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Dangote attracted to Ethiopia with alleged cheap electricity deal 07 September 2016
Ethiopia: The former governor of Nigeria's central bank, Sanusi Lamido Sanusi, has claimed that it was a cheap electricity deal that attracted Dangote to set up a cement plant in Ethiopia and that the cement market in East Africa will be impacted as the Adaberga wereda-based plant starts exporting cement costing almost 40% less than regional manufacturers, according to AFK Insider.
To attract Dangote to the East African country, the government offered to supply the company with electricity at a discounted rate of US$0.03/kWh, in exchange for the company building a plant in Ethiopia. This enabled Dangote Cement to cut the cost of producing a ton of cement by 60%, according to Sanusi in an opinion piece published by Premium Times. For a cement manufacturer, that is all the incentive that you need, Sanusi said, adding that this helped the construction industry in Ethiopia to boom.
The low-cost cement is now being exported to neighbouring countries like Kenya, where retail prices have remained static even as competition increased in the sector over the last decade. This is likely to shake up the regional cement market and make it affordable for developers to build more properties. Dangote Cement, one of the largest manufacturer of the product in Africa, said in a statement last week that it had started exporting to Kenya at US$74/t, more than 40% cheaper than what local manufacturer sell their brands for.
Dangote also started selling cement in Tanzania in 2016 after completing its factory in Mtwara about 400km from Dar es Salaam.
Ethiopia, one of the beneficiaries of the Power Africa program, an initiative of US President Barack Obama, has the highest electricity generating potential in East Africa due to its vast number of rivers and hilly terrain. It has invested billions of dollars to build several hydro-electric power plants including what will be Africa's largest dam, the Grand Ethiopia Renaissance Dam.
Original story from AFK Insider, http://afkinsider.com/132330/ethiopias-cheap-electricity-helps-dangote-shake-up-east-africas-cement-market/
Karel Okleshtek appointed new general director of Mordovcement
Written by Global Cement staff
07 September 2016
Russia: Karel Okleshtek has been appointed the new general director of the Mordovcement plant (included in Eurocement Group). Previously, he headed a plant of the international group HeidelbergCement.
Ireland's Ecocem invests Euro30m in new slag grinding capacity in Dunkirk, France in JV with ArcelorMittal 06 September 2016
France/Ireland: According to the Irish Independent newspaper, Irish cement company Ecocem has invested Euro30m into a new production facility in Dunkirk in the north of France as part of joint venture with the world's largest steel company. The investment is split 30% to 70% in favour of Ecocem and will increase the Irish firm's capacity from 1.4Mt of high performance, low carbon cement to around 2Mt. Ecocem said the main target markets for the plant will be the north of France and the UK.
ArcelorMittal, the company that is investing with Ecocem, is the world's largest steel firm. The investment is a strategic partnership as Ecocem uses a by-product of the manufacture of iron and steel - Granulated blast furnace slag - to make cement.
The news follows recent builds by the company with the Peel Ports Group. The pair built an import terminal in Runcorn on the Manchester Ship Canal and will look to add to it with another two, one in Runcorn and another in Sheerness in England.
Ecocem's continued expansion in the UK is a response to growing demand from the market. The firm has experienced an increase in exports from the UK as a result of a bustling cement market and a shortage of the type of cement Ecocem produces.
Speaking at the time of its UK investment, Ecocem managing director Conor O'Riain said the firm is looking long-term at the market. "We've invested in state-of- the-art equipment to demonstrate to the market that we're here for the long term, and I'm delighted to say that the response from the market has been phenomenal. We've made commitments to sell more in the UK in our first year than our total domestic sales in 2016," he said. Prior to entering the British market Ecocem had already received orders for 200,000t of product for its first year and stopped taking any further offers in the short term.
Ecocem is also trying to make its first move into the US. The company is looking to build a Euro45m grinding mill near San Francisco but has some hurdles to its intentions from its planning applications.
The firm has continued to grow its reputation as a low-carbon cement producer and last month the firm picked up the Green Product Award 2016 for its superfine product.
Lafarge Malaysia profits slump due to weak markets but plant expansions set to cut clinker transport costs 06 September 2016
Malaysia: Lafarge Malaysia Bhd's management has said that for the first half ended June 30 2016, core net profit was down 69.4% mainly due to lower cement revenue (-5.3%) due to weaker demand for cement on the back of a slowdown in the property market and delay in the commencement of mega projects such as KL118 Tower project, Tun Razak Exchange; Holcim 'synergisation' costs of about US$4m and a higher effective tax rate (+13.8%) from lower capital allowances.
Management expects the effective tax rates to be normalised in the 2017 financial year from capital allowances from its newly-commenced Rawang (Selangor) and Kanthan (Perak) plants expansions.
With the new capacity expansion in the Rawang and Kanthan plants commencing in March and April 2016 respectively, management revealed that this would provide savings in overall transportation costs as clinker is no longer required to be delivered from Langkawi (Kedah) to its grinding units in Pasir Gudang (Johor) which can now be delivered from Kanthan instead - which is approximately half the travelling distance.
Malaysia is due to see an increase in overall cement production capacity of 13% in 2016 due to the completion of expansion projects and the weak market is expected to become tougher-still. Besides looking out for further cost-saving avenues, Lafarge Malaysia is also looking for differentiation in this competitive market through higher investment in dry-mix cement and strengthening of its brand name through more aggressive marketing.
Africa/South Africa: Despite a decline in the construction sector, cement giant Pretoria Portland Cement (PPC) continues to defy the odds as it posted a 9% uptick in quarterly sales revenue. The cement producer said sales revenue in South Africa has seen an upswing of 2% with volumes increasing by at least 9%, although earnings per share disappointed as it fell by 55% for the period. However, revenue from outside of South Africa rose by 19% on the back of significant volume growth and newly commissioned plants in Rwanda as well as gains from the currency translations in Zimbabwe and Botswana. "The group's revenue has improved by 6% supported by strong cement sales volume growth in South Africa and Rwanda. Cement sales volumes grew in excess of 30% in the Coastal regions in South Africa," CEO Daryll Castle said.
"However, good cost control has led to further impressive declines in group overheads while variable delivered cost of sales per tonne in the South African cement business were well below inflation," Castle said. In addition, the cement maker said its cost of sales was also on the rise, increasing by 14% to R1.8bn (US$99m), largely on the back of higher volumes in the South African cement industry as well as more expensive logistics which rose by 3% during the period. "On consolidation of foreign currency denominated subsidiaries, the weakness of the rand contributed to rising cost of sales. Gross profit decreased by 11%, from R709m (US$50m) for the quarter ended June 2015 to R630m (US$44.4m) for the current quarter. "This decrease was mainly ascribed to the impact of selling prices pressures felt in our key cement operating markets together with the lower sales volumes in Zimbabwe and Botswana," the company said. But, the company said the R135m (US$9.5m)acquisition of 3Q Mahuma Concrete, one of the largest independently owned ready-mix concrete supplier in South Africa, will improve PPC's ready-mix footprint.