Global Cement News

India: JK Lakshmi Cement’s profit in the first three months of 2020, the fourth quarter of the Indian fiscal year 2020, was US$13.0m, up by 150% year-on-year from US$5.21m in the corresponding period of 2019. Sales were US$151m, down by 11% year-on-year from US$169m. The Press Trust of India has reported that the coronavirus outbreak had a ‘marginal impact’ on the results.

JK Lakshmi Cement said, “The company's concerted efforts in improving product mix, market optimisation, enhancing the premium products sales, reducing logistic costs and improving plant efficiency parameters enabled the company to post better returns. Softening of petcoke prices also helped the company to improve its margins.”

Canada: Votorantim Cimentos subsidiary St Mary’s Cement has completed a 30m-high stack extension at its 0.8Mt/yr integrated St Mary’s plant in Stonetown, Ontario. The Canadian Press newspaper has reported that the upgrade is a response to increased odour complaints from Stonetown residents.

Votorantim Cimentos St Mary’s plant manager Jose Soraggi said, “Growing along with the community also means adapting along with it. We consider ourselves fortunate to maintain good relations with local residents and the town and to serve as an integral part of the business community in St Marys and Perth County. We take every opportunity to hear from our constituents and find solutions toward a positive and mutually beneficial future. The stack extension is an excellent example of that.”

Switzerland/US: LafargeHolcim has announced the extension of its partnership with Solidia Technologies to mid-2020. Cash News has reported that the partnership, which has seen a 30% reduction in LafargeHolcim’s overall CO₂ emissions since its formation in mid-2013, aims to achieve a 70% reduction in the producer’s carbon footprint.

Huaxin Cement’s deal to buy ARM Cement’s assets in Tanzania has reportedly completed this morning. The Chinese cement producer will pour US$116m into Maweni Limestone to settle its liabilities and add another US$30m to complete plant construction and an upgrade, according to Reuters. Kenyan-based ARM Cement operates an integrated plant at Tanga and a grinding plant at Dar es Salaam.

Given the state of the world at the moment due to coronavirus the timing seems almost prophetic. There have been plenty of jingoistic warnings in Western media about renewed Chinese global dominance in the wake of the crisis. However, this agreement dates back to at least September 2019 when it was publicly announced, well before the current health scare. This is part of the Chinese expansion plan in Sub-Saharan Africa that’s been happening informally and formally since at least 2013. ARM Cement has seriously suffered since 2017 when cement demand fell in Kenya, a coal import ban in Tanzania caused production issues at its Tanga plant and increased competition hit both countries. It entered administration in the summer of 2018 and previous owner Pradeep Paunrana has been fighting PricewaterhouseCoopers’ attempts to sell the business to local rival National Cement. In some respects the timing of this deal may also be bad for Huaxin Cement given that it’s just suffered a 36% year-on-year drop in sales revenue to US$542m in the first quarter of 2020, related to the coronavirus outbreak. If the company can’t absorb this through the rest of the year then it might have a problem.

The real trend here in Chinese expansion strategy by its cement sector is a move from imports, building plants and co-financing projects to outright asset acquisition. This isn’t the first example either. West China Cement completed its purchase of a majority stake in Schwenk Namibia for US$104m in January 2020. This gave it control of Ohorongo Cement. Other recent Chinese moves in Sub-Saharan Africa include the supply of a modular grinding mill in Guinea by Sinoma and the competition of construction of a 1Mt/yr integrated plant in Lubudi Territory in Democratic Republic of Congo by another CNBM subsidiary, Tianjin Cement Industry Design and Research Institute.

An outlier from the more ‘traditional’ Chinese routes of either supplying equipment and/or co-financing cement plants in Africa has been the CNBM/Sinoma plan to build a 7Mt/yr ‘mega’ plant in Tanzania. Once completed it will nearly double local clinker production! Unsurprisingly, when it was first announced it was pitched towards the export market. Cement producers in East Africa might do well to remind themselves what has happened in Egypt since the 13Mt/yr government/army-run El-Arish Cement plant at Beni Suef opened in 2018: the over-supplied market collapsed. Together with the Huaxin Cement purchase, once the CNBM project completes, Chinese companies will own the majority of cement production capacity in Tanzania.

Looking at Sub-Saharan Africa, Chinese cement producers look set to benefit from any potential economic realignment following the coronavirus pandemic due to their conservative approach in expanding overseas. By investing cautiously and generally avoiding large-scale international acquisitions and mergers they have insulated themselves relatively well from any potential economic crisis. One weakness though is a reliance on the strong Chinese domestic market. If, say, it declines over a longer period due to the coronavirus crisis or ever reaches more ‘normal’ per-capita cement consumption figures then expanding too slowly overseas might look like the wrong strategy in retrospect. Yet, if western competitors start retreating further then the temptation to start to buy assets in bulk may grow. Another risk is how badly the coronavirus outbreak hits countries in Africa. The combination of poor healthcare systems, younger populations and warmer climates make it extremely unpredictable. Fortune may favour the bold but slow success seems to be working well for Chinese producers so far.

US: David Mariner plans to step down as president and chief executive officer (CEO) of Boral North America at the end of May 2020. He then plans to leave Boral altogether at the end of June 2020 following a decade with the company. Darren Schulz, currently the president of Boral Roofing North America, will become the acting president and CEO until a successor is appointed. The final decision on a permanent head for Boral North America will be made by Boral’s new CEO and managing director. However, the board of Boral is also looking for a new CEO, following Mike Kane decision to retire earlier in 2020.