Friday, August 17, 2012

EU: Cement maker Holcim cuts costs as Europe gets worse



The firm's construction industry customers, especially those in southern Europe at the heart of the debt crisis, are suffering as governments slash spending in an attempt to get budgets under control.

At the same time, Holcim and rivals Lafarge (LAFP.PA), HeidelbergCement (HEIG.DE) and Cemex (CX.N) (CMXCPO.MX) have been trying to pass a surge in electricity, coal and oil costs on to customers by hiking the prices of their products.

Holcim was most likely to raise prices for its cement, aggregates and concrete in Asia, Latin America, the U.S. and Canada, chief financial officer Thomas Aebischer said, where markets are more robust. Question marks remain over Holcim's ability to implement prices hikes in Europe, he added.

The company declined to comment on the size of price rises it is seeking across its various markets and product groups, but said it was aiming to at least pass on inflation-induced costs to its customers.

The Zurich-based group said in May it would take out costs and improve efficiency to boost profit by at least 1.5 billion Swiss francs $1(957 million pounds) by the end of 2014.

Analysts at Bank Vontobel said that while Holcim's overall outlook was almost unchanged, the contribution of Europe compared with North America was three times bigger, making this effectively a "reduction of the outlook".

Holcim stock was down 0.4 percent at 10:23 a.m. British time, after initially falling more than 2 percent. The Stoxx 600 European construction index .SXOP was down 0.7 percent.

Second-quarter net profit rose 9.2 percent to 379 million Swiss francs on slightly higher sales of 5.6 billion francs, which was chiefly due to strong demand from emerging markets in Asia, Latin America and Russia.

Analysts in a Reuters poll had forecast on average a net profit of 377 million Swiss francs and sales of 5.69 billion francs.

Looking ahead, Holcim said it will "accord cost management the closest attention" and that planned spending would result in an additional operating income of at least 150 million francs this year.

INDIA: Cement: Strong pricing drives earnings outperformance

Motilal Oswal has come out with its report on cement sector. The research firm expects strong earnings growth to drive stock performance, hereon. They prefer Ambuja Cement and UltraTech / Grasim among large-caps, andShree Cement among mid-caps.

1QFY13 numbers decipher more positives, no negatives-The cement majors have reported strong numbers for 1QFY13 (EBITDA 9-18% ahead of estimates), amidst a mixed bag of expectations improvement in operations coupled with regulatory concerns post the adverse verdict by the Competition Commission of India (CCI). The robust performance is attributable to (1) strong QoQ improvement in realizations (6-8%), and (2) in-line volumes and cost push (which has been showing signs of stabilization). Given our positive outlook, we have upgraded our earnings estimates (4-11% for ACC, Ambuja and UltraTech), backed by 10-12% upward revision in realization assumptions.

Favorable trends portend further upgrades- We expect stabilization in costs, driven by (1) declining prices of imported coal, (2) stabilization in freights, and (3) improving operating leverage, backed by higher utilization. Realizations are likely to remain healthy, even over seasonally weak periods, with only a moderate dip. Though we have significantly upgraded our realization estimates (10-12%), we see further upsides, as (1) implied realizations for FY13/FY14 are within 2-3% range of 1QFY13 levels, and (2) for new capacities to be viable (based on 15% CRoIC), realizations need to be ~12% higher than the current cement prices. Based on our current estimates, the large-cap cement companies are trading at historical average valuations (EV of ~8x FY14E EBITDA). While consensus estimates are upto 17% lower than our estimates, we expect meaningful upgrades in the same with positive outlook on price resilience, which should drive valuations.

Worst behind; expect gradual improvement- We believe that the worst is behind for the cement industry. We expect gradual and consistent improvement in capacity utilization and operating performance. Longterm demand drivers remain in place. After the recent outperformance, cement stocks are trading at historical average valuations, leaving limited room for further re-rating. We expect strong earnings growth to drive stock performance, hereon. We prefer Ambuja Cement and UltraTech/Grasim among large-caps, and Shree Cement among mid-caps.

Government intervention- key risk: Any intervention by the government to curb cement prices is a key risk for the industry. In the past, the government has intervened (driven by the then Finance Minister, Mr P Chidambaram) in free pricing of cement to curb inflation. This had severely impacted operating performance of the cement companies and their stock prices.

Valuations: The worst is behind for the cement industry. We expect gradual and consistent improvement in capacity utilization and operating performance. Long-term demand drivers remain in place. After the recent outperformance, cement stocks are trading at historical average valuations. We expect strong earnings growth to drive stock performance, hereon. We prefer Ambuja Cement and UltraTech/Grasim among large-caps, and Shree Cement among mid-caps.

INDIA: Calcium aluminate cement plant coming up near city



Kerneos India Aluminate Private Limited (KIAPL) will set up calcium aluminate cement production unit at Atchutapuram with an investment of Rs.100 crore during the first phase.

KIAPL Managing Director Segi P. Idicula told The Hindu that this facility would be 100 per cent import substitute. Land acquisition is over and the company is awaiting environmental clearance to take up construction work.

During the first phase the unit will have a capacity to produce 30,000 tonnes per annum. It is the most vital component of a castable. Twenty acres have been bought from APIIC.

Mr. Idicula said the first phase would be completed in 2014. Later the capacity will be doubled as part of expansion. At present, the product used for improving castable refractories is being imported from China, France and United Kingdom.

With castables penetrating into steel, ceramic and other sectors, the demand is growing. Kerneos has global presence and its international arm is owned by Materis which has a turnover of over two billion euros.

To a question, he said calcium aluminate cement produced from their Visakhapatnam unit would help in reduction of freight as well as production cost for the clients in the eastern belt. Bauxite and lime are the raw materials, which are used for its production. “Easy access to raw material and availability of land and manpower brought us to Visakhapatnam to invest,” he said.

This will be the seventh country where Kerneos is establishing its facility.

It has production units in China, France, South Africa, United Kingdom, United States and Brazil. Mr. Idicula said with the projected growth of steel and refractories, the demand for castables with calcium aluminate cement would go up. Admitting that the steel production, which was 72 million tonnes last year, had remained two years behind schedule than the projected growth, he said the national steel policy envisaged achieving 220 million tonnes by 2020.

Expansion mode

It is expected that steel production will cross 100 million tonnes in next three years. Rashtriya Ispat Nigam Limited, Steel Authority of India Limited and other steel producers are on an expansion mode.

“Even the infrastructure sector, which is facing ups and downs in past two to three years, is expected to be back on track within next six months,” he said. Hence, there is a good future for improving castable refractories with calcium aluminate cements.

INDIA: Cement demand may grow 10% in 2012: ACC



Country’s cement demand may grow at a healthy rate of 10 per cent in 2012, but subdued capacity utilisation and costlier raw materials will keep prices under pressure, cement major ACC Ltd has said.

“The demand for cement is expected to grow at 10 per cent over 2011. A lower utilisation rate coupled with increase in cost of raw materials and increasing logistics costs are likely to keep overall prices under pressure in all regions,” it said in its annual report.

The country’s cement sector saw a demand growth of around six per cent in 2011 over 2010. ACC’s saless, however, grew by 11.5 per cent during the year at 23.73 million tonnes. Poor demand led to the industry’s capacity utilisation falling below 80 per cent in 2011.

India’s total installed capacity of cement stood at 320 million tonnes per annum (mtpa) with the addition of 30 mtpa fresh capacity during 2011. Around 25 mtpa new capacity is set to be added in 2012.

“Pressure on costs will continue to mount mainly due to increases in the cost of domestic coal and owing to volatility in costs of imported coal,” ACC said, adding that availability of fuel at reasonable rates was one of the main concerns of the company as it uses large quantities of coal annually to meet its kiln and captive power generation requirements.

There was a steep hike in the price of coal in 2011 which adversely impacted the profitability of the country’s cement makers.

“During the current year, coal prices are expected to further rise sharply. This, coupled with limited production of fuel in the country, is expected to result in higher input costs for a fuel intensive industry like cement,” ACC said.

The cement major said as the availability of linkage coal is gradually dwindling, it is trying to mitigate its fuel risk by increased usage of alternative fuels and optimisation of coal mix.

“We have initiated steps and is in the process of developing own coal blocks which would partly go to meet its coal requirements,” it added.

CHINA: Cement giant Conch sees H1 profits down 51%



China's biggest cement producer by output - Anhui Conch Cement Co Ltd -announced Wednesday its net profit plunged nearly 51 percent year-on-year in the first sixmonths of 2012.

The sharp decline is a result of slower housing development and other fixed-asset investmenthobbling amid the economic slowdown.

Conch's net profit slumped to 2.93 billion yuan ($462 million), down 50.96 percent from a yearearlier, the company said in a statement filed with the Shanghai Stock Exchange.

Operating revenue dropped 7.92 percent to 20.56 billion yuan, while earnings per share stoodat 0.55 yuan in the first half of 2012, according to the internal financial reporting standards.

The sharp decline in net profit was mainly due to a macroeconomic downturn and shrinkingdemand for cement in the first half, the company said.

In the first six months of the year, China's economy expanded 7.8 percent year-on-year, down1.8 percentage points from a year earlier, the slowest pace in almost three years, according tothe National Bureau of Statistics.

During the period, the country's fixed-asset investment rose 20.4 percent year-on-year to15.07 trillion yuan, slowing by 5.2 percentage points, while investment in the nation's propertysector increased 16.6 percent to 3.06 trillion yuan, down 16.3 percentage points from a yearearlier, according to the NBS.

Data from the Digital Cement website showed China's cement output added just 5.48 percentyear-on-year to reach 994 million tonnes in the first half of the year, down 14.12 percentagepoints from a year earlier.

Investment in the entire cement sector fell 5.42 percent to 61.9 billion yuan in the period.

PAKISTAN:Fiscal year 2012-13 to stay muted for cement export

The economic slowdown, higher depreciation of trading partners’ currency and regional capacity additions exerted downward pressure on country’s cement exports.

Industry experts said that the fiscal year 2012-13 would remain muted on cement exports front, as the overall exports plunged by 9.2 per cent YoY to 0.76 million tons while on a monthly basis, the same improved marginally by 3.3 per cent. It is being expected that FY13 would stay muted on exports front because exports to Afghanistan (55 per cent of overall exports) will remain flattish owing to lack of construction activity as most parts of the country remain affected by armed conflicts. 

Relatively lower cement prices in India, main obstacle to Pakistani exports, are expected to remain upward sticky owing to recent regulatory pressure and the onset of monsoon season; thus further pressuring exports to India. Likewise, the sea exports will continue to falter with Sri Lanka and East African region providing nominal respite.

According to experts, cement is one of the major commodities that is abundantly available in Pakistan and can be exported to India through land route. Despite tall claims to increase bilateral trade, the respective governments failed to remove non-tariff barriers imposed on Pakistani products. 

The Most Favoured Nation (MFN) status to India is not giving boost to Pakistan’s cement exports to the neighbouring country mainly due to the Pak-specific non-tariff barriers, experts said. They regretted that despite rhetoric to promote trade with Pakistan, the Indians have not yet removed NTBs that impede exports from Pakistan. The cement sector representatives said that though there is high demand for Pakistani cement in India, where cement is around 16 per cent costlier as compared to Pakistan, the exports have constantly declined. Moreover, multiplicity of Indian standards, rules, regulations and enforcement agencies create confusion and hurdles in smooth trade. Likewise, the absence of testing facilities at border causes undue delays, they added.

They said that Pakistan, with a vast potential to meet India’s cement demand of construction sector, is unlikely to enhance its exports manifold to the neighbouring country in presence of NTBs. They believe that India is a place where manufacturers can offload huge surplus production of the commodity as their supplies are restricted against productions, they said.

The Pakistani exporters have demanded of the government to look into the matter, urging that exporters should also be provided all necessary facilities at the border points so that they could easily clear their consignments.

CHINA: China Resources Cement's H1 profit far worse than expected



Cement prices on the mainland market are expected to rally in the fourth quarter on resumptionof large infrastructure projects, helping to improve producers' profit margins, China ResourcesCement Holdings Ltd said after reporting a sharp fall in earnings and profit margins for the firsthalf, dragged down by weaker demand.

Despite turnover rising 9.8 percent to HK$11.03 billion ($1.42 billion) for the six months endedJune 30, 2012, the company's net profit slumped 68.9 percent to HK$635.2 million over thesame period due to sliding selling prices.

The company's HK$635.2 million profit gain was only a quarter of the 2.5 billion-estimates madeby Citigroup earlier. Even though the securities group was bearish than most of its peers on theperformance of China Resources Cement during the past six months, the company stillsurprised the market with an even worse outcome, according to the bank.

Average selling prices of cement - the key binding ingredient in ready-mix concrete widely usedin infrastructure developments - slumped over 10.2 percent to HK$333.9 per metric ton in thefirst half of 2012 from HK$371.7 a year early, according to China Resources Cement, a unit ofChina Resources (Holdings) Co.

Gross margin of cement decreased 15.8 percentage points to mere 21.0 percent during thefirst half from 36.8 percent last year.

Net gearing ratio also climbed to 104.2 percent during the period from 91.3 percent in the firsthalf of 2011. The company estimated that the ratio would reach 110 percent by the end of theyear due to restrained cash flows - a far cry compared with the estimation of an improved 80percent forecasted by the management team earlier this year.

China Resources Cement attributed the lackluster performance to a number of unfavorablefactors including sluggish demand caused by weakened economy and poor weather conditionsin the southern part of China, which led to accumulation of inventory as well as a series of pricecuts.

Bidding on the resumed construction of railway networks with a reported investment of 580billion yuan for 2012 as well as the ongoing affordable homes which targets completion of 5million units on the mainland, cement prices are likely to rebound to HK$340 to HK$350 permetric ton in the fourth quarter this year, Zhou Longshan, chairman of China ResourcesCement said during a media briefing in Hong Kong on Monday.

"Near-term cement prices pressure and earnings revision may still cloud the share performanceand we suggest waiting for share weakness," according to a report prepared by CCBInternational Securities Group.

"We expect cement consumption to pick up driven by monetary loosening and on-going policyfine-tuning, while the lower coal prices would be an additional catalyst for earnings recovery,"said the report.

But oversupply has become an issue haunting the whole mainland cement industry. A numberof mainland cement producers have posted profit warnings in Hong Kong over the past monthson the shrinking demand and decreasing prices.

Dongwu Cement International Ltd that listed in Hong Kong this June issued a profit warning inearly August - 49 days after its initial public offering.

Anhui Conch Cement Co, China's biggest cement maker, also warned in June that its net profitwould fall by more than 50 percent due to weak demand and falling product prices.

Other cement manufacturers on the mainland, including China National Materials Co, ShanshuiCement Group and Gansu Qilianshan Cement Group Co, have all posted similar profit alertsthis year.

"Producers in some regions attempted to implement collaborative price hikes. Meanwhile, theindustry remains in its slack season, with no obvious improvement in demand," said a CiticSecurities report on Monday. "Given prices are already close to breakeven level and someproducers are even at loss-making levels, so the downside in prices may be limited."

INDIA: Fauji Cement Company Limited

Fauji Cement Company, headquartered in Rawalpindi, has a cement plant at Jhang Bahtar, Tehsil Fateh Jang, district Attock in the province of Punjab. The Company is sponsored by the Fauji Foundation, and was incorporated in Rawalpindi in 1992. The annual production capacity of their cement plant is 1.165 million tons of cement. 

Like many prominent cement manufacturers in the country, Fauji Cement has also installed a Refuse Derived Fuel (RDF) processing plant at a cost of Rs 320 million, for which, a minimum of 300-400 tons of garbage is lifted from each garbage dump located at Rawalpindi and Islamabad. 
PLANT EXPANSION The company commissioned a new production line with a production capacity of 7,560 tons per day. Trial production for the plant started from June 2011. The added capacity is expected to fetch a growth in the company's volumetric sales, while it has also helped Fauji Cement increase its market share in the cement industry. 

However, with the new plant not having achieved full production and operational efficiency, Fauji Cement's capacity utilisation has taken a turn for the south. "Our capacity utilisation remained at 64 percent (based on the enhanced capacity of line-I and line-2) as compared to 92 percent (based on the capacity of line-I only) in the corresponding period last year," said the latest director's report for the company for July-March FY12. 

INDUSTRY REVIEW After a tough FY11 when the country was hit by the Great Floods of 2010, FY12 saw local cement retention prices going up, lending some price-based support to local cement manufacturers. In addition, post-flood reconstruction activity and greater housing construction in some parts of the country also brought about a volumetric growth in local sales - a nine percent year-on-year improvement in FY12 at 24 million tons. Export sales, however, continued to be stifled during the year, clocking in at 8.6 million tons during FY12, nine percent less than the last year. 

PROFITABILITY The company's net turnover went up by more than twice in 9MFY12 on a year-on-year basis, helped mainly by better domestic prices of cement. The company's cost of sales also increased during 9MFY12 because of rising costs of electricity, and fuel, with the cost of sales almost doubling during July-March FY12 versus the same period last year. 

The net effect on the gross margins was an improvement of about six percentage points in 9MFY12 relative to 9MFY11. Distribution costs as a percentage of sales during 9MFY12 improved, though only marginally. They were 1.6 percent of sales in 9MFY11 and fell to 0.9 percent of sales in the same period in FY12. This is plausibly attributed to a decrease in export sales, which has been a trend faced by the cement industry in general lately. Altogether, this cascaded into an improvement in operating margins of about nine percentage points during July-March FY12 versus the same period last year. 

The company's finance costs as a percentage of sales, however, spiked during the period under review. The management attributes this increase in finance costs to the impact of the debt taken up to finance the capacity expansion mentioned earlier. From 0.6 percent of sales in 9MFY11, finance costs went up to 16.2 percent in 9MFY12. The surge in finance costs was witnessed from the last quarter of FY11, therefore explaining the relatively less finance cost to sales ratio up till 9MFY11. The hefty bill of financial charges took a toll on the profit after tax of the company despite the improvement in operating margins. From Rs 303 million during July-March FY12, the profit after tax fell to Rs 140 million. 

LEVERAGE Having obtained financing for the capacity expansion through an additional production line, Fauji Cement's debt surged magnanimously since FY10. This is evident from the increase in the debt-to-equity ratio after FY09, with the long-term loans of the company having surged to nearly Rs 13 billion in FY10 from almost half the same in FY09. 

The effect on finance costs of the company, as already discussed, has been significant. However, the improved retention prices of cement in the local market, and the consequent effect on gross and operating margins, is expected to lend some support to the company's financial charges. 

"Due to strong volumetric growth coupled with healthy cement price outlooks, we believe that meeting debt servicing of more than Rs 3 billion for next three years may not be a challenging task for the company," said a report by Arif Habib Securities in March this year. 

FUTURE OUTLOOK The cement sector as a whole is poised for a promising FY13, with favourable budgetary policies, such as an enhancement of PSDP expenditures and reduction in FED. FED on cement was reduced by a further Rs 100 per ton for FY13, and the budgeted increase in PSDP is also more than 19 percent of last year's outlays - aspects that bode well for cement players like Fauji Cement. 

The FED reduction and better retention prices of cement locally, combined with the downtrend in global coal prices seen recently, may help Fauji Cement see a further uptick in its turnover and margins. Further, with the anticipated increase in the company's volumetric sales owing to additional production capacity, its profit margins will likely receive further boost, though the heavy leveraging charges will keep earnings subdued in the months to come.

AFRICA: NIGERIA: Local cement production hits 18m metric tons, says Makoju



Nigeria has recorded a major feat in the utilisation of a major natural mineral resource, limestone, as local production of cement hits 18 million metric tons above the 17 million metric tons local demand. The country also recorded zero importation of cement from January 2012 to date.

Joseph Makoju, president, Cement Manufacturers Association of Nigeria (CMAN), who disclosed this while addressing Mike Onolememen, Minister of Works, on the proposed utilisation of cement for road construction in the country, noted that the country has 58 million metric tons installed capacity of cement.

Makoju, who attributed the achievement to the “backward integration policy” initiated in 2002, explained that the move was geared towards improving local production of cement and reduction in capital flight.

He said, “In 2003, cement production was two million metric tons per year and in that year we were importing about six million metric tons. Importation was at the peak around 2007 at seven million. But as we are sitting here today, I’m happy to report that total local production has gone up to 12.8 million metric tons in 2011 from two million in 2002 and as we are sitting here today, we project local production for this year would be up to 18 to 20 million metric tons. The local demand is projected at about 17 million metric tons, even if the local production for the first time is in excess of local demand.

“I’m also happy to report that for the first time in our history, since January to date, there was no cement importation, so we are in a position where we are phasing-out import and relying on local production. For the total installed capacity, new plants were commissioned in the last two years. Dangote commissioned six million metric tons in Ogun State; Lafarge commissioned 2.2 million metric tons in Ewekoro, Ogun State; Dangote also commissioned a new plant of 5.5 million metric tons of cement plant in Obajana plant 3 and when you put all local production together today we have 58 million metric tons. So, Nigeria has arrived to be recognised as a cement producing country.”

While speaking on the proposal sent to the Federal Ministry of Works on the use of cement for road construction in the country, Makoju who doubles as special adviser to Aliko Dangote, president, Dangote Group, assured that the use of cement for road construction will reduce cost of maintenance at the long run as well as ensure durability of Nigerian roads.

“We believe the success story should impact on other problem areas in this country which is bad roads. Everybody knows the state of our roads; we have about 34,000km roads which is a massive road network using asphalt. Cement is an alternative in road construction. It was restricted to some areas where it was cost effective but most times, in terms of the initial cost, it was expensive than asphalt and that is why it did not have wide application. But all along, the life cycle cost of cement, if you build a road today with asphalt, and concrete, the concrete cost about 10 to 15 percent and expensive at the beginning but 25 years later if you are to add all the cost, and keep the roads motorable, you find out that the concrete life cycle ended up cheaper.”

AFRICA: Dangote set to reduce price of cement



To assuage the growing concern over the perceived high cost of cement in the country, leading manufacturer of the product, Dangote Cement Plc has commenced a systematic liberalisation of the product distribution . 

The Company said it has successful doubled local production with new capacity still ramping up. 

The managemnet said at the weekend that it was increasing the distribution outlets by opening more mega depots and signing on new dsitributors so that the consumers can reap the benefit of the increased local production. 

There have been concerns over the price of cement even with continuous efforts at increasing production, which has led to a successful local production beyond the national consumption demand . 

Dangote Cement, which accounts for over 70 per cent of the local production, has continued to invest more in local production by expanding its production lines and establishing new plants to ensure the nation produces enough for home consumption and have surplus for export to other countries. 

The management of Dangote Cement believes that only a liberalised distribution system can make increased local production translate to cheaper cement and bring meaning to the huge investments in local production. 

With more investments by the sector’s players, local production has risen to about 27 million metric tons per annum high and above the national demand hovering between 17 and 18 million metric tons per annum. 

Group Managing Director of Dangote Cement, Devakumar Edwin said the cement company decided to review its distribution network system to ensure the availability of the product by creating wider access for its customers. He noted that the move would ensure not only the stability of price, but also guarantee availability at the most reasonable price. 

Edwin said the company has acquired 5000 trucks to boost its logistics and pave the way for even distribution of the product across the nation, noting that “having solved the problem of logistics, the next phase is to ensure a wider distribution depot and register more dealers and bring the product closer to the customers. 

“What we are doing now is to liberalise the distribution network by increasing our depots and registering more credible distributors. All we require is the Certificate of company registration, two passport photographs and letter of intent. There is also opportunity for individuals to buy direct. 

“Henceforth, we are guaranteeing 48 hours registration with a minimum purchase of one trailer load that is 600 bags monthly. In fact no deposit is required. And customers can collect from any of our plants”, Edwin stated. 

According to him, individuals, corporate organisations and institutional buyers seeking to buy Dangote cement in bulk could just walk into any of the company’s depots or offices nationwide. 

He added that the company has begun a campaign aimed at sensitising the people to this development. “In the long run, we hope that this effort will not only make cement available in every nooks and cranny of Nigeria but will reduce the price and make the price stable.” 

“Our investments at Ibese and Obajana have helped Dangote Cement double shipments of locally produced cement that will help Nigeria towards self-sufficiency. The ramp-up of our new capacity is progressing steadily and we are increasing our distribution network to extend our reach in the market”, Edwin said.

Dangote Cement Group, which was listed on the Nigerian Stock Exchange in October 2010, is a fully integrated quarry-to-depot producer with an expected production capacity of 20mtpa in Nigeria by the end of 2012, increasing to 35.25mtpa in 2015. It plans to build a further 19mtpa of production and import capacity across Africa by 2015. 

It has announced an investment of more than $2.5bn to build manufacturing plants and import terminals across Africa. Current plans are for eight cement plants in Cameroon, Ethiopia, Gabon, Republic of Congo, Senegal, South Africa, Tanzania and Zambia, as well as import/packing facilities in Cote d’Ivoire, Ghana 

It has recently signed a memorandum of understanding for the construction of a 6mt plant in Calabar by 2015. 

Through its recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and will soon transform the nation into a net exporter serving other African states. Indeed the half year result of performance of the cement company indicated over 100 per cent rise in the sale of locally produced cement. 

Dangote Cement’s Obajana plant in Kogi, Nigeria, is the largest in Sub-Saharan Africa with 10.25tpa capacity across three lines and a further 3mtpa capacity planned by 2015. The Gboko plant in Benue state has 3mtpa capacity with an upgrade to 4mtpa expected by the end of the year. 

The new 6mtpa Ibese plant in Ogun, near the key market of Lagos, was inaugurated in February 2012. An additional 6mtpa of capacity is planned for completion by 2015.

INDIA: Cement Corporation plans to set up grinding unit in Assam: Govt



Cement Corporation of India is planning to set up a cement grinding unit with an installed capacity of 82,500 tonnes per annum in Assam, Parliament was informed today.

"Cement Corporation of India (CCI) proposes to establish a cement grinding unit in Baikunthapur in district of Cachar, Assam," Minister of Heavy Industries and Public Enterprises Praful Patel said in a written reply to the Lok Sabha.




The proposed unit would have an installed capacity of 82,500 tonnes per annum on a single shift basis at a cost of Rs 39.68 crore, he said.

The unit is proposed to grind fly ash along with clinker to be transported from CCI's Bokajan Cement unit in Assam for producing Portland Pozzolana cement, Patel added.

"About 98.36 bighas of land for the grinding unit has been acquired and a work order for design, engineering, manufacture, supply of equipment and commissioning has been given," he said.

Delhi-based CCI was set up in 1965 with an objective of exploring limestone reserves and setting up cement manufacturing units to meet domestic requirements.

OMAN: Oman’s cement companies continue steady growth

On the back of growing number of infrastructure and construction activities in Oman, the cement manufacturing companies are set for steady growth in the coming quarters. The growth in construction segment has led to higher off-take of cement, which on the other hand, has helped the sector majors to register double digit growth in their revenues in the second half of 2012.

Till recently, the Omani cement manufacturers were victims of cheap inflow of cement from UAE. In 2011, imports met 25 per cent of cement demand in Oman, mainly from UAE where weak construction sector resulted in excess supply of cement. The UAE companies recently increased their cement prices. Oman’s construction sector is on a positive progression with the industry value expected to grow to a level of over $5 billion from under $4 billion in next 3 to 4 years at an average growth rate of about 6 per cent.

“In the Sultanate, prices are slowly moving up in cement industry, and demand also is on the rise in the region. While these are good news but the supplies in Oman are still under significant pressure making the domestic scenario highly competitive”, according to Ahmed bin Alawi bin Abdulla Al Ibrahim, Chairman of the Board of Directors, Raysut Cement.

The company reported a pre-tax profit of RO 13.697 million for the first half of the financial year 2012, registering an increase of 54 per cent compared to RO 8.893 million in the same period last year. The profit before tax of the company remained flat on a quarter-on-quarter basis at RO 6.852 million for the second quarter of 2012 as against RO 6.845 million reported for Q1 2012.

At the same time, margins of the company improved substantially year on year basis and remained steady in the second half. Operating profit margin saw an increase of 30.8 per cent for the first half of 2012 from 25.3 per cent in H1’11 and pre-tax profit margin improved to 27.6 per cent for H1’12 from 20.5 per cent recorded a year ago. Increase in sales volumes and better price realizations have resulted in higher margins for the Company.

“The increase in profit is attributable to higher sales volume and better price realisation through market optimisation on the face of severe competitions faced by the company both in the domestic and in the export markets compared with that in the previous year. The increase in the market value of investment has some impact in the net profit”, said the Chairman.

According to the management of Oman Cement, the growth trend is expected to continue in the rest of the year.

Oman Cement said in its first half financial report that the pollution control equipment for Kiln 1 is in the final stage of implementation.

The company is likely to go in for purchase or import of clinker in order to bridge any shortfall in the production during the implementation period.

Oman Cement saw its revenue surging up by 18 per cent on year on year basis to RO 14.099 million.

The cost of sales during the second quarter of 2012 had increased substantially by 24 per cent to RO 7.505 million. Higher production had resulted in increased usage of fuel, gas and electricity which increased by 38 per cent year on year basis to RO 2.527 million.

In addition, Oman Cement had imported clinker to an extent of 15,000 metric tonnes to bridge the shortfall due to temporary shutdown.

The company reported a gross profit of RO 6.595 million an increase of 12 per cent on year on year and a decline of 8 per cent on quarter to quarter basis.

Gulf Baader Capital Market research report says: “The gains in the international oil prices have made the government to continue with its aggressive spending towards the infrastructure and construction activities which have spelled boon for the cement sector. With most of construction projects in Oman are in implementation stage, the cement demand in the local market will remain at higher levels”.

SAUDI ARABIA: Saudi cement market ‘prosperous’

The Saudi cement sector is fuelled by strong domestic fundamentals, namely: (1) the government’s continued high expenditure on physical and social infrastructure, driven by positive oil price movements, and buoyed by a young demographic structure; (2) relatively low fuel and raw material costs as a result of the subsidized power/ gas, and minimal royalty mining fees, sustaining domestic producers’ competitive advantage; and (3) new market entrants, leading to an influx in capacity dispersed geographically in areas of concentrated demand, the National Commercial Bank said in its latest "Saudi Economic Review" released Tuesday.

The size of the current cement market can be determined using the Kingdom’s construction activity as a proxy. Given the recent spike in construction, it is important to differentiate between core demand and transient demand for cement. Core is identified as the 2002-2006 CAGR demand for cement, which was equivalent to 5 percent. 

This period is generally representative of a natural business cycle for the Kingdom, excluding the intermittent construction boom. Transient is that generated from ongoing mega-project construction activity which we have identified as commencing in 2007.

Using the 2007-2011 CAGR of 15 percent, it can be assumed that the differential 10 percent represents transient demand because this trend is unlikely to continue in the long-term as the pace of new projects is likely to slow in the medium-term. 

Consequently, while in absolute terms transient demand appears to have increased since 2007, the overall growth trajectory is decelerating, with transient demand decreasing by 30.9 percent in 2011. 

By the end of 2011, total local sales amounted to 47 million tons, a 12.3 percent Y/Y increase. Of this total, an estimated 16 million tons represented transient demand.

According to the Central Department of Statistics and Information, a 50kg bag of cement in 2011 costs SR13.96 on average, which translates into SR279 per ton. Thus, total revenues are estimated to have reached SR13 billion. 
NCB estimates that total expenditure in the Saudi construction sector, as measured by its components in the country’s gross fixed capital formation (GFCF), reached SR169 billion by the end of 2011. This represented a 200 percent increase from 2000, and a 16 percent rise from 2010. The GFCF is composed of two components; Residential Building Construction (RBC), and Non-Residential Building Construction (NRBC). 

Examining the relationship between GFCF and the SR value of local cement consumption from 2006-2011, it can be estimated that, on average, the Saudi riyal value of local cement consumption accounts for an estimated 6.7 percent share of GFCF. 

According to market insights, the cost of cement accounts for a range of 3 percent-7 percent of the awarded contract value. It is important to note that GFCF is not accounting for the total value of contracts awarded, thus the two values are not equivalent. 

A key challenge to the sector is the ongoing export ban, which will serve to constrain growth for Saudi cement producers. In the almost four years since its introduction, neighboring and regional countries have developed their cement markets, becoming substitutes to the Saudi production. This will make it difficult for local producers to retain their high levels of exports should the export ban be removed. In addition, fuel shortages reported by some cement companies in recent months is another important challenge that the sector faces. 

According to market insights, it is new fuel allocation that is causing the delay, which is affecting the start of new production lines and output. Consequently, this will put upward pressure on cement prices, due to the increased reliance on inventory, which lowers stockpile levels, and results in a non-optimal utilization of resources.

EEUU: Reducing Mercury Emissions At Ash Grove Cement



For many years, the Ash Grove Cement plant in Durkee has been a linchpin of the local economy.

It has also been the hub of debates about jobs versus environmental regulation.

In 2012, Ash Grove Cement Company celebrates its 130th birthday. Ash Grove was founded in its namesake of Ash Grove, Mo., and its current headquarters are in Overland Park, Kan.

Besides the Durkee plant, Ash Grove owns seven others in the U.S. and a quarry in British Columbia, Canada. It's the largest U.S.-owned cement company.

The plant in Durkee is the only cement plant in Oregon.

Its workforce of 109 includes residents from Baker City, Haines, and Huntington, as well as Ontario and the Idaho towns of Payette, Weiser and Fruitland.

The plant has an annual payroll of about $9 million and reports annual taxes of more than $790,000, according to company and county assessor figures.

Whenever things slow down at the plant, many feel the impact. Sluggish demand for concrete has led to temporary layoffs each of the past three winters.

Everything is on a large scale at the Durkee plant: from the rocks quarried to the machinery used, from the employment to the volume of cement.

"We're running 3,100 tons of cement per day," said plant manager Terry Kerby. "And if we're selling out, we can run 3,300."

In the manufacturing process, Kerby explained, limestone is mined on-site along with shale and clay.

The rocks are crushed and proportioned into a mix called raw feed.

Raw feed is transported to a huge tubular kiln and heated to around 2,800 degrees to produce clinker.

Clinker is then mixed with small amounts of gypsum and limestone and conveyed to the finish mill for final grinding into cement powder.

Voila! -- Portland cement, which needs only water, sand and some type of aggregate, often gravel, to create the concrete for building foundations, freeways and sidewalks.

Yet some point to another issue -- the amount of mercury released into the air from cement plants.

The Durkee plant is located in an area rich with limestone, and the area's volcanic activity left natural mercury deposits.

Miller wrote, "Mercury is also released from the coal burned as fuel in the kiln, but the amount is minuscule compared to what's baked out of the limestone."

High mercury concentrations were described in the Burnt River, which empties into Brownlee Reservoir near Huntington, about 15 miles southeast of Durkee.

Miller also described the impact on the Powder River: "the Powder River Watershed, 20 miles to the north, has also received heavy doses of Durkee mercury.

"The EPA estimates that of the 231 pounds of mercury deposited annually in the watershed, a full 150 pounds comes from Durkee."

"We have 1,100 parts per million of mercury in our limestone, whereas in other places it may be five parts per million," he said.

"And the EPA has put out a one-size-fits-all rule with the 2010 MACT (maximum available control technology)."

This rule would set standards for air pollutants from Portland cement manufacturers nationwide.

It has yet to take effect after delays. 2013 was the earlier target, though now it is Sept. 9, 2015.

More information is available at http://tinyurl.com/8cvs8sm.

"Mercury had never been controlled before," Kerby said. "But we already entered into a mutual agreement order with the EPA."

Brian Mannion of the Department of Environmental Quality's Eastern Oregon Region explained the carbon injection method.

"Carbon particles stick to the mercury and then that is captured in a bag house, kind of like in a vacuum bag," he said.

These bags of mixed carbon and mercury are then shipped and sold to a mercury waste company in Union Grove, Wis.

Mannion said Ash Grove self-reports mercury emissions from the Durkee plant daily.

"It's about what society wants," Kerby said. "We do it because it's what we've been asked to do -- there's probably a fairer way than what the EPA is doing now, based on what the raw quarry level is."

Environmentalists operate with a different bottom line.

"The Durkee plant has sought special exemptions based on the premise that they're not doing anything unusual," said Justin Hayes, program director of the Idaho Conservation League.

"That's little comfort for those of us downwind," Hayes said. "The mercury can precipitate and ultimately fall out of the air onto a land surface or water source.

According to publicly-available data from the EPA database, 879 pounds of mercury compounds were emitted in Baker County in 2010 and the entire amount came from Ash Grove Durkee.

About 78 percent of Oregon's mercury compounds released came from the Durkee plant that year.

However, updated numbers appear to be much lower, attributable to mercury reduction technologies.

Doug Welch, environmental engineer with the Department of Environmental Quality office in Pendleton, confirmed these numbers.

The carbon-injection system was completed in July 2010 and the dust-shuttling system in September 2011, with a total cost of around $20 million.

And yet, no matter the numbers or costs, finding an agreeable middle ground between jobs/industry and environmental regulations often proves difficult.

Hayes declined to give an amount of mercury emissions he would consider acceptable.

"I'm not gonna give you that quote," he said.

"But we are one of the most efficient plants in the U.S."

UAE: Business Opportunities and Future Growth Potential to 2016




Synopsis

The report provides market analysis, information and insights into the UAE cement industry including:• In-depth analysis of the UAE cement industry • A detailed analysis of market attractiveness, covering the key trends, drivers and regulatory frameworks• Detailed market size figures for a period of ten years (2007–2016) • Detailed imports and exports figures for a period of five years (2007–2011) • Description and analysis of the competitive landscape and the industry structure • Analysis of market entry, growth and operational strategies of key players • Profiles of the major companies • Details of current and future production capacity

Summary

The UAE is ranked as the second-largest producer of cement in the Middle East and North Africa region (MENA), only behind Saudi Arabia. The continued slowdown in the UAE property and construction sector continues to haunt cement companies in the country. This led to an under utilization of capacity and a fall in prices. Production capacity is more than two times the domestic demand so companies are now looking at export markets in the MENA region. Margins are shrinking further as operating costs soar. However, the long-term prospects for the UAE cement industry are good and the industry is expected to reap the benefits of growing investments in infrastructure in the country, GCC and other key foreign markets.

Scope

• This report provides a comprehensive analysis of the UAE cement industry• It provides historical values for the UAE cement industry for the report's 2007–2011 review period and forecast figures for the 2012–2016 forecast period • It offers a detailed analysis of production capacity,consumption, imports and exports of cement • It details the regulatory framework for the UAE cement industry• It covers an exhaustive summary on key trends, drivers and issues affecting the UAE cement industry• It details the competitive landscape in the UAE cement industry• Analysis of market entry, growth and operational strategies of key players

Reasons To Buy

• Make strategic business decisions using historic and forecast market data related to the UAE cement industry• Assess growth opportunities and industry dynamics by understanding production capacity, demand, imports and exports figures • Identify the key market trends and opportunities • Assess the competitive landscape in the UAE cement industry market enabling the formulation of effective market-entry strategies

Key Highlights

• The UAE is ranked as the second-largest producer of cement in the Middle East and North Africa region (MENA).• The UAE has very high surplus production capacity.• Cement clinker is expected to remain the largest product category in the cement industry over the forecast period. Portland cement and ready-mixed concrete are the other key categories in terms of market value.• Refractory cements, mortars and concretes was noted as the fastest-growing category during the review period, while factory-made mortars is projected to be the fastest-growing category over the forecast period.• Prices of various types of cement remained relatively stable in 2011. Prices of white cement started to slightly increase from the third quarter of the year, while prices of Portland cement and sulfate resistance cement demonstrated a slight downward trend in 2011. Table of Contents1 Executive

Read more here: http://www.sacbee.com/2012/08/16/4731170/the-uae-cement-industry-outlook.html#storylink=cpy

INDONESIA: Indonesia July cement sales rose 9.9 pct y/y


Indonesia's domestic cement sales, an indicator of economic growth, rose 9.9 percent in July from a year ago, up from 9.5 percent in June, data from the country's biggest cement firm PT Semen Gresik Tbk showed on Monday. Southeast Asia's biggest economy consumed more than 4.8 million tonnes of cement in July, up 7.2 percent on a monthly basis. The Moluccas islands and Papua led July growth at 51.1 percent, while main islands Java and Sumatra led sales volumes. "We are looking at higher monthly basis sales in July, most likely because sales in outer Java has started to pick up," said Salman F. Alamsyah, an analyst at Bahana Securities in Jakarta. June sales slowed due to project completion in Sumatra and Kalimantan and fears in May of a possible fuel hike, he added. Indonesia's cement sales fluctuate on factors such as holidays and government project completion deadlines. Data shows the economy expanded 6.4 percent in the second quarter, driven by investment and domestic consumption. Bank Indonesia on Thursday kept its policy rate at a record low 5.75 percent for a sixth consecutive month, saying the rate remained consistent with low inflationary pressures. Below are details of Indonesia's cement sales for 2011/2012:
Month Volume m/m y/y (tonnes) Jul 4,811,416 7.2 9.9 Jun 4,488,689 -4.9 9.5 May 4,718,797 12.8 15.6 Apr 4,182,793 -4.5 12.0 Mar 4,379,022 7.8 16.2 Feb 4,062,514 0.1 23.9 Jan 4,059,711 -10.9 15.2 Dec 4,556,598 -2.2 16.6 Nov 4,460,456 -4.4 26.3 Oct 4,667,772 21.5 21.8 Sep 3,842,978 6.7 48.3 Aug 3,603,234 -17.7 -0.3 Jul 4,376,898 6.7 16.8

EEUU: City says CEMEX wants to burn plastic in cement kiln


It’s already burning tires, having gone through a lengthy study and approval process with regulators. Now the Kosmos cement plant owned byCEMEX has told city officials it wants to burn plastic waste and other alternative fuels in their kiln in southwest Louisville.
The company will need to secure a “consistency” determination from the Louisville Metro solid waste board, which is charged with making sure waste management practices in Jefferson County are allowed under the local waste management plan, said Pete Flood, a staffer with the city’s solid waste division.
Flood briefed the solid waste board last night on the matter, and said afterwards he’s not yet sure exactly what the company wants to do because it hasn’t filed an application. But it’s safe to say that residents of southwest Louisville, who already feel dumped on, will will want to make sure this proposal gets full and fair scrutiny.

My guess is that CEMEX might also need approvals from the local air district as well as the state Division of Waste Management, and I’ll be checking on that — and with the company.
Interestingly enough, the American Chemical Society and the University of Texas at Austin recently published a study from Texas of an “evaluation of the energetic, environmental, and economic trade-offs” of using leftover plastics and other fibers from recycling facilities as an alternative to coal in cement kilns. This sounds similar to what CEMEX to what was mentioned at the meeting.
DesignNews wrote about the study earlier this month, and provided a link to it.
The study reported test burns at a Texas cement kiln as a technical success, with the plastic and other recycling center residue equaling coal in energy output, allowing the waste to be diverted away from a landfill.
Some air pollutants went down and others went up:
– Sulfur dioxide emission rates were cut in half during the test burn.
– The emission rate of nitrogen oxides went up by 25 percent when the material was used
at 1 ton per hour and by 93 percent during the 2 ton per hour rate.
The total emissions were still within permitted levels, the study concluded.
This all ties into the movement by cities toward single-stream recycling. Remember how we used to have to separate paper from plastic, and glass — and sometimes even glass by color. Not anymore in many communities, including Louisville, where we dump all our recyclables together and they are hauled by garbage truck to a recycling facility that uses automation and workers to separate everything there.
However, the process results in some plastics and paper, paperboard, and cardboard fibers that are not able to be recycled and they go a landfill. The study said that can be 5 to 15 percent of what we think we’re actually recycling.
Those materials contain energy in them that can be put to use if burned.
If the economics are there, I think the question will come down to air quality.
In the past, burning waste products has been very controversial because of the pollutants that can be released, including a variety of toxic emissions that I did not see covered by the Texas study. That was then. We’ll see about now.