Friday, April 24, 2015

ALGERIA: Des licenses d´Importation pur les produits pesant fortement sur les importations

Les licences d'importations, dont une loi sera soumise prochainement à l'Assemblée populaire nationale (APN), ne concerneront que les produits qui alourdissent fortement la facture des importations, a affirmé, mardi à Alger, le ministre du Commerce, Amara Benyounès.

"La quasi-totalité (des produits importés) ne sera pas touchée par les licences d'importation, mais tous les grands postes, sans exception, seront concernés", a fait savoir le ministre lors d'une réunion, qui l'a regroupé avec le secrétaire général de l'Union générale des travailleurs algériens (UGTA), Abdelmadjid Sidi Saïd, et des représentants du patronat, consacrée à la promotion des produits nationaux.

Ces licences "ne toucheront que les produits qui nous coûtent cher et extrêmement cher sur la balance commerciale", a-t-il insisté, citant l'exemple du ciment et des véhicules.

Il a également indiqué que cette mesure concernerait les biens de consommation finaux qui coûtent le tiers de la facture des importations, tout en assurant que le principe de la "liberté du commerce" sera toujours garanti.
"Nous connaissons tous la structure de nos importations: un tiers représente les biens d'équipements, un tiers les matières premières et un tiers les biens de consommation", a expliqué M. Benyounès ajoutant que c'est sur cette troisième catégorie que le gouvernement va intervenir pour "maîtriser" les importations.

"Il faut que les choses soient extrêmement claires: la liberté du commerce est garantie (...) mais nous ne pouvons pas continuer à permettre d'importer des produits à tout va et sans limitation", a-t-il prévenu.
L'objectif du gouvernement dans cette démarche, selon M. Benyounès, est de réduire la facture des importations qui avait atteint près de 60 milliards de dollars en 2014, et de céder la place à la production nationale lorsqu'elle est disponible.

Le ministre a cité l'exemple du ciment expliquant que les nouvelles licences vont permettre de "limiter" ses importations selon les besoins nationaux afin d'éviter d'éventuels excédents en l'importation de ce produit, qui portent préjudice à la production nationale.

TANZANIA: Twiga Cement to have own gas plant

In an endeavour to reduce operational costs, the Tanzania Portland Cement Company Limited (TPCC) plans to have gas plant are expected to be realised this year.

The TPCC Managing Director, Mr Alphonso Rodriguez, said in Dar es Salaam during the 23rd Annual General Meeting (AGM) that arrangements were underway with a third party to build a gas plant at TPCC.

Once completed, he said the company will be assured of reliable supply of power to meet its operational demands.

Over the years, the power supply has been erratic, impacting heavily on the company’s capacity to meet its objectives. TPCC current demand is rated at 32MW and the gas plant would then come as an extra source of energy to compensate additional requirements and current fluctuations in power supply.

“The company’s investment in alternative sources of energy will ensure the reliability and quality of power supply,” he said adding that the initiative will contribute significantly to lowering the cost of doing business.

On Monday, the TPCC which trades on the Dar es Salaam Stock Exchange (DSE) as TWIGA had 20 shares in its counter transacted at weighted average price of 3,850/- per share in one deal.

During the period under review, TPCC saw its profitability jump to 54.5bn/- compared to 37.6bn/- of the previous year. Similarly, its sale volume rose by 15 per cent.

The positive performance was based on variable cost reduction and fixed cost contention. TWIGA Cement shareholders have a reason to smile following recommendation of directors of final dividend of 267/- per share (including 70/- per share paid as interim dividend) compared to 195/- paid in the year 2013.

NIGERIA: Reducing the price of cement

The call by the Cement Producers Association of Nigeria (CPAN) on the President-elect, Muhammadu Buhari, to slash the price of cement from the current N2, 200 to N1, 000 per bag would seem improbable because it flies in the face of law of demand and supply.

With a 17 million housing deficit in the country, the soaring price of the product is certainly worrisome. The situation, indeed, underscores the frustration of the citizenry, especially, when it is considered that a gnawing infrastructure gap also needs to be filled. However, only a comprehensive and well-formulated government policy that addresses all options, including alternatives to cement, could bring succor, and not an arbitrary price control as being advocated by the association.

CPAN made the request in a congratulatory message sent to Buhari and Prof. Yemi Osinbajo for emerging victorious at this year’s presidential election. They noted that the move would serve as the first dividend of change, which Nigerians voted for.

In the statement, they lamented that the cement industry has, in the last six years since the passage of President Musa Yar’Adua, witnessed wanton corruption and injustice.

According to the group, cement sells costliest in Nigeria the world over, noting that in countries that have attained self-sufficiency in production, the product goes for as low as N500 per bag. Yet the reverse is the case in the country despite government’s success claims and mouthing of Nigeria as a net exporter of the product.

Dismissing the claims, CPAN noted that the product still sells under N1,000 per bag in most African countries. This, of course, raises question as to how that is possible if the product is exported at the same price as it is sold in Nigeria.

The association particularly frowned at a situation where new foreign investors were allegedly barred from venturing into cement production to maintain the status quo. It reiterated that the situation is like that because a cabal, which wishes to monopolise the industry and enrich itself enough, is behind the opposition.

Furthermore, the group regretted that the late President Yar’Adua, had, in an attempt to close the housing deficit through affordable cement, granted import permit to six companies, one from each zone of the federation to crash the price to N1,000 per bag. But the move was quickly terminated at his death.

It will, therefore, take a firm desire for change to readmit the licensees to go into importation of cement. This, CPAN said, will not only crash the price to N1,000 per bag, but also enable them pay off the over N200 billion borrowed from several financial institutions.

In as much as mass importation would crash the high price of cement, that this in itself, would be short-term victory. The long-term solution lies in Nigeria’s ability to manufacture enough cement in the country. But, of course, the usual manufacturing woes are at the root of the problem.

In the 70s, there were at least five functional cement plants operating in the country. The companies, which were largely under the management of governments, were at Nkalagu, Ewekoro, Kalabaina, Calabar and Ukpilla. The combined output of these plants satisfied the level of infrastructural development at the time at an equally affordable price.

It is time Nigeria looks inwards and researches for local alternatives to cement. What prevents us from researching into how to refine the mud into a form of cement? The laterite, which is available in abundance and has been used for ages, is a necessary substitute for cement. Nigeria must begin to re-invent on the path of progress and development.

Luckily enough, the Nigerian Building Research Institute (NBRI) has done a lot in this regard even if much of the findings are not being adopted for use. By now, the nation should have more factories that utilize clay to produce blocks for building instead of depending solely on cement.

Nigeria is blessed with abundant limestone needed for cement production and the most fundamental problem is the cost of power. The current epileptic power supply is a hindrance to industrial development.

Depending on imported cement for national infrastructural development is certainly retrogressive in the face of such a huge cost of power. To be able to move in the right direction, Nigeria needs a national development plan that includes a functional housing policy. There should be regulation. There is no genuine policy direction at the moment that is spearheaded by government to ensure mass housing using local building materials. Yet, it is with such an example that focus can shift from dependence on cement.

NIGERIA: Leveraging Cameroon’s cement importation ban for growth

Nigeria currently prohibits importation of cement just like several other items. The use of import prohibitions in Nigeria is part of a trade policy regime that seeks to protect existing domestic industries and reduce the country’s perceived dependence on imports. The bans are often justified on the grounds of preventing importation of all products that the county is deemed to be capable of producing itself. With local cement demand being met by new investments, Cameroon, like Nigeria, took a similar turn. With the ban already effective, Dangote Cement Plc unveiled its growth consolidation agenda in the Central African region with its new plant in Doula, Cameroon. FEMI ADEKOYA writes.

IN climes where bans have proved effective, import bans benefit domestic producers since they reduce the amount of goods that are available on the national market and hence limit competition for domestic firms.

Hitherto, President Goodluck Jonathan had approved the decision on cement ban, in line with the National Industrial Policy.

Indeed, a statement issued by the Ministry of Finance in Abuja had said: “The recommendation of the committee approved by the President include: systematic and controlled programming of cement imports subject to the appropriate tariffs, reinstating of policy of banning importation of bagged cement in line with National Industrial Policy; and restricting issuance of cement import licences to only manufacturers and other players with track records of commitment to backward integration, including bulk cement importers with suitable bagging facilities.”

The statement noted that other cost-reducing measures for cement manufacturers had been approved for implementation. These, include concessional pricing and special allocation of LPFO, de-linking the price of gas for cement production from the price of LPFO and granting of duty free importation of LPFO during acute domestic shortage of cement.

The ban alongside other consistent investments in the sector has seen Dangote Cement growing its portfolio in Nigeria by hitting about 30 million metric tonnes of cement in all its plants in the country.

With the ban of cement importation in Cameroon, Dangote Cement Plc has expressed optimism of consolidating its Pan-African growth while effectively harnessing export opportunities to other regions.

The management of the Company had last year listed some six plants across five African countries scheduled for completion this year.

The plants at various stages of construction, according to the Group President and Chief Executive, Aliko Dangote will add about 13.5mmt of cement per annum to the existing capacity, when completed.

The on-going plant projects according to him then, were Zambia, 1.5mmtpa; Tanzania, 1.5mmtpa; South-Africa 3mmtpa; Republic of Congo, 1.5mmtpa; and Gabon 1.5mmtpa and Senegal 1.5mmtpa

Already, the company with a capacity utilisation of about 80per cent in its cement plant in Douala, Cameroon, hopes to deepen its market penetration in the country as well as the Central African region through innovative product offering.

Unveiling the company’s plans, General Manager, Dangote Cement, Cameroon Abdulahi Baba, noted that the plant has the production capacity of 1.5 million metric tonnes per annum with expectations to achieve full capacity utilisation by 2016.

He explained that the plant has one of the most recent facilities of ensuring that there are no dust emissions during production.

The General Manager stated that the company has put strategies in place to achieve 30 per cent market share, noting that there was also plans of achieving 30 per cent export of total production.

He stated; “We are set to achieve stability of operations in 2015 Q1, pursue aggressive market penetration and consolidation through appropriate above the line and below the line activities. 170 distributors have been selected after the interview process. 85 distributors will start, while the number will gradually increase with increasing production.”

“Mines at Tombel has been opened up and it is under exploitation. The Mines at Batoke would soon become operational. Exploration license for Foumban deposit has also been secured. EIA and other activities for securing mining lease are being being processed. About 5,000 MT of pozzolana is stockpiled at the living area,» he stated.

Baba noted that the company’s ex-factory price is the cheapest in Cameroon when compared to other products in the Cameroon market, stressing that Dangote Cement is cheaper than 32.5 grade that is sold in the open market.

Fonoggi Serge, MD ETS (distributor) noted that the product is of a very high quality but sold at a very cheap rate,

“Consumers and other dealers are already making demand for the commodity. I sell 20 tons daily and the acceptability of the product is rapidly increasing and it goes for between 4,000 – 4,500 CFA”, he stated.

The Dangote Cement Chairman, Aliko Dangote stated that the Douala plant would revolutionize the cement industry in Cameroon and help stimulate the Eastern African economy as Dangote Cement would be churning out its known quality grade of 42.5 at a very competitive price.

He explained that the plant remained the most modern in Cameroon because of the latest technologies used in the construction from Germany, USA, France and put together by the renowned plant engineers, Sinoma.

The Dangote Cement Chief stated that the company started by Importing Clinker and that production is being carried out at the most environmental friendly level pointing out that the dust emission by the plant is lower than the 50mm international standard.

Kamdoum Rodrigue, a block maker, certified that the product is very good, stressing that it takes a shorter period to dry.

“Before now, we use to stay for one week waiting for the blocks to dry, but with this new product, we only stay for two to three days and our blocks are ready for supply. Now we meet our customers’ demand earlier than it used to be.” Rodrigue stated.

It could be recalled that Dangote Cement had recently made an in-road into Senegal with an additional 1.5million tonnes to the country’s capacity, while serving an export market demand of two million tonnes along the Mali axis.

Besides, despite commencing operations only recently, the company is optimistic of penetrating the market with at least 1.2 million metric tonnes of cement before end of 2015.

Thursday, April 23, 2015

BRAZIL: Segunda indústria de cimento no Tocantins vai se instalar em Palmeirópolis

O Tocantins deverá receber ainda neste ano sua segunda indústria de cimento. Depois da Votorantim, que se instalou em Xambioá em 2009, o grupo de empresários chineses Zhonggang Construction, através de concessão, vai explorar uma mina de calcário para a produção de cimento no município de Palmeirópolis, região sul do Estado.

As negociações para a instalação do empreendimento já iniciaram e empresários do grupo devem ser recebidos em maio pelo governador Marcelo Miranda (PMDB).

O secretário de Desenvolvimento Econômico e Turismo do Estado (Sedetur), Eudoro Pedroza, se reuniu com os empresários na última quinta-feira, 9, onde discutiram a política mineral do Tocantins e os respectivos incentivos fiscais para o setor. As informações são necessárias para munir de dados os empresários, antes da sua visita programada ao Estado no próximo mês.

O deputado estadual Ricardo Ayres (PSB) que participou da reunião entre o governo e os empresários chineses, destaca os benefícios do novo negócio para Palmeirópolis e o Tocantins. "Vai gerar emprego e renda para os palmeiropolenses e, consequentemente, contribuir para o desenvolvimento do município e do próprio Estado", ressaltou o parlamentar.

Também participaram da reunião o prefeito de Palmeirópólis, Fábio Vaz (PSD), o vereador de Palmeirópolis, Alex Martins (PMDB) e o diretor de Geologia e Mineração da Sedetur, Sérgio Taveira de Camargo.

Atualmente, a unidade de Votorantim Cimentos em Xambioá produz cerca de 400 mil toneladas de cimento por ano, com a utilização da mão-de-obra de 600 trabalhadores. A Votorantim produzirá cimentos em Xambioá por um período aproximado de 50 anos, quando se esgotará a reserva de calcário, estimada em cerca de 50 milhões de toneladas.

CHILE: SMA formula cargos contra Cemento Polpaico por incumplimientos en planta de Til Til

La Superintendencia del Medio Ambiente (SMA) procedió a formular cargos contra Cemento Polpaico S.A., debido a una serie de incumplimientos ambientales constatados en la Planta de Cerro Blanco, ubicada en la comuna de Til Til, Región Metropolitana.

La mencionada instalación consiste en la planta de mayor capacidad del Grupo Polpaico y fue la primera en entrar en funcionamiento de las tres instalaciones que tiene a lo largo del país. Se dedica al proceso de producción de cemento en tres líneas paralelas, siendo la diferencia fundamental entre cada una de ellas, el tipo de tecnología de los hornos rotatorios de fabricación del clínker. Esta planta cuenta con numerosas Resoluciones de Calificación Ambiental (RCA), habiendo sido evaluada ambientalmente en los años 1998, 2000, 2002, 2003 y 2009.

En el marco del programa de trabajo de la Red Nacional de Fiscalización (RENFA), liderada por la SMA y en colaboración con la Secretaría Regional de Salud, se constataron los siguientes incumplimientos:

1. Utilización de gases patrones vencidos al realizar la calibración del Sistema de Monitoreo Continuo de Emisiones (CEMS), respecto a los parámetros de dióxido de azufre (SO2) y óxido nítrico (NO).

2. Superación de los límites máximos permitidos para el Mercurio y el Molibdeno de acuerdo al Plan de Seguimiento y Monitoreo comprometido en la RCA para calidad del suelo agrícola.

3. Incumplimiento a su Plan de Contingencias de Contaminación de Aguas Subterráneas, al no informar al organismo competente la superación de los parámetros establecidos en la Norma Chilena NCh 1.333.

Cabe recordar, que la formulación de cargos es el inicio de un procedimiento sancionatorio por parte de la SMA. En tanto, el infractor tendrá 10 días de plazo para presentar un Programa de Cumplimiento o cuenta con 15 días de plazo para formular descargos ante esta Superintendencia, tras lo cual continúa el proceso sancionatorio.

BRAZIL: InterCement, da Camargo, avalia fechar unidades de concreto

A InterCement, divisão de cimento do grupo Camargo Corrêa, deve decidir nesta semana o futuro de sua divisão de concreto, apurou o jornal O Estado de S. Paulo com fontes familiarizadas com o assunto.

A companhia vai definir qual a melhor estratégia a ser adotada para essa divisão, que tem 40 unidades no País.

Uma das alternativas é fechar algumas operações que não são consideradas lucrativas e pouco estratégicas para a companhia, de acordo com as mesmas fontes. Não há, contudo, intenção de fechar a divisão.

Envolvido na Operação Lava Jato, que investiga esquema de corrupção na Petrobras, o grupo Camargo Corrêa é o segundo maior produtor de cimento do País, atrás da Votorantim Cimentos.

A InterCement é líder de segmento na Argentina, atua em Portugal e tem posições relevantes em países da África.

Uma reunião para discutir os rumos estratégicos dos negócios da InterCement está prevista para ocorrer até sexta-feira, 24, apurou o jornal O Estado de S. Paulo. Procurada, a companhia não se manifestou oficialmente sobre o tema.

A produção anual de cimentos no Brasil está estimada em 70,8 milhões de toneladas.

Do total, 20% são negociados pelas cimenteiras para a produção de concreto, segundo fontes de mercado.

Em entrevista ao jornal O Estado de S. Paulo no início do segundo semestre do ano passado, a InterCement havia informado que estava cortando parte de seus investimentos para priorizar a redução de endividamento, que àquela época era de 2,5 bilhões.

A companhia encerrou o ano passado com endividamento de 2,6 bilhões, recuo de 0,8% em relação a 2013.

O lucro líquido no período caiu 68,8%, para 50,1 milhões.

A produção total de cimento atingiu 30 milhões de toneladas, das quais 12,6 milhões no Brasil, e a de concreto 4,5 milhões de metros cúbicos.

O grande salto da companhia nesse setor ocorreu após a compra da portuguesa Cimpor, em 2012.

"Com o boom da economia, as cimenteiras investiram em unidades de concreto para melhoria de processos em obras. É muito comum que, nas grandes obras, o concreto seja produzido no próprio local (com a mistura de cimento, água e brita). Esse mercado também enfrenta a concorrência de pequenas empresas”, disse outra fonte.

Marcha lenta

A desaceleração da economia brasileira deve afetar o mercado de cimentos e concreto no País, por causa da baixa demanda por obras no mercado imobiliário e de infraestrutura.

Atualmente, 75% do consumo de cimento e concreto é destinado para edificações em geral e o restante para infraestrutura.

O último boom vivido pelo setor ocorreu entre 2003 e 2012, quando a produção saltou de 35 milhões de toneladas para 69 milhões de toneladas, segundo o Sindicato Nacional da Indústria de Cimento (Snic). Em 2013, a produção ficou em 71 milhões de toneladas.

Os dados de 2014 ainda não estão fechados, pois o Snic não pode mais divulgar dados mensais consolidados por decisão do Conselho Administrativo de Defesa Econômica (Cade) associada às suspeitas de cartel no setor.

Porém, a expectativa é de que a produção do setor recue, caso a crise econômica perdure.

O primeiro grande impulso das cimenteiras ocorreu entre 1969 a 1980, saltando de uma produção de 9 milhões de toneladas para 27 milhões de toneladas.

Depois de um longo período de estagnação, o setor cresceu entre 1994 até 2000, puxado pelo Plano Real.

Como a expectativa atual é de novo retrocesso, parte das cimenteiras locais poderá rever planos de expansão. As informações são do jornal O Estado de S. Paulo.

USA: L’Italcementi, attraverso la Essroc, acquisisce due impianti negli Usa


Il Gruppo Italcementi, attraverso la filiale Nord Americana Essroc, ha firmato un accordo con Holcim per l'acquisto di un centro di macinazione della loppa d'altoforno a Camden (New Jersey) e di un terminal di cemento a Everett (Massachusetts).

L'accordo sarà perfezionato alla data di completamento della fusione fra Holcim e Lafarge e prevede l'assorbimento degli staff dei due impianti in Essroc. L'impianto di Camden può produrre fino a 500.000 tonnellate/anno di cemento da loppa. Attualmente Essroc produce questo materiale nelle cementerie di Picton (Ontario) e San Juan (Portorico), oltre che nel centro di macinazione di Middlebranch. Con l'integrazione dell'impianto di Camden la produzione totale di cemento da loppa potrà salire a oltre 750.000 tonnellate.

Essroc, uno dei principali produttori di cemento nel nord-est degli Usa, conferma con questa operazione il proprio impegno a cogliere le opportunità di crescita in un mercato molto dinamico e interessato a prodotti ad alto valore aggiunto. Grazie anche al sistema di marketing i.nova, viene ora proposto un ampio portafoglio prodotti con elevate caratteristiche sia in termini di performance che di sostenibilità.

In particolare infatti, il cemento alla loppa è un materiale che, oltre alle specifiche caratteristiche tecniche, permette di riutilizzare prodotti secondari derivati dall'industria siderurgica altrimenti destinati allo smaltimento, consentendo un positivo impatto complessivo in termini ambientali.

ZAMBIA: Zambezi Portland slashes cement price

ZAMBEZI Portland Cement (ZPC) has reduced the retail price of cement from K78 to K70 to make the product affordable to customers.

And ZPC, which has 500 workers, plans to expand its production capacity from 1,400 to 1,800 tonnes of cement per day.

ZPC marketing and sales director Valerio Ventriglia said in a statement on Monday that the cost of cement will reduce even further from the current price.

“Our appeal to customers is that they can come and purchase cement on a reduced retail price from K78 to K70,” he said.

Mr Ventriglia said ZPC would continue to produce high quality cement for the local market.

And Mr Ventriglia said the company plans to expand its production capacity to 1,800 from the current 1,400 tonnes of cement per day.

“We hope to increase our production capacity level to 1,800 tonnes of cement per day by next month,” he said.
After taking over the cement plant that broke the monopoly in the cement industry in Zambia, the new management plans to reach the 1,800 production capacity of 2012.

Mr Ventriglia said an additional 50 employees have been engaged by the company to assist in repairing the damaged equipment at the plant.

“Some of the equipment was dysfunctional and we are working on repairing the machinery to ensure we are back on track, a lot of work has been done so far,” he said.

INDIA: Jaypee to seek approval next month for sale of cement business.

Infrastructure major Jaiprakash Associates Ltd will next month seek approval from its shareholders and creditors for the proposed sale of its cement units to Ultratech Cement. 

"Pursuant to an order dated March 25, 2015...the High Court of Judicature at Allahabad has directed meetings of the equity shareholders and creditors of Jaiprakash Associates to be convened on May 16...for considering the scheme of arrangement between Jaiprakash Associates and Ultratech Cement Ltd," Jaiprakash Associates said in a regulatory filing.

Ultratech Cement Ltd had in January informed BSE that its board has approved signing of the agreement with JAL for the acquisition of the cement units of the infrastructure conglomerate. 

"The acquisition will be by way of a Scheme of Arrangement between JAL and the company and their respective shareholders and creditors," Ultratech Cement had said. 

"The acquisition is subject to the approval of shareholders and creditors, sanction of the Scheme of Arrangement by the High Courts, approval of the Competition Commission of India and all other statutory approvals," it had added. 

Ultratech had said in December last year that its board has approved the acquisition of JAL's Bela unit which has 2.1 million tonnes per annum (mtpa) clinker and 2.6 mtpa cement grinding capacity. 

The other unit, located at Sidhi, has 3.1 mtpa clinker and 2.3 mtpa cement grinding capacity. Both units have a total of 180 MW power generation capacity.

TRINIDAD & TOBAGO: Carib Cement Boss To Be Replaced

General manager of Caribbean Cement Company Limited Anthony Haynes is to demit office, Wednesday Business has learnt.

It's understood that Haynes, a Trinidadian, is to be replaced by a Mexican executive.

When contacted, Chairman of Caribbean Cement Christopher Dehring said he could neither confirm nor deny whether the Haynes is being replaced and instead referredWednesday Business to parent company Trinidad Cement Limited (TCL).

"I think what you have to do is to speak with the company directly. I am not close enough to the (issue). There is an operational protocol, so I am sure the company would be happy to talk to you in due course," Dehring said.

Two weeks ago, Trinidad Cement announced that under a rights issue, minority shareholder Sierra Trading, a subsidiary of construction giant Cemex of Mexico, had increased its ownership of TCL from 20 per cent to 39.5 per cent. Although Sierra and TCL struck an agreement that the former would not acquire more than 40 per cent of TCL, questions continue to be raised in Trinidad about a potential takeover by Cemex.

Dehring said that as Caribbean Cement is part of a wider operation "whatever the group executive is working out with regards to any statement to do with operations, I much prefer it come from the company itself rather than the board members speaking out about any operational aspect of the company".

Wednesday Business further sought clarification from the CEO of Trinidad Cement, Alejandro A. Ramirez Cantu, but was told a representative would return the call at a later date.

Haynes did not return calls for comment up to press time.

INDONESIA: Overview of the Main Players

The year 2015 may be a good one for Indonesian cement makers. The Indonesian government under the leadership of Joko Widodo is eager to invest heavily in the country’s infrastructure as this is one of the main bottlenecks that blocks higher economic growth. In the Revised 2015 State Budget the central government set aside IDR 290.3 trillion (USD $22.3 billion) for infrastructure development. Surely, the country's large cement producers - Semen Indonesia, Indocement Tunggal Prakarsa, Holcim Indonesia and Semen Baturaja - will benefit from this.

However, when we take a look at domestic cement sales in the first quarter of 2015 the aforementioned positive picture has not materialized yet. Based on the latest data from the Indonesian Cement Association (ASI) Indonesia’s cement sales fell 3.3 percent (y/y) to 13.6 million tons in the first quarter of 2015. Widodo Santoso, Chairman of the Indonesian Cement Association, said that several factors explain why we see disappointing cement sales in Indonesia in the January-March 2015 period.

Firstly, several ambitious government infrastructure and property projects have not seen groundbreaking yet. It is not uncommon for projects in Indonesia to be delayed due to severe bureaucracy, legal issues (especially land acquisition), or the lack of financial means. Although the government reserved IDR 290.3 trillion in this year’s state budget for infrastructure spending, this amount is far too little to fund all needed infrastructure development across the country and therefore the government needs to team up with the private sector.

However, as Indonesia is not the easiest place to do business (Indonesia ranks 114th from a total of 189 countries in the World Bank’s latest ease of doing business survey) the private sector is hesitant to invest. Moreover, infrastructure projects are usually not the first choice of the private sector as these projects constitute relatively long-term commitments and are costly. Without possessing a good track-record of successful public-private partnerships (PPPs), the government has difficulty to attract large investment from the private sector for infrastructure projects.

Infrastructure projects that have been delayed include the Jakarta-Surabaya high-speed train project (delayed for at least five years as the costs are too high) and the Cilamaya seaport in West Java (which will be relocated to a different location as the initial location could disturb a local oil and gas production block). Projects that are expected to see groundbreaking in April 2015 are the 2,700 kilometers-long Trans-Sumatra toll road and the “One Million Houses Program”. These projects will require plenty of cement.

The second reason why Indonesian cement sales have been weak in the first quarter of 2015 is the high amount of rainfall amid the peak of the rain season. As about 80 percent of cement sales are retail, demand drops when it rains.

Despite weak results in the first quarter, Indonesian cement companies and analysts agree that cement demand will grow in the remainder of 2015, particularly because the government projects will boost cement sales. The ASI expects to see a total of 62 million metric tons of cement sales in 2015, up 3.3 percent from last year.
Semen Indonesia

Semen Indonesia, the largest cement producer in Indonesia, posted a 10.2 percentage point (y/y) growth in revenues to IDR 27.0 trillion (USD $2.1 billion) over 2014, while the company’s net profit rose 3.7 percent (y/y) to IDR 5.6 trillion (USD $431 million). The company is the market leader in Indonesia in terms of cement sales and is investing to stay on top. By 2017, it wants to have production capacity at 40.8 million tons of cement per year, up from around 32 million tons of cement in 2014.

Regarding 2015, Semen Indonesia’s revenues are expected to rise by 10 percent (y/y). However, net profit growth will be limited at an estimated 3.5 percent (y/y). Main reason for this sluggish growth is that President Joko Widodo forced state-owned cement companies to lower their cement prices in January 2015 in order to make it easier for the wider public in Indonesia to buy cement. Although only state-owned cement producers were forced to lower these prices (Semen Indonesia and Semen Baturaja are both state-owned), private producers will have to follow suit to stay competitive. As a result of this government policy, shares of listed cement producers fell in January 2015.

The other reason why Semen Indonesia is expected to post limited net profit growth in 2015 is that operational costs will rise due to higher electricity tariffs. To reduce these costs the company is increasingly using waste heat recovery solutions.

Indocement Tunggal Prakarsa

Indocement Tunggal Prakarsa (Indocement), the second-largest cement producer in Indonesia, posted a 7 percentage point (y/y) growth in revenues to IDR 19.9 trillion (USD $1.5 billion) over 2014. Meanwhile, net profit grew 5.2 percent (y/y) to IDR 5.3 trillion (USD $408 million).
Compared to Semen Indonesia, Indocement has more stable margins and lower operating costs, resulting in a gross profit margin stably above 45 percent. Indocement keeps a lower level of leverage and has a relatively strong cash flow.

Indocement’s revenues are estimated to grow 17 percent (y/y) in 2015, supported by an estimated 9 percentage point growth in sales volume to 20.4 million tons. The company’s net profit may rise 13 percent in 2015.

However, the company is vulnerable to rupiah depreciation as 50 percent of Indocement’s costs are US dollar-denominated. Amid tightening monetary policy in the USA, the rupiah is expected to continue to depreciate against the greenback in 2015. Indocement President Director Christian Kartawijaya said that the company is now in the process of hedging currency risks.

Indocement is also eager to expand cement production capacity. The company’s new cement factory in Citeureup (West Java) is nearly completed and should start operations at the end of 2015. This factory will add 4.4 million tons to the company’s total annual production capacity. Two more factories are planned to be constructed in Central Java and North Sumatra and will add 5 million tons of cement to the company’s annual production capacity. But it will take up to 2019 before both factories can start operations. The company's annual cement production capacity stood at 20.5 million tons at the end of 2014.

Holcim Indonesia

Holcim Indonesia, part of the Swiss-based Holcim Group, recorded an 8.6 percentage point growth in revenues to IDR 10.5 trillion (USD $807 million) over 2014. However, the company’s net profit fell 30 percent (y/y) to IDR 669 billion over the same period. The primary reason for this development was that operational costs surged by about 18.5 percent (y/y) due to higher trademark service costs and higher franchise costs. Moreover, and more than its rivals, Holcim Indonesia is affected by rupiah depreciation as a larger portion of the company costs (including imports) are US dollar-denominated.

Although facing tougher conditions than its rivals, Holcim’s sales and production capacity are expected to increase in 2015. The company’s Tuban II factory will commence operations this year and will raise the company’s total annual production capacity to 12.7 million tons.

Semen Baturaja

Semen Baturaja is the smallest player (in terms of sales) among the listed cement producers. However, as the company has a strong connection to the government (it is for 76 percent state-owned) Semen Baturaja is expected to benefit from government infrastructure projects. Moreover, the company is based on Sumatra where the government is eager to develop the 2,700-kilometers long Trans-Sumatra toll road project. As such, the company’s cement sales are estimated to grow 41 percent (y/y) in 2015. However, Semen Baturaja’s production capacity is still limited at 4 million tons of cement per year only, far below production capacity of the aforementioned cement producers. The company is in the process of developing a new plant but it can only become operational in 2016 or 2017.

CAMEROON: EMCC to build offloading wharf for Dangote Cement

Referred to as the “French leader in dredging, water and subaquatic works,”Entreprises Morillon Corvol Courbot (EMCC) has just created a subsidiary in Douala, Cameroon’s economic capital. This was announced in a legal notice published on April 7, 2015.

An official document reveals that EMCC Cameroon was created “to effect a contract signed with the Dangote Company to conduct dredging and also build a wharf along the Wouri River.” The wharf should facilitate the offloading of raw materials for the 1.6 million-tonne capacity per annum Dangote group cement factory which recently launched production on the banks of the Wouri River in Douala.

A member of the global construction leader, the Vinci group of companies, EMCC indicates on its website that it specialises in dredging, maritime construction, civil engineering, laying conduits and subaquatic works

USA: Summit Materials Announces a Definitive Agreement to Acquire Cement Assets from Lafarge

Summit Materials (“Summit”) is pleased to announce it has signed a definitive agreement with Lafarge North America (“Lafarge NA”) to acquire Lafarge NA’s 1.2 million short ton (1.1 million metric ton) capacity Davenport, IA cement plant and seven cement distribution terminals (“Davenport Assets”) for $450 million, subject to certain post-closing adjustments, plus Summit’s Bettendorf, Iowa cement distribution terminal. The transaction is expected to close in July 2015, pending final regulatory approval and the closing of the Lafarge-Holcim global merger.

The Davenport Assets will be integrated into Summit’s Continental Cement Company business based in Chesterfield, MO. The combined business will have 2.45 million short tons of cement capacity across two plants in Hannibal, MO and Davenport, and eight cement distribution terminals along the Mississippi River from Minneapolis, MN to New Orleans, LA.

Summit CEO, Tom Hill, commented, “The Davenport Assets are an excellent fit with our materials-based growth strategy and a continuation of Summit’s proven track record of value-added acquisitions. The combination of the Davenport Assets and Continental Cement creates a strategically compelling and complementary multi-plant cement business in very attractive markets along the Mississippi. We are looking forward to welcoming the Davenport plant and terminal employees to Summit, and to servicing new and existing customers with high quality product from our expanded cement operations.”

The purchase price of $450 million is expected to be funded with a combination of debt and equity.

VIETNAM: SMGR to acquire second Vietnamese cement firm

State-owned cement manufacturer Semen Indonesia (SMGR) would further strengthen its foothold in Vietnam’s cement market by acquiring another local cement producer in the country, the company’s executive said.

SMGR’s finance director Ahyanizzaman said in Jakarta on Thursday that the publicly listed company had allocated a total capital expenditure (capex) of between Rp 7 trillion (US$545.8 million) and Rp 11 trillion this year to expand its operations, which includes the acquisition of the Vietnamese company.

He said that the company was currently conducting a due diligence audit on the Vietnamese firm and this was expected to be completed by the end of the first half of this year.

“The Vietnamese company is a private firm, which has a local market share of about 4 percent,” Ahyanizzaman said after the company’s general shareholders meeting on Thursday.

If SMGR goes ahead with the acquisition plan, it will be Semen Indonesia’s second subsidiary in Vietnam. Through its Vietnamese subsidiary Thang Long Cement Company (TLCC), SMGR produces about 2.5 million tons a year in the country. 

Ahyanizzaman said the company would borrow up to Rp 1 trillion to support the international expansion plan.

SMGR president director Suparni said the acquisition plan was part of the company’s strategy to take advantage of the ASEAN Economic Community, which would be implemented before the end of this year.

“Domestic and regional operations cannot be separated when the AEC is implemented, so we want to synergize our business,” Suparni said. 

SMGR earlier said it planned to build a cement plant in Myanmar, but it was delayed because it failed to reach a business agreement with its local partner.

SMGR, which operates factories in Gresik, East Java, also has several local subsidiaries including Semen Padang, Semen Gresik and Semen Tonasa.

Suparni said the company expected a higher growth in sales volume in the third and fourth quarters this year after posting a sales growth of just 1.8 percent in the first quarter. 

“We plan to export between 150,000 and 200,000 tons in the first half. In the second half, exports will be reduced because domestic demand will usually reach its peak,” Suparni said.

According to the company’s review, Indonesia’s cement consumption reached 59.91 million tons as of last year, a 3.3 percent increase from 58 million tons a year earlier.

Semen Indonesia expects to increase its production capacity to 40 million tons by 2017, which will be supported by its two new facilities in Rembang, Central Java, and Indarung, West Sumatra, currently under construction.

The two facilities are expected to add a total capacity of 6 million tons annually to the company’s current production of 31.8 million tons, Suparni said.

Suparni said the company was also expecting add an additional capacity of 2 million tons through acquisitions of cement plants in the country.

Suparni said further that the company would also build a new plant worth Rp 1.95 trillion in 2016 in Ja-
yapura, Papua with a total capacity of 1 million tons per year. On Thursday, the company’s annual general shareholders meeting approved a 40 percent dividend payment worth Rp 2.2 trillion out of its total net profits of Rp 5.6 trillion as of last year, with price per share at Rp 375.3. In addition, Suparni said the meeting approved new directors Aunur Rosyidi and Rizkan Chandra, as well as new commissioner Sony Subrata.

CAMEROON: Dangote Cement Cameroon seeks to nab 30% of Lafarge’s cement market

With its factory built on the banks of the Wouri River in Douala, the Cameroonian economic capital, the Dangote Group is aiming to grab 30% of the local cement market in 2015 with an expected production of 950,000 tonnes. This was revealed by company heads during a site visit at a production plant on April 8, 2015. Dangote Cement Cameroon, which will only start producing 1.5 million tonnes in 2016, is planning to make serious inroads into the market share of Cimencam, the Lafarge subsidiary which has enjoyed a monopoly for some 48 years.

The battle between Lafarge and Dangote, respectively based in France and Nigeria, will cover the entire Central African market where Dangote Cement Cameroon also plans to claim 30% of the market in 2015, according to plans revealed on April 8, 2015 by heads of Cameroon’s 3rd largest cement factory.

In the interim, Dangote Cement Cameroon has recruited 65 distributors in Cameroon, “This figure will increase. With time, we will identify distributors that are serious and those that are not,” assured Dangote Cement Cameroon’s Managing Director. Malko Building’s promoter in Douala, Serge Fouoggi indicates that Dangote 3X bags of cement (42.5R) with a capacity of 50 kg will be sold for 4,500 FCFA instead of the 4,450 FCFA recommended by the company. “I sold 70 tonnes of cement in two days. On average 35 tonnes per day. Customers are buying a lot at the moment. I think that it’s because they want to try out Dangote Cement. So far the feedback has been good. If anything, the paper packaging could be strengthened,” he stated.

According to Philippe Pidy Kobba, Marketing and Sales Director, Dangote Cement Cameroon, in the first few months, careful attention has been paid to distributor and consumer feedback on the Dangote cement product. This feedback will be taken into account to ensure customer satisfaction. “Next week, we will be tripling two-layer packaging,” he explained

On the production end, Dangote Cement Cameroon Managing Director Abdullahi Baba assures that the process is not yet at full speed. “We aren’t producing on a continuous basis. We’re testing the equipment and making adjustments as needed. We haven’t started intense production, but we’ve produced 50,000 tonnes of cement,” he stated. The company is seeking to position itself as one of the best priced on the market. “We’re not trying to have the best price on the market. We are the best priced and we have the most affordable cement,” declared Abdullahi Baba.

Indeed, according to Dangote, its cement will be sold to consumers for 4,450 FCFA per 50 kg bag, which is 150 FCFA cheaper than Cimencam’s (4,600 FCFA) and Cimaf’s (4,400 FCFA), produced locally by the Moroccan company Addhoha.