Global Cement News

Spain: Spanish association of cement producers Oficemen has appointed Isidoro Miranda as its new chairman. Miranda, the managing director of Lafarge Cementos, will replace the former chairman of Cementos Portland Valderrivas and current CEO of builder FCC, Juan Bejar. Oficemen also named Jaime Ruiz de Haro, Jose Maria Aracama, Feliciano Gonzalez and Jorge Wagner as vice presidents.

Once again the winter weather was bad in Europe. Once again the major European cement producers reported a fall in sales. So what has changed between the first quarters of 2012 and 2013?

Lafarge's cement sales volumes in Western Europe for the first quarter of 2013 fell by 24% year-on-year, compared to an 11% drop in 2012. Holcim's decline in volumes stabilised, compared to a 13.2% drop in 2012. HeidelbergCement's volume decline increased slightly, from a drop of 8% in 2012 to one of 10% in 2013. Cemex didn't release sales volumes figures for cement but overall net sales in its Northern Europe region fell by 13% in 2013 compared to 11% in 2012. Italcementi's cement sales volumes maintained a steady decline in both the first quarters of 2012 and 2013 at about 19%.

Even with the reduced number of working days for the quarter in 2013 taken into account, things are not looking good. Generally the results fit the prediction made by the UK Mineral Products Association (in the UK at least) that construction activity remains subdued in 2013 so far.

Profitability measures for the European divisions of the big producers, such as earnings before interest, taxes, depreciation and amortisation (EBITDA), reinforce the gloomy outlook, suggesting that most of the cost cutting exercises aren't having much effect on investor balance sheets quite yet. Lafarge's EBITDA in Western Europe fell by 94% to Euro5m. HeidelbergCement's loss before interest and taxes (EBIT) increased to Euro91m. Cemex's operating EBITDA fell from US$55m in 2012 to a loss of US$17m in 2013. Italcementi's EBITDA decreased to Euro12.8m.

Only Holcim reversed this trend, growing its EBITDA by 43% to Euro23.5m. The Holcim Leadership Journey appears to be working. Although the sale of a 25% stake in Cement Australia certainly helped.

Elsewhere, we have an additional story at add to last week's focus on Iraq, with the announcement that Mondi has opened an industrial bags plant in Iraq. It's based in Sulaimaniyah in northern Iraq near to the new Sinoma-Lafarge project that we reported on.

Finally, the news that the Competition Commission of India has been asked to investigate a complaint against a Chinese waste heat recovery vendor raises tensions between the world's largest two cement producers. The story echoes similar trends in the gypsum wallboard business in April 2013 where a selective anti-dumping duty was imposed on imports from China, Indonesia, Thailand and the UAE. Watch this space.

Ukraine: The supervisory board of Eurocement Ukraine has relieved acting director-general Vitalii Horholiuk and appointed Oleg Lopatin director-general, according to a company statement. The decision to dismiss Horholiuk was due to Lopatin obtaining a work permit for Ukraine. Previously, Lopatin managed the Voronezh branch of Eurocement Group, based in Moscow, Russia.

Chinese and Iranian companies have released information on two new projects in Iraq. Chinese cement equipment provider Sinoma has signed a contract with the Faruk Investment Group to build a cement clinker production line and the Islamic Republic News Agency has reported Iran's intention to build a 2Mt/yr plant.

Sinoma's project seems targeted at the domestic market. It is based at Sulaymaniyah, at one of Faruk Group's two plants that it runs with Lafarge near the northern Kurdish city. Lafarge also runs a third plant in Kerbala that announced the arrangement of a US$70m loan for renovations in January 2013. Lafarge holds a cement production capacity of 6.5Mt/yr, 20% of Iraq's total installed capacity of 32.5Mt/yr. Although, following years of neglect installed capacity and actual cement produced can vary significantly. Faruk Group's decision to choose Sinoma marks a move away from the German firm ThyssenKruppPolysius whom they have used previously. The new line will be Sinoma's seventh in Iraq through its Nanjing subsidiary.

Meanwhile, the Iranian project carries more international motives because the clinker for the plant will come exclusively from Iran. The build is based in the southern Muthanna province and is being overseen by the Iranian Azar-Abadegan Khoy cement plant. As reported in late January 2013, clinker stocks rose in Iran due to a decline in cement demand in the country. Iraq is one of the countries Iran has been able to export cement to during the 2012 – 2013 Persian year. In this context expanding into Iraq makes a lot of sense to combat potential Iranian overcapacity.

In addition all the products made at this plant will carry Iranian branding. Given that this plant is in southern Iraq relatively near to the Saudi border this will complicate any plans to sell stock across the border. As we report this week in Global Cement Weekly, Saudi cement producers have been asked to build reserves of cement to manage the shortage better.

Both projects reveal some of the issues facing Iraq's cement industry, specifically Iraq's redevelopment and the pressures it faces lying between massive demand for cement in Saudi Arabia and overcapacity in Iran. After years of low capacity utilisation rates, Iraq is predicted to hit a production capacity of 22Mt/yr by the end of 2014 with demand expected to reach 35Mt/yr.

For more information on the Iraqi cement industry read Global Cement Magazine's article.

It's been an expensive week for the US cement industry in terms of environmental infringements. First, the Environmental Protection Agency (EPA) announced that Cemex has agreed to pay a US$1m fine for nitrogen oxide (NO_x) emissions at its Lyons cement plant in Colorado. Then Lehigh's Glen Falls plant was fined US$50,000 by the state of New York for polluting the Hudson River.

With new NESHAP and MACT environmental regulations from the EPA in place for 2013, one thought that occurs is how long it will take for the new standards to sink in. For example, the lead-time for both of the cases we have reported upon this week was several years at least. The complaint against Cemex referred to a period from 1997 to 2000, when the plant was operated by Southdown. Lehigh's fine arose from an inspection carried out in April 2010.

The EPA hopes that its latest changes will cut US cement industry emissions of mercury by 93%, hydrochloric acid by 96%, particulate matter by 91% and total hydrocarbons by 82%. After years of haggling between the Portland Cement Association and the EPA, even the latest round of regulations received a reprieve until September 2015, with the option to ask for a year's extension. So, if the lead times from the Cemex and Lehigh fines are indicative, contravening cement plants might not be facing fines relating to the current NESHAP or MACT regulations until around 2023 - 2026. Of course by this time, the regulations governing emissions will probably have changed again.

Given the shifting backdrop of US environmental regulations, many of the pertinent environmental presentations at last week's IEEE-IAS/PCA Cement Conference in Orlando, Florida, were of great help to US cement producers. Among these were two presentations by John Kline, who firstly gave an overview on the hot-topic of mercury emissions from cement kilns. He singled out the difficulties in comparing cement kilns to power plants in terms of mercury as cement plants are far more complicated, with more input materials. Kline also delivered a second presentation comparing selective catalytic reduction (SCR) for removal of NOx to selective non-catalytic reduction (SNCR) in cement plants. Those at the conference who attended Carrie Yonley's presentations were given a helpful and concise review of the often-conflicting regulations for cement plants, which she bravely attempted to give in just 16 minutes.

Despite the challenges of adhering to new environmental regulations, the mood at the 55th IEEE-IAS/PCA Cement Conference was one of general optimism for the future of the US cement industry. A full review of the conference can be found here.