INDIA: Indian regulator says cement giants Holcim-Lafarge merger to hurt competition

The Indian competition regulator over the weekend said that the equal merger between Holcim of Switzerland and Lafarge of France is likely to hurt competition in the country.

The Competition Commission of India (CCI) said that it ''formed a prima facie opinion that the combination is likely to have an appreciable adverse effect on competition.''

It has now directed both companies to publish details of the merger to the knowledge of the public and rival companies that may be affected or likely to be affected by such combination.

The CCI also directed both companies to publish details of the merger in all India editions of four leading daily newspapers, including at least two business newspapers, and also host the same details on their respective websites.

It has sought comments or objections from the public within 15 days of merger details being published.

In April this year, Holcim and Lafarge, two of the world's biggest cement companies, agreed to merge, creating the world's biggest cement maker, with a market cap of $50 billion and annual sales of nearly $43 billion. (See: Cement giants Holcim and Lafarge announce merger of equals)

The merged company, to be called LafargeHolcim, will be based in Switzerland, listed in Zurich and Paris, have a workforce of 136,000 people and generate annual savings of more than €1.4 billion ($1.9-billion) over three years.

The mega deal would require approval from regulators from around 17 countries, including from Europe, Canada, the US, Brazil, India, Serbia, Romania, Hungary, Morocco, Philippines and China.

The merger would see the annual sales of Lafarge-Holcim more than double to that of its next-biggest competitor, HeidelbergCement AG of Germany, and far above Beijing-based China National Building Materials Group Corp, and Cemex SAB of Mexico.

Regulators from seven countries have already approved the deal, including Russia, Ukraine, Turkey, Morocco, Kenya, South Africa and Singapore.

But both companies would have to sell assets worth more than $11 billion is several countries mainly in Slovakia, France, Romania, Germany, the UK, India, the US, Canada, Brazil and the Philippines.

Holcim has already received 60 bids for cement factories and other facilities it has put on the European market.

The size of the merger requires a lengthy examination before it can be approved, European Competition (EC) Commissioner Joaquin Almunia had said just after the merger was announced.

''Given the size of the two companies, and that they are the two main players in the European market, yes, it's clearly a phase 2 analysis," Almunia said, and added that a review that could take several months.

The EC takes 25 working days even for a preliminary review and normally opens a Phase 2 investigation of up to four months if it has serious concerns over a deal.

The CCI had earlier said that it will look closely at the transaction since the merged company will be the largest cement producer in India after Aditya Birla group's UltraTech and could have a sway over pricing.

Aditya Birla Group is the largest cement maker in India with a capacity of 62 mtpa, followed by Holcim and Lafarge, who have a combined capacity of 57.5 mtpa. 

UltraTech Cement is among the world's top 10 cement companies and manufactures and markets ordinary Portland cement, Portland blast furnace slag cement and Portland Pozzalana cement. It also manufactures ready mix concrete.

The company, which has grown through acquisitions, has 11 integrated plants, one white cement plant, one clinkerisation plant in the UAE, 15 grinding units, 11 in India, 2 in the UAE, one in Bahrain and Bangladesh each, and five terminals, four in India and one in Sri Lanka.

Lafarge entered the Indian market in 1999, through its cement business. The Paris-based company currently has four cement plants in India and is the market leader in the ready-mix concrete business with 80 plants.

Lafarge, through its operating companies, Lafarge India and Lafarge A&C, provides cement, ready-to-use concrete, aggregates, fly ash, clinker and waste management services, while Holcim, through its operating companies ACC and ACL provides, cement, ready-to-use concrete, clinker, fly ash, EcoSand and waste management services.

There are around 65 cement companies in India and around 185 - 188 cement plants, out of which 77 are located in Andhra Pradesh, Rajasthan and Tamil Nadu.

COLOMBIA: Argos hará cemento con llantas usadas

La empresa dispondría inicialmente de 25 mil toneladas de llantas al año, en la elaboración de este producto.

A partir del próximo año Argos entrará a utilizar en sus plantas cementeras que tiene en Colombia, las llantas usadas como combustible en sus hornos para la producción de cemento.

Lo que comenzará hacer Argos, será reemplazar el carbón que emplea actualmente para la fabricación de esta mezcla por los neumáticos ‘viejos’, con lo cual busca garantizar un proceso más amigable con el medio ambiente.

Esta iniciativa arrancará con la planta de Rioclaro, donde se producen 2 millones de toneladas de cemento al año.

Según Camilo Restrepo vicepresidente de Innovación de Argos, “nosotros estimamos que podemos aplicar este concepto no solo en Rioclaro, sino en la planta de Cartagena y en otras en el interior del país, con lo cual estaríamos dando solución al 75% de los 7 millones de neumáticos que anualmente llegan a su vida útil. Pero inicialmente creemos que podemos utilizar alrededor de las 25 mil toneladas año”.

Este programa es una solución en donde deben participar varios sectores comenzando por el Gobierno y la autoridad ambiental, continuando con los generadores de estos residuos quienes deben llevarlos a los sitios donde se les va a dar la disposición adecuada. También, se debe involucrar los comercializadores y productores.

El éxito de este proyecto debe de ser una acción mancomunada de todos estos actores. Es así como, esta iniciativa hay que mirarla desde una perspectiva macro, porque se tiene primero que montar una logística adecuada para su recolección con centros de acopio, luego hay que llevarlas a un sitio dónde se les hará un proceso, si se van a destinar en la fabricación de otros artículos.

Pero si la finalidad, es para emplearlas como combustible en una planta cementera, en esta unidad se debe hacer algunas modernizaciones.

“Por tanto, mirando el proyecto en su conjunto se estima que puede tener un costo de unos 50 millones de dólares, porque cada uno de los actores debe hacer unas inversiones importantes para darles el manejo adecuado”, advierte Restrepo.

UNA TÉCNICA QUE ES USADA EN EL MUNDO CON ÉXITO

El uso de llantas en hornos cementeros es una tecnología ampliamente difundida y probada en el mundo. En países como Noruega, Alemania, Austria y Holanda se tienen porcentajes de sustitución de combustibles fósiles por alternativos en la industria cementera superiores al 60%, de acuerdo con un reporte de Oficem (Agrupación de fabricantes de cemento de España).

En el caso de Argos, ya viene utilizando esta técnica en las plantas que tiene en Estados Unidos y Honduras. Ahora la quiere aplicarla en Colombia, por eso, el proyecto viene siendo trabajado desde hace unos cuatro años.

AFRICA: ARM Cement to increase investments in East Africa

East African cement maker ARM Cement has announced an increase in investments across the region as the demand for cement has gone up

A statement from the company revealed that ARM Cement will complete some pending projects this year, and begin new ones in 2015.

The company, which has plants in Kaloleni and Athi River in Kenya, as well as Dar es Salaam and Tanga in Tanzania, will complete one more grinding plant in Tanga in 2015. The Tanzanian plant has the capacity to produce 2,500 tonnes of cement daily.

In July 2014, ARM Cement acquired Rwanda’s Kigali Cement for an estimated US$1.2mn. The company, which formerly owned 35 per cent stake in Kigali Cement from 2011, purchased the remaining 65 per cent from various stakeholders.

According to Pradeep Paunrana, chief executive of ARM Cement, the acquisition of Kigali Cement and completion of Tanga Cement is part of the company's expansion plans in East Africa. “Our next major growth will be in Kenya, a growing market that is still heavily reliant on imported clinker,” he said.

PAKISTAN: Cement companies: Rate cut, high development spending spark interest

The recent reduction of 50 basis points in the benchmark interest rate and a sharp increase in the release of funds for the government’s development schemes have helped spark significant interest in cement companies on the Karachi Stock Exchange (KSE).

According to a research report issued by Shajar Capital on Monday, cement companies recorded a high trading volume last week (Monday-Friday) at an average of 47.1 million shares, up 41% from a week earlier.

The rise in activities on the KSE was the result of mixed recent developments for the cement sector, the report added.

The State Bank of Pakistan (SBP) has cut the benchmark interest rate to 9.5% from 10%, which bodes well for the cement industry, especially heavily leveraged companies like Maple Leaf Cement, Fauji Cement and DG Khan Cement. This indicates a positive impact on their earnings of 1.4%, 0.4% and 0.3% respectively for fiscal year 2014-15.

Furthermore, with another expected rate cut in the second half of the fiscal year, these companies could see a further profitability surge, the report said.

According to the country’s fiscal operations, in the first quarter (July to September) the federal government released only Rs39.5 billion under the Public Sector Development Programme (PSDP) out of the budgeted Rs525 billion (approximately 8%). However, the figure has shot up to Rs111 billion, approximately 21%, in November this year.

The increase in the disbursement of funds will further push up cement consumption and support its manufacturers.

Meanwhile, international coal prices have also not picked up despite the commencement of winter season, providing the cement companies an opportunity to save much on their fuel consumption in coming months.

Gas tariff hike

Although, according to news reports, Prime Minister Nawaz Sharif has rejected plans to raise the gas tariff, it seems to be the case of delaying the inevitable as the International Monetary Fund’s directives are straight forward regarding gas tariff. Apart from this, there has not been any significant progress pertaining to the collection of Gas Infrastructure Development Cess (GIDC).

“With the talk of gas price hike at the forefront, we believe the tariff rise to have an impact of Rs2, Rs0.37 and Rs0.21 on earnings per share of Lucky Cement, DG Khan and Maple Leaf respectively,” the report said

TANZANIA: Tanzania to increase cement production

Tanzania expects to double its cement production in the next few years as new factories come on-stream to satisfy growing demand from the construction sector, a senior government official said on Tuesday.

Cement consumption is viewed as a barometer for construction activity, which is one of the main drivers of economic growth in the country.

Annual cement production in east Africa's second-largest economy will rise to 6 million tonnes in a few years' time as seven new factories start operations, deputy trade minister Janet Mbene told parliament, without being more specific about the timeframe.

Tanzania's cement output rose 18.9 percent last year to slightly above 3 million tonnes on the back of higher demand.

Mbene said the rise in output would mean Tanzania would produce a surplus to be exported. 

Cement makers operating in the country include Tanzania Portland Cement, which is 69.3 percent owned by a subsidiary of Germany's Heidelberg Cement AG; Tanga Cement, 62.5 percent owned by Afrisam Mauritius Investment Holdings Limited; and Mbeya Cement, 62.76 percent owned by France's Lafarge SA.

The new cement factories under construction include a 3-million tonne capacity plant being built by Nigeria's Dangote Cement, Mbene said.

INDONESIA: Cement maker Semen Baturaja seeks 800 bln rph loans for new plant -Kontan

State-controlled cement maker PT Semen Baturaja Tbk aims to get bank loans worth 700 billion rupiah to 800 billion rupiah (about $58 million to $66 million) to develop a new factory worth 2.9 trillion rupiah in South Sumatra, Kontan newspaper reported, citing Corporate Secretary Zulkifri Subli.

The firm plans to start construction of the plant that will have a capacity of 1.85 million tonnes per year early next year and expects to start operation in 2018. Semen Baturaja recorded sales volumes of 853,089 tonnes from January to September. It is targeting a 2014 full-year sales volumes of 1.31 million tonnes, up 4 percent from a year earlier, the report said.

TANZANIA: cement company signs MOU with Tanzania Prision

Tanzania Portland Cement Company Limited (Twiga Cement) has signed a Memorandum of Understanding (MoU) with Tanzania Prison for the production of limestone at Boko Prison in the outskirt of the Dar es Salaam city.

Speaking to the East African Business Week during the official handing over ceremony $100,000 (Tsh 100 million) as well as 1,200 bags of cement to the Tanzania Prison, the Permanent Secretary in the Ministry of Home Affairs, Mbaraka Abdulwakil said the production of limestone from Boko prison mines will commence during the first quarter of next year following the government approval of the deal.

He said the funds and 1,200 bags of cement would be used for the construction of houses to prison warden’s officials and staff at the Wazo Hill Prison. 

Mr Abdulwakil said that recently Tanzania Prison and Twiga Cement signed a MoU to improve and revamp the Tanzania Prison infrastructures system including staff houses.

“The government is welcome the improvement made by the management of Tanzania Prison in collaboration with the private sector (investor) through Public Private Partnership (PPP),” he said.

He said that the Tanzania Prison Management after adapting the government motto of “Big Result now” has started implementing the improvement of its infrastructure system to fast track the development of the sector in the country.

The minister has also called on the senior prison officials to adhere public ethics in overseeing the community projects that are supported by the private sector especially investors in order to create confidence on them.

He underscored that the project undertaken at the Wazo hill Prison that the management and Twiga Cement should take into account the issues of environment to ensure that the construction doesn’t destroy the environment and affect the people’s life.

Twiga Cement, Managing Director, Alfonso Rodriguez said the firm will continue supporting the government through Corporate Social Responsibility (CSR) in various sector such as power, water and construction of houses.

MYANMAR: Chinese firm invests in cement factory

The local Myint Investment Group Co Ltd has joined Anhui Conch Cement Co Ltd from China to upgrade No.33 Kyaukse cement factory into a plant that can produce 5,000 tonnes of cement daily through a build-operate-transfer (BOT) system, according to the Ministry of Industry.

The joint venture, Myanmar Conch Cement Co Ltd, was permitted on November 11 by the Directorate of Investment and Company Administration.

The managing director Zaw Hein of No.3 Heavy Industry signed the BOT contract with his counterpart Nan Lin Lin Htun from Myanmar Conch Cement Co Ltd on November 13.

The factory can currently produce 400 tonnes of cement per day and it is hoped it can become more stable and efficient.

Other foreign cement producers have recently set up in Myanmar with Lafarge from France opening a US$10 million cement repackaging factory in the Thilawa Special Economic Zone with the local Aung Myin Thu and My Associates this month.

Lafarage holds 60 percent ownership and the other two have 20 percent each.

INDIA: CCI closes case against 11 cement companies

The Competition Commission of India (CCI) has closed a case of alleged cartelization among cement companies for lack of evidence. 

An anonymous reference before the CCI had alleged that 11 cement companies had increased prices by Rs.75 a bag within the period of a month. 

The companies were named as Penna Cements, India Cements, Bharathi Cements, Dalmia (Bharat) Cements, Bhavya Cements, Zuari Cements, Ultratech Cements, Jaypee Cements, Ramco Cements, KCP Cements and My Home Cements. 

In its order, the CCI noted that the reference states that the price increased from Rs.230-250 to Rs.300-330 a bag after the general elections in Andhra Pradesh. 

The order didn’t specify the exact period over which the price rise took place. However, since the reference provided no documentary evidence in support of its allegations, the CCI deemed it fit not to order an investigation. 

“Save and except alleging an increase in price of cement bag by the named cement companies, no other allegation or averment has been laid in the reference wherefrom even a prima facie satisfaction may be recorded about the existence of a cartel,” the CCI order said.