NAMIBIA: Durban for Bigger Stake in Ohorongo Cement

The Development Bank of Namibia is set to increase its stake in Ohorongo Cement this month, according to officials working on the new shareholding structure.

Foreign minority shareholders Development Bank of Southern Africa (which owns a 7,3% stake and IDC of South Africa (which owns 20%) are in the process of selling their shares to Namibian institutional investors such as pension funds.

According to sources who preferred to stay anonymous since the official announcement will only be made later this month, Schwenk Zement KG of Germany is the majority shareholder with about 60% stake.

DBN spokesperson, Jerome Mutumba declined to comment when asked if the bank was in the process of increasing its stake of 10% in Ohorongo.

The official announcement is expected to be made on 29 July during the ground-breaking of the composite cement production plant and the inauguration of a training centre at Otavi where the company operations are based.

In its invitation to the event, Ohorongo said a Namibian shareholding structure will be announced.

INDIA: Despite signs of revival, cement demand remains weak

Cement demand continues to remain lacklustre though there are signs of revival in the economy, what with the Reserve Bank of India thrice cutting key bank rates this year.

Many banks, laden with huge loan defaults, have not fully passed on the benefit of lower lending rates to borrowers. This apart, large infrastructure and real estate companies are extremely cautious on fresh investments, given the high debt on their books. However, government spending on infrastructure projects is expected to boost demand from the second half of this fiscal.

Monsoon watch

The industry is keeping watch on the progress of the monsoon, with hopes that better rains could push up demand in rural regions.

The demand in June was better compared to the preceding three months, with increase in spending on infrastructure projects by government. However the housing sector remains sluggish, said a cement dealer.

Amit Kumar Singh, Vice President, Choice Broking said there may be a slight revival in cement demand from the second half of the fiscal, but prices may still be under pressure as companies try to ramp up their capacity utilisation. “The price realisation in the northern States may be better than other regions as fresh capacity addition is lower compared to other places. We expect overall capacity to improve marginally by 72 per cent, compared to 71 per cent last fiscal,” he added.

Except for the southern region, cement prices are under pressure across regions as companies try to increase capacity utilisation by pushing in their produce at the slightest sign of demand revival. The capacity utilisation in the southern States has hovered around 40-45 per cent while it ranges between 70-75 per cent across other States, sources said.

Pick up in June

In June, cement prices rose in a few markets due to seasonal uptick in demand from infrastructure projects before the monsoon and supply discipline adhered by companies, said J Radhakrishnan, research analyst at IIFL Capital.

However, he added, the overall recovery in prices was muted compared with the increase in last few years in June as the monsoon was better so far this year.

CHINA: Cement firms in China's Hubei likely to pay millions to meet carbon obligations

Cement companies, including Huaxin, covered by the carbon market in China's Hubei province will likely be forced to spend millions of yuan on permits before Friday's compliance deadline after authorities rejected their pleas for leniency.

Last month, the firms asked regulators to let them borrow some permits from next year's quota, saying they could not afford to buy permits to cover their obligations for 2014. But their requests were rejected, easing market concerns that big emitters would be let off the hook.

Huaxin Cement, Hubei's biggest cement producer, has been under particular pressure to buy over the last few trading days as it has a shortfall of 1.15 million permits.

"Local officials have talked through the consequences of non-compliance with cement factories, so Huaxin approved a 40 million yuan ($6.44 million) budget to pay for permits," said a trader with direct knowledge of the matter, who did not want to be named as he was not authorised to speak to media.

Huaxin declined to comment.

Trading volumes on the Hubei carbon exchange have surged ahead of the deadline, in the absence of any indication the compliance date, initially set for May 31, may be pushed back for a second time.

The market closed on Thursday with prices at 24.39 yuan ($3.93), up from the launch price of 21 yuan. It has been hovering at around 25 yuan for the past week.

Daily trading volumes have averaged 385,000 this month, nearly 15 times more than in June.

However, as of Thursday, 44 companies, or 32 percent of the total 138 firms, did not have enough permits to cover their obligations, brokers said. Of these, 26 were cement producers.

A manager with Gezhouba Cement Group, Hubei's No.2 cement producer, said its permit allocation had been miscalculated.

Firms covered by the Hubei exchange are only obliged to buy a maximum of 200,000 permits, regardless of how much they overshot their cap. But Gezhouba has eight subsidiaries in the scheme, bringing its total permit demand to more than a million.

"The scheme is punishing big producers but not inefficient competitors," the manager said. "We pleaded with the government to re-issue permits and narrow the gap, but we have not got any reply. How can we spend tens of millions on carbon?"

The most active carbon market in China, the Hubei Emissions Exchange, has traded nearly 17 million permits since its launch in April 2014, representing 55 percent of the nationwide volume. But most was conducted by a small number of trading companies, with compliance buyers moving in only as the deadline loomed.

But shrinking industrial output has undermined the prospect of any larger price hike. "Many institutional investors bought at 21 or 26 yuan, hoping it would go above 30 yuan in anticipation of a bull run ahead the deadline," a broker said.

KENYA: SGR Contractor Denies Importing Cement

Standard gauge rail contractor, China Road and Bridge Corporation has defended itself over accusation of bypassing local cement producers in favour of imports in the construction of the railway.

In a statement seen by nation.co.ke, China Road and Bridge Corporation (CRBC) the firm has been procuring cement from local producers since construction of temporary facilities of the SGR began last year.

This followed the signing of purchase agreements with major cement manufacturers last year for supplies throughout the construction phase of the Standard Gauge Railway (SGR).

The firm said it has to date bought about 150,000 tonnes of cement from the local manufacturers including Bamburi Cement, East African Portland Cement, Athi River Mining Cement and Savanah Cement and it anticipates the volumes of cement consumed increase substantially in the coming months.

According to CRBC manager for external relations and cooperation, Julius Li, it is cheaper to buy materials locally as opposed to importing the same due to inflation of costs associated with logistical procedures.

"We have a principle where we first source for materials from the Kenyan market and only resort to international market when these are not available locally," Mr Li said.

PHILIPPINES: San Miguel spending $800M to put up 2 cement plants

Conglomerate San Miguel Corp. is investing around $800 million to build two new cement manufacturing plants, preparing to meet an expected surge in demand from big-ticket infrastructure and private construction activities in the years ahead.

One of the plants will rise at cement affiliate Northern Cement Corp.’s existing facility in Pangasinan and the other in Quezon province, SMC president Ramon S. Ang said Thursday after the stockholders’ meeting of SMC’s parent firm Top Frontier Investment Holdings Inc.

Each of the plant will have an annual production capacity of 2 million tons and cost $400 million each, Ang said. The first plant will be completed by June 2017 and the other by end-2017.

About 50 percent of the project will be funded by equity and 50 percent by loan, Ang said. As such, around $400 million will be raised from borrowings for the cement plants, he said. Ang denied reports that SMC was raising $400 million through a seven-year loan facility for the construction of a new 300-megawatt coal-fired plant in Bataan. He said the project financing for this project had already been completed.

Coincidentally, he said SMC was planning to borrow $400 million not for power plant projects but for the cement business.

It was earlier reported that SMC had invested in Northern Cement, a company owned by its chair Eduardo “Danding” Cojuangco, in 2013.

The entry into the cement business is seen in line with the company’s large infrastructure projects. Ongoing projects include the Tarlac-Pangasinan-La Union Toll Expressway (TPLEx), the Boracay airport rehabilitation, Metro Railway Transit-7, Naia Expressway and the Skyway Stage 3 which will connect the South and Northern Luzon Expressways.

At present, the group is already operating South Luzon Expressway, Skyway 1 and 2 and Southern Tagalog Arterial Road (STAR) tollways.

SOUTH AFRICA: Cement sales jump as smaller builders buy

South Africa’s first quarter cement sales jumped more than 15% as demand from smaller players made up for the slump in the building sector led by bigger companies, analysts said.

Sales rose to 2.87 million tonnes in the first quarter of 2015, according to the report released by PPC on behalf of the country’s eight major cement producers on Wednesday.

With the order books of the major firms not looking healthy, the jump in cement sales could be the result of smaller companies such as Afrimat attracting more business or individual builders seeing an uptick, Imara SP Reid analyst Sibonginkosi Nyanga said.

Cement producing newcomer Sephaku has said that it had a very good first quarter this year, and could also be a substantial contributor to the 15% rise in sales, Nyanga said.

Despite the increase, listed construction firms mostly struggle to increase profit since the end of the building boom for the 2010 soccer World Cup.

Shares in Aveng, the largest company in the sector, has fallen 67% in the year to date, while Murray & Roberts has shed more than 40% of its value.

“While higher cement sales is a good sign for the construction sector, it is not necessarily good for the large listed companies,” Nyanga said.

Aveng flagged a 50% drop in its full-year earnings last month citing a slump in demand in its home market that shrunk its building orders by 10% since December.

INDIA: Falling demand from real estate and infra cos leaves cement industry reeling

The cement industry is staring at a dead investment of Rs 55,000 crore in the near term owing to high idle capacity of about 100 million tones (MT). 

The capacity utilisation in the cement industry has come down to a mere 70% as against 94% in 2007-08 because of supply and demand mismatch, according to data from the Cement Manufacturers' Association (CMA). 

"The installed capacity stands at 380 MT per annum and the utilization is just about 275 MT. This extra capacity of 100-105 MT has cost about Rs 55,000-60,000 crore of investment," says Shailendra Chouksey, whole time director at JK Lakshmi Cement and vice president of CMA. 

The slump in the real estate industry has not helped matters with the real estate industry accounting for about 15-20% of all cement demand in the country. 

About 55-60% of the cement consumption comes form the retail segment, followed by real estate at 15-20%, infrastructure at 13-15% and the commercial, factories segment at 10-12%. 

The demand by real estate players has gone down by 40% in the last three to four years, says Chouksey. The slowdown in the realty sector is coupled with weakness in rural demand and infrastructure development. Faced with the scenario, capacity addition is also expected to take a hit in the next few years. From about 25 MT of capacity added in 2013-14, new capacity additions will come down to 19 MT and 14 MT in 2015-16 and 2016-17, respectively, according to industry estimates. 

"The capacity addition will go down as banks are not lending to cement companies as they know they will not get returns in such a scenario," says Anil Kumar Pillai, director and chief executive officer, JSW Cement. 

Now the cement industry is looking towards major infrastructure and housing programmes of the government to provide succor. 

To bring about major infrastructural development in the country, the government has just announced The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for 500 cities, Smart Cities Mission and approved spending of Rs 1 lakh crore for the two schemes. It also aims to build 2 crore houses by 2022 under the Housing for All initiative. 

"The cement industry is likely to improve by second half (October) of the current fiscal on the back of huge infrastructure push by the government," says Pillai. 

However, not all manufacturers are enthused with the efforts by the government on the infrastructure push. 

"These programmes are good but the question is how and when would they be implemented. There has been no off-take of cement for highway construction so far," says Chouksey. 

Transport Minister Nitin Gadkari, in January this year, had said that highways in the country would be constructed using cement instead of bitumen and even launched a website in March for cement procurement and delivery for the purpose.

DOMINICAN REP.: Gabriel Ballestas es nuevo presidente Asociación Productores de Cemento

La Asociación Dominicana de Productores de Cemento (ADOCEM) juramentó al ingeniero Gabriel Ballestas como su nuevo presidente para el período 2015-2017.

Ballestas es director general de ARGOS Dominicana, S.A., y sucede en el puesto a Carlos González, presidente de CEMEX Dominicana, quien en el nuevo Consejo Directivo asume la función de Secretario.

Desde su nueva responsabilidad, Ballestas liderará las propuestas e iniciativas de la industria cementera destinadas a procurar el desarrollo y fortalecimiento del sector.

Durante su discurso de juramentación, Ballestas exhortó al sector que representa a continuar produciendo el cemento que República Dominicana necesita para su desarrollo, a través de un trabajo articulado entre el Estado y los demás sectores productivos nacionales.

Enfatizó que los productores de cemento siguen enfocados en seguir impulsando la industria de la construcción en términos de infraestructura y el desarrollo de una oferta de vivienda económica que satisfaga las necesidades presentes y futuras de la sociedad. 

En ese tenor, el nuevo presidente de ADOCEM expresó que el continuo incremento del déficit habitacional en el país, el cual asciende aproximadamente a un millón de viviendas, evidencia que las iniciativas desarrolladas por el Estado, tales como la liberación del encaje legal, la estabilidad en las tasas de interés y más recientemente la flexibilización del acceso a los créditos hipotecarios, aún no se ven reflejadas en la reducción de ese desbalance.

Durante la actividad, se le realizó un homenaje póstumo Osvaldo Oller Castro y a Huáscar Rodriguez Herrera en reconocimiento a sus aportes para la fundación, modernización y crecimiento de la industria del cemento en la república Dominicana.

El Consejo Directivo de ADOCEM está conformado, además, por Osvaldo Oller, como Vicepresidente; Cruz Amalia Rodríguez, de Cementos Cibao, como Tesorera y Carlos Emilio González, Secretario. Fungen como asesores Raysa Rodríguez, Gonzalo Rueda, Marco Focardi y Francesco Cardi.

ARGENTINA: Record de cemento

El despacho de cemento en el mercado interno registró en junio un record de 1.055.528 toneladas, con un avance de 19,1 por ciento respecto del mismo mes del año pasado, mientras que se acumularon en lo que va del año ventas por 5.877.168 toneladas, con un incremento de 21,9 por ciento interanual. Así lo informó ayer la Asociación de Fabricantes de Cemento Portland. La obra pública, a través de grandes proyectos, y el programa de créditos subsidiados para la vivienda Pro.Cre.Ar fueron claves para explicar la expansión del consumo durante los últimos meses. La actividad de la construcción en 2015 marcó una importante recomposición, con un crecimiento de más del 6 por ciento, lo que fue un elemento central para promocionar el incremento del volumen de negocios de fabricantes de cemento local. La edificación de viviendas particulares, las obras petroleras y los proyectos de repavimentación vial fueron algunos de bloques del sector que anotaron las mayores tasas de expansión.

KENYA: Lafarge and ARM cry foul

Kenyan cement producers say they are being left out of a $3.8-billion railway project that China Rail & Bridge Corporation is building, after the company gave an assurance it would source all of the material domestically.

Companies including Lafarge SA’s Kenyan unit and ARM Cement Ltd asked Kenya Railways Corporation, the implementing agency, to provide clarity on CRBC’s local procurement plans, five months after work on the project started, according to ARM Chief Executive Officer Pradeep Paunrana. Kenya Ports Authority data show CRBC imported at least 7 000 metric tons of the building material so far this year.

“There was an assurance that all cement would be supplied by local producers,” Paunrana, who is also chairman of the Kenya Association of Manufacturers, said in a July 6 interview in the capital, Nairobi. “There has not been transparency on how much we will supply, and we surely don’t understand why they are importing cement when we can clearly supply all cement to their specifications.”

The so-called Standard Gauge Railway Project is Kenya’s biggest investment in infrastructure since it gained independence from Britain in 1963. The Treasury is pinning its 7 percent growth target for this year partly on “activities” generated during construction of the 609km link. Last month, Treasury Secretary Henry Rotich allocated 143.9 billion shillings ($1.46 billion) to the project for the 2015-16 financial year.

Million tons

The SGR project requires 1 million tons of cement, all to be sourced in Kenya, according to a master list of supplies that the manufacturers’ association says it was given by CRBC. Kenya is a higher cost producer of cement than China and imports for the project are duty-free, Paunrana said, without providing details.

A communications officer at CRBC said questions about the project should be directed to KRC. Kenya Railways isn’t importing cement because the material is available locally and ARM and Bamburi are already supplying the project, spokeswoman Mary Oyuke said by e-mail.

ARM and other producers including Lafarge’s unit, Bamburi Cement Ltd, say they’ve upgraded their factories to produce the so-called I 52.5 grade of cement required by the contractors, according to Paunrana. The enhancements cost “several million dollars” and were commissioned on the understanding that CRBC would buy the cement from domestic manufacturers, he said.

“We undertook significant investments in an endeavour to seamlessly supply cement to the project,” including long-term agreements with transport companies to make deliveries, Bamburi CEO Bruno Pescheux said in a May 21 letter to CRBC, a copy of which was given to Bloomberg by one of its recipients.

Chinese bank

“It is our hope that the project will continue to purchase cement locally rather than import in light of the above investments,” Pescheux said. Bamburi “effortlessly” supplied 20 000 tons in April, he says in the letter .

Pescheux wasn’t available when Bloomberg called his office and didn’t respond to an e-mailed request for comment. Bamburi Corporate Affairs and Communications Director Susan Maingi said the request for comment was forwarded to the company’s head office in Paris, which has yet to respond.

The Export-Import Bank of China is funding 90 percent of the railroad, which will connect Nairobi to Mombasa, East Africa’s biggest port. It’s scheduled to be completed by 2017.

Details of supplies imported and obtained from domestic companies are contained in the master list, which was shared with manufacturers and the KRC earlier this year, Paunrana said

CAMEROON: Dangote Cement Factory Soon in Yaounde

The Nigerian business magnate, Aliko Dangote, was received by Prime Minister Philemon Yang on Thursday at the Star Building.

150 million US Dollars (about FCFA 88.7 billion) will be invested by the Dangote Group, a Nigerian investment holding, to build a cement factory in Yaounde, after the smooth take-off of its first cement factory in Douala. Speaking after an audience with the Prime Minister, Head of Government, Philemon Yang, yesterday, July 2, 2015 at the Star Building, the Board Chair and Chief Executive Officer of the Dangote Group, Aliko Dangote, said the investment’s aim will be to “totally eliminate” any future demand increase in cement in the country.

“Cameroon will not lack cement. We can assure the government that we are here to stay and will continue to invest,” stated the Nigerian business mogul to pressmen while his five-man delegation looked on. Assessing his multinational corporation’s investments in Cameroon, Aliko Dangote was full of gratitude to the Head of State, Paul Biya, the Prime Minister and all Ministers involved for assisting him to establish the Douala cement factory whose products are already on the Cameroonian market. Aliko Dangote said he had a very good meeting with the Prime Minister who promised to continue supporting the group. His company is looking forward to other investment opportunities not only in oil and gas but also in agriculture especially sugar and rice production.

Earlier on, Philemon Yang received outgoing Ambassador of the Republic of Senegal to Cameroon, H.E. Alioune Ndao Fall, who is at the end of his two-year stay in Cameroon. Besides showcasing achievements of cooperation ties between Cameroon and Senegal particularly in the domains of education, military training, housing, the Senegalese diplomat disclosed that the next Cameroon-Senegal Mixed Commission will hold in two months.