Global Cement News

Vietnam: Vietnam's cement sales in 2012 reportedly fell by 3.5% to 54Mt due to low demand in the domestic market, according to the Vietnam Cement Association (VNCA). The country's cement sales in its domestic market fell by 7.71% year-on-year to 45.5Mt. Cement and clinker exports rose by 30% to 8.5Mt.

In 2012 local cement makers faced many difficulties such as large inventories and low domestic demand created by a static real estate market. High production costs, high lending interest rates and high input costs for materials such as fuel, power and coal all adversely affected local cement producers. Cement and clinker exports have also been disrupted due to some firms 'unfairly' cutting their export prices.

For 2013 the VNCA has predicted that local cement producers will continue to face difficulties. However the government has approved spending of US$480m on new rural constructions and will encourage the use of local cement for transportation infrastructure projects. Vietnam's domestic cement sales are predicted to rise by 5-8% year-on-year to 48-49Mt in 2013, equal to the total sales seen in 2011.

Deputy Minister of Construction Nguyen Tran Nam said that the local cement sector must focus on dealing with three main problems: export promotion, production cost reduction and enterprise restructure. He also called on local cement companies to cooperate on exports instead of undercutting each other.

Nigeria's Minister of Trade and Investment, Olusegun Aganga brought together warring parties from Dangote and Ibeto Cement this week to discuss their very public spat about the state of the country's cement industry.

Claims that Nigeria is facing a 'glut' of cement have been building since the Cement Manufacturing Association of Nigeria (CMAN) declared that Nigeria was 'self-sufficient' in cement in late 2012. So when leading cement importer Ibeto Cement questioned this narrative, leading cement producers Dangote and Lafarge hit back. Aganga then announced a review of the country's industry.

Despite Nigeria's potential to consume cement, something is stopping it. Yet, as Ibeto Cement rightly asked, if Nigeria is producing too much cement why isn't the price falling?

Hard facts about the Nigerian cement industry are elusive. This is what we know. Nigeria's population is apparently 170m. Its cement industry has the capacity to produce 28Mt/yr (Global Cement Directory 2013). Its production level was 18.5Mt/yr in 2012 according to CMAN. However figures compiled by the United States Geological Survey placed production much lower at 11.6Mt in 2011. Consumption is believed to be 17-20Mt/yr. In 2011 it was 17Mt. Ibete Cement, the sole importer into the country, is allowed to import up to 1.5Mt/yr.

Nigeria's main producers include Dangote (19Mt/yr capacity, 70% of the market), Lafarge WAPCO (4.6Mt/yr, 17%), Unicem (2.5Mt/yr, 9%) and Ashaka Cement (2Mt/yr, 7%).

Hype about Nigeria's potential as a cement-producing nation hinges upon its low per capita consumption (110kg) compared to some of its African neighbours and indicators of expected growth such as a housing deficit of 16 million homes.

CMAN boss Joseph Makoju addressed this head-on, blaming the high cost of haulage and energy. He said that the energy cost accounts for over 35% of the production cost and that the price of low pour fuel oil (LPFO) had risen by over 300% from US$0.16/l in 2009 to US$0.69/l in November 2012. It should be pointed out that Makoju is also the special adviser to the president of Dangote Group, Aliko Dangote. Unsurprisingly he has advised the Federal Government to impose higher taxes on imported cement to discourage imports.

The production boom of recent years has been threatened by a weakening increase in demand. The gap between production and lower consumption estimates is around 1.5Mt. Dangote and Lafarge WAPCO's combined unsold stock at the end of 2012 was also just below 1.5Mt. Both figures are suspiciously close to the amount Ibeto is allowed to import annually. As usual, the easiest target is the cement importer. Dangote's political clout as a key Nigerian company, large-scale employer and all round African success-story will doubtless help its argument.

Yet if imports are really more competitive than Nigeria's domestic product how can the country possibly hope to export cement? Also this week Liberia announced it has relaxed its tariffs on cement. As luck would have it Dangote is building a new cement plant in the country. Sounds ideal for tricky import negotiations.

US: Gregory M Scott has become the president and chief executive of the Portland Cement Association (PCA), effective from 2 January 2013. Scott joined the PCA in January 2012 as the senior president of government affairs and was promoted to president in September 2012.

Scott holds a background in trade association leadership with legislative campaigns on federal transportation, environmental and energy issues. Most recently he served as executive vice president and general counsel for the National Petrochemical and Refiners Association (NPRA) in Washington, DC. Prior to joining the NPRA, Scott served as vice president of National Strategies, Inc, a trade association representing CEOs of Fortune 100 firms on corporate finance and tax issues.

He began his career serving on the staff of Senator Timothy E Wirth. From 1991-2008 Scott was a partner/member of Kelley Drye Collier Shannon, where he gained extensive expertise in petroleum refining and motor fuel marketing as well as legislative and regulatory issues.

Scott received his Bachelor of Arts degree from Colorado College in Colorado Springs and a law doctorate from the American University's Washington College of Law in Washington, DC.

Mexico: The French building materials giant Lafarge has announced a joint venture with new Mexican cement player Elementia, only a day after announcing that its UK joint venture with Tarmac received competition commission approval. The new joint venture formed will be held 47% by Lafarge and held 53% by Elementia, which will fully consolidate the venture's financial results.

The deal, announced on 8 January 2013, will see Lafarge contribute its two Mexican plants at Vito and Tula, which have a combined capacity of just under 1Mt/yr. Elementia will contribute its cement plant project, a 1Mt/yr installation, which is currently undergoing construction in central Mexico.

A Lafarge press release stated that the combination between Lafarge and Elementia would 'significantly' strengthen its position in Mexico. The transaction, which involves no cash and is subject to regulatory approvals, is expected to close in the second half of 2013, pursuant to the start up of the new Elementia plant.

India: Private sector ship builder ABG Group is in talks with private equity and financial firms to sell a minority stake in its cement business for about US$150m. According to Dhananjay L Datar, director of ABG Group, a potential deal is at a preliminary stage with several parties showing interest in the cement unit.

The group's cement business, ABG Cement, has a 6.5Mt/yr plant in Kutch, Gujarat, which is expected to be commissioned by the end of January 2013. India media has linked equity firms Blackstone and KKR to the deal. ABG Group originally announced its plans to enter the cement sector in 2008 with an initial investment of US$328m.