Global Cement Newsletter

Issue: GCW441 / 05 February 2020

Headlines


There have been rumours in the press this week that LafargeHolcim is weighing up its options in South Africa. Reports in the local press allege that the building materials company has tasked Credit Suisse Group with finding a buyer for its business. This may or may not be true, only time will tell, but South Africa certainly feels like a market where LafargeHolcim should be considering its future.

As a prominent but smaller producer in the country, Lafarge South Africa is behind PPC and AfriSam in terms of clinker production capacity. InterCement’s subsidiary Natal Portland Cement and Dangote’s subsidiary Sephaku Cement have a similar production base with an integrated plant each and one or two grinding plants. Halfway through 2019 LafargeHolcim was describing market conditions as ‘difficult’ in the country with it being the sole Sub-Saharan market holding back regional growth for the group. By the third quarter the situation had reportedly improved but net sales and cement sales volumes were flat for the year to date. A clearer picture should emerge when LafargeHolcim publishes its fourth quarter results at the end of February 2020.

PPC provided its view of the market in its half-year results to 30 September 2019. Its estimate was that the South African cement industry declined by 10 - 15% for the period, creating a competitive environment. It added that the situation had been, ‘exacerbated by imports and blender activity.’ Both its revenue and earnings fell year-on-year, although a 30% rise in fuel costs didn’t help either. Sephaku Cement suffered a similar time of it, with a 19% fall in cement sales volumes during the first half, although it reported improvement in the subsequent quarter. Overall, it blamed falling infrastructure investment for pressurising the market and allowing blending activity to mount. Sephaku Cement was also wary of the local carbon tax that started in June 2019 warning of a potential US$2.8m/yr bill.

PPC noted that cement imports had risen by 5% to 0.85Mt in the year to August 2019. This followed a lobbying effort by The Concrete Institute (TCI) in mid-2019 to implore the International Trade Administration Commission (ITAC) to look into rising imports levels. At the time the TCI’s managing director Brian Perrie expressed incomprehension that a country with six different cement production companies with an over-capacity rate of 30% could be facing this problem. This latest broadside tails South Africa’s previous attempt to fend off imports when it instituted anti-dumping duties of 17 – 70% against importers from Pakistan in 2015. Imports duly fell in 2016 but rose again in 2017 and 2018, mainly from Vietnam and China.

All of this sounds familiar following LafargeHolcim’s departure from the ‘hyper-competitive’ South-East Asian countries in 2019. Those countries also suffered from competition and raging imports. Bloomberg pointed out in a report on the local industry in 2016 that PPC’s, AfriSam’s and LafargeHolcim’s kilns had an average age of 32 years, suggesting that efficiency and maintenance were going to be concerns in the future. Also of note is LargeHolcim’s decision to move its South African operations from one subsidiary, Lafarge Africa, to another, Caricement, in mid-2019.

Some level of market consolidation would certainly help local overcapacity. Plus, surely, LafargeHolcim’s mix of inland integrated capacity and a grinding plant near the coast could prove enticing to some of the Asian companies pumping out all of those imports. The thought on the minds of potential buyers everywhere must be, if LafargeHolcim chief Jan Jenisch was bold enough to sell up in South-East Asia, how can he not in South Africa?!”


Philippines: Samuel O Manlosa has been appointed as the manager of Holcim Philippines’ Davao plant. He succeeded Xavier Arul Kennedy Savarimuthu in the post, who has been reassigned by the LafargeHolcim Group to lead plant operations in Nigeria.

Previously, Manlosa led a project to improve systems and processes to yield efficiency gains for Holcim Philippines' manufacturing operations. He has worked as a process and automation expert for LafargeHolcim's operations in Southeast Asia supporting plants in seven countries. Manlosa has also been sent to Holcim Switzerland for training on advanced process engineering and cement manufacturing. A native of Dipolog City, Zamboanga del Norte, he is a graduate from the Mindanao State University in Marawi City.

LafargeHolcim signed an agreement with San Miguel Corporation in mid-2019 for the divestment of its entire 85.7% shareholding in Holcim Philippines. The process is still ongoing.


Canada: Tina Larson has been appointed as Vice President, Saskatchewan and Manitoba by Lafarge Canada. She first joined Lafarge in 2010 as General Manager, Pipe in the Greater Calgary Area following a 16-year career with Weyerhaeuser Canada where she held various management positions. In 2015, Tina was promoted to the country level role of Director, Health and Safety for Western Canada. Larson holds an undergraduate and graduate degree in Chemical Engineering from the University of Alberta.


Germany: Ralf Dörner has retired as the managing director of Ventilatorenfabrik Oelde following a 50-year career with the company.

Following his apprenticeship as an industrial manager, Dörner took over a vacant position in the commercial administration division. Subsequently, he was given the job of assuring total data management integration within the company. In 1982 he was granted power of attorney and appointed commercial manager of the company. He became managing director in 2000.

Dörner handed over the Commercial Managing Director position to his successor, Nabil Abou Lebdi. The company will now be managed with Thomas Gandt, the Technical Managing Director.


Russia: Eurocement subsidiary Akhangarantsement produced 1.9Mt of cement in 2019, a rise of 16% year-on-year from 1.6Mt in 2018. The company attributed the growth to a programme of ‘modernisation of the equipment at the Akhangarantsement aimed at increasing productivity, energy efficiency and reliability of production,’ without any disruption to supply. Akhangarantsement general director Gennady Kulikov said, “The coordinated work of the entire team allowed us to fulfil the tasks assigned to the plant with honour.”


US: On 4 February 2020, PCA Senior Vice President and Chief Economist Ed Sullivan predicted that US cement demand would rise by 1.7% in 2020 and may rise by as much as 2.7% if residential construction exceeds expectations. Sullivan stated that demand would maintain moderate growth through at least to 2022. “As long as the economy continues to grow and create jobs, the economy will remain on solid ground and continue to support cyclical portions of the cement market,” he said.


US: National Gypsum has launched Permabase WP Waterproof Cement Board, a 1.3cm-thick cement board with a waterproof core, reinforced edge and smoother surface and stronger tile bond than previous Permabase boards for mould and moisture resistance and ease of cutting and installation. National Gypsum product manager for Permabase Tony Fuller said that “National Gypsum is committed to creating innovative products with performance benefits” for construction.


India: Switzerland-based LafargeHolcim has co-located its global digital and business services at a single site in Mumbai. The company says that the Global Hub will enable it to ‘focus on providing modern global platforms and capabilities, accelerating the pace of innovation at a local, regional and global level.’


Germany: UK-based Triton Investment Management Limited subsidiary Scur-Alpha has entered into a share purchase agreement with Volkswagen for the German gear manufacturer Renk. Renk will continue to serve the cement industry with its special gear units and horizontal slide bearings under the new ownership.


US: The Portland Cement Association (PCA) has launched a campaign called ‘Shaped by Concrete,’ which aims to teach people about how concrete made with cement ‘shapes the world to make our communities, city and country better’ by telling stories based on the themes of ‘sustainability, resilience and durability.’ “We are excited to share bold, compelling stories of how we can make the world a better place, shaped by concrete,” said PCA president and CEO Mike Ireland.


South Africa: LafargeHolcim is planning to sell its South African operations as the world's largest building material maker continues to streamline its portfolio, according to sources close to a deal who spoke to Bloomberg. The Swiss company is working with adviser Credit Suisse Group to seek a buyer for the business. It has apparently already reached out to local competitors, Chinese cement producers and buyout firms, but may struggle to attract interest for the unit due to challenging dynamics in the country's cement industry. South Africa is Africa’s most mature cement market but it is hampered by decreasing demand, old production facilities, tight domestic competition and cheap imports from the Middle East. A representative for LafargeHolcim declined to comment.


India: Nuvoco Vistas Corporation, Nirma Ltd’s cement making subsidiary, is reported to be considering a partnership with either Apollo Global Management or Bain Capital to bid for Emami Cement, according to sources quoted by the Mint news outlet. Emami Cement’s owners RS Agarwal and RS Goenka are seeking a valuation of around US$1bn for the company, which operates a 2.5Mt/yr integrated plant at Risda in Chhattisgarh and a 2.5Mt/yr grinding plant at Panagarh in West Bengal.

Emami also acquired a 0.6Mt/yr grinding plant at Bhabua, Bihar in September 2018. In addition, the firm has mining assets in Guntur in Andhra Pradesh and near Jaipur in Rajasthan. Its main markets are in West Bengal, Chhattisgarh, Odisha, Jharkhand, Bihar, Maharashtra and Madhya Pradesh, where it markets its products under the Double Bull brand.

LafargeHolcim and HeidelbergCement both submitted expression of interest in Emami, while UltraTech Cement has also been linked to the firm.


Poland: The Association of Cement Producers in Poland estimates that cement production reached 19Mt in the country in 2019, around 1% more than in 2018. According to estimates, imports from Belarus and Turkey, the producers of which do not have to purchase EU Emissions Trading Scheme (ETS) permits, grew by 0.25Mt and 50,000t respectively. The Association expects that sales will remain a similar level in 2020.

Polish electricity prices rose by about 35-40% during 2019, caused to a large extent by the surge in ETS permit prices. This, said Xavier Guesnu, CEO of Lafarge Polska, is leading to a marked increase in imports from outside of the EU. There are concerns that, if unchecked, this could adversely affect domestic cement producers.


Maldives: Oman-based Raysut Cement has announced that it is seeking a 75% stake in a cement terminal in the Maldives, as part of its long-term global expansion strategy.

In a disclosure filed with the Muscat Securities Market (MSM) in Oman, Raysut stated, “Raysut Cement Company wishes to inform that it is in discussions with Cementia AG of Zurich to acquire its 75% shareholding in LH Maldives Ltd, a cement terminal located at Thilafushi Island, Maldives.” Both Cementia and LH Maldives are controlled by LafargeHolcim.

Raysut Cement is also constructing a 1.0Mt/yr cement grinding plant in collaboration with MSG Group in Somaliland, internationally recognised as an autonomous region of Somalia. In September 2019 Raysut signed an agreement to set up a 1.0Mt/yr grinding plant in Duqm, Oman and is also setting up a US$200m integrated cement plant in Georgia via its UAE-based subsidiary Pioneer Cement.


Vietnam: Thailand-based Siam Cement Group (SCG) said its revenue from sales in Vietnam dropped by US$64.7m in 2019, a fall of 5.8% year-on-year to US$1.27bn. The figure accounted for 9.0% of SCG’s total revenue of US$14.1bn for the year. In the fourth quarter of 2019, SCG earned US$319m in revenue in the Vietnamese market, a fall of 11% year-on-year, appearing to indicate acceleration in the rate of decline. A possible contributing factor to the lower sales is Vietnam’s huge cement overcapacity, although SCG operates across a wide range of other sectors in addition to cement production.


India: JK Cement has successfully commissioned a 1.0Mt/yr grey cement grinding mill at its integrated Mangrol cement plant in Chittorgarh, Rajasthan and 1.5Mt/yr of new cement grinding capacity at its Aligarh integrated plant in Uttar Pradesh. Both of the units have also commenced commercial dispatches.


India: Udaipur Cement Works has applied for environmental clearance to the government of Rajasthan for the construction of a 5.0Mt/yr integrated cement plant in the state. It plans for the plant to have an additional 2.0Mt/yr grinding capacity, a 30MW waste heat recovery (WHR) power plant and a 25MW coal-fired power plant. Project Today has reported a conjectured value for the project of US$224m.


France: Following a successful trial that began in December 2019, LafargeHolcim has inaugurated a FastCarb CO2 absorption accelerator into concrete production at its Val d'Azergues cement and concrete plant (integrated capacity 0.4Mt/yr) in Lozanne. The technology involves the capture of CO2 from the plant’s cement kiln for reinjection into concrete produced with recycled aggregates. François Petry, LafargeHolcim France managing director, said the installation ‘fits perfectly into our Lafarge 360 approach for more responsible construction.’ The five-pillar approach consists of alternative fuel substitution and development, power consumption reduction, formulation of new cements, cooperation with Airium insulation solutions and assistance with low-carbon building design.


UK: InterBulk Group delivered a batch of Italcementi’s I.tech Ali-Na sulphoaluminate binder produced at its 0.3Mt/yr Guardiaregia cement plant in Molise, Italy to fellow HeidelbergCement subsidiary Hanson’s concrete plant in Hull, UK, on 28 January 2020. Hanson will use the low-environmental-impact binder in the production of fast-setting premixes for the UK market.


India: The government of Andhra Pradesh terminated JC Company subsidiary Trishul Cement’s limestone extraction lease of an area in Konappalapadu, Ananthapurama District, which had previously been extended for five years in 2015, for the company’s failure to establish an integrated cement plant in the area. The state-government also revoked a 20-year lease granted in mid-2007 of a plot of land for a cement plant on which no work had been undertaken. Hans India News has reported that JC Company has dissolved Trishul Cements by incorporation.


Mexico: Cemex has announced that it is currently helping 45,000 young people across 11 countries to improve their employability through such initiatives as its New Employment Opportunities (NEO) initiative, which provides industry training to disadvantaged Caribbean and Latin American youths. The company says it aims to positively impact more than 65,000 youngsters by 2022 through its initiatives including awards programmes and volunteering schemes and its partnership with the Global Alliance for Youth (All4YOUth), through which it aims to promote skills.


Germany: Dominik von Achten is set to become the new chairman of HeidelbergCement from the start of February 2020. He has been deputy chairman of the managing board since 2015 and succeeds Bernd Scheifele, who is retiring.

Achten, aged 54 years, has been a member of the managing board of HeidelbergCement since 2007. His area of responsibility included the group areas of North America and Western and Southern Europe as well as the Competence Center Materials. He worked on the integration of both Hanson and Italcementi. As Chief Digital Officer, he is responsible for the areas of digital transformation and digital ventures.

After a statutory two-year cooling-off period has expired, Scheifele will stand as a candidate for the supervisory board of HeidelbergCement in 2022 to become its chairman.

Lorenz Näger, who has been the company’s chief financial officer since 2004, will additionally become the new deputy chairman of the Managing Board. He is responsible for Finance, Group Accounting, Controlling, Taxes, Treasury, Data Protection, Insurance & Corporate Risk Management, IT, Purchasing and Shared Service Center.

Achten will hand over responsibility for the Western and Southern Europe Group area to Jon Morrish, who was previously responsible for the North America Group area.

Chris Ward, who was previously head of the Canada region and has been a member of the managing board of HeidelbergCement AG since September 2019, takes over the North America Group area and the Competence Center Materials. He has been with the company since 1996 and held several management positions in the US before assuming responsibility for the Canada region of the North America Group area.


Togo: Germany’s Intercem Engineering has been awarded a contract by CimMetal Group to build a 2.5Mt/yr cement grinding plant in Lomé. The opening ceremony for the project is expected to take place soon and production is scheduled to start in early 2021. No value for the order has been disclosed.

The order includes a 1000t/hr truck unloading station, a 25,000t/hr storage facility for additives, a 1000t/hr truck loading station, two 50,000t clinker silos, four packing machines, eight truck loading stations, 10 truck scales and the corresponding laboratory equipment. The steel construction, the entire sheet metal fabrication, the subsystems, the electrical equipment, the complete engineering, the supervision of erection and commissioning are also included in the scope of supply and services. All of the equipment will be supplied by European manufacturers. All material conveyors have a capacity of 1200t/hr and are installed in a closed gallery to ensure dust-free transport. This was planned because of the location in the immediate vicinity of the port in Lomé.


India: Wonder Cement has launched a new 2Mt/yr grinding plant at Badnawar in Madhya Pradesh. It follows the company’s first grinding plant at Dhule in Maharashtra that was launched in mid-2018, according to the Pioneer newspaper. The cement producer plans to open a third grinding plant at Jhajjar in Haryana to reach a combined production capacity of 13Mt/yr in 2020. The new grinding units have a cost of US$112m.


US: National Cement has broken ground on its US$250m upgrade to the Ragland plant in Alabama. City, county and state officials attended the ceremony, according to WBRC. The subsidiary of France’s Vicat is building a second kiln at its 1.9Mt/yr plant in Alabama. The project is expected to be completed in 2022.


India: Dalmia Cement (Bharat) has started producing oil well cement at its Khelrihat plant in Meghalaya. The subsidiary of Dalmia Bharat says that it is cement manufacturer to obtain a license for manufacturing oil well cement in the north east region of the country from the American Petroleum Institute (API) and the Bureau of Indian Standards (BIS), according to the Economic Times newspaper. This new unit it intended to serve markets in Assam, Tripura and Mizoram, Myanmar and Bangladesh. Dalmia Bharat has been producing oil well cement at its Dalmiapuram plant in Tamil Nadu since the mid-1980s.


Australia: The Australian Competition and Consumer Commission (ACCC) says that Barro Group’s acquisition of a 43% stake in Adelaide Brighton will not ‘substantially’ lessen competition. The ACCC examined the completed acquisition closely because the two vertically integrated companies have overlap in the market for the supply of cement, ready-mixed concrete and aggregates.

It found Barro and Adelaide Brighton will continue to face competition from Boral, Holcim and Hanson, three large vertically integrated competitors with national operations, along with a number of smaller independent competitors. The ACCC looked at competition impacts on the pre-mixed concrete and aggregates markets in Melbourne, Brisbane and Townsville, where Barro and Adelaide Brighton’s operations overlap and did not identify any areas of concern.

Barro did not seek informal merger clearance from the ACCC prior to acquiring Adelaide Brighton. However, the ACCC says it may reopen its investigation if it receives further information that alters its current conclusions.


Pakistan: Lucky Cement’s sales and profits have fallen in the first half of its financial year as gas, fuel and transportation costs of input materials have risen. Its sales fell by 11% year-on-year to US$201m in the six months to 31 December 2019 from US$226m in the same period in 2018. Its cement sales volumes dropped by 9.5% to 3.17Mt from 3.50Mt. Its profit after taxation more than halved to US$12.5m from US$35.6m. It also blamed lower sales volumes on price pressure due to low demand and higher transport and logistics costs.

The cement producer started operating a 2.8Mt/yr upgrade to its Pezu plant in Khyber Pakhtunkhwa at the end of December 2019. Construction work on a new 1.2Mt/yr plant in Samawah in Iraq is underway, with contracts in place for a cement grinding mill, packing plant and power generation unit. The new plant is expected to start commercial production in late 2020.


Ghana: Carlos Ahenkorah, Deputy Minister of Trade and Industry, says that government is considering a temporary block on imports on cement. However, he added the catch that it would only do this if local producers could ensure ‘fair’ pricing, according to the News Statesman newspaper. He made the comments at an award dinner organised by CIMAF.


Mexico: Grupo Cementos de Chihuahua (GCC) says it will commit to setting greenhouse gas reduction targets in line with climate science by joining the Science Based Targets initiative (SBTI). GCC will set science-based emission reduction targets in line with the level of decarbonisation required to keep global temperature increase well-below 2°C compared to pre-industrial temperatures, as described in the latest Special Report of the Intergovernmental Panel on Climate Change (IPCC).

“By joining the SBTI, GCC will ensure that the company´s low-carbon transformation is aligned with climate science and is a further reflection of our unwavering commitment to implement global best practices related to sustainability,” said Enrique Escalante, GCC´s chief executive officer (CEO).


US: RHI Magnesita has acquired Missouri Refractories for an undisclosed sum. The refractory producer operates a plant at Pevely, Missouri. It produces over 400 high-quality monolithic mixes, which serve industries, including cement, lime, steel and glass.

“With its more than 45 years of experience in fulfilling the needs of demanding, highly loyal and satisfied customers, Missouri Refractories perfectly fits into RHI Magnesita’s strategy to strengthen our position in the North American refractory market,” said Stefan Borgas, chief executive officer (CEO) of RHI Magnesita.


Thailand: Siam Cement (SCG) has recorded a profit of US$2.64bn in 2019, down by 13% year-on-year from US$3.05bn in 2018. Revenue fell by 8.5% to US$14.1bn from US$15.4bn.


India: Birla Corporation has recorded a profit of US$11.3m in the three months ending 31 December 2019 - the third quarter of the Indian fiscal year: up by 200% from US$3.77m in the corresponding quarter of 2018. Revenues in the period rose by 11% to US$243m from US$219m.

Birla Corporation has also announced plans for a 3.9Mt/yr integrated grinding plant in Mukutban, Maharashtra, as well as upgrades further increasing both its integrated and grinding capacities.


India: Ramco Cements’ profit in the three months to 31 December 2019 was US$13.3m, down by 6.3% year-on-year from US$14.2m. Revenues in the period rose by 5.3% to US$180m from US$171m. Sales volumes grew by 3.7% year-on-year to 28Mt from 27Mt.

A 100% capacity expansion of Ramco Cements’ 1.0Mt/yr Kolaghat grinding plant in West Bengal to 2.0Mt/yr, which begun in September 2019, is scheduled for completion in 2020.


UK: CemFree cement-free concrete has been applied volumetrically for the first time in a 52m3 repair to the Woodford West Viaduct on the M25 London ordbital motorway in Essex. The reason behind the choice of method was the unavailability of batching plants at night, which was the only time that a team of Jackson, DB Group and Axtell employees working on behalf of Connect Plus were permitted to perform the work on the UK’s busiest road. CemFree said that 9.4t of CO2 emissions were cut by comparison to the same project undertaken with ordinary Portland cement (OPC). Jackson director of highways Paul Watson said, “We hope this marks a turning point on the M25 and the wider Highways sector for using low carbon alternatives.”

Cemfree uses 95% ground granulated blast furnace slag (GGBFS) and a 5% alkali activator, removing the need for cement. This gave CO2 emissions of 114kg/t, which the company says is 77% lower than conventional (OPC).


India: 13 employees of Jammu and Kashmir Cements Limited (J&K Cements) have been suspended following an incident in which J&K Cements managing director Ishtiyaq Drabu was locked inside the 0.4Mt/yr J&K Cements Khrew plant, where he says he was ‘held hostage and threatened.’ In a charge sheet against the employees, he further alleged that they had ‘left their place of duty unauthorised’ in order to assemble at the main gate, where the trap was sprung. The Daily Excelsior newspaper has reported that the action was taken by the employees in order to demand payment of their salaries. “The intervention of the police saved my life,” said Drabu.

550 J&K Cements employees have not received wages since December 2018 and US$3.91m is missing from the state-owned producer’s pension fund. Drabu has been able to draw his salary every month since his appointment in January 2019.