Global Cement News

Pakistan: Germany’s Aumund Fördertechnik is supplying equipment for a new 8000t/day production line that Flying Cement is building at its Mangowal plant in Punjab Province. Aumund is providing bucket elevators, pan conveyors and silo discharge gates for the project.

One belt bucket elevator will feed raw meal to the silo. It is designed with a centre distance of 87.6m and will reach a capacity of around 650t/hr. The other belt bucket elevator will also have a capacity of 650t/hr. Its centre distance is 115m and it will take raw meal to the heat exchanger. Flying Cement will use an Aumund KZB 1200/400 pan conveyor to transport clinker to the main silo. This conveyor will be approximately 115m long, with a lift of 43.5m, and a capacity of up to 580t/hr. The off-spec silo will be served by an Aumund KZB 1200/400 pan conveyor which is 42m long and has a capacity of 580t/hr. The order also includes 13 silo discharge gates.

The bucket elevators will be dispatched to Pakistan at the beginning of August 2018 and the pan conveyors will be supplied in a second consignment at the end the year.

Germany’s Knauf announced this week that it is set to buy North American wallboard producer USG. The news is relevant for the cement industry because both companies are prominent gypsum producers. They are leading gypsum wallboard producers, with assets around the world, including gypsum mines. Although their focus is on wallboard a significant proportion of raw gypsum ends up being used in cement production. Hence, the takeover of a major North American producer by a European one deserves attention.

First a little background on the deal between Knauf and USG. The takeover has been a particularly acrimonious one at times, with both parties throwing strong language at each other and, although it has avoided being a hostile takeover, at times it seemed close. The deal became public in March 2018 when USG publicly said that it had rejected a bid of US$5.9bn from Knauf. It described the offer at the time as ‘wholly inadequate.’ Knauf then fought back by sending a letter to USG’s shareholders urging them to vote against director nominees at the next annual general meeting. Knauf owns 10.5% of USG’s shares. Then, in April 2018, Warren Buffett, the chief executive officer of Berkshire Hathaway, USG’s largest shareholder with a 31% stake, swung behind Knauf’s scheme. At this point it was revealed that Buffett had facilitated the initial talks between USG and Knauf. He even described the investment in USG as ‘disappointing.’ Buffett’s public move against USG in April 2018 signalled the death knell to USG’s independence. The US$7bn deal between Knauf and USG was agreed and announced on 11 June 2018. The transaction is expected to complete in early 2019.

USG operates 12 mines or quarries in North America. It also has other assets around the world including three gypsum mines in Oman, Thailand and Australia respectively that it runs in conjunction with its USG Boral joint venture in the Middle East and Asia. By contrast Knauf held over 60 quarries in 2014 with a focus on Europe.

The interesting implications from the merger may arise from what Knauf plans to do in certain regions. North America for example saw a reduction in raw mined gypsum production since the financial crash in 2008 as building markets suffered. Rising levels of synthetic gypsum production from coal power plants partly compensated for this. Buying USG gives Knauf a truly global base of natural gypsum production with which it can supply both itself and any cement customers. Knauf has a real shot of cornering the market in raw gypsum production provided it can keep the price low enough to stop enough rival mines being opened. Knauf might decide, as the construction market continues to recover in the US, to bring in the extra gypsum from elsewhere if it proved cost effective. Hooking up USG-Boral gypsum resources in Asia with Knauf’s might have implications for cement producing countries that lack sufficient gypsum supplies such as India. Oman is building itself up as the major gypsum exporter to Asia and USG-Boral is a part of it, with major gypsum resources in the country.

In terms of the cement industry it seems likely that there will be no immediate shakeup of gypsum supply. Long term supply contracts with either USG or Knauf should remain as they were and will stransfer to the new enlarged company. Knauf’s main market for gypsum is to use it to make wallboard but gypsum use for cement is a significant market as well. The ‘fun’ starts when or if Knauf starts to reorganise its supply chains. As its focus is on the wallboard business there may be implications thereafter for cement users. And since Knauf’s only major competitor at scale is Saint-Gobain, the market has just shrunk.

US: Cadence Environmental Energy has promoted Ted T Reese to Executive Vice President. Cadence provides technology for waste fuel recycling and emission reduction technology to the cement industry and is the exclusive supplier of waste-derived fuels for Ash Grove Cement. As part of the company’s succession plan founder Ted J Reese plans to hand over the presidency to Ted T Reese in 2019.

Finland: Carina Geber-Teir has been appointed as Senior Vice President, Communications by Cargotec. She will take the post by September 2018 at the latest. She will be responsible for leading communications, investor relations and sustainability function. She will be a member of Cargotec's Extended Executive Board and report to chief executive officer (CEO) Mika Vehviläinen. She succeeds Leena Lie, who has taken a new job at Huhtamäki Oyj.

Geber-Teir, aged 46 years, joins Cargotec from OP Financial Group, where she has been a member of the Executive Board and Chief Communications Officer since 2009. Prior to this she was Communications Director at Varma Mutual Pension Insurance.

China: Anhui Conch has suspended production at three of its production lines at the cement plant run by its Tongling Conch subsidiary at Gusheng in Anhui province. The suspension has followed the temporary closure of a pier used by the plant in late May 2018 in accordance with new government regulations on drinking water supply and pollution.

Use of the pier has been suspended as it is close to the Tongling Water Treatment Plant. The pier is used to export cement and clinker products from the unit and bring in raw materials such as coal. The temporary suspension of the plant’s production lines will reduce its clinker production capacity by 58% to just under 9Mt/yr from 15Mt/yr.

The cement producer has defended its environmental record, pointing out that the pier was approved with all the necessary licences and environmental approvals in 1987. Construction of the water treatment plant started in 1992.

Clinker products produced by Tongling Conch are mainly sold to Anhui Conch’s subsidiaries, including cement grinding plants along the Yangtze River and on the coast. The company plans to source clinker from other plants to continue supporting the affected grinding plants.