Global Cement News

Guatemala: The Inter-American Cement Federation (FICEM) has appointed Alejandro Ramírez Cantú, the chief executive of Cemex in the Dominican Republic, as its new president for the period 2017 – 2020 at its technical congress. He succeeds Gabriel Restrepo, manager of Institutional Affairs at Cementos Argos, in the role, according to the 7 Dias newspaper.

Ramírez Cantú is an industrial and systems engineer trained at the Tecnológico de Monterrey in Mexico and he holds a Master's Degree in business administration from the Wharton School of the University of Pennsylvania. He joined Cemex in 2000 and he has directed operations in Thailand, Puerto Rico, Costa Rica and the Dominican Republic.

Colombia: Organizacion Corona has announced that its President Carlos Enrique Moreno will be replaced by Jaime Alberto Angel from October 2017 as head of the Corona Industrial division. Angel will oversee the construction of a US$400m cement plant in the Sonson Municipality of Antioquia, which the group is building as a joint venture project with Spain’s Cementos Molins. The 1.35Mt/yr plant is expected to come online in early 2019.

Moreno said that the decision to split the company’s management was due to the construction of the cement plant. Angel will also look after Corona’s bathrooms and kitchens, materials and paints, energy and industrial supplies and tableware divisions.

Germany: RKW Group has appointed Reinhold Franke as the head of its packaging division and to its executive board. He succeeds Matthias Kaufmann. Franke's areas of responsibility also include group marketing and communications, as well as research and development, sustainability and new business development

Franke, aged 57 years, started his career in 1985 and has worked in the sales and marketing of plastic films and flexible packaging. He began his career with Haendler & Natermann and later worked internationally for Nordenia as Head of Sales in the Netherlands and the US. In 2012, as president and chief operating officer (COO), he assumed overall responsibility for Nordenia USA Jackson. Following the acquisition of Nordenia by the Mondi Group, Franke moved to the Verpa Group, where he was responsible for setting up its US business.

There have been sounds of discontent coming out of South Africa this week, as AfriSam and PPC continue to (apparently) fail to come to an agreement on the terms of their long-discussed proposed merger. The pair have formally been in discussion since February 2017 but the situation now looks precarious. AfriSam has cancelled the heads of terms that had stood since that month. PPC has now hit back by giving AfriSam until this Friday (1 September 2017) to come up with a new and ‘sufficiently interesting’ deal for it and its shareholders. AfriSam’s acting Chief Executive Rob Wessels said, "AfriSam remains firm that a transaction between AfriSam and PPC will greatly benefit the stakeholders of both companies.” However, PPC’s chairperson Peter Nelson said that his shareholders were ‘frightened about the prospect’ of the merger.

If you think all of this to-and-fro sounds a bit familiar, that’s because it should. AfriSam and PPC have been courting not just since February 2017, but since December 2014. At that time, following the surprise resignation of CEO Ketso Gordhan, discussions lasted until the end of March 2015 before fizzling out. PPC’s (then) new CEO Daryll Castle confirmed that neither party could agree on terms. The two parties were also able to save some face by pointing out that the merged entity would have had around 60% of all South African cement capacity. While this is a pretty big potential stumbling block, it would been pretty obvious before discussions started and is by no means insurmountable. One gets the feeling that, given more enthusiastic partners, the discussions might have found a way forward.

At the time PPC and AfriSam played their cards close to their chests and we can’t be sure quite why the discussions really broke down. However, regardless of what happened last time, there do appear to be a lot of parallels with the current situation.

Firstly, PPC is, once again, in a state of transition. CEO Darryll Castle announced in July 2017 that he would be leaving to ‘pursue other interests,’ although neither an exact departure date nor destination was provided. Johan Claassen, the current managing director of PPC, has been appointed to the role, but only on an interim basis, presumably in anticipation for the expected merger. Other positions in the group’s executive team were reshuffled in the past couple of weeks and there was also the resignation of Tito Mboweni, a non-executive director, rumoured to be over a difference of opinion regarding the merger. On top of this, AfriSam’s CEO Wessels is also on a short-term contract. Could all of these pre-merger moves now be in vain?

Secondly, PPC continues to suffer from a combination of a poor domestic construction market and increasing competition and from imports coming in from rampantly over-productive markets across the Indian Ocean. Arguably both of these effects are now worse than they were in 2015, although PPC did recently say that the second quarter of 2017 had been a lot better across South Africa than the first. However, PPC saw its full-year earnings collapse by 93% year-on-year in the first quarter of 2017, after it was awarded ‘junk’ status in May 2016 by credit-rating agencies. Is it this result alone that has gotten AfriSam thinking? Despite this, PPC remains the larger of the two parties. It certainly wants to be seen to be calling the shots with its 1 September ultimatum.

However, the two producers now share less than 50% of the integrated cement capacity in South Africa, not 60% as in 2015. According to the Global Cement Directory 2017 they share around 7.8Mt/yr of integrated capacity against 8Mt/yr in the hands of others. This is due to the commissioning of the monster 3.5Mt/yr Anganang clinker plant and associated Delmas grinding plant by Sephaku Cement (Dangote Cement) and the full commissioning of Mamba Cement, part of Jidong Development. Could this smaller combined market share make it easier for PPC and AfriSam to identify those assets that can be sold to appease the competition authorities? Could this yet save the discussions?

Whatever happens after Friday, it is apparent that some form of consolidation is essential for PPC (and the wider southern African market) if the industry is to ‘right-size’ for the future. The region is awash with cement. News from PPC Zimbabwe this week even hinted that the effects of imports are now so strong in that country that it is considering shutting down clinker production at its Colleen Bawn plant, which has operated for more than 70 years. This effect is in play all the way down the coast from the Horn of Africa to Capetown and has been discussed previously with reference to Kenya, Tanzania and Mozambique.

Even if it doesn’t get the ‘right answer’ from AfriSam this week, PPC may still stand to gain from the merger, even if it’s only in the short term. In March 2015 its shares jumped up 5% on the news that the merger talks had collapsed. Given its recent performance, another 5% boost would probably not be turned down.

UK: Hanson Cement has made two senior appointments within its bulk division as part of the company’s drive to improve customer service. Phil Matthew has joined as field sales manager and John Doolan has been promoted to key account manager. Phil and John will work together to strengthen new and existing customer relationships, reporting to Mark Hickingbottom, national commercial director – bulk products.

Phil Matthew was previously at AB InBev, where he held account and sales management roles. He will manage a team of six district sales managers and carry out internal training sessions in order to enhance customer service.

John Doolan, who has 27 years’ experience in the construction industry, will work in conjunction with Hanson’s key account customers to set and deliver strategic plans.

Commenting on the appointments, Mark Hickingbottom, said, “Phil and John’s combined experience and knowledge of the company will allow them to place Hanson’s values at the core of their work, helping to deliver our goals of being the most customer focused, responsible and reliable construction products supplier in the UK.”