Staying on track in Nigeria
"We believe that Nigeria has arrived as a cement manufacturing country," said Joseph Makoju, Chairman of the Cement Manufacturing Association of Nigeria (CMAN), to mark yet another 'moment' when Nigeria's ability to produce cement has overtaken its demand.
One of Makoju's reasons for Nigeria's 'arrival' was the fact that the Nigerian government hasn't issued any import licenses since the start of 2012.
As Global Cement Weekly #46 noted in April 2012 this is strange given that domestic consumption is up to 18Mt/yr: a figure 4Mt below modest estimates of national capacity which start at 22Mt/yr. According to Global Cement monthly price reviews the cost per bag has risen by 20% since 2010 despite presidential orders to keep it down. However much cement Nigeria seems to produce the price still keeps on rising.
The prices aren't the only figures that are rising year-on-year. Dangote, Nigeria's leading-producer, reported an increase in operating profit of 14% to US$745m in 2011 from US$654m in 2010. Lafarge WAPCO, the country's second largest producer, reported an increased operating profit of 41.7% to US$74.1m from US$52.3m.
Prices continue to rise but this could be due to cartel-like behaviour. President Goodluck Jonathan seemed to suggest as much in 2011 when he ordered prices down. Then again Nigeria's poor transport infrastructure and distribution chains could be to blame for rising prices instead. CMAN has announced plans to promote the use of concrete road construction with the government and Dangote announced plans in August 2012 to widen its distribution by opening more 'mega-depots' and signing on new distributors.
It's unclear exactly how much cement the Nigerian market actually wants. Its per capita consumption is 110kg, compared to 280kg in South Africa and over 600kg in Egypt. This is way down the consumption/GDP curve compared to Europe and North America. Its population has reportedly risen by 30m from 2006 to 2012. This implies massive total demand and demand potential.
So - past massive transport infrastructure projects, improved distribution and possible price inflation - how does Nigeria keep momentum? Ironically, given Nigeria's protectionist stance against imports, one of the measures CMAN is exploring is how to export cement to other countries. Recent news reports about local producers in Namibia and South Africa fighting foreign imports suggest that other African countries are starting to 'arrive' too. Even building the roads may not be enough to keep Nigeria's cement express-train on track.
Pioneer makes changes to its board
Pakistan: Faisal Imran Hussain Malik has been appointed as a director on the board of Pioneer Cement in place of Asif Hussain Bukhari. In addition Shafiuddin Ghani Khan has been elected as chairman of the board with effect from 29 September 2012. The Lahore-based cement producer made the announcement in a letter to the Karachi Stock Exchange on 4 October 2012.
Mugher mulls Chinese supplier for US$33.2m power upgrade
Ethiopia: Mugher Cement Enterprise is considering proposals from two Chinese suppliers for a turnkey project to convert its current heavy furnace oil (HFO) clinker burning system to a coal-fired system. Mekonnen Zergaw, CEO of the state-owned Mugher, declining to disclose the names of the companies. He said that five companies had participated in the bid, of which one has been disqualified at the beginning while two companies did not pass the technical evaluation.
This is the second time Mugher has accepted tenders for the upgrade. Originally Mugher awarded a US$28m contract to Chinese firm Hefei Cement Research Design Institute (HCRDI) that built the same project for the EFFORT Messobo plant. "The company increased the bid by around US$11m after we had already awarded it," said Zergaw.
Mugher plans to complete the coal-fired furnace by the 2013-2014 fiscal year and its demand for coal is estimated to be 693Mt/yr. However, Mugher is still waiting for the approval of a US$33.2m loan request from the Commercial Bank of Ethiopia. The Ethiopian government instructed cement factories in 2010 to shift from HFO to other alternative sources of energy in order to reduce foreign currency spending.
Holcim to close down cement factory in Hungary
Hungary: Holcim's Hungarian subsidiary Holcim Hungaria Zrt plans to close its cement plant in Labatlan in 2013. 94 employees will be affected by the decision to stop production at the wet kiln plant.
Holcim Hungaria Zrt originally planned to shut the 144 year-old plant by 2010 but its lifetime had previously been extended by environment-friendly investments of almost Euro1.76m to 2016. In a press release the company blamed the downturn of Hungary's construction industry for the closure.
Holcim employed more than 500 people at its cement, concrete and aggregates plants in Hungary in 2010, and 413 at the end of 2011. Its combined revenue in Hungary exceeded Euro84.7m in 2010, but this fell to Euro63.2m in 2011.
At the end of 2011 Holcim Hungaria Zrt indefinitely shelved a plan to build a cement plant in Nyergesujfalu that was designed to replace the plant in Labatlan. It also postponed the construction of a cement distribution base in Dabas, near Budapest.
Hanson to announce job losses
UK: Hanson, the UK subsidiary of HeidelbergCement Group, has announced that it will have to make job losses after a fall in demand. Hanson told its workers that demand for its core products, including asphalt, concrete and cement, had fallen by more than 10% during 2012 and that 2013 is likely to be worse.
The company said that it would have to take steps to balance the size of the business by reducing capacity and bringing overheads into line, moves that would 'inevitably' result in job losses.
An announcement on restructuring proposals will be made by the end of October 2012, with no details available yet on the number of job losses. The GMB union said it feared that hundreds of jobs will be lost.
2016 Olympic Games drive US$262m investment in Treinta y Tres region
Uruguay: Three cement companies are planning to invest up to US$262m in the Treinta y Tres region of Uruguay to meet demand for building materials driven by the 2016 Rio de Janeiro Olympic Games.
The Uruguan state oil and cement company Ancap, alongside Spanish firm Cementos Molins and Brazil's Votorantim, have filed an environmental impact study for a new cement plant with a capacity of 750,000t/yr. Total costs are estimated at US$160m, with Cementos Molins contributing 60% of the investment and Ancap and Votarantim contributing 20% each.
Ancap is also preparing environmental studies for two new lime production plants. A first unit will have a capacity of 150t/day with an investment of US$7m. Ancap has already secured a contract with Brazilian federal power holding group Eletrobras to place this production. A second unit will have a capacity of 500t/day with an investment of US$95m, including infrastructure costs related to the project.
In order to provide the region with better export options towards Brazil, Uruguayan port authority ANP is trying to develop a commercial route connecting the Merín and the Los Patos lakes. Merín lake is on the border between Uruguay and Brazil's southernmost state Rio Grande do Sul, and it is connected by the San Gonzalo canal to the Los Patos lake, which in turn empties into the Atlantic ocean.
CRH terminates Jaypee acquisition
Ireland/India: International building materials group CRH has said that negotiations with Jaypee Cement Corporation have been terminated because the parties were unable to agree terms.
On 7 August 2012 CRH announced that it had entered into talks with Jaypee regarding the possible purchase by CRH of an equity stake in Jaypee's Gujarat cement business. The operations in Gujurat consisted of clinker plants with a total capacity of 3.6Mt/yr. There are also two cement grinding plants with a total capacity of 2.8Mt/yr.
CMAN declares Nigeria self-sufficient in cement
Nigeria: Chairman of the Cement Manufacturing Association of Nigeria (CMAN), Joseph Makoju, has announced that Nigeria is producing more cement than it consumes, at a meeting held in Calabar, Cross River State.
Makoju said that the Nigerian cement industry was recording success at a time when the manufacturing sector as a whole in the country was shrinking. He attributed the slide in the price of cement to a surplus in the market, a feat he described as a first in the country.
"We believe that Nigeria has arrived as a cement manufacturing country. We are out to encourage local production against importation. The government has been very faithful as local production rose from 2Mt in 2002 to 13Mt in 2011 and so far this year to 17Mt," said Makoju. He added that for the first time in the country's history it had gone nine months without the government issuing licenses for cement imports. CMAN is now working out ways to export cement to other countries in the west African sub-region. Yet despite the surplus CMAN is still encouraging investors to build more cement plants.
Other issues raised at the meeting included the effect the poor state of Nigeria's roads has on the price of cement. Makoju estimated that 30% of the price comes from haulage fees which CMAN has no control over. CMAN has taken up the issue with the government and recommended the use of concrete road construction.
Saudi Cement sees 45% improvement in profit
Saudi Arabia: Saudi Cement Company (SCC) has announced that its net profit for the six months to 30 June 2012 surged by 45% year-on-year, to US$164m from US$113m in the same period of 2011. The company attributed the increase to rising local demand. SCC's operating profit increased to US$166m for the first half of 2012 from US$118m in 2011.
Cemex expects improved Q3
Mexico: Based on results for the months of July and August 2012 and preliminary estimates for the month of September 2012, the Mexican cement giant Cemex currently expects to report an improvement in its like-for-like net sales and earnings before tax, depreciation and amortisation (EBITDA) its 2012 third quarter results, on a consolidated basis.
Cemex expects that net sales for the quarter will decline by approximately 2%, although net sales on a like-to-like basis, which considers currency fluctuations, are expected to grow by approximately 3%. It expects its operating EBITDA to grow by about 9% and operating EBITDA, on a like-to-like basis, is expected to grow by approximately 13%.
The expected improvements are broadly in line with improvements seen in the first half of 2012 compared to the first half of 2011.