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ASEC Cement finalises sale of two units for US$127m 23 November 2015
Egypt: ASEC Cement, part of Egypt-based Qalaa Holdings, has finalised the sale of ASEC Minya Cement and ASEC Ready Mix to Misr Cement Qena for a total of US$128m.
ASEC Minya Cement is located in Upper Egypt. It began commercial operations in August 2013, with a capacity of 2Mt/yr. ASEC Ready Mix is a producer and distributor of ready-mix concrete. The company operates six batch plants in Upper Egypt with 382,000m3 of production in 2014.
At the time of sale, ASEC Cement held 46.5% of ASEC Minya Cement and 55% of ASEC Ready Mix. Qalaa and its subsidiary National Development and Trading Company (NDT) together own 70% of ASEC Cement.
"We are pleased to announce that the sale process closed today, putting in place another cornerstone in our strategy to deleverage at both the holding and platform company levels," said Ahmed Heikal, Chairman and Founder of Qalaa Holdings. "Both ASEC Minya and ASEC Ready Mix have established themselves as critical players in the vital Upper Egyptian market and we are honoured to have worked with an exceptional management team at each of them to build them into the companies they are today."
US Cement white cement plant project moving ahead in Texas 23 November 2015
US: The Brady City Council has voted to authorise two proposed sales tax rebate incentives for a US Cement proposed white cement plant and quarry that would be built in McCulloch, Texas.
The city sales tax rebate economic development incentive for the proposed plant would not exceed US$297,000 over nine years, or up to US$33,000/yr. The Brady Economic Development Corporation incentive would be a one-time payment of US$250,000, plus US$34,000 up to nine years, which would be a total package of US$556,000 over 10 years. The vote passed 4-1.
The council has authorised the city's Director of Community Services and EDC Director Peter Lamont to pursue negotiations with US Cement before it goes back to the city council for final approval. "I'm sure that there will be some back and forth on some of the qualifications," said Lamont. "Once we get all the language, terms and conditions and all the attorneys agree, it will be brought to the council for final approval."
Some of the qualifications are that US Cement generates a plant and quarry that improves the property value of its location by US$175m and provides 200 permanent, full-time jobs. There will have to be a 100ft buffer zone away from anything it doesn't own and the plant will have to purchase all of its natural gas from the city.
Those opposed to the cement plant are not against the plant itself, but where it will be located. There are 37 homes within 3000ft of the proposed plant and residents are worried about strobe lighting, blasting in the quarry, noise and dust pollution, truck traffic, emissions and a decrease in property values.
"We still have hope that Royal White Cement (the parent company of US Cement) will look for another piece of property," said Dale Matthews, an Austin-based attorney who is helping the opposition. "That there will be no approval of the incentive package if they insist on this location and find one that isn't disruptive to the people living here." Lamont said that finding another location will be up to US Cement and at present, there are no active offers of other properties on the table.
Australia: James Hardie's adjusted net operating profit for the second quarter of its 2016 fiscal year, which ended on 30 September 2015, was flat at US$65.3m and up by 12% for the first half of the year to US$129m. The quarterly result was affected by a higher adjusted income tax expense and higher gross interest expense offsetting the favourable operating performance. Half year sales were up by 2% to US$879m.
CEO Louis Gries said that all business units had performed well, driven in particular by its USA plants and lower input and freight costs. He said that primary demand growth in its USA business had again tracked below its targeted level. The company will focus on lifting its USA primary demand growth rate back up over the next several quarters.
The company expects its USA and Europe fibre cement segment earnings before interest and taxes (EBIT) margin to be towards the higher end of its stated targeted range of 20 - 25% for its full 2016 fiscal year.
In other news, James Hardie has re-opened its Queensland, Australia fibre cement manufacturing facility following a US$64m expansion. It said that the expansion of Carole Park, near Brisbane, will boost Australian capacity by 40% to meet strong domestic demand. "At a time of decreasing investment in manufacturing in Australia, James Hardie's US$64m investment in this new facility reflects our confidence in our Australian business, the future of manufacturing in this country and the underlying economy of Australia," said Gries.
PPC commissions 600,000t/yr cement plant in Rwanda 20 November 2015
Rwanda: PPC has commissioned its 600,000t/yr cement plant in Rwanda to offset declining sales in South Africa as its expansion into African cement markets gathers pace. The company plans to derive 40% of its revenues from the rest of Africa by 2017.
"We see the population doubling and becoming wealthier, a lot of infrastructure spend taking place and new cities being built that aren't there today," said Darryll Castle, PPC's Chief Executive. "If we can maintain our market share and exposure in Africa, we have to double the size of the business in well under 10 years. We see Africa as a very positive environment and PPC becoming a major player in a big growth area."
Castle said that the company ultimately saw PPC as a global player, but were focusing on Africa first, although it would be open to global opportunities when they arose. The new vision is for PPC to become a world-class supplier of materials and solutions to the basic services sector and establish a vertically-integrated materials business. This business unit will house PPC's ready-mix, aggregates and related building materials businesses to offer clients end-to-end solutions. A bolt-on acquisition has been earmarked for early 2016. Castle stressed that 70 – 80% of PPC's focus would remain on its core product of cement, but over time it would gain earnings and revenue that was not currently core to its business.
According to Castle, construction of the US$280m, 1Mt/yr cement plant in the Democratic Republic of Congo and the US$85m, 700,000t/yr mill in Harare were progressing well, with both on track for commissioning at the end of 2016. He said that the 1.4Mt/yr cement plant in Ethiopia would cost around US$170m, with commissioning scheduled for the second quarter of 2017.
Pakistan: The Ministry of Commerce has initiated World Trade Organisation (WTO) dispute settlement proceedings to fight South African anti-dumping duties on cement from Pakistan. The basis of Pakistan's argument is that the injury determination mechanism followed by South African authorities (ITAC) is flawed and does not reflect true analysis of the situation.
The Pakistan challenge has raised the issue that the South African authorities used an extended period of investigation of four years for causation analysis and didn't properly examine the evidence in the light of trends over that period. In addition, Pakistan considers that South Africa failed to examine the relationship between the alleged dumping and the worsening of the condition of the domestic industry especially by failing to consider the effects of the decartelization of the domestic cement producers. It also accuses South Africa of not properly examining the entire product under investigation and instead limiting its injury analysis to bagged cement and disregarded sales by the domestic industry of the bulk cement. Finally, the challenge has pointed out that the South African authorities didn't provide a fair opportunity to Pakistani cement exporters to defend their case, denying access to the trade statistics.
In May 2015 South Africa imposed various rates of duties on Pakistani cement exports ranging from 15 – 68% plus anti-dumping duty on the import of Pakistani cement. Since March 2015 Pakistan has been pursuing the matter on a legal and diplomatic basis.