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KKR backs SIMEC on ABG Cement buyout
India: According to The Economic Times, private equity company KKR will team up with diversified trading and commodities group SIMEC to invest US$142m to take over the cement business of debt-laden ABG Group through a complex, multi-tiered financial transaction. The funding will help ABG s founder promoter Rishi Agarwal to complete the last mile of his much-delayed cement plant project in Gujarat.

The first leg of the special situations transaction, which will be concluded in the coming weeks, will see KKR fund SIMEC to gain a 51% controlling stake in ABG Cements for US$82.6m. This will be followed by an additional US$60.6m of funding collateralised by Agarwal s unencumbered shares in the company. The money will be used to finish the project, fund working capital and pay back overdue creditors.

ABG Cement has been planning a 5.8Mt/yr cement plant in Gujarat since 2010. However, due to significant cost and time overrun, only a 3.3Mt/yr clinker plant at Kutch near the limestone reserves was completed. Agarwal ran out of money to complete the grinding unit at Surat. The plant is ultimately expected to produce slag cements with blast furnace slag coming from Essar Steel. It will be the only slag cement plant in western India.

SIMEC has already made a part payment to show its commitment to the deal. KKR, too, has signed a term sheet with ABG s management. A detailed due diligence process is currently ongoing. In 2014, SIMEC had agreed to buy into ABG s cement business, but the deal was not concluded. Now with KKR s funding, it is expected to close soon.
UAECEMENT.COM - Jul ,06,2015

How will the Greek cement industry cope with the Greek debt crisis?
Greek:The Greek debt crisis directly hit the local cement industry on Tuesday 30 June 2015 when Titan Cement reported that it was unable to pay a dividend to its shareholders. The leading local cement producer blamed the capital controls introduced by the government.

It is worth looking at the effects on the domestic cement industry as the Eurozone bureaucracy and the Greek government play chicken with each other while Greece starts the default process, having failed to pay the latest International Monetary Fund (IMF) payment on 30 June 2015. Greece will now join a group, possibly even more select than the European Union, of countries that have failed to pay back the IMF, including current defaulters like Sudan and Zimbabwe.

A better comparison might be made with Argentina which defaulted upon its foreign debts in 2001. Its construction industry fell by 12% year-on-year in 2001 and by a further 30% in 2002. Cement consumption and cement production utilisation rates hit 23% in 2002. One key difference with Greece is that the country has had major financial difficulties for far longer than Argentina. Argentina ran into financial depression in 1998 and defaulted in 2001. Greece ran into financial trouble following the 2008 financial crisis and then received its first bailout in 2010.

As the capital controls show, even initial responses to the financial situations are impacting upon the standard transactions a limited company conducts. The Financial Times ran an article in May 2015 examining the potential effects on businesses of a debt default and Greek exit from the Eurozone (Grexit). In short, business and commerce will continue where possible reacting to whatever comes their way. For example, an olive oil producer reported switching to exports to make profits. Crucially though, another company interviewed, a construction contractor, worried about potential cuts to government or EU-led infrastructure projects.

As Titan reported in its first quarter results for 2015, its Greek market has been dependent on road building. In February 2014 Titan Cement reported its first improved operating results in seven years followed by profit in 2014 as a whole. The other major cement producers, Lafarge subsidiary Heracles General Cement and Italcementi subsidiary Halyps Cement, reported an improved construction market in 2014 with rising cement volumes. However, it was noted by Lafarge that it was developing exports to optimise kiln utilisation. Titan also noted the benefits of exports in its first quarter report for 2015, focusing on a strengthening US Dollar versus the Euro. Given on-going events, one suspects there is going to be a lot more development of this kind.

To set some sense of scale of the crisis Jim O Neill, former head of economics at Goldman Sachs, famously calculated that, at the height of its growth, China created an economy the size of Greece s every three months. What happens next is down to the crystal balls of economists, although the path of least resistance now seems to be pointing at further default, departure from the Eurozone and Euro and further significant financial pain for Greece.

It looks likely that the local construction market will stay subdued and exports will offer a lifeline. How much the EU is prepared to let Greece default on its bills and then try and undercut its own over-capacity cement industries remains to be seen. However, since the main cement producers in Greece are all multinational outfits, it will afford them some flexibility in their strategy in coping with the fallout. Meanwhile a cement production capacity of around 14Mt/yr for a population of 11m suggests over capacity by European standards. If exports can t help then the situation looks grim.

UAECEMENT.COM - Jul ,06,2015

Four dead in fuel tank explosion at West African cement plant
Togo: Four people were killed when a fuel tank exploded at the West African Cement (WACEM) plant in Tabligbo, the country s security minister has announced.

Six workers were carrying out welding work on the roof of the tank when the tragedy happened. A total of four people died," said Colonel Yark Damehame to AFP. The explosion left one worker seriously injured and in intensive care. Another worker, an Indian national, is missing and a search is underway according to local media. A staff representative at the plant, Emmanuel Montcho, said that the Indian national was the foreman and that 13 workers in total had been working to repair the tank before the explosion.

UAECEMENT.COM - Jul ,02,2015

Arabian Cement commissions new alternative fuel equipment
Egypt: According to Reuters, Arabian Cement Company has commissioned new alternative fuel processing machinery at its plant in Suez.

The state-of-the-art FLSmidth HOTDISCTM allows Arabian Cement s plant to rely completely on coal and alternative fuels to run its operations. Moreover, it enables the plant to operate its kilns using alternative fuel materials directly, without the need to pre-treat them. Arabian Cement now has a designed fuel mix of 70% coal and 30% alternative fuels. The alternative fuel that will be used will be a mixture of agricultural wastes, municipal sludge and refuse-derived fuels (RDF). Alternative fuel use is expected to result in around 60,000t/yr of reduced CO2 emissions.

UAECEMENT.COM - Jul ,02,2015

Ash Grove Cement Louisville plant extends Nebraska Wildlife Rehab agreement
US: Ash Grove Cement Company has announced that its Louisville, Nebraska, plant manager John Dale has signed an agreement extending the use of an on-site building to Nebraska Wildlife Rehab Inc (NWRI). The agreement provides the rescue centre space at US$10/yr.

"We are happy to provide a home to the centre s staff and volunteers and the orphaned and injured wildlife they care for," said Dale. "The group offers an important service to the state of Nebraska."

Ash Grove first made the 4500ft2 building available to NWRI in 2010. The building provides a facility for the staff and volunteers to manage the hotline and conduct animal rehabilitation, education, training and fundraising. It typically sees more than 2000 animals each year.

This facility has allowed NWRI to grow to serve our community and to help exponentially more people and wild animals," said NWRI executive director Laura Stastny. "We have been honored to partner with Ash Grove since 2010 and are grateful for their generosity in their donation of the use of the building for our wildlife centre.

UAECEMENT.COM - Jul ,02,2015

Sephaku Cement increases production towards steady state at both plants
SEPHAKU Cement, a Nigerian-backed newcomer to the regional cement industry, is ramping up production towards steady state at both its Delmas and Aganang plants as its 100%-owned concrete subsidiary Metier increases its footprint in Gauteng.

It said on Friday in its results for the year ended March that revenue had shot up 36% in the period as earnings before interest, tax, depreciation and amortisation rose 39% to R139m. Operating profit soared 44% to R109m, with profit after tax up 57%.

The group recorded a profit before tax of R72m and net profit of R47m.

Sales revenues came mainly from the Delmas milling plant that reached steady state production in November 2014. Clinker and cement production at Aganang commenced in August and October, respectively.
UAECEMENT.COM - Jun,29,2015

Cement market in North India likely to recover by FY18: report
North India s cement market, which currently accounts for 31 per cent of country s total consumption, is expected to make a recovery only by FY2017-18 on account of demand revival in the infrastructure sector, according to a report.

Historically, North India is a well-balanced market with high capacity utilisation, low fragmentation and little inward dispatch threat from other manufacturing regions. But a large proportion of the cement market is dependent on rural or retail sales, Ambit Capital said in a report.

"A confluence of growth impediments -- slowdown in rural sales, weak demand for organised housing and elusive infrastructure recovery -- have further deteriorated cement demand/pricing in north India.

"North India s large share in major infrastructure projects exudes hopes of demand upcycle, but we believe it will take until FY 18 for a meaningful recovery," it added.

In 2014-15, North India consumed 79 million tonnes or 31 per cent of India s cement consumption, the report said.

"While 2015-16 was mooted to be a recovery year, demand has worsened, as rural sales decline sharply, real estate inventory has hit an all-time high and infrastructure recovery remains elusive with weak government tendering," it said.

ALSO READ: India s cement sector not out of the woods yet

Increasing prominence of regional manufacturers in a market with limited logistic challenges (largely roads) has led to price wars. Now prices in north India are at a 35 per cent discount to south India, it added.

Regional players accounted for 51 per cent capacity share in 2014-15 as against 45 per cent in 2006-07.

North India is facing growth challenges, on account of infrastructure recovery remaining elusive and rural demand deteriorating significantly in the last one year due to poor rainfall, low subsidies, wage growth and paltry MSP hikes.

Besides, real estate business is facing liquidity constraints due to government s clamp-down on black money, the report said.

It has projected that North India will be a key beneficiary of the infrastructure ramp up in India, given a majority share in large infrastructure projects (roads, Delhi Mumbai Industrial Corridor, etc).

"However, a strong and sustained volume growth will take till 2017-18 as retail demand will recover with a few quarters lag to infra demand," the report said.

Regional manufacturers with scale and cost efficiencies will benefit the most in an infra-led cement demand recovery, it added.

Pan-India players trade at rich valuations, run earnings downgrade risks and do not have the best cost efficiency to meaningfully improve RoCEs, as volumes might grow but chances of a sharp pricing recovery are scanty, it said.
UAECEMENT.COM - Jun,29,2015

Qalaa Holding divestments will see it focus more on cement
Egypt/Sudan: According to Daily News Egypt, Qalaa Holding for Investment has signed an agreement with Financial Holding International (FHI) to sell FHI some of Qalaa s units. This is in line with Qalaa s aim to exit from some of its non-basic businesses and to reduce its consolidated debts of US$105m.

Qalaa will sell FHI its stakes in MENA Homes, Grandview and Dina Farms Land Companies, which will be separated from Dina for Agricultural Investments. In return, Qalaa will buy FHI s stakes in several affiliated companies, including cement producer ASEC Holding, as well as Taqa Arabia and Mashreq Petroleum in the energy sector. Qalaa will also buy FHI s stakes in Nile Logistics International in the Transport and logistics sector, Dina Farms Supermarkets in the retail sector and United Company for Foundries (UCF) in the metallurgical industry sector. The deal is expected to be finalised by December 2015, after the customary conditions and requirements are met.

Abdallah El-Ebiary, managing director of Qalaa s cement division, said that the cement sector is a main strategic area for Qalaa and that it has no intention of exiting it, nor the transport and energy sectors. He added that FHI plans to build a new pulveriser mill at the ASEC Cement plant in Minya, Egypt within the company s plan to convert to alternative energy due to the energy deficit and gas crisis. The cost will be US$30.2m and it will be built in the fourth quarter of 2015. "The company s strategy for the next period is to diversify to new and cheap energy sources instead of the traditional and unavailable sources. The investment cost is at US$30.2m, with US$1.31m for a pulveriser mill and US$11.8m for alternative fuel production," said El-Ebiary.

Qalaa also plans to increase the production capacity of its Takamol cement plant in Sudan from 430,000t/yr to 800,000t/yr in 2016. Qalaa aims to establish a new coal mine for the plant. The plant is 51% owned by ASEC Cement and 49% controlled by the Sudanese Social Security Investment Authority (SSIA), the entity that manages all pension funds in Sudan.

Global Cement - Jun,29,2015

Indonesia:Semen Indonesia lowers prices amid increased competition, weaker demand
Semen Indonesia, the country s largest cement producer, has reduced cement selling prices by around 10 per cent this year and is looking to increase exports against a backdrop of heightened competition in a weaker demand environment.

Following a presidential instruction in January this year calling on state-owned cement producers to lower their prices by IDR3000/bag, Semen Indonesia has so far adjusted its prices by around 10 per cent this year, the Jakarta Post reports. Cement prices had been around IDR60,000/bag at the start of 2015.

The company has reduced prices to adjust to current realities currently prevailing in the domestic industry and market. “A number of new facilities have started operating, new supplies are coming in. We have to lower our prices to keep up with the market with overall plunging domestic demand,” the Jakarta Post quoted Semen Indonesia s marketing director, Amat Pria Darma, as saying.

Target out of reach?

As well as new players entering the market, domestic cement demand has contracted since the start of the year on the back of the slowing economy. For the first five months of 2015, nationwide consumption contracted by 3.8 per cent to 22.873Mt.

During the period, Semen Indonesia s domestic sales (including group companies Semen Padang and Semen Tonasa) fell by 5.3 per cent YoY to 9.913Mt. Amat told the daily newspaper that he was pessimistic that the company could achieve its target of six per cent growth this year, or even maintain it at the same position as last year, despite the construction season that usually begins in the second half of the year.

Export strategy

In a bid to cope with unfavourable market conditions at home, the company is now looking to export markets as a way of maintaining utilisation levels. Semen Indonesia increased exports to 184,181t over the January-May 2015 period versus 22,155t in first five months of last year. However, the benefits of a rise in exports should be viewed in light of high transportation costs.

Semen Indonesia corporate secretary Agung Wiharto said that if the domestic economy fails to show signs of revival, the company would look to initiate contract-based exports in the near future, in comparison to its current spot sales. y relying on a six-month to one-year contract, the company could ship more product, thus ensuring a more certain market.

“We hope to see our exports hit 1Mta this year. The prospect is good, given some of our traditional markets have no cement producers,” he told the Jakarta Post. Among Semen Indonesia s major customers are Timor Leste, Bangladesh and the Maldives.

UAECEMENT.COM - Jun,27,2015

Lafarge Africa partners PINE to rebuild North East Nigeria
Lafarge Africa Plc has launched a partnership with the Presidential Initiative for the North East (PINE) on the rehabilitation and rebuilding of the region s economy following the Boko Haram insurgency, pledging to invest NGN100bn (US$502.5m) for the expansion of its business in the region.

He said the company had decided to partner with the Federal Government in rebuilding the ravaged North Eastern region as part of the company s committment to rebuilding the region, saying:

Guillaume Roux, managing director/CEO of Lafarge Africa plc, who declared the firm s intention to invest in the region s economy during Lafarge Africa s courtesy visit to the Presidential Initiative for the North East (PINE), said that the cement company lost NGN2.5bn to the Boko Haram insurgency that ravaged the North Eastern part of the country between November 2014 and April 2015. “We have had some difficulties in the last few months and we estimate we have lost about NGN2.5bn during that period,"

While explaining that Ashaka Cement Plc, a subsidiary of Lafarge Africa Plc has been in the North East for over 40 years and has been a major player in the economic development of the region, he affirmed: “We are committed to development of the region. We have a programme of NGN100bn to invest in. This is why this partnership is very key.”

He said as private investors, the company can bring quick solution to help the north east rebuild quickly. He said the company will be partnering with the government in six key areas of entrepreneurship, health, skills acquisition, coal to power solution, education and technology.

UAECEMENT.COM - Jun,27,2015

Mozambique: Two new cement plants for Mozambique
Mozambique: According to Agence de Presse Africaine, two new cement plants are planned for Mozambique in the coming years.

Turkey s Limak Holding plans to invest US$150m in a 2Mt/yr capacity cement plant in the Maputo Port area of Mozambique. Limak chairperson Nihat Ozdemir said that his company would create least 500 jobs during the first phase of the plant." Limak is also interested in entering the Mozambican energy sector and later intends to assess the viability of investment in ports, railways and tourism," said Ozdemir. Mozambique s Industry and Trade minister Max Tonela pledged the Mozambican government s support for Limak.

Meanwhile, Portugal s Cimpor Cimentos group, via its subsidiary Cimentos de Moçambique, has announced plans to build a new integrated cement plant in Nacala, Nampula for an estimated investment of around U$250m. It already owns an integrated cement plant in Matola and also operates four grinding units.

UAECEMENT.COM - Jun,27,2015

Indonesia: Indonesian president caps cement prices during peak periods
Indonesia s president has signed a decree allowing the government to cap prices of cement, staple foods and other basic goods during peak periods, a presidential spokesman said.

"This regulation gives the authority to the government to set special prices ahead of, on, or after religious holidays or during periods of price volatility," Teten Masduki, presidential spokesman, told reporters.

The government is imposing extra measures to ensure prices for food and basic goods do not spike during Ramadan, usually Indonesia s biggest shopping season.

UAECEMENT.COM - Jun,24,2015

Egypt: EGAS dues from National Cement plant hit US$131m
According to the Middle East North Africa Financial Network, Egyptian Natural Gas Holding Company s (EGAS) dues from the government-owned National Cement plant have hit US$131m. EGAS has demanded that its money be paid back, but it remains undecided when it will receive the dues.

"The total dues from the industrial sector are now more than US$1.57bn, for its natural gas consumption and the delay in paying monthly bills," said EGAS chairman Khaled Abdel Badie in a statement to Daily News Egypt. EGAS dues from public sector plants amount to 75% of the total debt, because they are not committed to paying the monthly consumption bills, the chairman added.

According to Abdel Badie, EGAS will not be able to cut its gas supply from the National Cement plant because the plant is government-owned and is linked to a gas line that comes directly from the field. Abdel Badie said that dues are continuously rising and that EGAS gave the industrial plants a debt re-scheduling, but only a limited number of private-sector plants took part. New committees were also formed to resolve financial obstacles between public entities, however, nothing has been resolved yet.

UAECEMENT.COM - Jun,24,2015

Russia: Cement industry in Russia needs development strategy
EY produced a report on The cement industry of the Customs Union 2014 – 2015 and presented the results during the St Petersburg International Economic Forum. Evgeny Khrustalev from EY said that factors including the drive to improve efficiency and productivity, source alternative raw materials and fuel, for example, are important to trying to forecast the development of the sector.

Discussing the report, Mikhail Skorokhod, President of the Eurocement Group, said he was in agreement with its findings, including the need for a development strategy for the cement industry in Russia and the countries of the Customs Union. He said that the cement industry cannot develop successfully without looking at how to place capacity in regions where there are shortages and to manage production according to demand. Cement consumption in Russia is expected to be 78 million t this year and 93 million t by 2018. A well thought-out strategy is necessary to meet that demand.

UAECEMENT.COM - Jun,24,2015

Dangote to start construction of Nepal cement plant in three months
Nepal: Dangote Cement Nepal has said that it will start the construction of a plant in Makawanpur in three months, when all of the preparatory works, licensing and permissions are complete. D V G Edwin, executive director of Dangote Group, said that the company would also acquire a license for an additional mine by then.

Dangote Cement Nepal plans to start production within three years with an investment of US$550m. It will be Dangote s 15th cement plant and will have 6000t/day of production capacity.

Meanwhile, Dangote Group has provided US$1m of to Nepal s Disaster Relief Fund. The support was provided through Dangote Foundation, the corporate social responsibility arm of Dangote Group. Zouera Youssoufou, managing director of the foundation, handed over the cheque to prime minister Sushil Koirala on 17 June 2015. According to company officials, Aliko Dangote, chairman of Dangote Foundation, has also sent a message of sympathy to the government and assured the foundation that support in the rehabilitation of earthquake victims would be provided.

Global cement - Jun,20,2015

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Arab Union for Cement and Building Materials
 10th Middle East CemenTrade, 05-06 Oct, 2015, Dubai
 17th Asia CemenTrade Summit 20-21 Oct, 2015 - Bali


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