AFRICA: EGYPT: Italcementi Group to invest Eur140m as a continuous commitment to the future growth of Egypt

Nine leading international wind turbine manufacturers have arrived in Hurghada to take part in a site-visit organized by Italgen (Italcementi Group) to present a new state of the art renewable energy project in the Red Sea area, which represents the first Foreign Direct Investment in this sector.

The investment, estimated around Eur140m, envisages job opportunities and social initiatives to the local community besides allowing the transfer of know-how. The project will cover the energy needs of the Suez Cement Company plants in Egypt (whose main stakeholder is Italcementi Group), thus contributing to Egypt's environmental goals of reducing impact on the environment and consumption of fuel based energy resources.

Giuseppe De Beni -managing director of Italgen- also met the new Governor of Red Sea, H.E. Counsellor Mahmoud Assem, to discuss the features of the project, mainly the economic and social benefit that will be generated to Red Sea Governorate, especially Wadi Dara and Gulf El Zayt areas. In the afternoon, a meeting was held with international suppliers and senior representatives of the New and Renewable Energy Authority and other Egyptian Institutions. Egypt has set a very ambitious target to have 20% of total energy capacity installed from Renewable Energy in 2020. This would mean 7000 MW installed before 2020 and the contribution of the private sector is crucial to met the target. 

"I have been extremely pleased to listen to the new Government, saying that the private sector could help Egyptians by partnering with them" underlined Mr. De Beni, "this is exactly the attitude of Italcementi Group towards Egypt and the framework within which we are developing this wind energy project. We do expect a continuous close cooperation with New and Renewable Authority Energy and with the Ministry of Energy to finalize very soon the last phase of the permitting process and to start the implementation phase." 

Mr. de Beni added that private investors are now looking to Egypt to understand whether the framework will be favorable in the next future and that he is sure that the implementation of such a relevant project in a crucial and innovative field like renewable energies would be an important sign of the renewed confidence and trust of foreign investors in the country. 

"Egypt is a priority in our internationalization strategy and we are fully committed to it. We are confident that the new era will mean a favorable and more dynamic business environment," he said. 

Italgen is part of Italcementi Group, one of the biggest Italian companies and the fifth cement producer worldwide, operating in 22 Countries. The Group has been contributing to the industrial and social development of Egypt since 2001 (as main stakeholder of Suez Cement group of Companies), providing know-how and updated technology, investing more than one billion euros, and implementing social actions dedicated to local communities.

AFRICA: NIGERIA: FG must allow 30% cement import to check monoploy - Rabiu

The Chairman of Sokoto Cement, Alhaji Abdulsamad Rabiu has called on the Federal Government to allow 30 per cent of cement import to check monopoly, insisting that a situation where 150 million Nigerians rely on just two players was dangerous for the economy.

Rabiu, who was part of the just concluded two-day presidential retreat with the private sector on economic development and job creation, at the Banquet Hall of the Presidential Villa, described the two days spent with President Goodluck Jonathan as the best for the private sector so far.

He warned that the call for licences for cement importers not to be renewed was not good for the economy, as the two major players would not be able to meet the demands of Nigerians for the product.

“We had a retreat with most of the stakeholders here in Nigeria business wise and with Mr. President. Everybody was frank, open and most of the issues discussed were really issues that affect the business environment in this country and so we are really happy.

“ I am a cement manufacturer, I have got a cement plant, Sokoto cement in Sokoto State, I have got another one in Edo State, so I am a manufacturer but I know that the demand for cement in Nigeria is a lot more than we can produce. So there is need and government has always had that policy in issuing licences to bridge the gap between what we can produce and what the demand is in the country.

“Right now, we are in the situation where by the end of this year, licences will expire and there is a lot of clamouring that licences should not be renewed again for the importation of cement. The reason I am bringing this issue and we raised this with Mr. President at the retreat is simply because we see a situation where 80 to 90 per cent of cement production is being controlled by two companies in Nigeria, I believe that is risky, it’s dangerous and should not be allowed because the consumer comes first. Yes, it is good, it is commendable to some of the companies, putting up cement factories in Nigeria and yes they have put in a lot of money but look, we are talking about one or two companies as against 150 million Nigerians. 

“So that is why I actually raised the issue that we should carefully make sure that we do not fall into the hands of very few players in the market.

AFRICA: NIGERIA: Dangote Cement capitalisation hits $15 billion, says Paramjit

Dangote Cement capitalisation has hit a whopping $15 billion and the company would single-handedly surpass Nigeria’s entire cement need which stands at about 17 million metric tons annually, before the end of next year.

Dangote Group’s Chief Human Resources Officer, Mr. Pabby Paramjit disclosed this at the inauguration of Dangote Academy’s Graduate Engineer Trainees Scheme, GETS, at the Obajana Cement plant, Kogi State, at the weekend.

He put Dangote’s current cement output at about 12 million metric tons per annum and that a new cement plant at Ibere, Ogun State would soon come on stream with another six million metric tons, annually. The third phase of the Obajana Cement Plant, he disclosed, would soon be commissioned and therefore boost output of the commodity.

He said that the vision of the President of the Group, Alhaji Aliko Dangote was to grow the cement segment of the business empire into an international organisation that would export cement from Nigeria to the West African sub-regional market within the next four years.

According to him, cement accounted for 80 per cent of Dangote Group’s business, while non-cement segment such as the flour mills, water, juice, pasta and bag account for the remaining 20 per cent. Mr. Paramjit said Alhaji Dangote decided to establish the Dangote Academy in recognition of the important roles personnel play in building great companies around the world.

INDIA: Cement sector likely to witness negative growth in October

The cement sector is likely to witness negative growth in sales in October due to a slowdown in infrastructure construction activities amid the festive season, besides the higher base in the corresponding month last year, a brokerage firm has said.

"Given last year's higher base and the upcoming festival season (Diwali), the cement industry is expected to report negative year-on-year growth in dispatches for the month of October, 2011," Elara Securities said in a report.

In September, the country's cement firms reported a marginal 1.4% decline in dispatches vis-a-vis the same month last year. In August, cement dispatches were down by 6.6% in comparison to July.

Industry sources said the unavailability of sand has impacted cement offtake in the Western region, while the monsoon and the fluid political situation hit sales in Andhra Pradesh.

"As cement demand is still subdued, cement players have cut down supply in the low price non-trade segment. Thus, cement prices during the month increased in most parts of the northern, eastern, western and central regions by Rs 5-30 per 50 kg bag," it said. Cement prices in the southern region (except Andhra Pradesh) remained flat, as cement demand was weak due to

festivals like Onam and Dussehra. Prices in Andhra Pradesh have inched up by Rs 10 per bag due to the Telangana agitation.

"Cement dealers expect prices to inch up further by Rs 5-10 per bag in most regions,"

INDIA: Cement producers to shift to high cost imported coal

Emkay Global Financial Services has come out with its report on cement sector.

Cement producer will have to shift to high cost imported coal: With the multiple issues plaguing the coal supply, the country today is facing acute shortage of coal and the power stations running on very low inventory of coal. To improve the worsening coal supply issue, Coal India (CIL) has decided to offer the October -11 e-auction quota coal to power companies first (though the same would be under of the FSA quota for FY12). We believe that this move will affect cement manufacturers who have significant dependence on e-auction coal. In the event of short supply of coal through e-auction, cement manufacturers will have increased dependence on imported coal. Though prices of coal in international markets have been stagnant at USD 120, the sharp depreciation of INR against USD has increased the landed price. Currently price of imported coal is ~Rs6600/t as compared to e-auction price of ~Rs3400/t. However adjusted for calorific value, the cost of imported coal is ~15-20% higher.

Costs most likely to get passed given the onset of construction season: The increase in fuel cost though negative for cement producers, is unlikely to impact FY12 earnings meaningfully as CIL chairman has said that the supply of e-auction quota coal to power producers is only for the month of October-11. Further with the onset of busy construction season, cement producers should be able to pass on the increased cost to the consumer.

Continued shortage could impact cement production and dispatches: Though cement companies keep 30-40 days of coal inventory we believe that the continued shortage of domestic coal could disrupt production schedule which in turn would impact the cement dispatches. The following exhibit contains the proportion of coal procured through e-auction by cement companies.

Impact: Cement majors procure 20% of their requirement from E-auctions. If we assume that the problem could persist for a quarter i.e. the Oct-Dec-11 quarter, ACC & ACEM’s CY11 EPS could get impacted negatively by 1.2% while that of Ultra TechCement by ~4% Shree to benefit as it has no dependence on domestic coal. Further the sharp surge in price of merchant power will significantly improve the profitability of its power division in short term.