INDONESIA: Holcim Indonesia Adds Cement Plants to Tap Rising Demand

PT Holcim Indonesia (SMCB), the country’s third-largest cement producer, will add a plant in Tuban, East Java in addition to one already under construction as it seeks to meet rising demand in Southeast Asia’s biggest economy.
Holcim Indonesia, 80.6 percent owned by Swiss cement maker Holcim Ltd. (HOLN), plans to boost capacity to 12 million tons a year by 2015 from 8.3 million tons as housing construction increases and the government works on more infrastructure projects, President Director Eamon Ginley said.
“The cement industry here in terms of domestic supply needs to double because the market will grow to nearly 100 million tons by 2020-2021,” Ginley, 46, said in an interview at the company’s headquarters in south Jakarta. “The prospects for the cement industry are very strong.”
Indonesian President Susilo Bambang Yudhoyono has pledged to build more highways, airports and ports to clear bottlenecks and meet an economic growth target of an average 6.6 percent by the end of his second term in 2014. Gross domestic product expanded 6.37 percent in the second quarter. Bank Indonesia (BBRI) reiterated its forecast last month for expansion at 6.1 percent to 6.5 percent this year and 6.3 percent to 6.7 percent in 2013.
Holcim Indonesia is spending $450 million to build the first Tuban plant, which will have an annual capacity of 1.7 million tons when it begins operation next year, Ginley said. The second facility will have “similar” capacity, he said.
Holcim operates two sites on Java island and a cement grinding station in Banten province, west of Jakarta. If the second plant in Tuban is approved, the company would have total capacity of almost 12 million tons by 2015, Ginley said.

Outlook

“If Holcim wants to remain competitive with the other two listed cement companies, it better expand its capacity again,” said Adolf Sutrisno, an analyst at Andalan Artha Advisindo Sekuritas in Singapore. “The outlook for the cement industry is very good as it will be supported by the government’s infrastructure spending.”
Indonesian cement companies have outperformed the broader market this year and Holcim is the best-performing stock among three listed cement makers. Its share price has gained 49 percent in 2012, better than the 28 percent increase of PT Semen Gresik (SMGR) and 26 percent gain of PT Indocement Tunggal Prakarsa. (INTP) The Jakarta Composite index has risen 13 percent.
Holcim reported yesterday its nine-month net income rose to 911.2 billion rupiah ($95 million) from 740.2 billion rupiah the same period a year earlier. Its share price was unchanged at 3,250 rupiah each as of the noon Jakarta-time break. The Jakarta Composite index declined 0.7 percent and Semen Gresik, Indonesia’s biggest cement producer by volume, fell 2 percent.

Better Margins

Ginley predicted a margin on earnings before interest, tax, depreciation and amortization of 30 percent to 35 percent over the next five years as better efficiency from the facility in Tuban helps lower the operating costs and reduces transportation costs to areas in East Java. The margin for the nine-month period rose to 28.2 percent from 21.5 percent a year earlier.
The Tuban plant “gives us position in the East Java market,” Ginley said. “We truck the cement from the West Java or Central Java plants to supply East Java today. Next year, when we turn on the Tuban plant, we can save all those additional logistic costs.”
Indonesia consumed 48 million tons of cement last year, industry data show, and Ginley expects the volume to expand by 14 percent this year and at least 10 percent in 2013.
Indonesia has a “very solid plan” to boost economic growth, Ginley said. “In order to do this, you need cement. If you don’t have cement, you can’t have development. That’s why it’s very important for Indonesia that the local industry also continues to invest and meet this challenge.”

OMAN: Cement tenders sizeable capacity expansion

Oman Cement has decided to increase its cement grinding capacity by installing an additional cement mill capable of processing 150 tonnes of material an hour in response to rising sales and profits.

Chairman Dr Abdullah Abbas Ahmed told the Times of Oman that the tender process has already been initiated for the building of the plant.

Oman Cement is also planning to improve its pollution control equipment to control dust emission levels and is in the process of identifying a consultant for this project.

In the first nine months of 2012, Oman Cement saw its net profit increase by 32.5% to $33.4m, up from $25.2m for the same period last year. Sales revenue increased by $14.3m, or 290,000 tonnes.

ETHIOPIA: Dire Dawa to Open Its Second Cement Factory

The second cement factory for Dire Dawa town, Ture Dire Dawa Cement Factory will start production within the next two weeks.

The cement factory, which has a combined production capacity of 1, 500tns of Ordinary Portland Cement (OPC) and Pozolana Portland Cement (PPC) a day,started the construction of its factory in 2008.

The factory, located eight kilometers west of Dire Dawa town has now completed its construction and is awaiting approval from the Ethiopian Conformity Assessment Enterprise (ECAE), according Mohammed Amin, public relation officer of the factory.

We have delivered a sample of our products and are waiting for ECAE’s approval to start our operation, Mohammed told Fortune.

Ture launched itsconstruction with a total cost of 307 million Br.The company, which is named after the late HajiMohammed Ture, a prominent businessman who established Ture Chinese Commodities Plc, a company engaged in import and export, in 1954, is owned by six members of the Haji Mohammed Ture family.

The Cement Factory has targeted to deliver its products to the eastern parts of Ethiopia, Somalia and Djibouti. In order to facilitate this, the company is planning to import 10 Sino trucks.

Dire Dawa Cement & Lime Factory, the nation’s first cement plant, is also undergoing an expansion project. It was established in Dire Dawa town by Italian investors in 1938. Later, it was acquired by East African Group Plc, which purchased 80pc of the company ownership at a cost of 48 million Br in 1995.

Since then, the company has gone through some major restructuring. The company began an expansion project with a total cost of 1.8 billion Br since 2005.

Located three kilometers north of the existing plant in Dire Dawa, the new plant that National Cement is erecting on 40ha of land, including the quarry, in Ija Aneni Kebele, off the highway towards Dire Dawa, will have the capacity to produce 3,000tn of cement a day, a volume that is equal to the production capacity of both Mugar and Messebo cement factories combined.

ESPAÑA: Tudela Veguín suministrará cemento y clínker a Brasil

La Corporación Masaveu –en la que se incluye la fábrica de cementos Tudela Veguín de La Robla– vuelve a manifestar su afán por crecer y expandirse a nivel internacional, con la puesta en marcha de un nuevo negocio en Brasil. Esta nueva actividad industrial, según indicaron en un comunicado desde la firma, se materializó el pasado mes de julio, cuando su presidente, Fernando Masaveu, en representación de la filial brasileña Masaveu Brasil Participações e Investimentos Ltda., firmó en la ciudad de Río de Janeiro la compra del 50% de las acciones de la sociedad Cimento Verde do Brasil (CVB) al Grupo Ferroeste.
A través de CVB, Corporación Masaveu y Grupo Ferroeste producirán cemento en el estado de Maranhão y comercializarán este producto, junto con cemento importado en los estados del norte del país, que suponen los de mayor potencial de desarrollo de infraestructuras de Brasil. El país americano está viviendo un boom inmobiliario a la sombra de las próximas olimpiadas y el mundial de fútbol.
El Grupo Ferroeste explotaba con razonable éxito el negocio del cemento en el norte del país desde hacía relativamente poco tiempo, siendo el principal cliente brasileño de Cementos Tudela Veguín, de Masaveu Industria, que le suministraba clínker y cemento en saco. Fruto de las actividades complementarias de ambos grupos y de las buenas relaciones entre la dirección de los mismos, surgió la posibilidad de explotar y desarrollar de forma conjunta el negocio del cemento y sus derivados en el país, para lo cual Grupo Ferroeste constituyó recientemente CVB con los activos afectos al citado negocio.
La operación de compra del 50% de las acciones de CVB se ha complementado con la firma de sendos contratos de suministro de clínker y cemento en saco por parte de Cementos Tudela Veguín, además de la venta a la sociedad de un molino horizontal que permitirá incrementar la capacidad productiva de la misma. Con la inversión en este nuevo proyecto, Masaveu Industria apuesta con vocación de permanencia por Brasil como país al que dirigir los esfuerzos de internacionalización del grupo, dado su déficit de infraestructuras y las buenas condiciones que el país presenta para la inversión.