Colombia's largest cement maker Cementos Argos' acquisition of a number of Lafarge's US cement assets - expected to be approved by August 1 - will significantly bolster the company's growing US presence. CFW notes that despite the firm's entry into the American market (in 2005) being overshadowed by a deep recession, it remains unperturbed with regard to its strategy. Moreover, while weak economic data continues to emerge from the US, Cementos Argos is among a growing number of Latin American and emerging market (EM) firms within the sector keen to capitalise on the divestiture of US assets by indebted Western companies.
Wednesday, June 15, 2011
CHINA: Conch Cement to acquire Yunnan Cement Co
It is reported that Anhui Conch Cement plans to fully acquire Yunnan Zhuangxiang Cement for CNY 50 million. In addition, the company will build a new type dry process clinker production line with daily production capacity of 2,000 tonnes.
The company plans to expand its cement production capacity to 300 million tons a year over the next five years.
INDIA: After Meghalaya, Lafarge plant in Himachal faces trouble
NEW DELHI: Lafarge, the French cement giant, has landed in trouble again with green clearances, this time for a project in Himachal Pradesh.
The French company intends to set up a 3 million tonne per annum cement and 2 million tonne per annum clinker plant along with a captive limestone mine of 3 million tonne per annum in Mandi, Himachal Pradesh. In June 2009, the company got environmental clearance for the project.
But the company, which has faced similar problems in Meghalaya, was taken to court. A petitioner from an affected village filed a case before the National Environment Appellate Authority against the plant. Among other things, the petition alleged that the plant was coming up within 10 km of a wildlife sanctuary. Such proximity is not allowed without the permission of the National Wildlife Board, which Lafarge had not sought.
The NEAA cancelled the clearance given to the project after a site visit.
Lafarge then went to the Himachal Pradesh High Court pleading against cancellation of the environmental clearance.
In the HC, the petitioners claimed that Lafarge hid the fact that its proposed cement plant was close to a wildlife sanctuary, which was later affirmed by the state forest department as well as the statutory Forest Advisory Committee of the Union environment ministry and finally by the appellate authority. The Majathal Wildlife Sanctuary fell within 5 km of the plant site, NEAA had concluded.
Lafarge contested the petitioner's argument that it had made wrongful claims about the ecological impact of the project on the people and land. The appellate authority, while cancelling the green clearance to the cement plant, had noted that the land was cultivable and that there had been near total opposition to the project from the affected villagers. NEAA had said the villagers were against the location of the plant near their land as it would impact their agriculture, horticulture and livestock.
AFRICA: Egypt's Suez Cement 2011 Q1 profit down 10 pct
Egypt's Suez Cement (SUCE.CA) (SUCEq.L) posted a 10 percent decline in 2011 first-quarter net profit to 277.4 million Egyptian pounds ($46.68 million), the stock exchange said on Tuesday.
Suez Cement reported 307.8 million pounds of net profit for the same period in 2010.The firm, Egypt's largest listed cement maker by market value, is a subsidiary of Italcementi (ITAI.MI).
INDIA: JK Cements to adopt pet coke technology in 3 months
J&K Cements Limited, a state-owned profit-earning enterprise, is all set to adopt the most modern Pet Coke technology to make its production cost effective.
The total technology upgradation system involving a cost of Rs 5.30 crore including Rs 3.67 crore as equipment cost would be put in place within 3 months. The technology shall help the enterprise to reduce heavy input costs on coal raw material.
Announcing this while reviewing the performance of J&K Cements Limited here today, Minister for Industries and Commerce, S S Salathia asked the company to devise a realistic working schedule to achieve the production targets.
“The company should tap all the resources vis-à-vis modernizations and modifications to exploit the full plant capacity,” Salathia said adding that all the possibilities needs to be explored to put in place some kind of power back-up system at the Cement Factory to overcome periodic plant closures due to power shut downs and tripping.
Managing Director, J&K Cements Ltd., Mushtaq Ahmad, Secretary, Sheikh Ghulam Nabi, Deputy General Manager Works, Ghulam Hassan Sofi, Financial Advisor, Kaiser Ahmad and concerned Officers from the Administrative Department were present in the meeting.
The Minister asked the management of the company to adopt all the available modern technology to enhance market acceptability of its product as has been done by some private players in the field including Tramboo Cement Industries (TCI) and TCI Max.
He asked the management to explore possibility for installing a mega diesel generator at the cement plant as a standby arrangement to run its factory without any interruption.
He also directed for completing renovation of the old Rotary Kiln within a shortest minimum period but not more than a month to enhance cement production.
The old Rotary Kiln is in the final stage of renovation at a cost of Rs. 1.50 crore. The company should revisit its financial management and business plan in tendem with the present day requirement, Salathia added.
Managing Director of the company, Mushtaq Ahmad informed that the company has fixed an ambitious sale target of 1.97 lakh MT during the current financial year and eyes on fetching a net profit of about Rs 11 crore.
He said the target for clinker production has been fixed at 1.80 lakh Mts. The company has sold about 1.37 lakh MT cement during last fiscal, generating a revenue of Rs 81.87 crore, he added.
He said all the related section of the cement Factory have been brought under Pollution Control by installing the electro-Static Precipitators (EPSs), Gas Conditioning Towers (GCTs) and Reveres Pulse Jet (RPJ) system of anti pollution devices adding that these systems have reduced the emission level below 50 mg/Nmz which is below the permissible level.
JAPAN: Taiheiyo Cement to burn disaster rubble at Ofunato plant
Taiheiyo Cement Corp. said Monday it will start incinerating debris left by the March 11 earthquake and tsunami in two cities in Iwate Prefecture at its plant in Ofunato next week as part of efforts to reconstruct the cities devastated by the disasters.
Japan's largest cement producer will burn debris mainly from collapsed houses scattered around the cities of Ofunato and Rikuzentakata from June 22 using its No.5 rotary kiln, which is located on higher ground and avoided damage.
The company halted production of cement at the plant after its furnaces were damaged by the massive tsunami following the earthquake. But it decided to make use of the No.5 furnace to burn the debris at the requests of the local governments, the company said.
The company will incinerate 300 tons of debris every day up until around the end of August, and will continue thereafter if the furnace can handle it, the company said. It may also consider expanding the areas from which it will accept rubble as the Iwate prefectural government has asked it to do so, according to a company official.
How the ash produced in the process of incineration will be disposed of has yet to be determined, but it could be used in the production of cement, the official added.
The company plans to partially resume cement production at the Ofunato plant in November.
SAUDI ARABIA: Saudi cement sector posts 16% annual growth
The Saudi Arabian cement sector recorded sales growth of 16%, the highest in more than a year and an indicator of confidence in the economy and an increase in appetite for projects in the country.
Domestic cement sales grew to 4.2 million tonnes in April, compared to 3.61 million tonnes in the same period last year, say NCB Capital analysts. Private projects, mainly school and residential, are especially increasing the demand for cement.
"Last year, people were very wary. The last thing they wanted to do was commit money, but now the outlook is looking brighter," said Farouk Miah, an analyst at NCB Capital in Riyadh.
"There is also a lot of activity for plans to develop the rest of the region, in Mecca, Madina and Jeddah," he adds.
Officials in Riyadh last week allocated 1,953-hectares of land for housing projects in the city. The directives follow King Abdullah decree ordering authorities to build 500,000 low-cost houses in different parts of the kingdom. Demands for housing in the country increased dramatically, the kingdom needs two million homes by 2014 to keep up with growing population that has quadrupled in the last four decades.
Shares of companies in the cement sector have increased this year, up 24% from the same period last year and outperforming the country’s benchmark Tadawul All-Share Index, which is up 2% in the same period. "Saudi Cement, Southern Province Cement and Yamama Cement should benefit from the demand because they are the ones who have the biggest spare capacity, an average of 20 per cent," added Miah.
"Smaller cement companies can’t benefit because they can’t produce much more." Shares of Yamama Cement gained 0.4 per cent to 63.25 riyals, Southern Province cement lost 0.3 per cent to 70.5 riyals, and Saudi Cement was unchanged at 63.75 riyals yesterday.
EEUU: Repair, expansion of Tampa reservoir could cost $162 million
It will cost more to repair the regional reservoir and expand its capacity than it cost to initially build the structure, according to a proposal that will go before Tampa Bay Water later this month.Agency staff will ask the board of directors on June 20 to spend $162.4 million with Kiewit Infrastructure Group of Omaha, Neb. to repair cracks to the C.W. Bill Young Regional Reservoir.
The repair job also would expand the capacity of the reservoir by 3 billion gallons – from 15.5 billion gallons to 18.5 billion gallons.The vote comes a month before a federal lawsuit against HDR Engineering Inc., designer of the original structure, is scheduled to go to trial.
The reservoir has cracking problems in the thin layer of soil cement and also suffers from poor drainage, officials have said."We had never anticipated having to spend this kind of money to fix this facility," said Michelle Rapp, spokeswoman for Tampa Bay Water. "But it's a very important facility.
It needs to be fixed. It has become a cornerstone of our system."It is hoped that the federal lawsuit against HDR will recover much of the cost of the repairs and expansion, Rapp said.Tampa Bay Water has reached settlements with Barnard Construction, the contractor, and CDG, which provided construction management.
If the board OKs the contract with Kiewit, it will take a year for permitting and design, Rapp said. Construction on the project would begin in September 2012 and it would take two years to complete.The reservoir, which currently holds nearly 8 billion gallons of water from the Alafia River and the Tampa Bypass Canal, would have to be drained for the project.
AFRICA: New factories, presidential intervention raise hope on affordable cement
In response to federal government’s quest to make cement affordable, manufacturers of the commodity in the country have quickened the pace on factory expansions to boost production capacity and consequently bring about a friendly pricing regime, writes AUSTIN IMHONLELE
By the end of last month the soaring price of cement had peaked at N2, 500 a bag; a price which according to analysts,is three times higher than the going rate in most emerging markets. It took a presidential order to bring about the slight
reduction in price that became noticeable last week. Business Day gathered that members of the Cement Manufacturers Association of Nigeria (CMAN) Manufacturers are already meeting with distributors on ways to further reduce cost of cement. An industry source told Business Day that the stakeholders have already started increasing cement depots nationwide and increase the number of trucks to supply their distributors.
Dangote Cement which is the largest manufacturer in the country has so far deployed 5000 cement trucks for the benefit of up to 50 depots in the country while Lafarge WAPCO plc is adding over 1000 trucks to increase the number of trucks.
Some manufacturers have observed that the nation’s cement production will soon hit over 28 million tonnes from about 12.5 million tonnes annually as Dangote Cement for example has many ongoing cement projects in the country that are at various stages of completion.
Increasing capacity
Dangote’s Ibese cement plant in Ogun State with six million metric tonnes per annum capacity which is in the final stages of completion and commissioning will commence in August this year.
The managing director of Obajana Cement Plc Jagat Rathee, an arm of Dangote Group, also told Business Day that Dangote Group alone produces over 60 per cent of local production as the firm’s expansion project in Obajana, Kogi, and the construction of Ibese Cement Plant would inject about 17 million tonnes into the market annually. The company has already commenced the construction of some facilities to actualise the export dream, but the poor condition of roads has been the limiting factor for poor sales.
He maintains that the current plant capacity is five million metric tonnes per annum, but by the time the two new lines currently under construction are completed, the capacity will increase from five million to 7.5 million metric tones and target 10 million tonnes in the next 2 years. “We should have been making three trips per day but we are able to make one trip per day, we currently export very little quantity to Niger, Togo and Chad. If there is good road or rail lines connectivity, we should be exporting more to Cameroon and other neighbouring States,” Rathee said.
Benue Cement Company (BCC) another subsidiary of Dangote Group has five new generating plants installed at a total capacity of 52 mega watts to boost production capacity. These projects operators say, would inject millions of tonnes of cement into the market and even begin export in large quantity to other ECOWAS countries.
Thirumoorthy Sukumars, told Business Day that its five new generating plants are installed at a total capacity of 52 mega watts to boost production capacity. The company which locally sources raw materials currently produces 6000 tonnes of bagged cement per day an equivalent of 200 trucks per day.
For Lafarge WAPCO Cement, the company has completed the construction of Ewekoro plant which will be commissioned next month to enable it keep pace with the growth in the Nigerian cement market and maintain its market share.
The company say it is part of strategic plans to boost its production capacity by 2.5 million metric tonnes of cement per annum. The Lakatubu plant is expected on completion to add 2.2 million metric tonnes to the current 2 million metric tonnes capacity from the two plants at Ewekoro and Sagamu in Ogun State.
The Lafarge project is expected to create additional 400 jobs for Nigerians and will continue to create value for the company’s shareholders and stakeholders as soon as it begins operations. “The new cement line at Ewekoro plant, which costs a total of 370 million Euros with a capacity of 2.5 million metric tonnes per annum will be using a dry process production technology and will increase to over 4.5 million metric tonnes per annum that means 12,000tonnes of cement will be produced daily,” says, Samy Abdekalder, managing director and chief executive officer of the company.
The Ewekoro project, according to the firm’s management is expected to make more profits and then the local consumers will also gain affordable cement prices that can sustain the building industry in Nigeria.
Lafarge currently has other cement plants such as Ashaka Cement in Northern part of Nigeria, Unicem in the south, south and Atlas in the Niger Delta to easily reach its distributors.
BUA Group, another indigenous firm and owner of Edo Cement has gone into collaboration with FLSmidth, a Danish company, for the expansion of a cement line in Edo Cement plant in Okpella community of Edo State.
The plant, when completed, will produce 2.5 million tons of cement annually. The executive chairman of BUA Group, Abdulsamad Rabiu, announced at the contract signing ceremony for the building of the plant last week in Abuja that the building of the Edo Cement Plant would be completed in August, 2013.
“The building of the Edo Cement will take 28 months to be completed and it is expected to offer jobs to 4,000 skilled workers and over 20,000 indirect jobs to Nigerians,” Rabiu stated.
It was learnt that the financing of the project is to be provided by FLSmidth and a consortium of banks led by Ecobank, which has since provided an initial $50 million for the take-off of the plant’s construction. Other banks in the consortium are FirstBank, Diamond Bank, Finbank and Bank PHB.
The chairman stated that the total project cost of $500 million includes cement equipment acquisition, infrastructure and a power plant of 100 megawatts.
Self-sufficiency in production
Rabiu however posited that with the coming on stream of so many plants, Nigeria can be talking of self-sufficiency in cement supply in the next three to five years. “Now we import about 6-8 tonnnes of cement to bridge the gap between demand and supply. That is why I said in the next five years, when the companies are in full production, the problem will be over”.
These investments are parts of federal government’s initiative to encourage local production of cement. This initiative has resulted in full-scale production of cement locally as the country before the initiative in 2002 was barely producing about 12.5 million tonnes of cement annually and there was a huge gap in demand. Local demand for cement hovers between 19 and 20 million tonnes annually while local production is about 17 million tonnes.
The president of the Cement Manufacturers Association of Nigeria (CMAN), Joseph Makoju, lauded the management of BUA Group for the investment, saying that the plant would contribute significantly to the quest of the Federal Government to make Nigeria a cement-exporting nation.
He lauded the government for its back-integration policy in the cement sector, saying that the policy would assist in the effort to reduce the high cost of cement and other building materials in the country.
Makoju expressed delight at the involvement of the Danish firm in the plant, recalling that the company had been involved in the building of many thriving cement plants in Nigeria.
Closure of Kaduna Refinery
Some manufacturers have also complained that the closure of Kaduna Refinery in February and March affected companies that use LPFO for production. As a result of this Benue Cement factory was short down for two-week; a situation that contributed to the scarcity of cement products recorded recently across the country.
Before now there had been so much anxiety over a trend of arbitrary increase price of cement in the past three months. President Goodluck Jonathan was so worried that the development would negatively affect growth efforts that he last month gave the manufacturers ultimatum to crash the price. Somehow the riot act worked as the price had come down to N1, 900 in the Lagos area by last week end. While the situation subsisted, the position of the manufacturers was that they do not decide the price of cement, adding that their task is to ensure that there is enough cement in the market.
In rationalising the situation Joseph Makoju, president of Cement Manufacturers Association of Nigeria (CMAN) said: “When there is scarcity in any product there is bound to be an increase in price. Now that there is enough cement in the market, the price will gradually come down.”
But now that the Kaduna Refinery is back in production, LPFO supply now restored to BCC plant in Benue State, the plant is now producing at full capacity and supplying the market with an average of over 250 trailers of Cement daily.
The manufacturers have estimated that 17 million metric tonnes which would be produced this year would be supplied to the market. A number of new cement plants with combined capacity of 14 million metric tonnes that are currently under construction are all expected to come on stream at different periods of this year and we expect some considerable additional output from the factories.
The manufacturers claimed that their factory price remained unchanged throughout the year at N1,500 in the Lagos area in spite of the rise in the cost of some inputs in the year. Technically, prices effectively came down in 2010 as companies introduced a number of discount and rebate arrangements to encourage their distributors.
Consequently, open market prices also remained stable and in most areas even came down in 2010, averaging N1500 - N1550 per bag in Lagos compared with N1900 - N2000 at the beginning of 2009.
A 50-kg bag of cement currently sells for N1, 900 at the open market in Lagos. That is about 21 per cent drop from N2,500.
Business Day gathered that in the factories, cement sell at N1, 500 but because diesel has gone up from N80 a litre to N160/N170 a litre, transporters have taken this as an opportunity to hike the price. Said one of the manufacturers: “If they charge more than double on a product that you sell at N1, 500; and a transporter is charging N700. That’s quite a lot.”
According to Makoju, we do not expect anything less that 60% performance from most of the new plants in 2012. “Investments in the industry are ongoing and if the government continues with the strict implementation of the backward integration policy, our expectation is that more new entrants will come into the business of cement manufacturing and the present tempo of growth in the cement industry will be sustained.
The price of cement has continued to rise in the country, making it difficult for many Nigerians to become home owners.
Importation to the rescue
Aliko Dangote, who had earlier reacted to government decision to import cement to force down price, said cement importation was not the solution because there were unavoidable costs which come with importation which cannot be controlled.
Speaking on the dynamics of cement pricing, Dangote said his company’s control over the price of cement “is limited as price is directly related to the price of energy”. “If price of diesel goes up by one naira today, transporters will increase their price and this is passed on to the price of cement,” he said.
AFRICA: NIGERIA: Dangote Cement test runs $620 million Ibese plant
Dangote Cement Plc has begun the test run of its six million metric tonnes per annum cement plant at Ibese, near the Polytechnic town of Ilaro in Ogun State, preparatory to the commencement of cement production in August. The 620 million US dollar plant (about 99.200 billion) is said to have attained over 80 percent completion level.
These facts were disclosed by the Deputy Director, Sinoma International Engineering Co. Ltd, the Chinese construction firm handling the project, Dr. Ved Prakash Sarkari and a Manger in the Projects department, Engr Bolu Aladeniyi when they conducted newsmen round the expansive complex last week. Dr Sarkari stated that when the plant rolls out the first batch of ordinary Portland cement OPC, in August, it will reduce the price of the product by at least 15 percent in the open market.
He however decried the high cost of energy in the country, noting that the increase in the price of diesel from N155 per litre to N180 is being borne by manufacturers.
Engr Aladeniyi disclosed that all the raw materials required to flag off the production of cement -limestone, shale and red soil, barring gypsum, are readily available at the company’s Ibese Mines. The mines has an estimated reserve of 760 million tonnes of limestone which is expected to last for the next 105 years.
The conveyors which are currently being test-run without loads will transport materials from the crusher location to the cement plant located about two kilometres away.
Ibese cement plant which has two production lines, will be powered by three turbines being built by the company. Each of the turbines being installed by Messrs Siemens of Germany, will generate 37 megawatts of electricity.
Engr Aladeniyi explained that the Ibese plant can also operate with coal, natural gas and HFO. The kiln, two storage houses for limestone, six silos each with a capacity of 10,000 metric tonnes as well as mine fields and other local raw materials needed for cement production are also ready, awaiting the take-off of actual production in the next two months.
The gas powered plant which is serviced from Itori Gas Plant, 24 kilometres from Ibese (to supply power to the cement plant) is equally ready.
Flaunting the uniqueness of the plant, Aladeniyi declared: “The equipment we are using at Ibese Cement plant is the latest in cement production anywhere in the world, in terms of modern technology. The equipments were bought from the best manufacturers in the world”.
He outlined other special features of the new plant which will use the dry process method of cement production. “The gamma matrix on-line analyser (an equipment) is used to control the quality of incoming raw materials from mines automatically and corrects the mix-up to 99 percent at crusher itself.
Also, the Robo lab ensures that there is no manual intervention. It guarantees auto sampling and testing. By using the latest proven technologies, we can achieve a pollution free environment,” he said.
Continuing, Engr Aladeniyi said “we have 18 loading bays and 15 parkers (parking machines). You can position 18 trucks at the same time to load. Our auto bag placer is a proven design to achieve a better, faster way of stacking accurate quantity and faster 18 automatic bag placers,” he said.
Also bemoaning the high cost of energy, Engr Aladeniyi explained that the company uses about 56,000 litres of diesel a day to test run the plant. “If we are using the turbines, one of them can consume three tanker loads of diesel a day,” he said. He urged the government to crash the price of energy as this will reduce the cost of cement in the country.
According to him, the company didn’t build independent power plants in other countries where it has invested in cement production because power is readily available.
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