Global Cement News

Nigeria: The Northern Cement Company of Nigeria has appointed of Alhaji Ibrahim Aminu as executive director (finance). He replaces Finn Arnoldsen. Alhaji Garba Muhammad Sarkin Kudu has been appointed as a non-executive representing Sokoto State Government on the board, replacing Alhaji Sani Garba Shuni. The appointments take immediate effect.

Alhaji Ibrahim Aminu, a chartered accountant aged 45, holds a Bachelor of Science Degree in Accounting from Ahmadu Bello University. He started his working career in 1991 with the Federal Civil Service Commission, Lagos and subsequently worked for the Nigeria Universal Bank, the Nigerian Security Printing & Minting Co, Nigerian Telecommunications Ltd and BUA Flour Mills, before joining the Cement Company of Northern Nigeria as financial director in 2010.

Alhaji Garba Muhammad Sarkin Kudu, aged 53, holds a Bachelor of Art Degree in History from Usman Dan Fodio University. He has held various roles with the Sokoto state government becoming the Permanent Secretary Ministry of Commerce, Industry and Tourism prior to his appointment with the Cement Company of Northern Nigeria.

Three stories this week from the Philippines build a complex picture of a booming cement industry. San Miguel purchased a 25% stake in Northern Cement, Lafarge Republic announced its capital expenditure budget for 2013 and the country's on-going price probe reported on its progress.

San Miguel's entry into the market should raise the most interest since its president stated that the company intends to spend US$750m on the construction of three cement plants. Each plant will have a cement production capacity of 2Mt/yr with construction timed to start in 2013 and finish by the end of 2015.

This level of investment, if it happens, surpasses the last major build announcement in the Philippines. In May 2013 Holcim released details of a US$550m plant in Bulacan with a capacity of 2.5Mt/yr. Some indication of the viability of San Miguel's plans may be gleaned from the comparative costs of the projects. San Miguel's plans will cost US$125/t of installed capacity, less than half of Holcim's US$220/t. Possible reasons for this difference may lie in San Miguel releasing the wrong figures or a reliance on lower build quality. However San Miguel's sheer size - its net income was US$2.25bn in 2011 - may itself herald the start of a major player in the domestic cement industry.

Meanwhile the Department of Trade and Industry (DTI) has continued to investigate why the price of cement has risen since 2012. Currently prices are about 5% above the suggested retail price for cement. Cement producers blamed the increases on a higher cost of coal.

The Philippines is currently experiencing massive cement sales increases. In 2012 sales rose by 17.5% to 18.4Mt from 15.6Mt in 2011. With a total capacity of 21Mt/yr and a capacity utilisation rate of 85% in 2012, this growth looks set to continue in 2013, as confirmed by more rises in sales in the first quarter.

Pakistan: Power Cement, formerly Al Abbas Cement Industries, has released the names of its directors for the period to 2016. Kashif Habib, Samad Habib, Muhammad Ejaz, Nasim Beg, Syed Salman Rasheed, M Yousuf Adil and Muhammad Yahya Khan are all set to be elected unopposed at the company's extraordinary general meeting to be held on 4 June 2013 in Karachi.

Back in November 2012 this column asked whether the UK cement market had become more competitive following the sale of the Hope cement plant. Broadly, we thought it had. Half a year later though and it seems that the UK Competition Commission doesn't think so. On 21 May 2013 it released provisional findings that the UK's three major cement producers were failing to compete on price with each other.

Its three main points of evidence included increases in average cement prices between 2007 and 2011, rising profitability for UK producers between 2007 and 2011 and only small changes in annual market share of sales. All of these market outcomes occurred despite a 'significant' slump in demand for cement from 2007 to 2009.

The problem here is that the Competition Commission's data refers to the UK market before it took action. In 2012 it forced the sale of Lafarge's Hope cement plant as a condition of the joint-venture between Lafarge and Tarmac. Subsequently, Lafarge and Tarmac's combined cement production capacity in the UK fell from 5.15Mt/yr to 3.85Mt/yr. However, the Competition Commission has modelled Hope Construction Materials as an effective replacement of Tarmac's previous market share in its analysis. With no major change to the status quo in the UK cement industry, it feels that competition is unlikely to improve. Hence the need for further action.

It must be emphasised that the Competition Commission did not find any evidence of explicit coordination between the producers. Professor Martin Cave, Competition Commission Deputy Chairman and Chairman of the Inquiry Group, summed it up as follows: "In a highly concentrated market where the product doesn't vary, the established producers know too much about each other's businesses and have concentrated on retaining their respective market shares rather than competing to the full."

To look at just one example, it should be noted that most of the management team of Hope Construction Materials came originally from jobs at either Lafarge or Tarmac. However in Hope's defence, who else would the new company hire except seasoned industry personnel. Naturally they would want the best people possible!

With the revival of the UK construction industry hanging in the balance the Competition Commission has a tough job ahead to ensure increased competition in the future.

Pakistan: Lucky Cement has announced that its chief executive Muhammad Ali Tabba has been appointed as a member of the cement producer's Human Resource and Remuneration Committee. The committee now includes the following members of the board: Rahila Aleem, Jawed Yunus Tabba, Zulekha Razzak Tabba and Muhammad Ali Tabba.