to CMAN. However figures compiled by the United States Geological Survey placed production much lower at 11.6Mt in 2011. Consumption is believed to be 17-20Mt/yr. In 2011 it was 17Mt. Ibete Cement, the sole importer into the country, is allowed to import up to 1.5Mt/yr.

Nigeria's main producers include Dangote (19Mt/yr capacity, 70% of the market), Lafarge WAPCO (4.6Mt/yr, 17%), Unicem (2.5Mt/yr, 9%) and Ashaka Cement (2Mt/yr, 7%).

Hype about Nigeria's potential as a cement-producing nation hinges upon its low per capita consumption (110kg) compared to some of its African neighbours and indicators of expected growth such as a housing deficit of 16 million homes.

CMAN boss Joseph Makoju addressed this head-on, blaming the high cost of haulage and energy. He said that the energy cost accounts for over 35% of the production cost and that the price of low pour fuel oil (LPFO) had risen by over 300% from US$0.16/l in 2009 to US$0.69/l in November 2012. It should be pointed out that Makoju is also the special adviser to the president of Dangote Group, Aliko Dangote. Unsurprisingly he has advised the Federal Government to impose higher taxes on imported cement to discourage imports.

The production boom of recent years has been threatened by a weakening increase in demand. The gap between production and lower consumption estimates is around 1.5Mt. Dangote and Lafarge WAPCO's combined unsold stock at the end of 2012 was also just below 1.5Mt. Both figures are suspiciously close to the amount Ibeto is allowed to import annually. As usual, the easiest target is the cement importer. Dangote's political clout as a key Nigerian company, large-scale employer and all round African success-story will doubtless help its argument.

Yet if imports are really more competitive than Nigeria's domestic product how can the country possibly hope to export cement? Also this week Liberia announced it has relaxed its tariffs on cement. As luck would have it Dangote is building a new cement plant in the country. Sounds ideal for tricky import negotiations.

US: Gregory M Scott has become the president and chief executive of the Portland Cement Association (PCA), effective from 2 January 2013. Scott joined the PCA in January 2012 as the senior president of government affairs and was promoted to president in September 2012.

Scott holds a background in trade association leadership with legislative campaigns on federal transportation, environmental and energy issues. Most recently he served as executive vice president and general counsel for the National Petrochemical and Refiners Association (NPRA) in Washington, DC. Prior to joining the NPRA, Scott served as vice president of National Strategies, Inc, a trade association representing CEOs of Fortune 100 firms on corporate finance and tax issues.

He began his career serving on the staff of Senator Timothy E Wirth. From 1991-2008 Scott was a partner/member of Kelley Drye Collier Shannon, where he gained extensive expertise in petroleum refining and motor fuel marketing as well as legislative and regulatory issues.

Scott received his Bachelor of Arts degree from Colorado College in Colorado Springs and a law doctorate from the American University's Washington College of Law in Washington, DC.

Just before the end of 2012 Holcim sold shares in companies it owned in Thailand and Guatemala. It reduced its stake in Siam City Cement Company (SCCC) in Thailand from 36.8% to 27.5% and it sold its entire 20% minority stake in Cementos Progreso in Guatemala. For the sale of these two share packages Holcim received approximately Euro310m.

This is interesting given that Asia-Pacific was the Switzerland-based multinational's biggest sales area in 2011 and because sales of cement rose by 6% in Latin America in 2011. Similarly in 2012 from January to September the two regions propped up the group's profits. Why would Holcim sell stakes into two of its most profitable regions?

In its third quarter report in 2012 Holcim repeatedly described Thailand as 'encouraging' following floods in 2011. It added that it had focused increasingly on the cement market in the country and strengthened its position in neighbouring countries that resulted in lower clinker exports.

According to the Global Cement Directory 2013 SCCC has a capacity of 31Mt/yr, 65% of Thailand's total capacity of 48Mt/yr. SCCC predicted in December 2012 that domestic cement demand would increase by 5-10% in 2013. The company is currently planning to build new plants in Indonesia and Cambodia and is considering investing in Myanmar. In Indoniesia Holcim is the third biggest producer after Semen Gresik and HeidelbergCement subsidiary Indocement.

Meanwhile in Central America, Cementos Progreso was the sole producer in Guatemala with 2.5Mt/yr from two plants. This was set to double with the commissioning of a third plant towards the end of 2012. However, Holcim retains seven plants in southern Mexico (12Mt/yr), both of El Salvador's plants (2Mt/yr) and a plant in Costa Rica (1Mt/yr).

With Holcim's strong presence in Central America and the North American market reviving leaving Guatemala makes sense with the group's debt reduction programme in mind. The situation in Thailand is more complex, so unsurprisingly Holcim has reduced its stake rather than leaving completely. SCCC's expansion plans outside of Thailand suggest, that although growing, the market is maturing. In one such potential expansion target, Indonesia, Holcim is already a major producer.

In its press release announcing the sales in Thailand and Guatemala, Holcim attributed the decision to its ongoing debt reduction programme. As part of its 'Leadership Journey' the group intends to save Euro1.25bn by the end of 2014. Other savings in 2012 included reducing management in Europe, layoffs and closures in Australia, a plant closure in Hungary, further delays on the decision to build a new plant in New Zealand and layoffs in Spain. The management changes in Europe alone contributed a Euro99m chunk of Holcim's target saving of Euro124m for 2012.

Yet it's worth considering that a week after the sales of its shares Holcim's subsidiary in India, Ambuja Cements, announced investments of Euro277m in India. Perhaps the best way to save money is to make more money.

Portugal: Portuguese cement producer Cimpor has appointed Luiz Roberto Ortiz Nascimento and André Pires Oliveira Dias as members of the board of directors. The move follows the resignations of Erik Madsen and Walter Schalka.

Ortiz Nascimento, aged 62 from Brazil, holds a degree in economics from Mackenzie University in São Paulo. He became the chief executive officer of construction and trade at Camargo Corrêa, the owner of Cimpor, in 1992.

Oliveira Dias, aged 31 and also from Brazil, holds a degree in Business Administration and International Business from the American Intercontinental University in London. He has worked for Camargo Corrêa since joining its trainee program in 2005. Most recently he was the strategy and planning department manager since 2009.

For the last Global Cement Weekly of 2012 we look at the big stories in the cement industry from over the last year. As usual we'll be posting this in our LinkedIn group. Given the scope we're bound to have missed some themes – for example we haven't mentioned the continued growth in Indonesia - so let us know your additions, comments and responses.

Bad news from Europe
With stories this week of layoffs at Italcementi and Oficemen confirming that Spanish cement consumption has fallen by a third in 2012, our first theme of the year has been the continued decline of the western European cement industry. Given that no western European countries even made the top 10 list of cement producing countries in 2011, readers might be forgiven for asking why this is news. The reason is because many of the multinational cement producers are still based in Europe. Although fears of financial meltdown following a Greek exit from the European Monetary Union have receded, Titan's crashing profits still present a stark warning.

Multinational debt reduction
This leads us to the next point: several of the global cement majors have been pursuing aggressive debt reduction schemes over the last year. Holcim's 'Leadership Journey' saw it announce cost-cutting measures designed to save Euro99m this week. This is part of an overall series of personnel changes to save at least Euro1.25bn by 2014. Lafarge has sold plants in the United States and the UK whilst cutting its debts. How much longer will these schemes go on for?

Recovery in the Americas
Across the Atlantic in the Americas the cement industry has been quietly growing in confidence in 2013. In the United States a forecast from the Portland Cement Association (PCA) expects a 7.5% rise in cement consumption in 2012. Brazil's Camargo Corrêa acquired the controlling stake in Portugal's Cimpor over the summer, with Votorantim picking up Cimpor's overseas assets as part of the deal. As a whole demand for cement in Brazil rose by 8.5% in the first eight months of 2012.

Yet hurdles still remain for the US industry. The US Fiscal Cliff now seems unlikely to wreck the recovering US economy but EPA regulations may still stall the US cement industry. The weakened maximum achievable control technology (MACT) standards for air toxics emissions were received at the White House Office of Management and Budget earlier in December 2012 for pre-publication review. If there are any surprises here US producers need only look at Australia for what might happen next, where carbon legislation may be crippling the industry.

Managing the African boom
After all the gloom above at least Africa's growth remains spectacular, particularly as east Africa continues to develop. Here the challenges have been more about fighting off the competition. On the east coast of the continent this has meant coping with cheap exports from Pakistan and Vietnam flooding the market, Currently poor infrastructure links are preventing the exports reaching much beyond the immediate coast. With Nigeria declaring itself 'self-sufficient' in cement in October 2012 and Dangote planning to shut a plant, infrastructure building and intra-continental exports seem set to rise massively. Fortunes will be made and lost in the business melee.

Mixed demand in the Middle East
Saudi Arabia's decision to lift its import ban in March 2012 indicate that the Middle East's biggest player demands significant amounts of cement. Yet across the border the United Arab Emirates is massively overproducing which in turn is wrecking the industry in Oman. Egypt remains riddled by industrial disputes that have reduced production by 50%. Iran continues to promote its growing production capacity but the international economic sanctions enforced upon the country can only lead to overcapacity.

Where next for India and China?
This leaves the world's biggest cement producing nations: India and China. India's promise remains immense yet so too does speculation regarding its growth. Indian capacity utilisation looks set to stick at 76% in 2012. UltraTech nearly doubled its profit in the second quarter of the 2012 fiscal year and many projects have been announced in recent months, yet India's power grid collapse over the summer is just one of many endemic problems facing the industry.

China remains the world's biggest producer of cement by a gargantuan margin but halfway through the year profits from Chinese cement producers took a nasty knock. Since then it's got worse. Chinese officials have spent the year stating publicly that their country is producing too much cement.

Whilst it's hard to tell what will happen next, China's state-owned approach to capitalism could allow positive change to the industry on a massive scale, from even more infrastructure spending to further tightening of environmental regulations. Or it could just carry on as before as the risk of a 'hard' economic landing looms. One consequence might be Vietnam-style overcapacity creating mass exports forced through by China's global political power. Nowhere would be safe!

Global Cement Weekly will return in 2013

Oman: Mohammed Ahmed Al Dheeb has agreed to go back on his resignation and continue working for Raysut Cement Company as the Group CEO following an unanimous decision by the company's board of directors to ask him to remain in his position.