Global Cement Newsletter

Issue: GCW381 / 28 November 2018

Headlines


Chief executives from over 30 companies attended the Global Cement and Concrete Association (GCCA) inaugural event last week in London. Its first president Albert Manifold, the chief executive officer (CEO) of CRH, laid out the line by saying that, “For the first time we have a global advocacy body.” He followed this up by emphasising that ‘our product’ is the most used man-made product in the world. Just like the Cement Sustainability Initiative (CSI), the body the GCCA is partly-replacing, it is a CEO-led organisation. The target is very much about giving a global voice to the cement and concrete industries and the vertically integrated companies that produce these products.

Along with the head of CRH, the leaders of LafargeHolcim, HeidelbergCement, CNBM, Votorantim, Buzzi Unicem and Eurocement, amongst others, were all on the attendance list too. That kind of representation gave the event a charged air and a real sense of intent. At present the association says it represents 35% of global cement production and its aim is to reach 50%. That compares to the 30% base that the CSI had.

Representatives from some major cement associations were also present, including Europe’s Cembureau, the Federación Interamericana del Cemento (FICEM), the Canadian Cement Association and the VDZ. The only thing stopping the US Portland Cement Association being there was reportedly the Thanksgiving holiday. Although not comprehensive, that kind of representation suggests serious interest from the regional cement associations. The word from the GCCA CEO Benjamin Sporton was that the GCCA is here to provide a global level of coordination to the advocacy and sustainability side of the industry dealing with global organisations like the United Nations (UN), development banks, other associations and non-government organisations (NGOs).

How this will work in practice has yet to be seen, but at the very least, the GCCA can take over the work of the CSI and run with it. The word from the attendees we spoke to was uniformly positive for the association. It was seen as a long-overdue move to finally give the industry some sort of uniform voice at a global scale. In this sense it is catching up with similar bodies in industries like wood and steel. One benefit from moving from the CSI to a full advocacy organisation is that the industry can actually talk about the good things it does rather than being limited to sustainability and environmental data reporting. It seems like a small change in focus but it’s a big shift in mind-set.

A cynic might suggest that the exercise is one of a dirty industry trying to wrest the Overton window, or window of public discourse, back from legislators facing mounting environmental pressure. The latest UN Emissions Gap Report for 2018, for example, reported this week that CO2 emissions rose in 2017 after four consecutive years of decline. This is the latest environmental report in a long line pointing out bad news. Yet, the GCCA’s unwritten mantra, that concrete improves lives, is sound. Somebody or something needs to link it all up. That somebody might just be the GCCA.

A review of the inaugural annual general meeting and symposium of the GCCA will be published in a forthcoming issue of Global Cement Magazine.


South Africa: Johan Claassen, the chief executive officer (CEO) of PPC, says he wants to take early retirement. He made the decision during a restructuring of the company’s board. It will now search for a replacement while Claassen stays in post until his successor is found.


Switzerland: LafargeHolcim is expecting its sales growth to slow in 2019 but earnings to grow as its ‘Strategy 2022’ management plan takes shape. Net sales are forecast to grow by up to 6% year-on-year in 2018 yet by only 5% in 2019. However, recurring earnings before interest, taxation, depreciation and amortisation (EBITDA) are predicted to rise by up to 5% in 2018 and then by at least 5% in 2019.

“With the recent divestment of our Indonesian operations we reached a major milestone in focusing our portfolio which allowed us to accelerate deleveraging. At the same time we aggressively move forward in Aggregates and Ready-Mix Concrete. These results are strong proof points for our Strategy 2022 and we will continue delivering across all value drivers," said chief executive officer (CEO) Jan Jenisch.

The group has made the forecasts as part of its Capital Markets Day taking place at Bardon Hill near Birmingham, UK.


Malaysia: Cahya Mata Sarawak’s (CMS) cement division profits have fallen so far in 2018 due to planned maintenance shutdown at its integrated plant and rising clinker prices. Its profit before tax dropped by 14% to US$16.7m in the first nine months of 2018 from US$19.6m in the same period in 2017. The division’s performance was also hit by an increase in the price of imported clinker. The company said that this occurred due to a spike in global demand, following the reduction of clinker production in China and continued high demand for clinker especially from Bangladesh and the Philippines. Overall, CMS’ sales revenue and profit have risen so far in 2018.


UK: The Mineral Products Association (MPA) has joined the Global Cement and Concrete Association (GCCA) as an affiliate member. Its application was confirmed at the GCCA’s inaugural annual general meeting and symposium in London, which took place in late November 2018.

“Our affiliation to GCCA builds on our valued membership of 12 European Regional Trade Associations covering aggregates, asphalt, cement, concrete, dimension stone, lime, mortar, silica sands. The strengthening of the link between the MPA’s national role, the regional associations and now the global level is a positive and logical next step in aligning the advocacy and influence of the industry in a fast changing and complex world,” said MPA chief executive officer (CEO) Nigel Jackson.


Philippines: Solid Cement is using a US$75m loan from Cemex Asia to partly pay for a new production line at its plant in Antipolo, Rizal. The subsidiary of Cemex Holdings Philippines has made an initial withdrawal of around US$41m, according to the Manila Standard newspaper. The upgrade has a total cost of US$235m and it is scheduled completion in 2020. The new line will be supplied and built by China’s CBMI Construction.


Israel: Nesher Israel Cement has dismissed 20 workers at its Haifa plant. The redundancies took place in October 2018 due to a fall in production, according to the Globes newspaper. The company is also considering making staff change at its Ramla plant. Previously, Israeli cement producers have blamed Turkey and Greece for declining business and have lobbied for anti-dumping tariffs.


US: A fire at Argos USA’s Martinsburg cement plant in West Virginia is being investigated. The fire followed an explosion at the site on 25 November 2018, according to the Herald-Mail newspaper. A spokesman for the cement producer said that the incident occurred in the coal-mill dust-collector bag house. Although damage estimates are not available yet, repairs following the fire include replacing blast doors. No injuries have been reported. Production at the plant has been suspended while the cause of the fire is investigated.


Russia: Eurocement has hired Turkey’s Dal Teknik to upgrade a production line at its Zhigulovskiye Stroymaterialy plant in Samara so that it can manufacture white cement. The project has a budget of around Euro13m. Once complete the line will be able to produce 0.3Mt/yr of PCB 1-500-D0 or just below 0.4Mt/yr PCB 1-400-D20 white cement. The new product will be sold in big or regular sized bags. First deliveries are expected in the summer of 2019.


Sweden: Cementa says it is has supply problems delivering its Bascement product. The delivery issues have been caused by frequent power cuts to its Slite plant, weather-related delays to its shipping schedule and high cement demand. The subsidiary of Germany’s HeidelbergCement said that it was keeping its customers regularly updated.


UK: The Global Cement and Concrete Association (GCCA) has held its inaugural annual general meeting and symposium in London. Member companies ratified key deliverables for the association and set-out its priorities and work program. Albert Manifold, chief executive officer (CEO) of CRH, was confirmed as GCCA President and will serve for two years. Fernando A González, CEO of Cemex and Jianglin Cao, CEO of CNBM, were confirmed as Vice-Presidents.

The work program will focus on: position concrete as the sustainable building material of choice; promote international best practice in the areas of safety, production and the use of cement and concrete in the built environment; foster innovation in the cement and concrete sectors; make a positive contribution to global sustainable development; and promote the principles of a circular economy across the value chain.

“Concrete is the enabler of critical buildings and infrastructure that enhance the way we live – safe and durable homes, roads, hospitals, clean water, effective wastewater management, as well as providing the vital structures for the clean energy of tomorrow,” said Benjamin Sporton, the CEO of the GCCA.

The association was launched in January 2018. It represents 32 member companies with nine affiliate organisations. Its members hold 35% of global cement production.


Qatar: Al Khalij Cement Company has obtained certification from the American Petroleum Institute (API) to produce oil well cement. The certification allows it to make Grade (s) HSR class G oil well cement at its Umm Bab plant, according to the Gulf Times newspaper. The API has awarded Al Khalij Cement a three-year licence to apply the API monogram on its products. 11 other companies are certified to produce by the API to produce oil well cement in the Middle East.


Saudi Arabia/Yemen: Tabuk Cement has signed a memorandum of understanding to export 6000t of cement to Yemen. The agreement has a duration of three months.


Bangladesh: Saudi Arabian company Engineering Dimensions has expressed interest in building a cement plant at Chhatak in Sunamgan. The company’s president Mohammed N Hijji has met Secretary-in-Charge of the Industries Ministry M Abdul Halim about the project, according to the Financial Express newspaper. Engineering Dimensions says that the country’s high population, local demand and skilled workforce have attracted it to the location.


Dominican Republic: Cementos Cibao has inaugurated a new packing and despatch plant. The unit has two automated packing lines with a palletising system, according to the Listín Diario newspaper. The site also includes a warehouse that can store 200,000 bags of cement. The cement producer operates an integrated plant.


Uruguay: Cement sales rose by 4.6% year-on-year to 0.60Mt in the first nine months of 2018 from 0.57Mt in the same period in 2018. Exports and internal sales both rose by similar ratios to 87,700t and 0.51Mt respectively, according to data from the Chamber of Industries of Uruguay. Despite overall growth, exports in the third quarter of 2018 nearly halved. Most exports were sent to Paraguay, followed by Argentina and Brazil.


Paraguay: Yguazú Cementos has renewed its call for a ban on clinker imports to be lifted. The cement producer made its latest bid to the Luis Alfredo Llamosas, the Vice Minister of Industry, during a visit to its plant, according to La Nacion newspaper. The company produces 0.37Mt/yr of clinker that it uses to make 0.55Mt/yr of cement. However, the plant can grind up 0.75Mt/yr of cement and it wants to import clinker to increase its productivity. Staff at Yguazú Cementos have previously criticised the import ban that allows only Industria Nacional del Cemento (INC) to bring in clinker from abroad.


Panama: The economic slowdown and a strike by the Trade Union of Construction Workers, combined with a fall in consumption and construction permits have hit the cement sector hard. It is expected that this will mean a 13% fall in cement demand in 2018, according to José Luis González Habas, Cemex's planning director. Cemex is the country’s only integrated cement producer.

González said that the cement sector had been growing by 13-14% and that infrastructure was growing even more. However, he was worried by the situation, stating that it was intolerable that the sector could be so unstable.
Héctor Ortega, president of the Panamanian Chamber of Construction has suggested a reduction in paperwork to help free up planning procedures and ensure infrastructure growth.


Zambia: BBMG Corporation and Tangshan Jidong Cement have resumed work on the development of a cement plant in Zambia, which requires a total investment of US$290m. The facility will produce 3000t/day of clinker and have a cement capacity of 1.3Mt/yr.

Up to 60% of the funding will be secured from Bank of China (BOC), the International Finance Corporation (IFC) and South Africa-based Nedbank. Aside from the 20% project capital that has been invested by the project owners, Tangshan Jidong Cement will raise the remaining 20% funding from other banks after February 2019.

The original contract was made prior to 2015 between Tangshan Jidong Cement and Zambia-based Suhails International Ltd. and the cement plant was supposed to commence operations by the end of 2017. The IFC also launched due diligence at the beginning of 2015, according to reports published by Hebei government website and Tangshan local media. In April 2015 regulators from China and Zambia approved the project. However it was delayed due to the restructuring of Tangshan Jidong Cement.


South Africa: PPC reports that its strategy to expand into the rest of Africa has started to bear fruit, despite continuing challenges in many markets. Johan Claassen, the chief executive of PPC said that the group's diversified portfolio had enabled the company to offset the weaker South African performance with robust growth in its rest of Africa segment.

"We are very pleased with our rest of Africa operations, which grew volumes by more than 34%, increased revenues by 36% to US$120m and improved earnings before interest, tax, depreciation and amortisation (EBITDA) by 18% to US$36.7m. "This performance was supported by robust volume growth in Zimbabwe and a positive contribution from the Democratic Republic of Congo (DRC),” said Claasen.

Claassen added that the first phase of PPC's Cimerwa plant upgrade in Rwanda, which involved de-bottlenecking the plant to increase production capacity, was successfully completed in the six months to September 2018 and that PPC began to realise the benefits towards the end of the reporting period when record volumes were achieved.

However, the revenue achieved by the Cimerwa plant declined to US$29.1m from US$31.9m in the prior period because of a 7% reduction in volumes. PPC’s Rwandan EBITDA slumped to US$6.7m from US$12.2m, because of unexpected maintenance associated with clinker imports costs. Claassen added that its operations in the DRC continued to encounter challenging market conditions, which were characterised by overcapacity and muted cement demand due to political uncertainty.


Ireland: Ecocem Materials’ turnover rose by 9.4% in 2017 to Euro79.4m from Euro72.6m in 2016. Pre-tax profit fell by 37.5% to Euro2.5m from Euro4m in 2016, as its costs rose by 12% to Euro76.5m from Euro68.6m.

Ecocem makes cement using waste from steel slag. The company has its head offices and a factory in Dublin, as well as businesses in the UK, France and the Netherlands. It is looking to expand into the US, although its subsidiary Orcem Americas has come up against stiff resistance from environmental groups in San Francisco.


India: Dalmia Bharat is reported to be planning a 4Mt/yr greenfield cement plant in Rajasthan to cover the north Indian market. It was earlier reported to have secured limestone mining rights in the area surrounding Chittogarh and it has recently missed out on the purchase of northern cement maker Binani Cement to its rival Ultratech Cement.

Speaking to Business Standard, a Dalmia Bharat spokesperson said, “If we aren’t able to foray into North India via acquisition, we’ll do it via a greenfield project.” He added that the plant will start with a single 2Mt/yr line, with a second to be added later.

This new proposal gives Dalmia Bharat exposure to Rajasthan and neighbouring Gujarat, opening the wider nothern region up to the company. “The region is expected to register good growth in the next 10 years, which makes this market lucrative for us. It has always been our endeavour to be present across the country,” concluded the spokesperson.


Vietnam: The Vietnamese Prime Minister Nguyen Xuan Phuc has asked the Ministry of Construction and VICEM to report on the country’s excess cement capacity, which is set to reach 25-36Mt/yr by 2020.

The latest statistics from the Ministry of Construction’s Building Material Department show that cement consumption was approximately 45Mt in the first half of 2018, a rise of 30% year-on-year compared to the same period of 2017, and more than 50% of the year’s plan.

The sector’s capacity is 110Mt/yr, including the volume from plants expected to be built in 2018. Aside from that, existing plants have kept improving technology so their production capacity might reach 120-130Mt/yr by 2020.

Three large projects with the total capacity of 10Mt/yr were put into operation in the past 12 months. In 2019 many more projects are expected to come into operation, with a total new capacity of 12Mt/yr coming online.


Saudi Arabia: Cement despatches dropped by 5.4% year-on-year to 37.3Mt in the first 10 months of 2018 from 39.4Mt in the same period in 2017. The local industry’s utilisation rate has declined in consecutive months since October 2017 to just 54.8% in October 2018, according to Aljazira Capital. At the same time clinker inventories increased by 1.6% month-on-month to 41.6Mt in October 2018.


Honduras: Cementos Argos and Cementos del Norte have agreed to cut the price of cement for government-backed reisdential and infrastructure projects following a request by President Juan Orlando Hernández, according to the El Heraldo newspaper. The price will fall by around 15% when the agreements between the cement producers and the government is finalised.


France: Ciments Calcia has launched Hop’ pour les Pros, a dissolvable cement bag product. Cement sold in the bags can be placed directly into a mixer to make ready-mix concrete. Its puported beneifts include reduce spillage, time savings and no packaging. CEM II 32.5 R cement will be used in the product manufactured at he company’s Bussac-Forêt cement plant in Charente-Maritime.


Colombia/US: Edgar Ramírez, the former vice president of planning for Cemex in Colombia, has been summoned by the US judiciary in relation to the Maceo cement plant corruption case. Ramírez reportedly fled to the US following calls for his arrest in Colombia earlier in 2018, according to W Radio. Another suspect in the case - Eugenio Correa Díaz, the former representative of CI Calizas y Minerales, which sold the property to the cement producer, is also being questioned by the US authorities. Ramírez and accomplices allegedly paid over US$13m to Correa, despite being aware of the fact that the property was in the process of being expropriated over unpaid taxes.


Spain: Jesus Ortiz, the president of Oficemen, says that the local market has ‘worrying’ levels of uncertainty. His comments follow a reduction in cement consumption growth since 2017 and falling export markets. The Spanish cement associaton is concerned that growth has mainly been driven by residential construction. The Cement Demand Index (IDC) grew by 8.5% year-on-year in September 2018 but this was a slight decline month-on-month. From October 2017 to September 2018 an estimated 13Mt of cement was consumed, a rise of 1Mt from the previous year. However, exports have fallen conscutively over the last year and a half.


Spain: FYM-HeidelbergCement has launched a sustainability commission to support its Malaga cement plant and the surrounding community. The initiative is part of the company’s 2030 sustainability plan. It includes representatives from local neighbourhood associations, local government and environmental bodies. The commission will meet several times a year to foster an open relationship between the cement producer and its neighbours. It also intends to promote behavior based on the circular economy and the reduction of the unit’s carbon footprint. It will build on the company’s work with the Provincial Forum of Socially Responsible Companies of Malaga since its inception in 2013.


France: Hoffmann Green Cement Technologies has inaugurated its pilot plant at Bournezeau, Vendée. The 50,000t/yr unit will manufacture cement products using metakaolin and blast-furnace slag, according to the L'Usine Nouvelle magazine. It says it will produce cement with reduced CO2 emissions up to 250kg/t using a flash-calcined process down from 900kg/t in the normal clinker production process. The project had investment of Euro10m.


India: UltraTech Cement says that Binani Cement has become a wholly-owned subsidiary. The announcement to its shareholders follows a protracted legal battle with Dalmia Bharat group over the outcome of an auction for the insolvent producer. The acquisition includes production capacity in Rajasthan as well as subsidiaries in China and the UAE.