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Hyundai Cement could be on sale in 2016 12 May 2016
South Korea: Creditors could put Hyundai Cement on sale in 2016, according to sources quoted by the Korea Herald. The South Korean cement producer has been on a debt management scheme. Its creditors, led by the state-run Korea Development Bank, will be able to complete any sale when the lock-up period on their shares in the company expire at the end of 2016.
Previously the company suffered financially from the misfortunes of its affiliate Sungwoo Engineering & Construction. Sungwoo has since been sold to other investors.
FLSmidth and GE to partner on data platform 12 May 2016
Denmark/US: FLSmidth and GE (formerly General Electric) have announced a partnership to create digital solutions for increasing productivity in the cement and minerals industries. The new solutions developed on GE's cloud-based Predix platform will use FLSmidth's knowledge of cement and minerals processing along with GE's industrial application of networked physical objects (the internet of things) to increase the productivity of connected equipment units in the cement and mining industry.
FLSmidth will build their solutions on top of the Predix platform with applications for managing process flows. This should allow customers to leverage process data and analytics for monitoring, benchmarking their performance and predicting maintenance of their equipment.
"Cement and mining companies already collect significant volumes of data, but currently, only a fraction of it is used. This will be the first available solution for a full coherent process monitoring to leverage optimisation solutions offered by a full service provider like FLSmidth," said FLSmidth’s head of Global Research & Development Jens Almdal.
Switzerland: LafargeHolcim’s net sales have fallen by 5.5% year-on-year to Euro6.06bn in the first quarter of 2016 from Euro6.41bn in the same period in 2015. Its sales volumes of cement rose slightly by 1.4% to 56.6Mt from 55.8Mt. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 15.6% to Euro774m. It blamed the fall in sales on ‘challenging conditions’ in Nigeria, Brazil and India.
By region the cement producer reported that sales volumes of cement in Asia Pacific rose by 6.6% to 30.1Mt supported by a stabilisation of the Chinese economy with growth in March 2016. However, its sales revenue was affected by low prices. In Europe cement sales fell by 3.1% to 7.7Mt due to slowing construction growth in the UK despite improvements in France and Switzerland. In Latin America cement sales fell by 10.7% to 6Mt mainly due to problems in Brazil. In the group’s Middle East Africa region cement sales rose by 3.1% to 10.8Mt led by Algeria, Egypt and Nigeria. Finally, in North America sales of cement grew by 18.9% to 3.4Mt boosted by a ‘vigorous’ housing market.
“The first quarter is not indicative of our full year performance. We are on track with our plan and we see favourable underlying trends,” said chief executive officer Eric Olsen in a statement. The multinational construction materials producer intends to keep to its 2018 targets announced in November 2015. It will do this through holding down costs, continuing its Euro3.16bn divestment programme and increasing benefit from synergies following the merger of Lafarge and Holcim in 2015.
Cemex walks the line in the US
Written by David Perilli, Global Cement
11 May 2016
Cemex took a major step towards cutting its debts last week when it announced the sale of selected assets in the US for US$400m. Two cement plants in Odessa, Texas and Lyons, Colorado were included in the deal along with three cement terminals and businesses in El Paso, Texas and Las Cruces, New Mexico. Grupo Cementos de Chihuahua (GCC) was announced as the buyer.
Together the two plants being sold hold a cement production capacity of 1.5Mt/yr giving a rough cost of US$267/t for the assets. This compares to the cost of US$170/t that the European Cement Association (CEMBUREAU) estimates is required to build new capacity. Back in August 2015 when Taiheiyo Cement’s Californian subsidiary CalPortland purchased Martin Marietta Materials’ two cement plants in the state it paid US$181/t. Summit Materials paid far more at US$375/t in July 2015 when it purchased Lafarge’s cement plant in Davenport, Iowa, although that deal included seven cement terminals and a swap of a terminal. Other sales in 2014 to Martin Marietta Materials and Cementos Argos also hit values of around US$450/t involving lots of other assets including cement grinding plants and ready mix concrete plants.
Back on Cemex, the current sale to GCC maintains its position as the third largest cement producer in the US after the HeidelbergCement acquisition of Italcementi completes in July 2016 subject to Federal Trade Commission approval. However, it holds it with a reduced presence. Its cement production capacity will fall to 13Mt/yr from 14.5Mt/yr. It loses cement production presence in Colorado although it may retain distribution if it holds on to its terminal in Florence. In Texas it retains the Balcones cement plant near San Antonio and up to nine cement terminals depending on which ones it sells to GCC.
Selling assets in the US must be a tough decision for Cemex given that a quarter of its net sales came from the country in 2015. This was its single biggest territory for sales. This share has increased in the first quarter of 2016 as the US market for construction materials has continued to pick up.
Withdrawing from western Texas with its reliance on the oil industry makes sense. The plant it has retained in that state, the Balcones plant, is within the so-called Texas Triangle and so can hopefully continue to benefit from Texas’ demographic trends for continued housing starts and suchlike. Colorado is one of the middling US states in terms of population and likely to be a lower priority than other locations. The sales will see Cemex retrench its cement production base in southern and eastern parts of the country with the exception of the Victorville plant in California.
We’ve been watching Cemex keenly as other multinational cement producers have merged and laid out plans to merge in recent years. Saddled by debts, Cemex has appeared unable to either buy more assets itself and has remained distant from any talk of merger activity itself. The sales announcements in the US reinforce the image of a company taking action to relieve itself of its debts in 2016 following sales in Thailand, Bangladesh and the Philippines, and amended credit agreements and more borrowing. However, sales of cement plants in west Texas and Colorado outside of the strong markets in the US don’t quite suggest a company that has really committed yet to reducing its debt burden. Cemex continues to walk a tightrope between keeping the creditors at bay and riding the recovery in the US construction market.
This article was updated on 14 June 2016 with amended production capacity data for the Odessa cement plant
Canada: A fire broke out at a coal silo at the Lehigh Cement plant in Edmonton on 10 May 2016. Four fire fighters were sent to hospital to investigate potential carbon monoxide inhalation, according to Postmedia Breaking News. An investigation is now underway to discover the cause.
Lehigh Hanson health and safety director Gerry Sanderson said that the plant wasn't shut down or evacuated. He added that the fire had been contained and that damage to the facility appeared to be minimal.