Global Cement News

US: The Argos USA Newberry cement plant in Florida has achieved Energy Star certification from the US Environmental Protection Agency (EPA) for its superior energy performance in 2015. It joins nine manufacturing plants that have gained the certification for the first time. Overall, 28 cement plants gained certification in 2015.

“Energy Star certified manufacturing plants are driving the kinds of efficiencies and innovations that keep our country strong,” said EPA Administrator Gina McCarthy. “They’re proving every day that businesses can save on energy, cut down on bills and reduce harmful greenhouse gas emissions all at the same time.”

Since 2006, the EPA has certified manufacturing plants with the Energy Star for reaching the top 25% of energy performance in their industries nationwide each year. Energy Star certified plants must have their energy performance independently verified. Plants from the automotive, cement manufacturing, corn refining, food processing, glass manufacturing, pharmaceutical manufacturing and petroleum refining industries are among those that qualified in 2015.

Since the inception of EPA’s Energy Star certification, a total of 148 manufacturing plants have achieved this distinction. These plants have saved over 41Mt million of carbon dioxide equivalent emissions.

Brazil: InterCement made a loss of Euro43.7m in 2015. In 2014 it made a profit of Euro50.1m. Its revenue fell by 4% to Euro2.49bn from Euro2.6bn. It attributed the loss to an economic downturn in Brazil and unfavourable exchange rates.

“This was undoubtedly a challenging year for InterCement, particularly due to the macroeconomic situation in Brazil, which accounts for about 35% of the cement production, the largest contribution within the company. The scenario was even more complex, as coupled with the economic downturn in the largest market where it operates, InterCement faced average unfavourable exchange rates,” said CEO Ricardo Fonseca de Mendonça Lima in a statement.

He added that the company’s decrease in earnings before interest, taxes, depreciation and amortisation (EBITDA) margin remained high in the international cement market at 20.8%. EBITDA fell by 18.2% to Euro518m in 2015. The cement producer reported that overall cement and clinker sales fell by 6.1% to 28.1Mt in 2015 from 30Mt in 2014.

By region, InterCement has temporarily suspended it grinding plants at Jacarei and Suape and its clinker kiln at João Pessoa in Brazil to cut costs. By contrast its plants in Argentina were working a full capacity in 2016. Co-processing developments were noted in Egypt and Portugal. The Alhandra cement plant in Portugal was the first unit in the company to beat a 50% co-processing monthly rate. A production decline was reported in Cape Verde and operational difficulties in Mozambique led to a kiln stoppage.

The Saudi Cement Company has been complaining in recent weeks about market conditions in Saudi Arabia. Following a meeting of its board of directors in early February 2016, it decided to temporally a 3500t/day production line and halt further upgrades. At the meeting it blamed the local market and the country’s export ban.

In January 2016, the cement producer reported that its net profit had fallen by 35% year-on-year to US$49m in the fourth quarter of 2015 from US$76m in the same period in 2014. The trend for the year as a whole was less pronounced but still downward. Its net profit fell by 14% to US$257m.

Saudi Cement’s experience may be indicative if one looks at wider figures for the industry. Cement output is high, inventory is piling up and government infrastructure spending is falling. If the country’s industry isn’t feeling the pain right now surely it must be wondering what might happen next.

Figure 1 – Saudi Arabian cement production and inventory, 2011 – 2015

As Figure 1 shows data from Yamama Cement for the industry as a whole. Cement output has been steadily growing over the last five years since 2011 to the current declared level of 61.5Mt. However, in the background, cement inventory has also been growing. The particular jump appears to be between 2012 and 2014 when the stock grew from 6.4Mt to 21.5Mt. In mid-2013 King Abdullah bin Abdulaziz Al Saud issued an urgent command ordering 10Mt of cement to cope with a local shortage at that time. Subsequently cement producers were asked to build a 'strategic' reserve of two months inventory at each plant. It looks like they took that message to heart.

Alongside this the Saudi Ministry of Finance slashed its Infrastructure and Transportation budget down to more than half to US$6.37bn in 2016 from US$16.8bn in 2015. Local media reported that value of new contracts won by the Saudi contractor Abdullah A M Al Khodari & Sons in 2015 fell by nearly 50% in the lead-up to the 2016 budget announcement in December 2015. Previously, Al Khodari had typically earned about 95% of its revenue from government-related contracts.

It should be noted that Saudi Cement is based in the east of the country and some regional variation is possible here. The country’s other major cement producers - Yamama Cement, Yanbu Cement and Southern Province Cement have all reported that their net profits rose in 2015. Yet the inventory keeps piling up.

The other reason than Saudi Cement pointed out for its woes was the country’s cement export ban. The government introduced an export ban on cement exports in February 2012. Since then local cement producers have asked on several occasions to have the ban repealed. Most recently the chairman of Saudi Arabia's Cement Association asked in March 2015 to lift the ban so that his producers could supply Egypt with 6Mt of cement. At the time, as now, the chairman would have been well aware of all the cement lying around.

Local press reported in late November 2015 that government bodies were considering cutting the ban on cement exports. The ban was originally introduced in Saudi Arabia to keep prices down and production flowing for large infrastructure projects built using oil revenue. These same projects were designed to wean the economy off its reliance oil revenue. With investment falling as the price of oil stays low the cement industry is in a tight spot. The government and cement producers will need to think very carefully what the consequences are of opening the gates for Saudi cement exports.

Zimbabwe: Kelibone Masiyane has been appointed as the managing director of PPC Zimbabwe. He replaces Njombo Lekula, who recently became the managing director of PPC's international operations. Previous to the appointment, Masiyane’s was the general manager of the Colleen Bawn and the Bulawayo cement plants.

"Kelibone's promotion will see him assume overall responsibility for PPC Zimbabwe's business, with his key focus our Harare factory," said Lekula. Other recent promotions include those of Iain Sheasby and Karen Mhazo to the roles of Commercial Director and General Manager of Finance respectively, and that of current Group Human Resources Manager designate Trust Mabaya in March 2016.

South Africa: Striking Lafarge South Africa employees affiliated to the National Union of Mineworkers (NUM) have returned to work after a 12-day strike, according to Lafarge South Africa. The industrial action involved disputes on several issues, including a salary increase.

"We are pleased that we have been able to negotiate solutions that benefit our employees. While our operations were not grossly impacted, we are happy to announce that we are running at full capacity," said Unathi Batyashe-Fillis, Country Manager for Communications and Public Affairs at Lafarge South Africa.

Lafarge reported that an agreement had been reached on an 8% salary increase effective from 1 January 2016, a commitment to tighten salary gaps per job category by the end of April 2016 and a one-off fixed housing grant of US$4640 per employee to acquire or build a house. The grant would, after two years of implementation, be increased by a sum equal to the annual average inflationary rate for workers.

Around 800 NUM affiliated employees demanding initially a 13% raise and a US$3310 housing grant, according to Reuters. The union has confirmed that the deal has been accepted.