Global Cement News

US: Gregory M Scott has become the president and chief executive of the Portland Cement Association (PCA), effective from 2 January 2013. Scott joined the PCA in January 2012 as the senior president of government affairs and was promoted to president in September 2012.

Scott holds a background in trade association leadership with legislative campaigns on federal transportation, environmental and energy issues. Most recently he served as executive vice president and general counsel for the National Petrochemical and Refiners Association (NPRA) in Washington, DC. Prior to joining the NPRA, Scott served as vice president of National Strategies, Inc, a trade association representing CEOs of Fortune 100 firms on corporate finance and tax issues.

He began his career serving on the staff of Senator Timothy E Wirth. From 1991-2008 Scott was a partner/member of Kelley Drye Collier Shannon, where he gained extensive expertise in petroleum refining and motor fuel marketing as well as legislative and regulatory issues.

Scott received his Bachelor of Arts degree from Colorado College in Colorado Springs and a law doctorate from the American University's Washington College of Law in Washington, DC.

Just before the end of 2012 Holcim sold shares in companies it owned in Thailand and Guatemala. It reduced its stake in Siam City Cement Company (SCCC) in Thailand from 36.8% to 27.5% and it sold its entire 20% minority stake in Cementos Progreso in Guatemala. For the sale of these two share packages Holcim received approximately Euro310m.

This is interesting given that Asia-Pacific was the Switzerland-based multinational's biggest sales area in 2011 and because sales of cement rose by 6% in Latin America in 2011. Similarly in 2012 from January to September the two regions propped up the group's profits. Why would Holcim sell stakes into two of its most profitable regions?

In its third quarter report in 2012 Holcim repeatedly described Thailand as 'encouraging' following floods in 2011. It added that it had focused increasingly on the cement market in the country and strengthened its position in neighbouring countries that resulted in lower clinker exports.

According to the Global Cement Directory 2013 SCCC has a capacity of 31Mt/yr, 65% of Thailand's total capacity of 48Mt/yr. SCCC predicted in December 2012 that domestic cement demand would increase by 5-10% in 2013. The company is currently planning to build new plants in Indonesia and Cambodia and is considering investing in Myanmar. In Indoniesia Holcim is the third biggest producer after Semen Gresik and HeidelbergCement subsidiary Indocement.

Meanwhile in Central America, Cementos Progreso was the sole producer in Guatemala with 2.5Mt/yr from two plants. This was set to double with the commissioning of a third plant towards the end of 2012. However, Holcim retains seven plants in southern Mexico (12Mt/yr), both of El Salvador's plants (2Mt/yr) and a plant in Costa Rica (1Mt/yr).

With Holcim's strong presence in Central America and the North American market reviving leaving Guatemala makes sense with the group's debt reduction programme in mind. The situation in Thailand is more complex, so unsurprisingly Holcim has reduced its stake rather than leaving completely. SCCC's expansion plans outside of Thailand suggest, that although growing, the market is maturing. In one such potential expansion target, Indonesia, Holcim is already a major producer.

In its press release announcing the sales in Thailand and Guatemala, Holcim attributed the decision to its ongoing debt reduction programme. As part of its 'Leadership Journey' the group intends to save Euro1.25bn by the end of 2014. Other savings in 2012 included reducing management in Europe, layoffs and closures in Australia, a plant closure in Hungary, further delays on the decision to build a new plant in New Zealand and layoffs in Spain. The management changes in Europe alone contributed a Euro99m chunk of Holcim's target saving of Euro124m for 2012.

Yet it's worth considering that a week after the sales of its shares Holcim's subsidiary in India, Ambuja Cements, announced investments of Euro277m in India. Perhaps the best way to save money is to make more money.

Portugal: Portuguese cement producer Cimpor has appointed Luiz Roberto Ortiz Nascimento and André Pires Oliveira Dias as members of the board of directors. The move follows the resignations of Erik Madsen and Walter Schalka.

Ortiz Nascimento, aged 62 from Brazil, holds a degree in economics from Mackenzie University in São Paulo. He became the chief executive officer of construction and trade at Camargo Corrêa, the owner of Cimpor, in 1992.

Oliveira Dias, aged 31 and also from Brazil, holds a degree in Business Administration and International Business from the American Intercontinental University in London. He has worked for Camargo Corrêa since joining its trainee program in 2005. Most recently he was the strategy and planning department manager since 2009.

For the last Global Cement Weekly of 2012 we look at the big stories in the cement industry from over the last year. As usual we'll be posting this in our LinkedIn group. Given the scope we're bound to have missed some themes – for example we haven't mentioned the continued growth in Indonesia - so let us know your additions, comments and responses.

Bad news from Europe
With stories this week of layoffs at Italcementi and Oficemen confirming that Spanish cement consumption has fallen by a third in 2012, our first theme of the year has been the continued decline of the western European cement industry. Given that no western European countries even made the top 10 list of cement producing countries in 2011, readers might be forgiven for asking why this is news. The reason is because many of the multinational cement producers are still based in Europe. Although fears of financial meltdown following a Greek exit from the European Monetary Union have receded, Titan's crashing profits still present a stark warning.

Multinational debt reduction
This leads us to the next point: several of the global cement majors have been pursuing aggressive debt reduction schemes over the last year. Holcim's 'Leadership Journey' saw it announce cost-cutting measures designed to save Euro99m this week. This is part of an overall series of personnel changes to save at least Euro1.25bn by 2014. Lafarge has sold plants in the United States and the UK whilst cutting its debts. How much longer will these schemes go on for?

Recovery in the Americas
Across the Atlantic in the Americas the cement industry has been quietly growing in confidence in 2013. In the United States a forecast from the Portland Cement Association (PCA) expects a 7.5% rise in cement consumption in 2012. Brazil's Camargo Corrêa acquired the controlling stake in Portugal's Cimpor over the summer, with Votorantim picking up Cimpor's overseas assets as part of the deal. As a whole demand for cement in Brazil rose by 8.5% in the first eight months of 2012.

Yet hurdles still remain for the US industry. The US Fiscal Cliff now seems unlikely to wreck the recovering US economy but EPA regulations may still stall the US cement industry. The weakened maximum achievable control technology (MACT) standards for air toxics emissions were received at the White House Office of Management and Budget earlier in December 2012 for pre-publication review. If there are any surprises here US producers need only look at Australia for what might happen next, where carbon legislation may be crippling the industry.

Managing the African boom
After all the gloom above at least Africa's growth remains spectacular, particularly as east Africa continues to develop. Here the challenges have been more about fighting off the competition. On the east coast of the continent this has meant coping with cheap exports from Pakistan and Vietnam flooding the market, Currently poor infrastructure links are preventing the exports reaching much beyond the immediate coast. With Nigeria declaring itself 'self-sufficient' in cement in October 2012 and Dangote planning to shut a plant, infrastructure building and intra-continental exports seem set to rise massively. Fortunes will be made and lost in the business melee.

Mixed demand in the Middle East
Saudi Arabia's decision to lift its import ban in March 2012 indicate that the Middle East's biggest player demands significant amounts of cement. Yet across the border the United Arab Emirates is massively overproducing which in turn is wrecking the industry in Oman. Egypt remains riddled by industrial disputes that have reduced production by 50%. Iran continues to promote its growing production capacity but the international economic sanctions enforced upon the country can only lead to overcapacity.

Where next for India and China?
This leaves the world's biggest cement producing nations: India and China. India's promise remains immense yet so too does speculation regarding its growth. Indian capacity utilisation looks set to stick at 76% in 2012. UltraTech nearly doubled its profit in the second quarter of the 2012 fiscal year and many projects have been announced in recent months, yet India's power grid collapse over the summer is just one of many endemic problems facing the industry.

China remains the world's biggest producer of cement by a gargantuan margin but halfway through the year profits from Chinese cement producers took a nasty knock. Since then it's got worse. Chinese officials have spent the year stating publicly that their country is producing too much cement.

Whilst it's hard to tell what will happen next, China's state-owned approach to capitalism could allow positive change to the industry on a massive scale, from even more infrastructure spending to further tightening of environmental regulations. Or it could just carry on as before as the risk of a 'hard' economic landing looms. One consequence might be Vietnam-style overcapacity creating mass exports forced through by China's global political power. Nowhere would be safe!

Global Cement Weekly will return in 2013

Oman: Mohammed Ahmed Al Dheeb has agreed to go back on his resignation and continue working for Raysut Cement Company as the Group CEO following an unanimous decision by the company's board of directors to ask him to remain in his position.