Global Cement Newsletter

Issue: GCW422 / 11 September 2019

Headlines


The news from Mali this week is that a new cement grinding plant is in the works. Ciments et Matériaux du Mali plans to build a 0.5Mt/yr plant near Bamako. Work on the US$34m project is set to start in October 2019 although there has been no word on the equipment supplier. The project is a long-standing one from France’s Vicat.

A new plant is probably very welcome following the last six months in the local market. Prices spiked by a third in May 2019, leading local producer Diamond Cement Mali to arrange a press conference to defend itself. Director Ibrahima Dibo explained that the company had fixed its prices in conjunction with the government at its units at Astro and Dio Gare since 2012. Instead, he blamed importers and traders for the situation, as well as low import rates from Senegal and Ivory Coast. The company proposed that it tackle the situation by importing more cement from one of its plants in Takoradi in Ghana and then transporting it into Mali via Dakar in Senegal. Although it noted that it would need permission from the government to do this.

The country has also been targeted by Nigeria’s Dangote Cement for several years. Back in 2016 the Nigerian cement producer was considering building a 1.5Mt/yr grinding plant. It also wanted to build a second production line at its Pout plant near Dakar in Senegal to export clinker specifically to Mali. It has since scaled back its expansion plans as the Nigerian economy entered a recession but in its 2018 annual report it noted that it had exported 0.43Mt of cement from Senegal and that most of this had gone to Mali, with plans to further increase exports in 2019.

At present Mali has three main grinding plants. Two are run by Diamond Cement and the third by Ciments de l'Afrique (CIMAF). An integrated plant at Guinbané, Diéma in the Kayes region was announced in late 2016 when the government signed a memorandum of understanding with Gaia Equity, a private equity company. This project was going to be built by China’s Sinoma.

Figure 1: Distribution of cement prices in Africa and Location of Plants 2015. Source: World Bank / ECDPM.

Figure 1: Distribution of cement prices in Africa and Location of Plants 2015. Source: World Bank / ECDPM.

The status of that last project is unknown since there has been little news on it since. However, Figure 1 above shows why a private equity firm might sense opportunity. It’s out of date as various countries have become self-sufficient and we’ve covered this plenty of times before but the graphic from the World Bank really brings home the message that moving cement overland is uneconomical. This is mirrored by the mounting price of cement in Mali earlier this year. Africa has been described as the last great cement frontier and Mali is on the frontline.


Malaysia: Tasek Corporation has appointed Go Hooi Koon as its company secretary. She succeeds Vincent Chow Poh Jin who has resigned. Tasek operates an integrated cement plant at Tasek in Perak.


El Salvador: Guatemala’s Cemento Regional has started building a 0.12Mt/yr grinding plant at Acajutla. The subsidiary of Grupo Monterrey has invested US$12m in the project, according to the El Economista newspaper. The plant is scheduled to be commissioned in December 2019. A ceremony marking the start of construction was attended by the president of the Export and Investment Promotion Agency of El Salvador (PROESA), Salvador Gómez Góchez and the president of Cemento Regional, Roberto Díaz Durán.

The new plant is situated near to the port at Acajutla, enabling it to import clinker and other raw materials from Asia. The plant will be built by Qualicons, a Guatemalan construction company. It was previously reported that Spain’s Cemengal would supply a modular mill for the plant.


Philippines: Premiere Slag has received an investment of US$1.95m from the Philippines’ AbaCore Capital Holdings for the construction of a cement facility in Mabina, Luzon.


US: Charah Solutions has been awarded an extension to its contract to provide byproduct sales and material handling operations for Luminant’s Miami Fort Power Plant and Zimmer Power Plant in Ohio. Charah Solutions will continue to manage and market coal combustion products produced by these two units. It currently sells and markets grade Class F fly ash from the two power plants via its materials network to concrete product manufacturers and ready mix concrete producers in the Midwest, Northeast and South regions of the country.

In addition, Charah Solutions will continue all other coal combustion residuals material handling and disposal operations at both locations, including landfill management and byproduct loadout, as well as the operations and maintenance of the plant flue gas desulphurisation (FGD) system at Miami Fort.


Guatemala: Colombia’s Ultracem has invested US$1.2m in a facility for packing cement in Puerto Barrios, Guatemala, generating 16 jobs. The company has revealed that its next project in the country, where it currently sells 0.12Mt/yr of cement, will be production facilities. Prensa Libre has reported that Ultracem’s three-step entry into Guatemala, beginning in April 2019 with the import and distribution of packed cement, has entered its second stage. This consists of packing its Colombian cement, imported via Honduras, in Guatemala.

Ultracem hopes to have entered production in the country to compete with Cementos Progreso, whose three plants’ 5.3Mt/yr total output constitutes the entirety of domestic production, by September 2020. Ultracem’s administrative director Estuardo Solís has stated that ‘an aggressive marketing plan for expansion into Guatemala, Central America’s largest market’ is in place. Over four months the company has sold 40,000t of cement in the country, all of it in the east, centre and north-east.

Ultracem began its Central American expansion in 2018 with cement distribution to Panama, followed closely by Honduras, where it established a US$2m grinding plant in May 2019.


UAE: Failure of financing has put a stop to Ras Al Khaimah’s intended purchase of an 0.6Mt/yr integrated white cement plant in Fujairah and its associated quarry. Reuters has reported that the estimated US$123m deal will not be going ahead.


Australia: Adelaide Brighton’s credit manager from 2009 to 2017 appeared in Adelaide Magistrates Court accused of defrauding the company of US$8.52m over 230 different occasions. ABC news has reported that the defendant stands charged of aggravated deception and dishonestly dealing with documents.


Bangladesh: Germany’s HeidelbergCement will purchase Ultratech’s stake in Emirates Cement, the owner of the 0.5Mt/yr Emirates grinding plant in Dhaka. NewAge Business has reported that Ultratech, a subsidiary of India’s Aditya Birla Group, has set the price of the stake at US$32.1m.

Ultratech first produced cement in Bangladesh following Aditya Birla Group’s acquisition of ETA Star Cement in April 2010, when it bought into the latter’s Bangladeshi subsidiary Emirates Cement for an estimated investment of US$382m. The divestment of its sole Bangladeshi asset awaits bank approval.

Bangladesh produces 58Mt/yr of cement, exceeding a market demand of 31Mt/yr. Of the 75 producers in the country, only 35 are actively making cement.


Turkmenistan: The state-owned 1.0Mt/yr integrated Lebap cement plant has exported 0.2Mt of cement to neighbouring countries in the eight months to the end of August 2019. Uzbekistan received the majority of this. Neitralnii has reported that the plant has produced test batches of cement using basalt instead of its usual iron ore. It has noted increased durability, density and frost resistance, as well as lower costs and financial impact. The substitution of the locally-sourced ferrous rock for imported haematite is part of the central Asian country’s state programme of import substitution.


Saudi Arabia: Najran Cement has received a licence to export clinker from the Saudi Ministry of Commerce and Investment. The licence is valid for a year from 4 September 2019.


Oman: CMO Asia International Consulting has twice decorated Oman’s Raysut Cement at its first Oman Leadership Awards. Raysut won ‘Best Company for Socially Responsible Practice’ and ‘Best Cement Trading Brand.’


Brazil: Brazil’s National Syndicate of the Cement Industry (SNIC) has released August 2019 sales figures of 5.10Mt, up by 3.0% year-on-year from 4.95% in August 2019. This corresponds to an equal apparent consumption of cement in the country of 5.10Mt, up by 2.9% year-on-year from 4.96Mt in August 2018. Besides rising demand, SNIC points to non-repeating depressing factors acting on domestic cement capacity a year ago, including a lorry drivers’ strike.


Argentina: Argentina’s Association of Portland Cement Manufacturers (AFCP) has reported on a 5.0% month-on-month growth in cement volumes sold to 1.05Mt in August 2019 from 1.00Mt in July of the same year. Domestic production continues to meet the entirety of demand, which grew by 5.1% year-on-year to 1.00Mt in July 2019 from 0.95Mt in July 2018.


Philippines: The 30-day inquiry by the Mergers and Acquisitions Office (MAO) of the Philippine Competition Commission (PCC) into First Stronghold Cement’s takeover of Holcim Philippines has concluded that the deal may affect market concentration in the cement sector. The Philippine Star reports that this finding clears the way for a phase-two review. The MAO will seek to ascertain whether the deal might result in lessened competition or increase the likelihood of cartel-like activities. This ties in with the Commission’s general investigation into anti-competitiveness in the cement industry.

First Stronghold Cement, a subsidiary of San Miguel, has a stake in Northern Cement and its president and chief operating officer, Ramón Ang, is also the majority owner and chairman of Eagle Cement. In May 2019 it acquired 85.7% of Holcim Philippines for US$2.15bn.


Russia: Buzzi Unicem has formed its total 8.1Mt/yr Russian operations into a limited liability company called SLK Cement. The name combines the first letters of the names of cities where its plants are located, namely Sukhoi Log and Korkino. Andrey Immoreev, chief executive officer (CEO) of Dyckerhoff Cement in Russia, said that the rebranding ‘emphasises the importance of the Russian market in the company’s plans.’ Buzzi Unicem continues to trade as Dyckerhoff in its Central and Eastern European production areas.


Spain: The residents’ association of San Diego, Galicia, has filed a complaint to the Port of A Coruña over a discharge of cement dust from Cementos Cosmos’ 0.7Mt/yr Niebla plant. La Voz de Galicia has reported that the emission was the result of a broken pipe. Cementos Cosmos, a subsidiary of Votorantim, says that it detected the malfunction instantly, and resolved it within three minutes.


Germany: Berthold Technologies, the innovator of measurement and detection software and electronics, has released a white paper on radiometric measurement processes relevant to the cement industry. The technologies under investigation are non-contact moisture, density and liquid/bulk solid level measurers, which can also be used as non-contact limit switches. The white paper details the accurate and reproducible use of the technologies, and their application in minimising error sources.


Mali: Ciments et Matériaux du Mali has revealed plans for a 0.5Mt/yr grinding plant in the Kati commune. Agence Ecolfin has reported that the plant, to be supplied by the nearby Sonityeni quarry, will employ 150 Malians and ‘contribute to Mali’s cement self-sufficiency.’ Construction of the US$33.6m facility is set to begin in October 2019.


Colombia: The Regional Autonomous Corporation of Antioquia has reissued Cemex’s environmental clearance for its 1Mt/yr integrated cement plant in Macao. The certification marks the conclusion of a dispute over mining right in the course of which Cemex fired multiple executives for payment of US$25m to a private third party. La Republica reports that Cemex is now in a position to advance several licensing processes and to begin construction of connecting roads for the plant.


Philippines: The September 2019 customs duty of US$4.81/t on imported cement is in danger of disrupting a Philippine Competition Commission (PCC) probe. The Philippine Star has reported that the PCC is conducting an investigation into domestic cement producers’ alleged anticompetetiveness following an accusation by a Department of Trade and Industry (DTI) official in 2017 that a ‘cartel’ of producers was maintaining artificially high pricing and spreading of misinformation about the quality of imported products. PCC chair Arsenio Balisacan has noted the danger of ‘having an ongoing investigation and introducing a policy which can influence the outcome of that investigation.’

Napoleon Co, chairman of the Philippine Cement Importers Association (PCIA), has stated that cement traders will keep on importing unless the local cement sector produces more. He said that foreign producers’ Philippine sales were driven not by their lower prices but by the domestic industry’s inability to fulfill the country’s 28Mt/yr demand.


Norway: HeidelbergCement has joined a list of leaders from various industries in endorsing Norway’s state-owned energy group Equinor’s carbon dioxide (CO2) capture and storage (CCS) plans. Bernd Scheifele, chairman of the managing board of HeidelbergCement, was among representatives of seven companies who signed memoranda of understanding with Equinor.

HeidelbergCement’s Norwegian subsidiary Norcem has been involved in CCS research at its 1.2Mt/yr integrated cement plant in Brevik since 2011. In early 2018, the government shortlisted the plant for its multiple-industry ‘Northern Lights’ CCS project. Beginning in 2023, Equinor will remove 0.4Mt/yr of CO2, half of the plant’s total CO2 output, from Brevik for storage in empty oil and gas fields beneath the North Sea.

In a statement, HeidelbergCement expressed its intention towork together with Equinor to optimise CO2 transportation and develop Europe-wide disposal solutions


Turkey: Fuchs Petrolub and Opet Petrolcülüks’ joint venture Opet Fuchs has completed construction of its 60,000t/yr plant for the production of assorted oil products, including lubricants for the cement industry. The facility was the result of Euro24m in investment.


Thailand: Germany’s Schmersal has founded Schmersal Thailand to serve the machine safety and systems solutions needs of Thailand’s growing industries, including its 42.4Mt/yr cement industry. It will further support Schmersal’s sale partners throughout the Association of Southeast Asian Nations (ASEAN) region.


Philippines: Cemex’s subsidiary APO has stopped operations at its Barangay Tina-An cement plant in Naga during morning and afternoon/evening rush-hour to ease the city’s traffic congestion problem. The Philippine Star has reported that lorries dispatching cement from the 4.0Mt/yr integrated plant were a cause of traffic build-up on the Pan-Philippine Highway. Ignacio Mijares, President of Cemex Holdings Philippines, agreed to the restriction following a meeting with Gwendolen Garcia, Governor of Cebu Province. Representatives of Cemex and regional government will meet next week to discuss the working of the solution.

The disruption to production follows the introduction of tariffs of US$4.81/t on imported cement.


Kenya: East Africa Portland Cement Company (EAPCC) has declared an intention to sell two parcels of idle land in Machakos County totalling an area of 2000 acres. Business Daily reports that the 40-day leniency period in which for the company to clear its debts expires on 11 September 2019. Shareholders will vote at an extraordinary general meeting (EGM) on 27 September 2019 on whether to sell the land. To sell the land, EAPCC must first evict 14,300 resident squatters.


Dominican Republic: The national total yield of cement rose to 2.81Mt in the six months to 30 June 2019 from 2.73Mt in the same period of 2018, an increase of 2.7% year-on-year. Data from the national cement industry association Adocem shows that 0.50Mt was exported over the period, 17.8% of the Dominican Republic’s production. The remaining cement boosted domestic sales by 5.2% to 2.31Mt from 2.19Mt in the first half of 2018, corresponding to a revenue of US$223m, up by 14.6% from US$195m in the half to 30 June 2018, on the back of rising demand from construction projects.


Brazil: Repsol Sinopec Brazil, Ouro Negro and the Mechanical Engineering Department of the Centre of Science and Technology at Rio de Janiero’s Pontifical Catholic University (PUC-Rio) are working together on a through tubing logging profile tool to assess cement quality in lined wells. Arbolas has reported that, where current technologies allow only for observation of anomalies located directly around the tool, the sought-after solution will facilitate detailed recording of the integrity of the adjacent layer. Ouro Negro Chief Executive Officer (CEO) Eduardo Costa has described the proposal to incorporate its TTilt technology into the Wellrobot, yielding continuous data feedback and thus reducing well interventions. The companies say that the prospect of reliable seal integrity testing for plugging and abandonment operations on fluid-bearing formations is of enormous economic and environmental import to numerous industries.


UK: Cemex has installed Patol’s Firesense linear heat detection cable (LHDC) at its 1.8Mt/yr integrated cement plant in Rugby. The installation uses a digital interface to monitor a zonal length of LHDC which will detect any overheating in the plant’s lubrication systems.


Australia: A general labourer and rigger who worked for Macweld Industries, contracted by Adelaide Brighton at its Birkenhead cement plant, is suing the cement company. The Advertiser has reported that the man is seeking damages for Adelaide Brighton’s ‘failure to take reasonable action to minimise risk of injury,’ which allegedly led to the man falling through a hole during upgrade works on the plant in 2016. The man previously received an unspecified sum in worker’s compensation benefits from his erstwhile employer.