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Bangladesh/India: Lafarge Umiam Mining has won the Outstanding Achievement Award from the Indian Bureau of Mines. The subsidiary of LafargeHolcim was cited as a role model for other mining operators in India's north-eastern region, according to the Financial Express newspaper. It also picked up an award for health and safety. Lafarge Umiam Mining operates a mine in Meghalaya in India that provides raw materials to LafargeHolcim Bangladesh’s integrated plant at Chhatak in Sylhet.
Iranian cement production remains stagnant 19 April 2018
Iran: Cement production remained stagnant at 54.5Mt during the Iranian financial year that ended on 20 March 2018. Clinker production was reported as 57.9Mt, according to ISNA. The country produced 54.1Mt of cement in the preceding financial year. The lack of growth has been blamed on a recession in the construction sector, poor supply of gas to industrial users and declines in the export market.
Exports fell by 9% year-on-year to 5.8Mt in the 2018 period, according to Abdolreza Sheikhan, the secretary of Iran's Cement Industry Employers Association, with particular declines noted in Iraq and Afghanistan. Iraq temporarily banned imports from Iran in 2015 due to low quality but volumes fell following the resumption of trade. Cement shipments to Russia have also reportedly been returned due to quality issues. An arrangement with the Islamic Republic of Iran Shipping Lines to implement a 30% discount for cement cargos to Persian Gulf states has been agreed but it is yet to be implemented.
Vietnam: Nguyễn Quang Cung, vice chairman of the Vietnam Building Material Association, says that local industry cement exports grew strongly in the first quarter of 2018 due to Chinese cement plants shutting down because of pollution and power shortages. He made the comments at the Vietbuild conference, according to the Viet Nam News newspaper. Local cement production rose by 18% year-on-year in the first quarter and exports rose by 68%.
Cung said that the Chinese government ordered the closure of a series of cement plants from 15 November 2017 to 15 March 2018 due to environmental concerns and a shortage of electricity during the winter. These circumstances turned China, the global clinker exporter in 2016, into an importer of cement at the end of 2017. It has mainly imported clinker from Vietnam, at a volume of 1.5Mt/month. Vietnam’s clinker exports ‘skyrocketed’ in 2017 due to this.
The association expected the country to export 15Mt of clinker in 2017 but it exported nearly 21Mt instead. It also anticipates that plant closures in China will increase in 2018.
Shayona Cement to expand plant in Malawi 19 April 2018
Malawi: Shayona Cement plans to more than double production at its integrated plant at Kasungu in Lilongwe. The unit has a clinker production capacity of 1200t/day and this will be increased to 3000t/day. The cement producer is also considering expansion to other countries in the continent.
Breedon goes international
Written by David Perilli, Global Cement
18 April 2018
The rumours were confirmed yesterday when the UK’s Breedon Group announced its acquisition of Ireland’s Lagan Cement. The price was Euro527m, which Breedon will finance with a combination of a new loan, extended credit and an equity placing. The assets it will gain include a cement plant in Kinnegad, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants.
Breedon said that its strategy is to continue buying businesses in the heavyside construction materials market. At a stroke, once the deal completes on 20 April 2018, it becomes an international company. From the cement perspective it gains a new 0.7Mt/yr plant in central Ireland and a terminal in Belfast, UK. The UK Competition and Markets Authority (CMA) wasn’t mentioned in Breedon’s press release on the purchase but it seems unlikely that the competition body would have much to say on the transaction. Lagan Cement does hold ready-mix concrete (RMX) plants, aggregate and asphalt assets in Northern Ireland but these are far away from Breedon’s operations in mainland Britain. That said, the CMA did force Breedon to sell 14 RMX sites when it bought Hope Construction Materials in 2016. Generally speaking, Breedon’s enlargement reduces the diversity of the UK cement industry on the smaller end leaving only Quinn Cement, with operations on both sides of the border, as the country’s sole remaining single site clinker producer.
Aside from geographical expansion, becoming an international building materials company may offer Breedon Group some security from the UK’s exit from the European Union (EU) (so called Brexit). Breedon will join CRH as the only two cement producers with production facilities in both the UK and Ireland. The strategic significance of the position Breedon and CRH are in geographically may arise from whatever deal is reached between the EU and the UK and the significance of the UK’s only land border with the EU. LafargeHolcim is nearly in this club with its plants in England and Northern Ireland and plenty of the other local producers straddle the UK-EU border with terminals or production facilities elsewhere. Yet, in an uncertain Brexit negotiation, having kilns on both sides of the line might come in handy once (or if) the politicians make a decision.
Although, if Liam McCaffrey, the chief executive officer of Quinn Industrial Holding, is to be believed, then Brexit will have little impact at all other than (low) tariffs in a worst case scenario. He said to local press that although damage to the construction industry might arise in the UK from a prolonged recession, the UK’s housing shortage and reliance on imported building materials would probably see it through. That point about a possible financial downturn is important to Breedon Group, given the new debt it will be taking on to pay for acquisition. This is something that will be familiar to Breedon’s competitor Cemex. It is still paying off the debts from its acquisition of Rinker in 2007.
Breedon has decided to delay the release of its interim results from mid-July to September 2018 to allow time for the integration of Lagan into the group. Its sales and earnings may dwarf those from 2017 that it described as ‘one of the most productive years’ in its history. In the meantime congratulations are in order for Breedon Group for ensuring that the UK cement sector is never dull.