TANZANIA: Govt conducts feasibility study on 35 pct cement tax

Ministry of Industry and Trade experts are now conducting feasibility study to oversee whether the reintroduction of 35 per cent tax on imported cement will have less brunt to both manufacturers and buyers. 

In a phone interview with The Guardian at the weekend, Permanent Secretary in the ministry, Uledi Mussa said the study has come after cement manufacturers urged the government to reverse the tax so as to create fair competition.

He said in order to ensure fair competition; the findings obtained will be presented to the government for further implementation.

According to him, the government will work on the proposal to oversee if the proposals will bring about fair competition and have delicate balance to both manufacturers and buyers. 

He, however, admitted that currently the price of cement in the country is still high due to production cost especially the cost for electricity, adding that it is not a reliable source of energy.

“The government is finding ways to ensure that electricity is available at affordable prices. It’s our hope that the installation of gas pipe to Kinyerezi power plant by December this year will help to reduce production cost of cement,” he said. 

Besides, he said the operation of new cement factory “Dangote” will to great extent increase cement in the market hence reduce its prices.

He said the reason why the saying ‘sensitive products” was removed in 2008 was because of cement shortages occasioned by the construction of stadiums for the 2010 World Cup in South Africa.

Mussa further said as a result, import duty was reduced to 25 per cent from 40 per cent and has remained so todate.

Local producers claimed that the cement import tariff reduction has made cheap cement from China, India and Pakistan flood the market, with market insiders saying cement from those countries sold at 50 per cent to 60 per cent below the domestic market price.

Seconding the argument, the Standing Permanent Committee Chairman of Industry and Trade, Luaga Mpina said if the 35 percent levy is re-introduced, it will help check imported cement and boost local production and at the same time level the playing field for foreign and domestic companies.

Mpina said the government should reverse the tax in order to protect the local industry regardless of other East African countries’ decisions.

Recently, the East African ministers jointly decided to remove cement from the list of “sensitive products”, meaning partner states would continue paying an import duty of 25per cent on Portland cement and promised low consumer prices.

The East African Community (EAC) had a sensitive list of products covered by the EAC Customs Union Protocol, which exposed cement to a 55per cent tariff to be reduced by five percent a year from 2005.

While the 25per cent tariff may seem best to the bloc currently, the ministers are expected to address the tariff issue once its overall effect on the market is observed.

“We had hoped the import duty would be increased to at least 35per cent so that we’re cushioned from the imports,” said Narendra Raval, chairman of Devki Group.

Raval, whose company produces the National Cement brand, noted that local cement producers expected to be promoted before cheap imports were allowed into the market.

CABO VERDE: Investidor suíço interessado em retomar produção de cimento

Um investidor de nacionalidade suíça está interessado em retomar a produção na cimenteira Cabocem do Porto Novo, ilha de Santo Antão, informou o jornal cabo-verdiano A Semana.

O jornal adiantou que o investidor, que trabalhou mais de 40 anos na Secil, empresa portuguesa que fornecia à cimenteira santantonense “clinker”, matéria-prima para a produção de cimento, reuniu-se durante a sua recente estada em Cabo Verde com os donos da Cabocem e com os representantes da Empresa Nacional de Portos (Enapor).

A Cabocem, instalada no Porto Novo há mais de 10 anos, produzia cimento “Portland” pozolânico (cinzas vulcânicas) em “big-bag” (1,5 toneladas) e sacos de 50 quilogramas.

Já na ilha do Sal a produção era de cimento “Portland” calcário, além de agregados hidráulicos diversos, todos certificados com a norma internacional EN 197-1.

Um contencioso com o governo de Cabo Verde, acusado pela empresa de não cumprir as suas obrigações, mais a crise internacional, obrigaram a unidade fabril a fechar as portas.

BRAZIL: Holcim e Lafarge querem vender 30% de capacidade no Brasil

As cimenteiras Holcim e Lafarge fizeram proposta para vender ativos no Brasil com capacidade para produção de cerca de 3,6 milhões de toneladas de cimento por ano, na tentativa de obterem aprovação de autoridades para a fusão que criará o maior grupo do setor no mundo.

Os ativos para alienação pelas empresas em proposta ao Conselho Administrativo de Defesa Econômica (Cade) envolvem duas fábricas de cimento da Lafarge nas cidades mineiras de Arcos (500 mil toneladas) e Matosinhos (1,1 milhão de toneladas) e uma fábrica da Holcim em Cantagalo (1,2 milhão de toneladas), também em Minas Gerais.

A capacidade proposta para a venda é equivalente a cerca de um terço da produção de ambos os grupos em 2012, de 10.691 milhões de toneladas, segundo dados mais recentes da entidade que representa o setor no Brasil, Snic.

Além das fábricas, a proposta inclui duas unidades de moagem da Lafarge, com capacidade conjugada para 700 mil toneladas anuais, e uma usina de concreto da Holcim, em Pouso Alegre. Representantes do Cade não puderam comentar o assunto de imediato.

"Os desinvestimentos propostos foram apresentados ao Cade no contexto de negociações anteriores e serão objeto de análise e discussões até que uma decisão final seja alcançada com a autoridade", disseram as companhias em um comunicado à imprensa divulgado mais cedo.

A Holcim e a Lafarge precisam se desfazer de ativos gerando cerca de 5 bilhões de euros (US$ 6,71 bilhões) em receita anual para persuadir reguladores de competição ao redor do mundo a aprovarem a fusão das empresas anunciada em abril. A operação criará um grupo com vendas anuais combinadas de US$ 44 bilhões.

publicidadeNo Brasil, a fusão das duas empresas criará a terceira maior empresa do setor, atrás de Votorantim Cimentos e Intercement, do grupo Camargo Corrêa, segundo dados do Snic.

No fim de maio, o Cade condenou Votorantim Cimentos, Holcim, Cimpor, InterCement, Itabira Agro Industrial (do grupo João Santos) e Companhia de Cimentos Itambé a pagarem R$ 3,1 bilhões em multas e a venderem 20% de capacidade em serviços de concretagem em um caso que considerou que o grupo formou um cartel no setor no país. Na época, a Lafarge não foi incluída na decisão porque tinha feito um acordo anos antes com o Cade.

CSN

Os ativos a serem vendidos por Lafarge e Holcim no País podem interessar a grupos como a Companhia Siderúrgica Nacional (CSN). Perguntado por analistas nesta segunda-feira se a CSN teria interesse nos ativos, o diretor de relações com investidores da CSN, David Salama, afirmou que a empresa "acompanha os movimentos de mercado, se surgir oportunidade vamos analisar, dentro de nossa filosofia de avaliar se a aquisição criará valor para a empresa como um todo".

A CSN mantém em Arcos uma fábrica de clínquer, principal insumo para a produção de cimento, que produz 2,5 mil toneladas por dia e abastece a moagem da empresa instalada na Usina Presidente Vargas, em Volta Redonda (RJ). A empresa trabalha atualmente na implantação de uma nova unidade de moagem em Arcos, que ampliará a capacidade da empresa de 2,4 milhões para 5,4 milhões de toneladas anuais. A unidade é prevista para entrar em operação em 2016.

BRAZIL: Lafarge et Holcim détaillent leur proposition de cessions

Lafarge et Holcim annoncent les détails d'une proposition de cessions d'un ensemble significatif d'actifs situés au Brésil, dans le cadre de leur projet de fusion entre égaux pour créer LafargeHolcim, un groupe à la pointe de l'innovation et à l'avant-garde de l'industrie des matériaux de construction.

Comme annoncé le 7 juillet 2014, et afin d'anticiper les demandes éventuelles des autorités de la concurrence, le comité de désinvestissements a établi une liste d'actifs de grande qualité appartenant aux deux entreprises Holcim et Lafarge. Cet ensemble, proposé aux autorités brésiliennes de la concurrence CADE (Conselho Administrativo de Defesa Econômica), comprend trois usines de ciment intégrées et deux stations de broyage (représentant une capacité totale annuelle de production de ciment de 3,6 millions de tonnes), ainsi qu'une centrale à béton, toutes situées dans le Sud-Est du Brésil.

Le Brésil est un marché important pour le futur groupe LafargeHolcim, qui maintiendra sa présence dans ce pays, au service de ses clients, avec un réseau d'actifs équilibré dans toutes ses activités : Ciment, Granulats et Béton prêt à l'emploi.

Les désinvestissements proposés ont été présentés à la CADE lors de discussions de pré-notification et sont conditionnés à leur examen et approbation, dans le cadre d'un dialogue continu.

Le processus de cession se déroulera dans le respect des conditions d'information et de consultation en vigueur et dans le cadre d'un dialogue permanent avec les instances de représentation du personnel. Des discussions seront menées en parallèle avec les autorités de la concurrence et les acquéreurs potentiels. La finalisation du processus de désinvestissement sera conditionnée à la conclusion effective de l'opération de fusion entre Holcim et Lafarge.

Comme annoncé, le projet de fusion devrait être finalisé au premier semestre 2015, avec pour objectif de créer un groupe bénéficiant du portefeuille le plus équilibré et diversifié du secteur, présent dans 90 pays et disposant d'un fort potentiel de création de valeur pour toutes ses parties prenantes.

Les actifs proposés pour cession sont les suivants :

La cimenterie de Lafarge de Matozinhos

La cimenterie de Lafarge de Arcos Jazida

La cimenterie de Holcim de Cantagalo

La station de broyage de Lafarge de Arcos Cidade

La station de broyage de Lafarge de Santa Luzia

La centrale à béton de Holcim de Pouso Alegre

ALGERIA: Une dizaine de cimenteries en projet cette année

Pour faire face à la hausse continue des importations de ciment, les pouvoirs publics ont décidé le lancement d’une dizaine de projets de cimenteries durant cette année.

En effet, les importations de l'Algérie en ciment ont atteint, durant le 1er semestre 2014, près de 283,9 millions de dollars contre 218,19 millions en 2013, en hausse de 30,11%, selon les Douanes Algériennes. Les quantités importées ont été estimées à 3,086 millions de tonnes durant les six premiers mois de 2014 contre 2,438 millions de tonnes à la même période en 2013, en augmentation de 26,55%, précise le Centre national de l'informatique et des statistiques (CNIS), relevant des Douanes. L'Algérie produit 18 millions de tonnes de ciment par an et importe 2 à 3 millions de tonnes pour répondre à la demande locale estimée à 21 millions de tonnes par an. Devant cette situation, le gouvernement a décidé de faire du développement de la filière ciment l’une des priorités de son programme, afin de satisfaire la demande en hausse de ce produit pour atteindre une production de 20 millions de tonnes/an à l'horizon 2016 et 29 millions de tonnes en 2018, mais surtout dans le but de cesser d’en importer dans un proche avenir. Selon le ministère du Développement industriel et de la promotion de l'investissement, l'Algérie devrait cesser d'importer du ciment d'ici 3 à 4 ans, et ce, grâce au renforcement de ses capacités de production nationale avec le lancement d'une dizaine de projets de réalisation de cimenteries durant cette année qui devront entrer en production d'ici à fin 2016 début 2017. Parmi les nouvelles cimenteries, on citera celle que projette de réaliser l’homme d’affaire Issaâd Rebrab, dans la ville d’El Khourb (Constantine). Selon notre confrère El Watan, le Conseil national de l’investissement (CNI) a donné à la fin du mois dernier son aval au groupe Cevital pour la construction d’une méga-cimenterie d’une capacité de 8 millions de tonnes. Selon le patron de Cevital, la nouvelle cimenterie sera la plus grande en Algérie. En plus de satisfaire les besoins du pays en ciment, la nouvelle cimenterie, qui devra créer 750 postes d’emploi directs, sera résolument tournée vers l’exportation. Elle produira, dans une première phase, 4 millions de tonnes de ciment par an, dès la mise en service de la première tranche du projet, prévue dans 36 mois. L’autre grand projet est celui d’un partenariat lancé le mois de février dernier entre l’entreprise algérienne Hodna Cement Compagny (HCC) et le groupe sud-africain Pretoria Portland Cement Limited (PPC). Le projet, qui sera implanté à M’sila et dont le coût de réalisation est estimé à 28 milliards de dinars, est destiné à produire 2,2 millions de tonnes par an. Ce projet, dont la durée de réalisation est fixée à 22 mois, permettra de créer quelques 400 postes d’emploi directs et entre 3 000 et 4 000 indirects. La nouvelle cimenterie devrait entrer en service à partir de juin 2016 et entamer la commercialisation du ciment en Algérie. Selon les responsables de HHC, le projet contribuera à la réduction des importations à hauteur de 66%.

INDONESIA: Semen Indonesia Sets 2015 Spending at $500m on Construction Pick-Up

Semen Indonesia, the country’s biggest cement manufacturer, is setting aside $500 million in capital expenditure next year, anticipating the revival of the government’s infrastructure projects.

The 2015 capital spending plan — which is 25 percent higher than this year’s amount — will be used to build or upgrade cement plants and to improve Semen Indonesia’s distribution network, president director Dwi Soetjipto said.

Dwi added that state-controlled Semen Indonesia aims to produce up to 40 million metric tons of cement by 2017, foreseeing a jump in cement demand between 2014 and 2019 from infrastructure projects with the country’s new administration.

Indonesia’s cement industry faced weakened demand in the first half of the year as concerns over the political outcome led to delays in construction projects across the nation.

However, the market is expected to pick up in the remainder of the year once political stability sets in.

According to Dwi, funds for next year’s capital expenditure will come from both internal and external sources, including a loan from Bank Mandiri.

In June, Bank Mandiri, Standard Chartered and Japan’s Sumitomo Mitsui Banking Corporation approved a $100 million syndicated loan to Thang Long Cement, Semen Indonesia’s unit in Vietnam.

IVORY COAST: Limak Holding plans $50 mln Ivory Coast cement investment

Turkey's Limak Holding will enter the African cement market with a $50 million investment to build a plant in Ivory Coast with partner Afrikbat.

Limak will hold a 51 percent stake in the joint venture set up with Afrikbat and they aim to begin production in late 2015.

The plant will have a processing capacity of 1 million tonnes and will export to other African countries, Limak CEO Nihat Ozdemir said at a signing ceremony.

The ground-breaking for the plant is planned in December.

MONGOLIA: Did Chinese factories cause rising cement prices?

Prices of consumer commodities have increased because of the exchange rate increase. During this construction season, the price of cement has increased. During Naadam, the price of one ton of cement rose to 200,000 MNT. That was the highest price for cement this year. The average price for one bag of cement in construction markets is between 10,000 to 13,000 MNT. Before Naadam, the cost of one bag was around 7,500 to 9,000 MNT. But after Naadam, the price rose significantly and experts say the increase was related to demand during the construction season, average consumer demands and the increased exchange rate. Cement prices have now decreased, but market analysts say they are likely to go up again.

The best solution for this price problem is addressing the influence of domestic production. Head of Ministry of Construction and Urban Development Ts.Bayarsaikhan says government is planning to change the situation of import products and prices dependent on import products in 2015. “Mongolia has its own cement industry, which is able to produce at least 1 million tons of cement a year. Also, two more factories will be built, so we will not buy imported cement in 2015,” he added.

We tried to understand the specific reasons for the price increase, so we spoke to government organizations and non-governmental organizations about the changing price of cement.

Domestic suppliers

B.Tsedevsamba, Head of the Building and Construction Materials Policy Coordination Department at the Ministry of Construction and Urban Development:

Today, the price for one ton of imported cement is 200,000 MNT. Domestically produced cement costs around 170,000 MNT. In the Mongolian market, cement that is imported is leading in sales. Construction companies require an average of two to 3.5 million tons of cement a year. Cement demand has risen, so we need to import cement. In relation to the exchange rate, cement sellers did not increase its cost suddenly. Honestly, it is possible for cement costs to be lower than today’s. As far as I know, factories in China have increased their cement prices. But this is not a definite fact.

Last year, the government implemented a policy to stabilize costs. It was effective and cement cost 145,000 MNT per ton last year. But the policy received criticism and its implementation has failed. The price of cement is getting higher because of this. The government decided to support domestic production instead of make policy like before, so Khutul’s chalk and cement factory opened. This factory is able to supply 50 percent of cement needs in Mongolia. If MAK opens its cement factory, we will be able to fill our cement needs by ourselves and prices will be stable in 2015. So we should not concentrate on price, just focus on the numbers of domestic suppliers. If domestic suppliers increase, costs will become stable.

Exchange rates

B.Baatar, Chairman of the Board of Directors of the Federation of Cement Producers:

The increase of exchange rates causes cement price increases. Also, Chinese cement factories stopped working and that became another reason for it. Vendors who sell cement usually import cement from three factories in Erenhot, China: Taigo, Mengo, and Tunkhui. These three Chinese factories stopped work for five days in the middle of June. Demand for cement rose and its price went up to 195,000 MNT. When the factories started working again, they increased the cost of their cement. The exchange rate is increasing hour by hour, not day by day. So cement prices increase along with the exchange rate, because 75 percent of cement is paid for in cash.

Companies start construction work in mid August. During this time, the cost of cement will increase again.

Construction costs

E.Usukhbold, Supply Manager at Undur Buyant:

Increased prices during an economic crisis is becoming a strain. People are doing business by barter, not in cash. This is not only happening in Mongolia, it occurs all over. Because of the qualifications for their products and consumer standards, Chinese factories that we import cement from were closed for several days. During this time, it was difficult for Mongolian importers and the cost of transportation was high, so cement suppliers say they raised cement prices.

If we don’t focus on this issue, and try to resolve or lower cement prices, it will eventually influence the costs for construction projects.

AMERICA: Votorantim confirma criação de nova empresa com Cementos Molins

A Votorantim Cimentos confirmou, em nota, que, por meio de sua subsidiária Votorantim Cimentos Europe, Asia & Africa (VCEAA), firmou um acordo com a espanhola Cementos Molins para a criação de uma nova empresa, denominada Yacuces, que atuará no desenvolvimento de projetos na América Latina.

Conforme a Votorantim, a Yacuces inicia suas atividades com a aquisição do controle, ou 66,7%, da boliviana Itacamba Cemento, da qual a acionista local Cementos Camba (Coceca) deterá 33,3%.

A empresa informou ainda que a Itacamba investirá aproximadamente US$ 220 milhões na construção de uma nova fábrica de cimento na Bolívia, com capacidade aproximada de 900 mil toneladas por ano. A nova unidade se somará à atual operação de moagem da empresa, com capacidade de 200 mil toneladas por ano.

Pela manhã, a Cementos Molins enviou um fato relevante à CNMV, órgão que regula o mercado de capitais na Espanha, no qual informava ainda que o valor da aquisição de 66,7% da Itacamba foi de US$ 18,6 milhões.

SOUTH AFRICA: Sephaku Cement gets behind training goals

Sephaku Cement has affirmed its support for the North West provincial government’s regional job creation and artisan training targets and initiatives.

Pieter Fourie, the chief executive of Sephaku Cement, said yesterday that as it moved into the operational phase of the Aganang plant, the company’s employment numbers would reach 170 people, with an additional 300 employment opportunities created through subcontractors.

The majority of the semi-skilled employees would be recruited from the adjacent communities, he said.

Aganang is an integrated cement plant located in Lichtenburg in the North West and one of two major projects undertaken by Sephaku Cement, a 64 percent-owned subsidiary of Nigeria’s Dangote Cement and an associate of JSE-listed Sephaku Holdings.

The other major project is a milling plant in Delmas, Mpumalanga, where commercial production began in January.

The two projects involved an investment of R3.3 billion. Commissioning of the Aganang plant commenced at the beginning of this year.

Fourie said Sephaku Cement’s project contractor spent about R500 million with local subcontractors during the plant’s construction phase, of which the majority were from the North West.

He added that as Sephaku Cement’s business grew, it would do what was in its power to support the people of the North West and Mpumalanga to make a real difference.

Fourie said the company had to date recruited more than half of the employees at its flagship Aganang plant from local communities, most of whom had never been employed or were unemployed prior to the commencement of the project.

Sephaku Cement’s commitment to job creation and artisan training follows North West Premier Supra Mahumapelo setting a target to create 7 407 job opportunities through infrastructure development, the green economy and social economy during the 2014/15 financial year. Mpumalanga Premier David Mabuza is targeting the creation of 78 000 jobs a year over the next five years.

Fourie said Sephaku Cement invested in artisan development while it built its plants and had supported the training of 10 fitters and electricians, of which seven had been employed at Aganang.

The company would also source youth from further education and training colleges in the two regions to build its pool of learners for recruitment.

CANADA: Lafarge joins legal challenge against $1-billion Quebec cement plant

Lafarge SA has joined two non-profit groups in mounting a legal challenge against a Quebec cabinet minister’s authorization of a $1-billion cement plant to be built in the province’s chronically-underemployed Gaspé region.

The French building products giant, together with the Centre Québécois du droit de l’Environnement and Environnement Vert-Plus Inc., has filed a motion for judicial review asking the Quebec Superior Court to quash a decision by David Heurtel, Quebec’s environment minister, authorizing construction of the McInnis cement plant in Port-Daniel-Gascons on the Gaspé peninsula.

Lead by the well-known Bombardier-Beaudoin family, it is one of the largest industrial projects underway in Eastern Canada, and made possible by $350-million in loans and equity from the Quebec government.

The plaintiffs argue Mr. Heurtel, “exceeded his jurisdiction” by giving the controversial project a green light in June without it being subject to an environmental impact assessment and review. They want a full environmental review to take place by the province’s Bureau d’Audiences publiques sur l’environnement (BAPE).

It’s the latest development in what has been a lingering battle between proponents of the cement facility, who argue that it will bring much-needed jobs and investment to a distressed area, and detractors who say the government shouldn’t be supporting one project in an industry already in oversupply. U.S. lawmakers have voiced serious concerns about the project, charging it may violate trade rules.

KENYA: Savannah cement firm lowers construction costs by 30 per cent

Kenya’s cement manufacturing firm Savannah Cement said Wednesday it has developed a hydraulic road binder (HRB) product for road construction which may lower costs by 30 percent.

The cement blend product is used in road construction works to stabilize road surfaces and has been developed in response to a request by the Ministry of Transport and Infrastructure.

Savannah Cement’s Managing Director Ronald Ndegwa said the new HRB product which will retail at a lower rate than conventional cement, is expected to contribute up to 30 percent estimated cost savings on the 285 million U.S. dollars national road construction budget.

"The product development team has made a major breakthrough on this project geared at drastically, reducing infrastructure development costs," Ndegwa said in Nairobi.

Globally, HRB products are used in place of mainstream cement and lime products for soil stabilisation on loose road surfaces.

The development of the Savannah HRB product is part of a commitment by the firm which is Kenya’s latest cement manufacturing firm to provide a range of diversified products to spur public and private sector construction needs.

Ndegwa said his firm was committed to partnering with all players in the building sector to provide solutions in the construction industry.

To grow its local and regional market share, Savannah Cement has already lined up development projects valued at more than 300 million dollars which include an investment plan to establish a clinker manufacturing facility and commission the second grinding plant.

The firm has invested more than 100 million dollars to develop one of the most advanced and Eco-friendly cement manufacturing plants in sub-Sahara Africa with a 1.5 million tonnes annual production capacity.

AFRICA: Low Import Duty To Hit Cement Producers In East Africa

Local producers of cement are set to bear the brunt of the East African ministers’ decision to retain a lower duty on importation of the commodity.

The decision by the ministers to remove cement from the list of “sensitive products” means partner states would continue paying an import duty of 25 percent on Portland Cement and promises low priced for consumers.

“It has been our prayer that the import duty is increased to at least 35 percent so that we’re cushioned from the imports,” local media outfit, Business Daily quoted Narendra Raval, chairman of Devki Group as saying.

Raval, whose company produces the National Cement brand noted that local producers of the commodity expected to be better promoted before cheap imports are allowed into the market.

The East African Community (EAC) has a sensitive list of products covered by the EAC Customs Union Protocol, which exposed cement to a 55 percent tariff to be reduced by five percent a year from 2005.

The sensitive status was however removed in 2008 following cement shortages occasioned by the construction of stadiums in preparation for South Africa’s hosting of the 2010 World Cup. The import duty was then reduced to 25 percent from 40 percent and has remained so.

Local producers lament that the cement import tariff reduction has made cheap cement from China, India and Pakistan flood the market, with Business Daily quoting market insiders as saying cement from those countries sold at 50 percent to 60 percent below the domestic market price.

With one of the main objectives of the EAC being to sustain the expansion and integration of economic activities within the Community, the local producers are wondering if the bloc is living up to its objectives.

While the decision of the EAC to maintain the 25 percent tariff may seem best to the bloc at the moment, the ministers are expected to address the tariff issue once its overall effect on the market is noticed.

AFGHANISTAN: Existing units' expansion plans pose risk of price war

Injection of additional capacity by way of expansion plans of existing units pose a risk of a price war within the industry. As per analysis of Yawar-uz-Zaman, head of Capital Market in Aba Ali Habib Securities, country already holds surplus capacity of 10 million tons that is 23 percent of its total capacity which could increase to 46.5 million tons. 

Untapped capacity couple with additional capacity arising from upcoming expansion plans would be a threat for industry price arrangement. As a result, profitability of small cement makers is expected to shrink after initiation of price war in the industry. As local demand in the country increased by a meagre CAGR of two percent in the last 5 years, cement price in the domestic market swelled up by 150 percent during the period under review. Consequently, sector gross profit margins have also improved to 33 percent from 19 percent in the same period. Going ahead, if distortion occurs in the industry's price arrangement, we foresee key players like (LPCL, LUCK, MLCF, FECTC, and FCCL) will have to face the margins contraction as their respective DOL are higher than other players. Hence, downgrade our outlook on sector from Positive to Neutral. 

Moreover, he said that DG Khan is one of the largest and leading cement producers, plan to increase its capacity to meet increased demand in the country through either expansion plans or acquisitions. As being intended to increase its capacity, DGKC sets eye on Lafarge buyout. However after takeover by Bestway, DGKC likely to pursue expansion plans in Hub, Balochistan. In the last 5 years DGKC plant has been utilising 96 percent of its capacity, with healthy cash flow and expected rise in cement demand in the country, company likely to continue its expansion plan of 2.6 million tons which is expected to be online in FY17. Currently, southern region of the country is equipped with 7-8 million tons of capacity where plants utilisation level is also higher than the other region. Moreover with export potential through sea, the regions also have strong demand potentials. 

Likewise DGKC, Cherat Cement also publicised to enhance its capacity to 2 to 2.5x million from 1.1 million tons (up 100 percent) last year. However, company's largest export market, ie Afghanistan discerns excess supply from the neighbouring Iranian cement market with comparative low price. Therefore, export to Afghanistan has declined 16 percent YoY in FY14, which pose less attraction for the company to go with its expansion plan. Currently, CHCC is exploiting 92 percent of its capacity with sales mix of local and export stand at 65:35 respectively. 

Zaman concluded that if DGKC go with its expansion in the southern region, it would take 1.5 to 2 years to bring its capacity online. Whereas, other strong players in the south market (LUCK and ACPL) might not seen the event positively. Therefore, industry price arrangement would be in doldrums in the upcoming years. Meanwhile, DGKC might issue right shares in the outgoing years to fund its expansion plan, which could restrict healthy dividend payout in FY15. Hence, downgrade our outlook on sector from Positive to Neutral. 

CANADA: McInnis Cement new generation cement plant completes its financing

McInnis Cement announced that the financial structure of its new generation cement plant under construction in the Gaspé region has been completed. National Bank of Canada, as sole bookrunner of the bank syndicate, has confirmed the availability of a $360M loan for the project. This amount is in addition to the $500M in equity from private and public investors including the joint venture formed by the groupe Beaudier and La Caisse de dépôt et placement du Québec, as well as the participation of Investissement Québec (IQ). Furthermore, IQ has also provided a $250M commercial loan, for a total of 1.1 billion $.

« We are pleased that the project can be realized without any subsidy; we are also very proud to be able to complete, more than 30 years after it was imagined by local entrepreneurs, this visionary, ambitious and modern cement plant at the cutting edge of technology », says Christian Gagnon, CEO of McInnis Cement. « Construction has begun and the project is well under way. Moreover, the ecological footprint of this flagship project for the cement industry in Canadaand across the world will be one of the lowest in the industry. »

Project details

The Port-Daniel cement plant:

1.Will use up to 40 % less fuel per ton of cement than traditional cement plants (due to higher use of hydroelectric power) reducing emissions of greenhouse gas;

2. Will comply with the US standards set out in the National Emission Standards for Hazardous Air Pollutants (NESHAP (2015)), which are more stringent than those presently applied in Quebec. For comparison, the NESHAP 2015 standard applicable to the emission of particulate matter from the kilns is 15 times more stringent than the one applied in Quebec (maximum of 10 grams per ton of clinker produced, while the Quebec standard allows 150 grams per ton of clinker (mixture of limestone and silica)). The Port-Daniel cement plant will be the only one in Canada to comply with the NESHAP 2015 standards;

3. Will be equipped with all the latest technology for improved environmental performance, including the latest generation bag filters throughout the plant for improved efficiency;

4. Will also utilize maritime transportation for fuel, further reducing greenhouse gas emissions associated with the project.

The project will use petroleum coke as fuel, an oil refinery residue with a high heating value. The cement plant represents one of the more ecological ways of putting this residue to good use. Its kilns that operate at very high temperatures enable its usage while reducing atmospheric emissions through a succession of high performing filtration stages of the combustion gases.

« Over the coming years, we intend to reduce even further the greenhouse gas emissions (GHG) by partly replacing the petroleum coke with biomass, available in the Gaspé region. This partial conversion to biomass is at the very heart of the concept of this new cement plant » added Mr. Gagnon.

McInnis Cement has released, on a voluntary basis, the documents related to the environmental assessment of thePort-Daniel cement plant project, although the project is not subject to the BAPE process. However, the environmental Impact study has been updated – a comprehensive, rigorous and meticulous undertaking performed by dozens of professionals from independent firms – and has been available on the McInnis Cement website sinceNovember 2013. Moreover, the monitoring committee of the project has been active since March 2013 and an information office has been opened in Port-Daniel since June 2013 to answer questions of citizens and workers wishing to learn more about the project.

« We have received at our offices people who are proud to see this major project move forward, as well as workers pleased to be part of the construction of a project that will have a significant economic impact for years to come, and that will provide quality jobs to the Gaspé region. The Port-Daniel cement plant will favorably position Quebec on the North American export market and strengthen its competitiveness in the cement industry. For years, we haven't seen such a unique project of its type and size in all of eastern North America. We are determined to make the Port-Danielcement plant a sustainable and profitable project for all Quebeckers », concluded Mr Gagnon.

NIGERIA: Cement Grading Manufacturers Want Adequate Compliance Period

The Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos Chapter, said cement manufacturers needed adequate time to become compliant with the production of the 42.5R and 52.5R grades of cement.

The Chairman of the institution, Mr. Stephen Jagun, told newsmen in Lagos, that the manufacturers were used to 32.5R as its application was limited to plastering works only.

“The grading of cement; the industry is capital intensive.

“As there are improvements in the system and production process, the Standard Organisation should keep these people abreast with world standard and then over time ensure that they catch up with that system.

“So, that is where the regulation authority stands in place to give them adequate notice, adequate time - within a particular time frame we want you to have caught up with this trend which is globally acceptable.

“And the time should be reasonable so that they put necessary investment into it.“

Jagun said that time was of essence to ensure regular supplies to the market until full compliance to the approved grades.