PAKISTAN: Cement sector seeks relief

Cement manufacturers have asked the Federal Board of Revenue (FBR) to exclude cement from the “Third schedule” of Sales Tax act.

In case the said procedure continues, fixation of maximum retail price (MRP) must be allowed on the basis of two different zones in the upcoming budget of 2014-2015.

In a letter to the FBR chairman, All-Pakistan Cement Manufacturers Association said dynamics of every province and region are different, therefore, collection of sales tax on the basis of single MRP across the country is anomalous which would ultimately force manufacturers to restrict sales only to nearby markets.

It added that this would mean stopping sales to the far-flung areas where there are increased chances of parallel market getting established which would impede FBR’s revenue collection.

As an alternative, cement industry proposes a zone based maximum retail price as it will save consumers of nearby areas from paying excessive amount while protecting manufacturers from incurring losses on cement sales in remote areas.

In a letter, the association asked the FBR to introduce uniform tax rate for corporate sector besides some other measures in the upcoming budget for the year 2014-15.

Cement is one of the most taxed industries of the country and is currently subject to various taxes including Corporate Income Tax — 34pc of taxable income; Minimum tax: 1pc of Turnover (in case of losses; Withholding Tax — Multiple and cross withholding; FED — Rs400 per tonne; and Sales Tax — 17pc of the maximum retail price.

The association also proposed step wise abolishment of FED, which amounts to Rs400 per tonne to encourage cement off-take.

Cement industry is subjected to 17pc GST, imposed on MRP instead of ex-factory, which is comparatively very high from the global rates.

The reduction of GST to 12.5pc will encourage the registration of unregistered taxpayers to avail benefits of input adjustments.

The cement industry is experimenting with different options for reducing fuel cost by using alternative energy resources such as pet coke and shredded rubber tires to enhance its competitiveness in the global market. Therefore, the government should reduce the duty on alternative fuels to zero per cent as has been the case with coal, from current 5pc and 10pc of ad valorem.

APCMA has also suggested that the 50pc rate of initial allowance on plant and machinery be restored from the current 25pc which in turn would result in gearing up investment in BMR and capacity enhancement of existing industries.

It further proposed that withholding tax rate on import of raw material, spares, stores and capital goods by industrial undertaking for its own use be reduced from 5pc to 1pc.

APCMA proposed that 210 days should be set for filing duty drawback claims which were not accepted by the Customs Department pertaining to the period July 2005 to June 2011 due to unavailability of original Afghan Customs documents.

NIGERIA: Lafarge Invests €1bn in Cement Production

Lafarge Country Chief Executive Officer (CEO) Nigeria and Benin Republic, Mr. Guillaume Roux, has said that the company has invested more than €1 billion (about N214 billion) in the country since 2008, adding that an additional €1billion would be injected to double its operational capacity within the next three to four years.

He said Lafarge had through the years earned a reputation for products of impeccable quality and differentiated itself through innovation, value adding services and contribution to industrialisation of the country. He said plans are underway to double the number of plant it currently has in the country.

Speaking at an interactive session with journalists in Abuja, Roux, who is also the company's Group Executive Vice-President said going forward, Lafarge planned to deploy various innovative solutions which are tailored and adapted for the Nigerian environment with a view to addressing customers' varying needs.

He said it intends to make a big difference in the industry by having a nationwide coverage with a strong push to develop the people boost their economic power.

Specifically, he said there are plans to install construction development laboratories to cater for different solutions for different types of customers.

He also said there are ongoing plans with the ministry of works and housing to promote the use of concrete for road construction in the country.

He said:"We are keen at supporting the industrialisation of the country and region in which we operate."

He noted that efforts had been made to development the country's human capacity by ensuring 98 percent of staff are Nigerians.

Lafarge is a French industrial company specialising in four major products including cement, construction aggregates, concrete and gypsum wallboard. It is currently one of the leading private sector companies which is sponsoring Nigeria's centenary celebrations.

"We want to bring different solutions to our customers, we are not just selling cement powder, we are selling products and solutions for different types of customers," he said.

Reacting to allegations that the increasing incidence of building collapse in the country due to the prevalence of substandard cement products, Roux, while regretting the trend however argued that building collapse has no direct bearing to quality of cement.

Notwithstanding, he said Lafarge puts quality control at the forefront of its operation stressing that "we have a high quality cement with is consistent with local and international standard."

Rather, he blamed the collapse of buildings on the misapplication of building materials and low level of construction education adding that cement manufactured in the country are of international standard and best practice.

He said it had been proven globally that cement has no direct link with building collapse, adding that there was the need for enhanced education programme on proper usage or cement application.

Control of construction is also key to stopping collapse buildings.

Roux said:"Cement quality is not cause of building collapse, this has been proven internationally. What causes building collapse is related to the way concrete is being made; the way the materials are being applied; Andy designs of buildings that could be faulty. Those are the main causes of building collapse that is why we are focusing on the education and training of our people."

He further noted that the control of construction activities was also key to stopping buildings collapses.

According to him, among other initiatives, Lafarge is currently working out modalities for giving training to block makers on usage of cement in relation to other building materials.

He said the company would continue to work with the works and housing ministry to help more people understand the benefits of complying to set standards.

He said the current policy of backward interest anion in the industry had been a success by helping to create more jobs and better products and innovation as we'll as stability in the environment leading to decrease in price of cement to the benefit of consumers.

Somaliland: Ethiopian Cement Finds A Booming Market

Ethiopian cement manufacturing factories under the umbrella of the state owned National Cement Industry are experiencing a market boom in Somaliland with heavy commercial trailers ferrying loads of the commodity creating a traffic jams on roads of major towns in the country while other queuing outside major cement factories.

The Ethiopian cement rated as of good quality has monopolized the Somaliland market as a result of edging off cement produced from other neighboring nations like the Oman cement which was the favorite in the construction industry of the country. This follows a series of deliberations between Ethiopian Government & stakeholders in the cement industry who have positively utilized the Eggaga cement producing hills by establishing 5 industrial plants that culminated in increased in production rate hence exporting the surplus to the neighboring nations of Somaliland & Djibouti.

The Ethiopian cement production rate reached a climax at a time when the local cement industry at Berbera could not kick start producing the construction ingredient following uncalled bickering between the state & local residents after the latter turned down a Government proposal of privatizing the industry. This resulted to loss of consuming locally produced cement with the resultant surplus being exported to neighboring nations of the region that subsequently could have narrowed the existing trade imbalance.

The successive regimes that ruled this country could not come up with sound economic policies with respect to rejuvenating Berbera cement industry to operate yet the current regime was elected on a platform of economic reforms but still reluctant to fulfill its pledge due to the existence of conflict of interest from State officials tasked with running the industry.

According to opinion of experts in cement manufacturing it is believed that Berbera cement factory has higher production capacity & a better quality than that produced from Ethiopia & Arab world due to its strategic location to Gulf of Aden that composes the cement with varied sea minerals.

Initially trade in Ethiopian cement was being controlled by Businessmen from Somaliland but of late trade in that merchandize has fully given the mantle to Ethiopian traders who are making a kill in the market to the exclusion of local traders leading to poll of complains being directed in the ministry of trade.

Whereas the Government collects revenue from trade in importing cement, majority of Somalilanders are astonished why can't they produce their own cement locally at Berbera factory. People are questioning what happened to President Silanyo's Government given that initial plans to rejuvenate the industry hit a snag does that means that they can't come up with an alternative one to jump start producing cement locally knowing that the commodity is the backbone of the mushrooming construction currently being witnessed all over the nation.

AUSTRALIA: Cement storage factory approved for Osborne

The $18 million expansion of a cement storage and loading station at Osborne has been approved.

Cement Australia’s proposal would allow five times more cement to be transferred through the Mersey Rd North site, increasing its yearly capacity to 500,000 tonnes.

The nine new 38m tall silos, approved by Port Adelaide Enfield’s Development Assessment Panel last night, would be of similar height to the nearby Torrens Island power station and Penrice Soda plant.

Cement Australia is based in Brisbane and has leased the site near ASC since 1991.

The only objection received by the panel was from Cr Bruce Johansen, who lives about 1km from the site, in North Haven.

Cr Johansen told the panel his main concerns were noise from trucks and ships loading and unloading cement, the height of the silos and cement dust escaping the silos.

He said he was concerned the dust problem around Adelaide Brighton Cement’s factory at Birkenhead could be replicated in Osborne.

Cement Australia project manager Peter Klose told the panel the depot was a completely sealed, pressurised system and there would be no dust problems.

“This facility is purely a receival and storage facility and Cement Australia has a number of these around the country,” Mr Klose said.

Mr Klose said the noise from trucks and the depot would be similar to the sound of an air-conditioning unit for residents closest to the site.

He said the plant would increase truck movements on Mersey Rd North from 100 per day to 180. Two people will be employed there once it is complete.

PHILIPPINES: Holcim defers $550M cement plant investment

The country’s leading cement maker, Holcim Philippines, has put on hold the construction of a new cement plant costing as much as $550 million in Norzagaray, Bulacan, to review leeway in supply chain management arising from the proposed integration in 2015 of Southeast Asian economies.

The new plant was originally targeted to add 2.5 million metric tons to Holcim’s annual production capacity by 2016. As of late last year, Holcim was already shortlisting contractors to build the new plant.

At a recent briefing, however, Holcim Philippines chief executive officer Eduardo Sahagun said the plan to set up a new cement plant was still part of the company’s roadmap. “It’s not a question of will it still be built? It’s a question of when,” Sahagun said, adding that studies were now being conducted to determine the best course of action.

Sahagun said the creation of the Association of Southeast Asian Nations (Asean) Economic Community by next year would allow Holcim to absorb excess capacity from units in other markets like Vietnam.

Being a global company and especially with this regional integration, Sahagun said, strategic planning was now being made not just from the perspective of a single country. He said Holcim’s rosy outlook on an upswing in demand trajectory from the Philippines had not changed, adding that it’s the supply equation under review.

Cement market size in the Philippines is about 20 million metric tons a year, with Holcim having a market share of about one-third, Sahagun said.

In terms of labor and power costs as well as coal sources, he said, other neighboring markets like Vietnam offered lower costs. However, he said Holcim Philippines could compensate for higher variable costs by boosting productivity.