Global Cement News

India: The Union Budget for 2012-13 has divided the cement industry on the likely impact of its new measures. An increase in excise and service tax is expected to increase the price for consumers, whilst an expected demand increase for cement will be driven by housing and infrastructure development.

Finance Minister Pranab Mukherjee proposed to exempt imported non-coking coal from the current basic duty of 5%. It is anticipated that this will have a positive impact of 1-1.5% on the industry's operating profit. The cement industry is the third largest consumer of coal after power and metallurgy, requiring about 15-20Mt/yr. At present, the industry meets close to one-fourth of its total coal requirement through imported coal.

Cutting the duty on imported non-coking coal has been offset by an increased excise and service tax of 2%. This hike in excise duty is expected to increase the cost of cement for consumers as manufacturers pass on the impact. One positive feature is the 30% abatement on the retail sale price, a long pending demand of the industry.

Meanwhile on the demand side the measures set to encourage housing and infrastructure development are expected to boost sales.

Overall opinions on the Union Budget have remained neutral for the cement industry, as the increase in excise duty combined with the recent increase in the cost of rail freight will result in a considerable increase in the cost of delivered cement. This will then impact upon the cost of construction. Although welcome the 30% abatement of the retail sale price will also pose some practical difficulties as the sales price changes with different markets.

Japan: Taiheiyo Cement is aiming for a group operating profit of around US$600m in the 2014 fiscal year, an increase of 90% on its projection for the current fiscal year, which ends on 31 March 2012. The target will be included in an upcoming midterm business plan that runs through to March 2015. The underlying assumptions include total domestic demand rising by 4% to 43Mt/yr. Taiheiyo Cement anticipates a 2Mt/yr boost from earthquake rebuilding.

In its domestic business, the Japanese market leader is likely to seek a 10-20% increase in its profit that will be underpinned by reconstruction demand. The operations are expected to give a profit of more than US$360m for the current fiscal year.

Taiheiyo has reported that cement production at its Ofunato plant in Iwate Prefecture has returned to about 70% of the levels seen before the 11 March 2011 earthquake and tsunami disaster. The company is scrambling to repair the production base with an eye toward returning the facility to full capacity at the end of June 2012. In the autumn the firm will start producing high-tensile cement for use in repairing infrastructure in the disaster-hit Tohoku region.

Taiheyo Cement will also shake up its sluggish US business, which is on track for an operating loss of US$108m in the current fiscal year. On top of personnel reductions, the company will continue to sell land and make other downsizing efforts. An operating profit of US$120m for US operations is targeted by the 2014 fiscal year.

US: Lafarge US has announced that it has laid off 36 workers at its plant at Joppa, Illinois, representing about one-third of the plant's total workforce. The layoffs, which took place Thursday 15 March 2012, were cited as the result of the closure of one of the two kilns at the plant, which has a total installed capacity of 1.25Mt/yr.

The kiln has been mothballed due to consistent low cement demand, with Lafarge saying that local sales have fallen by 44% in recent years.

Cameroon: Construction of a US$109m Dangote cement plant in Duoala has been halted following an order from the Douala City Council (DCC), raising fears that the 18-month timeline for the construction of the plant may not be met.

DCC delegate Fritz Ntone Ntone halted work on the site following complaints from Ngondo cultural officials. He explained that part of the site allocated for the plant belongs to the DCC and will be used for the construction of an urban park. He added that much of the site is traditionally used as land for the Ngondo cultural celebrations. During the Ngondo General Assembly on 10 March 2012 Sawa Chiefs resolved not to release the land for any reason.

In September 2011 an agreement was signed between the Cameroonian government and Dangote, which authorised the construction of a US$109m cement plant in Douala with a capacity of 1Mt/yr along the shorelines of the River Wouri. The disputed land was contracted from the government through a lease of 30 years. On 13 March 2012 a Dangote delegation from Nigeria announced that the company was ready to renegotiate in order to keep the venture going.

Demand for cement in Cameroon is currently rising rapidly, increasing by 8% in 2011. According to government data the country imported at least 0.5Mt in 2010 but demand is estimated at 4Mt/yr. In addition to Dangote two companies from Korea have also signed investment agreements with the government.

Indonesia: Chinese cement giant Anhui Conch Cement plans to begin construction of a plant in South Kalimantan later in 2012, with an anticipated investment of US$400m.

"The planned plant in South Kalimantan will be able to produce 2.5Mt/yr," announced Industry Minister MS Hidayat as he met with a business delegation from China's Anhui province at the ministry's office. The output will be used for domestic purposes.

Anhui Conch Cement is currently awaiting the completion of its land acquisition process and a license to be issued by the South Kalimantan administration so that the plant can be built in Tanjung, Tabalong. The plant will be equipped with a cement-grinding plant, a seaport, a 60MW power plant and other supporting infrastructure.

Hidayat added that Anhui Conch Cement is also preparing to acquire land in Manokwari, West Papua, in 2013 for another cement plant that would require US$400m. It is expected to meet cement demands in the surrounding areas.