Global Cement News

India: PC Abraham has been appointed as the managing director of Loesche India. He took the post at the start of October 2012.

Abraham joined Loesche India in 1995 and has been working as executive director of the technical department. Under his leadership, Loesche India established a technical field service department. He was also responsible growth in the after sales business of the company.

As 2012 draws to a close the challenges posed by the Australian carbon tax to the Australian cement industry are starting to show. First, Holcim Australia announced it was to lay off 150 staff. Then Boral released the news that it was planning to cut 90 jobs at its Waurn Ponds cement plant.

Following years of debate the Gillard government introduced the Clean Energy Act in July 2012. Heavy polluters were initially charged US$23/t of CO₂ emitted, more than twice the cost of similar schemes in Europe where it is US$10/t. A key criticism of the scheme was that it would damage the Australian domestic cement industry with cheap imports. However the Australian government cushioned the move with compensation packages for major polluters, including cement producers, currently set to last five years.

Although the Australian cement industry hasn't totally collapsed, with the loss of 1800 jobs as the Australian Federal Opposition warned of in 2011, imports have been favoured in recent months. Boral's suspension of clinker production at Waurn Ponds will increase imports. The change will result in 25-30% of Boral's clinker being imported. It's worth noting that Boral pointed out in its press release that this was 'in-line' with the Australian industry.

Adelaide Brighton, the country's third biggest producer after Holcim and Boral, may not have laid anybody off but it has secured a 10-year supply of foreign clinker. On 5 December 2012 the building materials producer announced that it was going to a buy a 30% stake in Malaysian white clinker and white cement producer, Aalborg Portland Malaysia. In the accompanying press statement the company's chief financial officer explicitly blamed the carbon tax as one of the reasons for the acquisition.

Whether the job losses at Boral and Holcim can be totally blamed on the carbon tax remains to be seen. Boral's second-half profit for the year ending 30 June 2012 suffered a fall of 59% to US$35.7m. Holcim noted weaker demand outside of mining regions for the third quarter of 2012. By contrast, Adelaide Brighton reported steady gains in its half-year report for 2012 although cement sales only increased 'marginally'. Elsewhere in its report Adelaide Brighton stated that it would cope with the impact of the carbon tax by reducing reliance on domestic manufacturing. These can hardly be comforting words for the Australian cement industry.

US: On 7 December 2012, The Monarch Cement Company elected Steve Sloan to serve on the board effective immediately to fill the unexpired term of independent director Richard N Nixon, whose resignation was effective 31 October 2012.

Sloan, aged 51, moves to the board of the cement firm with 17 of years experience in the aggregate and ready-mixed concrete industry. He has served for many years as the President and CEO of Midwest Minerals, Inc, headquartered in Pittsburg, Kansas. His current responsibilities include oversight of the financial, production, sales and regulatory affairs of Midwest Minerals' ready-mixed concrete plant and 19 aggregate quarry operations.

Monarch said that Sloan has the experience and skills to provide exceptional insight and judgment relative to corporate governance, corporate strategy, budgeting, banking, financial reporting, administrative functions and risk management.

Sloan will be a non-employee member of the board and will participate in the board's compensation policy and practices for non-employee directors. His term as an independent Class I Director will expire at the Annual Meeting of Shareholders on 9 April 2014.

Step forward UltraTech Cement into the vertical rumour mill! The Indian cement producer is the latest company reported as wanting to buy Jaypee Group's cement business in Gujarat. It follows Italcementi, Aditya Birla and CRH, who announced in October 2012 that negotiations had been 'terminated' as the parties had been unable to agree terms.

This time the asking price has risen, with Ultratech allegedly offering US$160-165/t and Jaypee holding out for US$180-185/t. Whilst UltraTech hasn't publicly confirmed the move, it pointedly hasn't denied it either. The Aditya Birla Group subsidiary only commented to the Bombay Stock Exchange that it had not issued any press releases on the subject. Aditya Birla Group itself was reported in October 2012 as pursing interest at US$130/t for Jaypee's 9.8Mt/yr operations in Gujarat and Andhra Pradesh.

Given the number of rumours and cash-rich CRH's very public failure to strike a deal it seems likely that Jaypee has a specific price in mind and it's sticking to it. Prasad Baji of Edelweiss Securities stated in a television interview with CNBC-TV18 that he thought that the cement industry cycle was starting to look up. Crucially he predicted that India's capacity utilisation was set to rise from its current level of 78% to 82% despite price declines in the current quarter.

This is in sharp contrast with Fitch Ratings which rated the Indian cement industry with a negative outlook at the start of 2012 and reports in late May 2012 that capacity ultilisation had actually fallen from 76% to 71%. Since then ICRA Research reported in late September 2012 that it expected Indian capacity ultilisation to stick to 76% for 2012 with prices showing 'resistance' in some regions to cost increases due to rising input costs.

With all this in mind it seems likely that UltraTech will join the growing list of Jaypee's spurned buyers when it fails to reach terms or when the rumours simply fizzle out. However if UltraTech does strike a deal the Indian industry will be the one to watch in 2013. According to data in the Global Cement Directory 2013, an acquisition of nearly 10Mt/yr production capacity would boost UltraTech's capacity to 62Mt/yr making it the 12th largest cement company in the world.

Denmark: Danish cement plant manufacturer FLSmidth has announced that Jørgen Huno Rasmussen, aged 60, group chief executive officer (CEO) of FLSmidth since 2003 has decided to retire in the middle of 2013 after 10 years of service. Thomas Schulz will be appointed new group CEO of and is expected to take up his new position no later than 1 June 2013.

Schulz, aged 47, is a German citizen and has since 1998 been part of Sandvik (Svedala Industries), currently as President of Sandvik's Construction business area and member of Sandvik's Executive Management Group, based in Sweden. From 2005 to 2011 Schulz was based in Germany, Sweden and Singapore as president of Construction and senior vice president of Mining and Construction. Schulz holds a MSc and PhD in Engineering from the Technical University of Aachen, Germany with a dissertation in Mineral Mining and Quarrying.

"On behalf of the Board, I wish to express my sincere gratitude to Jørgen Huno Rasmussen for his decisive contribution to the successful turnaround and development of the FLSmidth Group and for his dedicated leadership over 10 years. I am sure Thomas Schulz will prove to be a worthy successor and look forward to welcoming him to FLSmidth", commented chairman of the board of FLSmidth, Vagn Ove Sørensen.