Global Cement News

Myanmar: Indonesian giant Semen Gresik has announced plans to build a cement factory in Myanmar with a production capacity of up to 2.5Mt/yr. The project is estimated to cost US$500m according to Ahyanizzaman, the finance director of Semen Gresik.

PT Semen Gresik is one of four state companies asked by the government under Indonesia Incorporated to expand its operations to Myanmar. Ahyanizzaman added that Semen Gresik chose to expand to Myanmar as demand for cement in that country is strong with supplies falling well short of demand. Cement demand in Myanmar is approximately 8Mt/yr compared to a current domestic production of 4Mt/yr.

The three other state companies asked to expand their operations to Myanmar include oil and gas company PT Pertamina, construction company Wijaya Karya and Bank Negara Indonesia.

Indonesia: Indonesia's domestic cement sales grew strongly in February 2012, up by 23.9% year-on-year, according to data from the country's largest cement firm PT Semen Gresik. Sales for the month reached 4.1Mt, slightly higher than January 2012's 4.06Mt.

"Low 2011 loan to GDP ratio at around 30% combined with low interest rates should allow credit to continue growing, paving the way for economic growth," said Teguh Hartanto, deputy head of research at Jakarta-based Bahana Securities. The country's cement sales fluctuate from month to month depending on a variety of factors, including religious holidays, which can delay construction, and the government's end-of-year project completion deadlines.

Mexico: Cemex has paid 20% of the US$361m in taxes it owes the Mexican government, with the rest due in January 2013.

The company said it made a US$72m payment on 1 March 2012. It said it has an option to extend the January 2013 obligation and opt for 36 instalments instead, a move that would cost the company a bit more.

"Cemex thinks it has adequate provisions to meet the (tax) requirement," the company said in a statement.

In 2008 the Supreme Court overturned a ruling that protected Cemex from paying taxes linked to investments in offshore tax havens. The court cited several articles in Mexico's income tax law that required Mexican companies to pay taxes locally on investments in countries where there are no taxes or where levies are 75% lower than in Mexico.

Pakistan: Cement manufacturers in Pakistan are regretting their decision to increase capacity as consumption has remained stagnant over the past four years, according to the All Pakistan Cement Manufacturers Association (APCMA). Exports are also declining, forcing the sector to operate at 69% of its installed capacity.

An APCMA spokesman explained how capacities were increased when the economy was booming and that most of the plant capacities were increased in the northern part of the country. For these regions Afghanistan was the only export market but its potential was limited. Exports to India were limited at that time and today as well due to many non-tariff barriers erected by India.

The spokesman regretted that the growth during the past four years had been much below expectations and that the government also failed to provide funds for, what he called, 'essential' infrastructure. The fierce competition between the mills sitting on huge capacities kept the rates of the commodity much below the average inflation in the country, he added. Rates of inputs of the industry increased in line with the inflation and rupee devaluation while the cement prices increased by just 6% from the average cement rates in 2006.

The APCMA spokesman added that exports, which provided some relief to the industry in the past few years, have declined at a rapid pace during the first eight months of the current fiscal year (July 2011 to February 2012). During this period the decline in exports was 5.57% to 5.62Mt from 5.95Mt during the corresponding period in 2010-2011. He said that exports to India, mostly via train, had increased by 39.5%.

Tanzania: The Tanzanian government has urged cement producers to establish their own depots in remote areas to reduce the risk of rising cement prices. The Minister for Industry, Trade and Marketing, Dr Cyril Chami, said the time had come to ensure cement prices were uniform throughout the country.

"Although the manufacturing firms incur transport costs in shipping the product to the market, they offer it at retail prices that are not affordable to ordinary people," said Chami. He cited the case of Coca Cola, which sells its drinks at the same price in all the regions, saying this has been made possible with the availability of depot services. "Cement manufacturers should emulate what the soft drink producers are doing by establishing their own depots so as to ensure equitable retail price of the products in all the regions," he added.

According to one of the major producers in the country, Tanzania Portland Cement Company (TPCC), development in the construction industry will increase demand for cement demand rapidly. A recent report conducted by the Tanzania Securities Limited (TSL), shows that the cement industry is expected to grow further due to high demand from the construction industry, which has already increased by 10% since 2007.

"We expect demand to grow at 18% if the retail business, infrastructure development and mining investments are sustained and the economic momentum quickly returns to pre-global financial crisis levels," said Moremi Marwa, the TLS's report analyst.

Tanzania remains a net importer of cement and, despite the recent up-cycle expansion of about 1.4Mt/yr, there are plans to increase capacity by 0.75Mt/yr. This comprises 0.25Mt/yr from Lafarge (Mbeya Cement) and 0.5Mt/yr from Lake Cement in the next two years.