Global Cement News

Reporting the annual results for Turkish cement producer Adana Çimento opened up an issue familiar from many of the international big players' annual reports last year: currency fluctuations.

The conversion rate between the US dollar and the Turkish lira rose from US$1 to Turkish lire 1.55 at the end of 2010 to US$1 to Turkish lira 1.89 at the end of 2011. This created the alarming situation where the company's annual sales rose by 3% from 2010 to 2011 if you measured it in Turkish lira, but fell by 15% if you measured it in US dollars!

Great news for currency speculators playing with so-called 'hot money' but not so great for manufacturers seeking stable trading conditions. As for the company's shareholders, if they are paid their dividend in Turkish lira then it's the value of the lira that is important. If the shareholders have to change Turkish lira into their own 'foreign' currency in order to spend it (or keep it in the bank), into dollars for example, then that's when they could lose out.

This is particularly bad news for a country like Turkey with its strong export market. Although looking at the nation's top export destinations in 2010 reveals a roll call of instability, including Iraq, Syria, Libya and Egypt. Regardless of the price, these countries are going to need cement when the dust settles from ongoing political turmoil, something we also cover in another story this week with reports of striking at Egyptian plants. Cement isn't likely to be coming from Saudi Arabia though, which we see is enjoying demand driven by government-funded construction projects.

Elsewhere this week we have stories on the impact of the Indian Budget on the cement industry, yet more Dangote projects in Cameroon and Liberia and promising signs from Taiheiyo in Japan.

France: Gerard Lamarche, managing director of Groupe Bruxelles Lambert, will be appointed to the board of Lafarge at a meeting on 15 May 2012. He will replace Thierry de Rudder.

Lamarche, aged 50, graduated from the University of Louvain-la-Neuve in Belgium. He also completed the advanced management programme at the INSEAD Business School. He began his professional career in 1983 with Deloitte Haskins & Sells in Belgium, and became mergers and acquisition consultant in the Netherlands in 1987.

From 1995 he became the special projects advisor to the president and secretary of the Suez board of directors and participated in the merger between Compagnie de Suez and Lyonnaise des Eaux in 1997. He was later appointed the new Group's senior vice president in charge of planning, control and accounts management. He was appointed senior executive vice president – finance of the Suez Group in 2004, becoming executive vice president, CFO of GDF SUEZ, and member of the Management and Executive Committees of the GDF SUEZ Group in July 2008. Lamarche is also a director of Total and Legrand.

Last week Lafarge received a US$20m slap-in-the-face for cartel-like activity in South Africa. The case, which has been running since 2008, has investigated dealings at Lafarge, Pretoria Portland Cement, AfriSam and Natal Portland Cement-Cimpor. Yet the question remains: are cartels ever a good thing for the industry?

Back in December 2011 we covered the Common Price Agreement (CPA) in an article on cement price trends in the UK in Global Cement Magazine. This legally-approved cartel, operated by the UK Cement Makers' Federation, ran from 1934 until 1987. It was dissolved to allow UK producers to compete with cheaper foreign imports. Its supporters argued that it kept prices down in remote areas and stabilised the industry, a situation that cement buyers faced with escalating prices in Tanzania and Saudi Arabia might sympathise with this week. Despite this, prices in the UK fell after the CPA ended in 1987.

An uncited 'fact' on Wikipedia – itself a virtual monopoly on online knowledge – suggests that the median price increase achieved by cartels over the last 200 years could be 25%. Lafarge's fine represented 6% of its 2010 annual turnover in the region. Depending on how Lafarge's sales relate to its turnover this raises the possibility that even with its hefty fine Lafarge may still be in profit over the venture.

Cartels dog the cement industry given the prevalence of small groups of sellers in many markets. Throw in the current economic pressures in regions with over-capacity and the temptation must be irresistible. When one makes a link from this week's story from Pakistan about over-capacity to January's headline of 'inexplicably high' prices, the feeling occurs that Lafarge's chastening in South Africa is just the tip of the iceberg.

What do you think? Join our discussion on cartels in the Global Cement LinkedIn Group

Switzerland: Wolfgang Reitzle has been proposed to the Annual General Meeting on 17 April 2012 for election to the board of Holcim Ltd. Reitzle, aged 63 and a German citizen, studied engineering and economics at the Technical University of Munich and holds a degree and a PhD in mechanical engineering.

From 1976 to 1999 he worked for the car manufacturer BMW, where in 1987 he was appointed as a regular member of the Executive Board, responsible for research and development. In 1999, Reitzle took over as CEO of the Premier Automotive Group and Vice President of the US car manufacturer Ford. In 2002, he joined the Executive Committee of Linde, a world-leading gases and engineering company, and became CEO in 2003.

Lafarge UK has scored a notable success recently at its Cookstown Works reaching 10 years without a lost-time injury (LTI). It has emerged that this is the longest a Lafarge Group plant anywhere in the world has gone without a LTI. Cookstown also set the record the previous year in 2011, showing how far ahead it is of the rest of the group.

LTIs are generally defined as any work related injury or illness which prevents a worker from doing any work the day after the accident. Another similar measure is Lost Time Injury Frequency Rate (LTIFR), which takes into account hours worked by staff.

For example, in April 2011 Global Cement Magazine interviewed the safety manager at the Ste. Genevieve plant in Missouri, USA. He revealed a rate of zero lost-time incidents rate over the last 1.2 million-man hours and no LTIs over the last 700 days. Through construction the plant employed 2300 personnel and then 200 operational employees when it went live. By comparison Cookstown employs only 80 workers. Its LTIFR will be much lower.

The Mineral Products Association recorded a 81% reduction in LTIs between 2004 and 2009 for the UK cement industry. It has since set itself the further target to halve the LTIFR between 2009 and 2014. As of 2009 the UK LTIFR for direct employees was 3.59 per million hours worked. The MPAs target LTIFR for 2014 is 1.79 or lower.

Regardless of how you present the figures the Cookstown Plant LTI achievement is impressive. The challenge, as ever, lies in bettering it.