Global Cement News

India: Reliance Infrastructure Ltd (R-Infra), part of Reliance Group, has named M S Mehta as chief executive officer (CEO) with effect from 7 July 2014. He will take over as CEO from Lalit Jalan, who held the portfolio for more than seven years.

Mehta was the Group CEO of Vedanta Resources Plc until recently, having held the position for five years. Prior to that, Mehta was the CEO of Hindustan Zinc Ltd. Mehta is a mechanical engineer and an MBA from the Indian Institute of Management, Ahmedabad.

R-Infra is an infrastructure company developing projects, through various special purpose vehicles, in sectors such as roads, metro rail and cement. R-Infra also promoted Jalan as director (corporate strategy and affairs), saying that Jalan will steer future growth initiatives.

A group of news stories from Central Asia and Azerbaijan this week present a good opportunity to look at the cement industry in this part of the world.

Uzbekistan

Eurocement has announced that it plans to build a 2.4Mt/yr cement plant near to Tashkent. Chinese contractors have been signed for the work in line with the Russia-based cement producer's other plant builds in 2014. Eurocement also operate a subsidiary in the country, the 1.6Mt/yr Akhangarancement cement plant, that reported a criminal investigation and financial audit following various misdemeanours in April 2014.

Also in April 2014 the Almalyk Mining-Metallurgical Combine (AMMC) proposed building a 1.5Mt/yr cement plant in the south of the country and then commissioning of a white cement plant in the central Jizzakh Province. Both the Eurocement and AMMC projects show that organisations are investing in the local market of the region's most populous country at around 30m.

Turkmenistan

In neighbouring Turkmenistan the TurkmenCement Production Association has issued a tender this week for the construction of a 1Mt/yr clinker plant in the central-south of the country in the Baharly District of the Akhal Region. If realised, the new plant will raise Turkemistan's cement production capacity to 4Mt/yr. Currently the country has three state-operated plants. The most recent, the 1.4Mt/yr Garlyk plant, was commissioned in February 2013.

Kazakhstan

An investor has stepped forward to finance the completion of the delayed Khantau cement plant in Zhambyl region in southern Kazakhstan. The 0.5Mt/yr plant was originally started in 2007 before being mothballed part-way through construction.

The reignition of this project follows a couple of stories from Kazakhstan including a report on testing at the HeidelbergCement Caspi cement plant in Mangistau region and the start of operation on Line 5 of Steppe Cement's Karaganda Cement. Kazakhstan has more western international cement producers, unlike the generally state-run companies in Uzbekistan and Turkmenistan. HeidelbergCement will join plants run by Italcementi and Vicat.

Azerbaijan

Finally, on the other side of the Caspian Sea, Azerbaijani local media has reported that cement production for the first half of 2014 has risen by 40% year-on-year to 1.1Mt. Following the opening of the Gazakh cement plant in mid-2013 the country has three cement plants with a combined cement production capacity of nearly 5Mt/yr.

Germany: Dirk Hoke took over as CEO of the Large Drives Business Unit of the Siemens Drive Technologies Division on 1 July 2014. Large Drives develops, manufactures and markets products, systems, solutions and services for drive engineering in industrial and infrastructure applications as well as sectors such as marine engineering, mining, cement, pulp and paper.

Hoke, a 45 year-old graduate engineer, joined Siemens in 1996 and started his career at the Transportation Systems Division. Subsequently Hoke held management posts in rail electrification, traction technology, and power supplies at Siemens locations in Germany and other countries. After serving for several years as CEO of Siemens' Cluster Africa and Siemens Morocco, in 2011 he took over leadership of the Industry Solutions Division before being appointed to head the Siemens Division Customer Services in October 2011.

India: UltraTech Cement has announced that M Damodaran, the company's Independent Director, has resigned from the board with effect from 20 June 2014. Damodaran has cited increasing work load and time commitments as well as the need to reduce his board level engagements as the reasons for stepping down.

Bad news for both cement workers and local clinker production in Australia and New Zealand this week with the announcement of job cuts and planned closures of clinker plants. Holcim New Zealand has confirmed that around 120 jobs will go when its Westport cement plant closes in 2016 along with the rationalisation of a few management jobs when the company integrates its Australian and New Zealand businesses. Meanwhile, Boral announced that it will cut 28 jobs from its Maldon Cement plant in Australia when it ceases clinker production at the end of 2014.

With these planned closures cement production capacity in the antipodes will shrink by just over 1.5Mt/yr to around 7.5Mt/yr, a reduction of over 15% Alongside the drop in native cement production players are re-focusing on an import market.

The trend is highlighted by the fact that Boral's Maldon site will retain its grinding mill. Earlier in June 2014 it was reported that Vue Australia is planning to convert a brownfield site on Kooragang Island, New South Wales into a cement storage and transfer plant. In February 2014 Cockburn Cement cut 44 jobs at its Munster cement plant as it started to restructure its operation for grinding using imported clinker. Also in February 2014 Cement Australia, the joint-owned company between Holcim and HeidelbergCement, had a US$17m expansion of its cement loading and storage facility for processing at Osborne approved by local authorities.

Following its restructuring in 2013, which has seen clinker production cease at Waurn Ponds and soon to cease at Maldon, Boral reported that its cement revenues grew in its 2012 – 2013 financial year. This is likely to continue when the 2013 – 2014 year is reported in August 2014. Likewise, Adelaide Brighton reported growing revenues in 2013. Cement Australia reported growing cement sales year-on-year in the first quarter of 2014 following reduced sales in 2013.

All in all the local cement industry in Australia and New Zealand has taken quite a knock in recent years. Reasons for this have included a poor recovery for the local building materials market, high-energy costs, the Carbon Tax in Australia, competition concerns and the spectre of cheap clinker imports from East Asia undercutting everything. However the return to revenue and then profit suggest that the worst of the job cuts and clinker production shrinkage is over.

In this business environment, revelations such as a China Resources spending upwards of US$300,000 on golf are unlikely to garner sympathy for any measures that appear to reduce international competiveness for Australian industry. The current Australian government led by Tony Abbott is set to make good on its promise to repeal the Carbon Tax from July 2014. The environmental effects will be unclear given that the tax may have cut emissions from participating companies by 7%, falling from 342Mt in 2011 – 2012 to 321Mt in 2012 – 2013, according to the Investor Group on Climate Change. As is usual with localised carbon taxation or legislation, whether global emissions fell during this period or whether emissions grew in looser jurisdictions to compensate is hard to calculate. The trend towards clinker imports suggests that there may be a significant contribution from the latter.