CemWeek Magazine, Issue 3

CemWeek CemWee MAGAZINE

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

MAY / JUNE / JULY 2011

White Cement

CemWee CemWee BMWeek

Global Market and Trade

Effective Sourcing

Close-up: Sinai White Cement

Cheap vs Smart

CW GROUP SURVEY:

The Cement Industry Looks At Sustainability News

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Analysis

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Market Coverage

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Interviews

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People Moves

EDITOR’S NOTE Letter from the publisher and editor

Up here. Down there.

Sideways over there.

That's the cement market in a nutshell.

All you need to succeed as a cement executive is a crystal ball that shows – as much as a decade in advance — where here, there and over there happen to be.

It would also be useful to know the future shape of government regulation in the markets you choose to enter.

Not to mention the timing and location of impending natural disasters and political upheaval.

Unfortunately, our magazine can't tell you any of those things.

What we believe we can do is provide you with a combination of researched facts, opinions, insights and statistics not found in other publications that will help you achieve a high batting average on the critical decisions your stakeholders are depending on you to make, if not every day then many times every year.

For example, this issue features an in-depth look at the relatively small, but important niche market of white cement. How is it viewed by the majors? By specialty players? You may not have a direct interest in white cement, but this article details the kinds of information you'll need to know and questions you'll need to ask when making any significant decisions on what to produce and where to sell it.

We also have an extensive conversation with Mr. Paulo Bossi, managing director of SWC Egypt, the major production subsidiary of Cementir / Aalborg, the world's leading producer of white cement. His insights into preparing for and executing major capital projects within the white cement sector will be instructive to anyone in the industry.

These days, how often have you heard the advice to cut costs and the recommendation to do it by outsourcing as much as you can? And how many horror stories have you heard about companies that got into huge trouble taking that conventional wisdom out the window? Read about “Cheap Sourcing” (on page 14) and consider yourself fairly warned.

And while we're on the topic of buzzwords you'll be interested in our reality check on sustainability in the cement industry. CW's Research Department reveals some surprising attitudes.

The CemWeek Magazine is published by the CW Group (CemWeek LLC) 848 N. Rainbow Blvd., Box #1658 Las Vegas, NV 89107, USA T: +1-702-430-1748 F: +1-928-832-4762 www.cwgrp.com www.cemweek.com

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CemWeek Magazine

Robert Madeira

cemweek publisher head of cw group research

Arthur Norwalk editor

Paolo Dela Rosa art director

Anthony Fitzgerald advertising

Diana Heeb Bivona pat ryan Claudia Stefanoiu John Thompson

& CemWeek CemWeek CemWeek BMWeek BMWeek BMWeek

contributing writers researchers

To subscribe or advertise, please contact us at T: +1-702-430-1748 F: +1-928-832-4762 E: sales@cwgrp.com

All this, plus revealing regional reports and key people on the move.

©2011 CemWeek LLC. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher.

We hope you'll get at least one "AHA!" moment reading this issue. And we'd be delighted if you'd let us know what it was.

Any submissions or contributions from readers shall be subject to and governed by CemWeek's Terms and Conditions, which are available upon request.

Robert Madeira

Arthur Norwalk

publisher and head of research

editor

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CONTENTS FEATURES 4 WHITE CEMENT

How this important niche plays out around the world

14 CHEAP SOURCING

The potential dangers of saving money up front

40 SUSTAINABILITY

What it means to the cement industry and how it's being implemented

13

VENEZUELA GUYANA

FRENCH GUIANA

SURINAME

COLOMBIA ECUADOR

PERU

South american facilities

8

sinai white cement

BRAZIL BOLIVIA

CHILE

28

PARAGUAY

ARGENTINA

URUGUAY

production unit

communication: more IS better

36

RDF in Africa

DEPARTMENTS Numbers in Brief

2 White Cement in Perspective

13 South America Comprehensive new research

From Our Industry Partner

Leaders Comment

MANAGEMENT TACTICS

Projects & People

8 Planning & Executing a Major Plant Expansion: Paulo Bossi of Sinai White Cement reveals how they made the big decisions 36 Implementing RDF in Africa: Insights from Vecoplan's Boris Sassenrath

Country/regional Snapshots 34 United Arab Emirates - Recovery prospects remain uncertain

28 Communication: more is better

TECHNOLOGY

32 Silo cleaning emphasizes economy and safety

Regional Reports

16 Americas 18 Europe, Middle East & Africa 22 South Asia 24 Asia Pacific

26 Building materials update

30 Notable projects 31 People on the move

Data Share Performance

38 Overview of stock performance for cement companies

Monthly FOB pricing for cement for key markets ■■ Subscription-based price and analysis tracking service ■■ Ad-hoc reports and market analysis CW regional cement price indices with monthly updates: ■■ Mediterranean basin ■■ North America & Caribbean ■■ East & Southeast Asia ■■ And other regions Contact us at sales@cwgrp.com to discuss this unique offering further.

Laun c h ing Sum mer o f 2011 We know the cement industry well. Let us guide you. For more information please contact us at inquiries@cwgrp.com or on +1-702-430-17 48 848 N. Rainbow Blvd., Box #1658, Las Vegas NV, 89107, USA

NUMBERS

IN BRIEF

White cement:

not for the faint of heart ollowing the white cement theme of this issue of the CemWeek Magazine, it prompts the question of how important the white cement sub-segment is within the larger global cement sector. Looking at two metrics (per capita and 2009 – 2010 change in global demand) for the global cement and white categories offers a snapshot. However, the metrics belie the real importance of the white segment that largely lacks any effective substitutes.

STANDING SHORT, BUT PROUD Global per capita consumption (kilos) 550

30 0

White

Grey

Source: CW Group Research

White cement saw a tough 2010 on an absolute basis as the market shrank. The contraction in global volumes compares starkly to overall global cement volumes that rose for the year. Part of the divergence can be explained by the larger reliance of white cement on developed markets in architectural and infrastructure applications that have seen building activity plummet (e.g., U.S. and Spain). Global gray cement has largely been buoyed by Chinese demand that has helped support growth, even as many developed markets have seen volumes slide.

TOUGH TRADING 2009 - 2010 YoY volume change (percent) 1.5

0

Grey

White

-1.5 Source: CW Group Research

2

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PLANT

MAINTENANCE Rope and remote access services throughout the cement plant High-capacity industrial vacuuming services, wet and dry Cleaning and painting of small and large structures Clean outs of cement bulk ship transport carriers High-altitude measurements and verification of plant infrastructure

 (+34) 917.231.502  (+34) 917.952.529

worldwide service

Calle La Resina 37 Nave 11 28021 Madrid, Spain

www.blancon.net

FEATURE

CW GROUP RESEARCH

White Cement:

Much More Than The Color Is Different Though it represents only a small percentage of the total world consumption, white cement remains an important market for the industry's major companies and specialized manufacturers as well. The CW Group Research — the leading cement industry analyst firm and CemWeek's parent company — has uncovered the many factors producers must be aware of to succeed.

he white cement market, though still less than one percent of the total cement market, occupies an important niche in the global cement sector. Emerging markets, led by China, have influenced the growth and driven demand for white cement. While the compound annual growth rate for white cement consumption was about half that of the overall cement sector between 2005 and 2010, projections suggest that the annual growth rate will accelerate.

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White cement is traded globally, but mostly within specific regional outlines and among subsidiaries. White cement is traded globally, but for most manufacturers, trade occurs within specific regional confines and among subsidiaries. Trade volumes have been relatively range-bound in the last five years, but are expected to rise substantially by 2015. Turkey holds the distinction of exporting the most white cement and the U.S. is still the largest importer, though volumes have deteriorated materially.

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In 2010 global utilization of white cement plants reached about 76 percent. Around 23 percent of global white cement production was located in China. Regionally, Europe remained a key white cement producer, despite the shuttering of several facilities in Italy, Spain, Poland and Romania.

White cement manufacturing is dominated by several global manufacturers, but their contributions to the global production total are noticeably different from the overall cement market with different names

FEATURE

appearing on the top 15 global league table, including multiple independent operations (e.g., Federal White and RAK White Cement). Aalborg Cement remains the market leader and other manufacturers with significant white cement operations include Holcim, Lafarge, Cemex, Italcementi and HeidelbergCement.

several key aspects. First, availability of raw materials of sufficient quality is a key driver in consumption since local production generates better availability and more marketing and awareness for the product, and thus ultimately demand. Second, cultural preferences play an important role in driving demand. Lastly, as expected, absolute market size naturally correlates Consumption positively to absolute demand, though the former two are much more notable drivers White cement consumption is different from of per capita consumption. the much more widely used gray cement in

Worldwide white cement consumption has increased by about 3 million tons in the aggregate over the last five years. On a regional basis, China is the largest white cement market. This unsurprising finding is perhaps more interesting in that the country only represents about 25 percent of the white cement market compared to over 55 percent of the total global cement market.

This is in part driven by China’s greater need for cement for basic infrastructure construction and mass-construction of dwellings that typically use CemWeek cheaper CW and Group BMWeek MAY/JUNE/JULY 2011

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FEATURE SHARE OF WHITE CEMENT TRADE (% of demand)

more widely available gray cement. After China, the Middle East is the second market since it has a strong preference for the white product as well as generally available production facilities.

Trade With limited production facilities globally as a result of less naturally occurring limestone deposits of sufficient quality, a much higher degree of global white cement demand is provided through trading than for grey cement. In 2010, about 30 percent of global white cement volumes were traded. The major exporter in terms of gross volumes was Turkey, with the U.S. as the leading importer. Based on the CW Group’s price indices, the trade segment globally reached an estimated US$580 million.

A much higher degree of global white cement demand is provided through trading than for grey cement

Pacific, excluding China, was the largest net importer while Europe, though home to one of the larger white cement manufacturing bases, was a large net importer. Some of the biggest trade flows in 2010 included Canada to the U.S. and Turkey to Syria.

Production Like the overall cement market, global manufacturers are dominant in white cement. The majority of these manufacturers are worldwide operators that also produce grey cement in far larger quantities. However, there is a degree of specialization as more independent / dedicated white cement manufacturers exist on a relative basis as well as at least one operator historically focused on white cement, Aalborg. Generally, however, white cement is a smaller segment within the manufacturers’ larger operations.

By leveraging extensive global networks, manufacturers have been able to distribute their products and effectively grow their export markets. For example, Cemex’s manufacturing facility in Buñol, Spain, produces a brand of cement called Dalmacijacement White Cement, which is sent to Croatia for packaging and distribution. This also illustrates that a material share of global trade is intracompany as product is moved from production centers to subsidiaries in other countries that market and distribute the product.

On a regional net basis, the Middle East was the biggest exporter and Africa, led by Egypt, Tunisia and Algeria, followed.

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2010 CONSUMPTION BY REGION

China Middle East Europe Other Asia & Pac North America South Asia Africa Latin America Caribbean

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Aalborg was the world’s leading white cement manufacturer in terms of capacity in 2010. The company controlled 2.25 million tons of production (assuming full year capacity of the Sinai White Cement upgrade). Lafarge and Cimsa held the second and third places, respectively.

White cement production lines are often co-located within gray plants, though many were standalone white cement production units. Given the higher requirements on limestone quality, as well as orders of magnitude lower demand than gray cement, production facilities were naturally fewer and more distributed geographically.

Due to high energy costs, waning demand and other factors, more white cement units have come offline than new ones added in the last few years. A few of the facilities that stopped producing white cement were converted to manufacturing gray cement to

FEATURE LEADING PRODUCERS (Share of capacity)

Aalborg Lafarge Cimsa Cemex Italcementi Holcim Federal White Grasim JK White Cement Heidelberg Cement Other

“cowboys” to participate in the trade.

Being a niche market with well-established marketing channels and intra-company trade, the white cement opportunity needs to be approached with more thoughtfulness and market understanding than other cementitious segments offering a lower margin for error. BMWeek CemWeek CW Group BMWeek BMWeek

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Coal Coal Coal

More information about the CW Group's recently published 97 page report - "Global white cement market and trade (2011 update)" —can be found at www.cwgrp.com/research, or by contacting the CW Group at inquiries@cwgrp.com

meet higher demand and sales volumes for notable new projects include Lafarge Morocco and Sinai White Cement, among the latter product. others.

For example, Lagan in Ireland has focused on gray cement in extremely tough trading Outlook conditions, and for almost the opposite reason, Brazilian production has been The outlook for white cement consumption focused more heavily on gray cement is encouraging albeit not as strong as for units. The world’s largest white cement the broader global cement market (though manufacturing facility was Aalborg / the latter is largely driven by Chinese Cementir’s newly expanded Sinai White infrastructure construction). The growth Cement plant in Egypt (see article, p 8). rate is expected to accelerate in the next five-year span, compared to the pace with The white cement production capacity has which the market expanded between 2005 seen relatively few greenfield additions in and 2010. recent years. Naturally the market is orders of magnitude smaller than the gray cement The white cement segment requires more market so it would follow that on an absolute skill to navigate than the much larger basis there would be fewer additions. Some gray segment and there is less room for GLOBAL WHITE CEMENT CONSUMPTION

MAY/JUNE/JULY 2011

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LEADERS

COMMENT

Making the Big Decisions on a Major Plant Expansion

Doubling Down on White Cement Sinai White Cement (member of the Aalborg Portland group and Cementir Holding) draws on worldwide resources to get it done

Sinai White Cement plant in Egypt 8

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LEADERS COMMENT

Sinai White Cement (SWC) – a subsidiary of Aalborg Portland and Cementir Holding - is situated in the northeastern part of Egypt's Sinai Peninsula, site of some of the purest raw material sources in the world. The company transforms the desert's purity into architectural aesthetics and durability. In response to growing local and worldwide demand for its specialty product, SWC recently doubled its production capacity. Mr. Paolo Bossi, managing director of SWC Egypt, talked with CemWeek about the challenges involved in planning and completing such a major expansion.

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LEADERS COMMENT CW: Tell us about the new project, what costly Chinese alternatives. The decision motivated it and what some of the major was in favor of the high quality advanced technology and procurement decisions FLSmidth technology. have been.

CW: Large projects such as this are PB: In 2006 the full 600,000 million tons/ never easy to get done right, on time year capacity of the Sinai White Cement and on budget. How did you as head of plant was committed, but we could see the company organize and manage the that growth in demand for our high quality initiative: products in both domestic and export markets would require a significant capacity PB: The first line of Sinai White Cement increase. While we had raised capacity from was successfully built in 1999 through a the initial 410,000 million tons/year in 2001 Turnkey Contract (TC) with FLSmidth and to the 600,000 million tons/year level with ASEC. In 2006 the preferred solution for the support from the Aalborg technical center, construction of the second line was again a it was clear that we needed more than TC-solution. Three TC bids were obtained, another incremental increase. Therefore at but all of them were over the expected budget the end of 2006 the Shareholders decided mainly due to the contractors’ contingencies to double the plant's capacity to 1.2 million for their risk in a TC. Based on this it was decided to pursue a self managed execution million tons/year of white cement. of the project: the main advantage of the Once that goal was set, it was left to the Self Managed Contract was the savings of Aalborg technical center to decide between approximately 10% compared to a Turnkey the advanced technology of European Contract. cement equipment producers and less In October 2008, when the second line entered in production, SWC became the main producer of white cement in the world; by the beginning of 2009 SWC had reached a production capacity of 1.2 million million tons/year of high quality white cement.

provided SWC with all the necessary information to develop a marketing plan identifying all potential markets expected to experience demand for white cement.

Three TC bids were obtained, but all of them were over the expected budget; based on this it was decided to pursue a self managed execution.

To assure that we are able to meet customer demands for product and packaging, we added staff to our sales department and deployed them to be near the market so CW: From a business perspective, how we can be fast and flexible in responding to have you changed sales and marketing market changes. efforts or other functional support areas to take full advantage of the new capacity? Along with the new capacity a new quality control system was put in place for all PB: This process actually began even production and logistic phases in and before approval of the expansion, with outside the factory, to the final client. By development of a Business Case to closing the loop of quality inside and outside determine which markets would potentially the factory we are confident that we are at absorb the new production. Aalborg the maximum level of customer satisfaction.

Portland Group's international marketing department CW: With a more specialized product in Copenhagen such as white cement, the geographic market tends to be wider than for regular gray cement. How are you looking at the domestic vs export volume balance? How are you effectively projecting sales into export markets?

PB: Gray cement is normally a commodity sold in a limited geographical area close to the factory. It is usually exported or moved for long distances only in case of high extra production capacity vs deficit and in case of big regional price differences.

Mr. Paolo Bossi, Managing Director 10

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LEADERS COMMENT

Egypt

White cement is a specialized product that requires a very high quality of raw material and is consequently produced in specific regions and distributed over a much wider area. In the specific case of Sinai White Cement, the local market is absorbing approximately 50% of the first line production where SWC has approximately a 60% market share. The second line therefore has been built to satisfy the growing export markets of Aalborg plus the new emerging markets. Cementir Holding and Aalborg Portland Group’s international marketing departments are continuously updating the market study to immediately identify new needs worldwide

CW: How have recent events in Egypt and the region affected the new unit operationally as well as from a business perspective?

PB: Generally we believe that the recent events in Egypt are a good step towards a better future, leading to an improved business environment. While other companies may see what has happened as “problematic” we look at it as an “opportunity for growth”, therefore we are now intensifying our efforts to catch any opportunity for new supplies in different markets.

The recent events have not significantly impacted the new unit operationally; like all

Sinai White Cement MAY/JUNE/JULY 2011

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LEADERS COMMENT Risks and Rewards of the Self-Managed Contract In deciding to go the route of a Self-Managed Contract, Sinai White Cement had to consider several disadvantages as compared with a Turnkey contract: ■■ Contracts had to be negotiated with numerous vendors (RHI, FLSmidth, ASA ESACO and Shotmet) rather than just one.

■■ Three qualified suppliers had to be identified for each purchase, elaborate bid documents sent to each, offers evaluated and purchase orders placed with those selected.

■■ On-site coordination among the different contractors was required so a delay by one would not result in a claim by another.

■■ Ongoing responsibility for progress and budget monitoring.

To reduce the above risks of a self-managed contract, SWF decided to select a project management company. RHI was chosen for this critical role based on their cement experience and knowledge of Egyptian contractors.

In December, 2006, the following main contracts were signed for the second production line: ■■ FLSmidth, for design and process equipment, drawings, inspection of local manufacturing, supervision of site erection and commissioning. 40 percent of project cost.

■■ RHI, for project management and civil design. 5 percent of project cost.

■■ ASEC-Automation, for electrical delivery, erection and commission. 11 percent of project cost.

■■ ESACO, for civil works, local fabrication and mechanical erection. 21 percent of project cost.

■■ Shotmet, for local fabrication and mechanical erection. 6 percent of project cost.

RHI was then requested to directly purchase all the remaining bulk materials for an overall value of 17% of the project cost. RHI was requested to prepare the bidding documents to be sent to minimum three suppliers for each material request and submit to Sinai White Cement for final approval after the technical tabulation was completed.

Production guarantees for the second line were achieved on time and within budget.

■■ Contract in Force – 29th November 2006 ■■ Raw Mill Production –11th October 2008 (22 months) ■■ Kiln Production –28th November 2008 (24 months) ■■ 85 % of guaranteed kiln production 28th December 2008 (25 months) Looking back on the project, Paolo Bossi concludes that “with a strong project management team it is possible to do a Self Managed project and obtain the savings compared to a Turnkey project. However, it is very important to be critical in setting up prequalification for contractors and suppliers. And you need to be aware that application of delay penalties is not a significant tool in this arrangement.”

SWC sees future applications in ready-mixed, drymixed products and artificial stones

new export countries due to the weakening of demand in some traditional export countries of the region like Syria, Libya and Yemen.

We believe that despite the number of surrounding markets that are temporarily closed (e.g., Libya) or slowed down (e.g., Syria) due to political unrest, once this situation regains stability the exports to CW:What does the future hold for the these markets will be restored or even white cement market in Egypt and the increased due to the strong ties with our broader region? distribution network.

PB: Looking at the history of the white cement mature markets, we do expect a significant increase in consumption in the emerging markets like Egypt and the surrounding region. In particular, we noticed that the market in Egypt has well survived the worldwide economic crisis From a business prospective, the Egyptian of 2008/2009 and will continue to grow market has not been significantly affected positively in the future. by the recent events, butBMWeek SWC isCemWeek looking for CW Group Coal Week the other producers in the country, we had some difficulties immediately after January 25th, mainly due to the strikes affecting our suppliers, transporters, clients and the closure of some banks.

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At the same time, SWC is not targeting only the markets in the region, but a much wider area, including North and South America, Africa, Europe, Asia and Australia.

The future growth of white cement consumption is predicated on development of new applications. SWC sees potential growing future applications in ready-mixed, dry mixed products and artificial stones. BMWeek BMWeek BMWeek

Cem Cem Cem

SOUTH AMERICA: COUNTRY SNAPSHOT

Cement Facilities T of T

SOUTH AMERICA

Cement capacity (mm tons) 160

152

120

Eastern Southern Cone

80

Andean

40 0

Nameplate Capacity

VENEZUELA GUYANA

FRENCH GUIANA

SURINAME

COLOMBIA ECUADOR

PERU

BRAZIL BOLIVIA

CHILE

PARAGUAY

ARGENTINA

URUGUAY

production unit

A more detailed poster that can be ordered from the CW Group shows unit type and index with details for all units

SOUTH AMERICA CEMENT PRODUCTION: BRAZIL 51% - ALL OTHERS COMBINED 49% .

The CW Group’s detailed, unit-by-unit analysis of cement production facilities in South America shows that the total nameplate cement manufacturing capacity reached over 150 million tons per year (mtpy) in 2010. Across the continent, there were about 160 cement production facilities, about a quarter of which were grinding units. Facilities are distributed across three sub-regions: Andean (36 percent of capacity on the continent), Eastern (51 percent) and the Southern Cone (13 percent).

The corporate leader in terms of manufacturing capacity was Brazil’s Votorantim Cimentos, which directly or indirectly influenced over 27 percent of the continent's manufacturing capacity. Global cement majors Holcim (second largest in terms of capacity), Lafarge (fifth largest) and Cemex (seventh largest) controlled about 24

percent in total of the installed nameplate largely found in the Andean part of the capacity. Camargo Correa occupied the continent with the slag cement units in the second position in terms of capacity. Other Eastern part. BMWeek CemWeek CW Group Coal Week CemWeek CW Group Coal Week BMWeek leading cement manufacturers in the region CemWeek BMWeek CW Group Coal Week include Cimpor and Cimentos Nassau.

Brazil is the single largest cement producing country on the continent, representing over 50 percent of the total output potential.

Colombia shares the second position in terms of manufacturing units with Argentina; both have 17 units, but Colombia has somewhat more production capacity.

The age and nature of the cement plant infrastructure varies across sub-regions, with average facility capacity ranging from 0.90 mtpy in the Southern Cone to 0.98 mtpy in the Eastern region. On a production line basis the Eastern region has the largest cement plants. White cement units are

The research is a first in that for the first time a single source details all the integrated gray, integrated white, grinding stations and slag cement plants for all countries on the continent, providing details on principal cement type produced, plant capacity, number of production lines, ownership structure, and affiliation with global groups. The report and poster are available directly from CW Group, by contacting us at sales@ cwgrp.com or by visiting our website at www.cwgrp.com/research MAY/JUNE/JULY 2011

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TOOLS

& ANALYSIS

Cutting costs, not corners

In the age of cost pressures, remember to reject “cheap sourcing”

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TOOLS & ANALYSIS or any firm, control of input costs, production efficiency and selling at a reasonable price are key elements to profitability. For the capital intensive cement industry in particular, it becomes critical to control any variable costs and ensure efficient use of invested capital. Since the advent of the global recession, the focus on controlling costs has risen to the fore in many parts of the world. Huge cost cutting programs are found across most global construction material manufacturers.

that too much economizing can become very expensive. For instance, to guard against quality issues and maintain project times lines, specialized on-site quality and project management consultants may need to be hired to verify everything from calculations, drawings and in-plant production schedules. Though these additional costs may not show up on the headline capital good procurement, they will certainly add to the overall project cost and introduce additional risk elements. And this of course assumes that the final quality is not compromised and the equipment While the ability to control and lower costs lifespan and maintenance costs do not rise – is paramount, it's important to balance the resulting in ultimately high sourcing costs. temptation of implementing tactical input cost reducing programs at the expense of less immediate programs to control input costs across their lifecycle. “Cheapsourcing” (finding the lowest cost bidder) may produce the biggest short-term cost reductions but carry the risk of longer-term inefficiencies and higher costs. In the age of relentless pursuit of lower costs, managers are well advised to take a step back and keep their eyes on the medium and long term as well.

“Cheap sourcing” is just a label for the age old process of minimizing production costs at any cost. The argument is that the reduced cost of such inputs will lead to a significant competitive advantage.

Are you seeking the cheapest price today or a structured, mutually supportive, supply chain for tomorrow?

On this basis it is useful to pose the question: is cheap always desirable? Or perhaps more relevantly, why is cheap sourcing different from taking a more strategic long-term Equally, how much is it worth to pay approach to the purchase of goods and extra to a supplier who has an effective services? disaster recovery plan in place? In effect, the consequence of looking for the lowest In effect it depends on why a given supplier cost source of supply may be to increase, may be cheaper than its rivals. For example, in various ways, either the longer-term cost if a producer's internal production and of production or the risk of interruption quality control processes are less robust, this of supply. In both respects, a question that might lead to a greater risk of being supplied can be usefully posed is: are you seeking lower-quality goods, leading to faster devaluation of expensive capital equipment, or higher maintenance costs over the life cycle.

the cheapest price today or a structured, mutually supportive, supply chain for tomorrow?

On the support services side, if you decide to outsource standardized process support operations such as ICT, HR or transport and logistics, how can you be sure that the chosen partner will deliver? The logic of ‘cheap sourcing’ and a desire to reduce costs may lead to higher costs later on for these types of functions as well. If either the basic service is inflexible or the supplier prone to delivery problems, short term cost reduction may lead to longer term operational costs.

More generally, the trade-off between addressing the needs of an individual firm and of the wider economy is as old, and complex, as capitalism itself. We all want to minimize costs (materials and wages), but some of the money that is paid out to meet those costs is used to buy either the goods we produce or that are produced, in turn, by firms we sell to. So if we significantly reduce those outgoings, the consequence may be less demand for our products. In times of economic expansion this trade-off is usually easy to manage; in times of recession managing the consequences become more stark. In effect, looking to pay less than a reasonable price may result in short term savings and longer term problems in ensuring sufficient demand.

Of course, the alternative is to engage in a long term strategic purchasing relationship with the best suppliers of critical goods and services you can find. This may lead to higher short term costs than a search for the cheapest supplier at the moment, but over the long term it will lead to lower costs and higher operating efficiencies. The challenge is naturally how to think about this trade-off in an environment where financial pressures tend to get the upper hand. BMWeek CemWeek BMWeek BMWeek

Sourcing major cement plant equipment in low-cost countries brings with it immediate cash savings. The positive cost savings impact is noted on the bottom line as well as headline. However, considering the capital project more broadly, it becomes clear MAY/JUNE/JULY 2011

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REGIONAL REPORT:

NORTH AMERICA Colombia’s Cementos Argos is confident housing and road construction projects in the U.S. and Colombia will support its expansion efforts. Expecting the U.S. market to recover between 2014 and 2015, the company has made some acquisitions.

In May, it purchased U.S. $760 million worth of Lafarge’s U.S. assets including two cement plants in Harleyville, South Carolina, and Roberta, Alabama, five terminals and an Alabama seaport. The deal, which is awaiting approval by federal regulators, will give Argos 3.2 million tons of U.S. cement capacity. Argos also acquired a 9.33 percent stake in Ceratech, a company that has developed a technology to produce cement with zero CO2 emissions.

Drake Cement, a subsidiary of Peruvianbased Cementos Lima, is close to expanding its U.S. capacity and is poised to move forward in what is still a tough operating environment. Its U.S. $300 million plant in northern Arizona, the first new cement facility to open in Arizona in the last 50 years, is slated to produce 660,000 tons a year.

April, effectively cutting emissions by 90 percent in one month.

U.S. INDUSTRY CUTS ENERGY USE 13 PERCENT The Portland Cement Association filed a challenge to the EPA over the NESHAP Over a ten-year period, cement rule, which establishes new, very stringent manufacturers in the U.S. have successfully standards regarding particulate matter, reduced the industry’s energy intensity hydrochloric acid, total hydrocarbons, by 13 percent, according to a study and mercury. Compliance is set to begin commissioned by the EPA. This is welcome September 9, 2013. While the EPA agreed news considering that a one percent to reconsider a number of technical issues improvement equates to a reduction of in the NESHAP, it declined to revisit issues almost 1.5 metric tons of energy related the EPA believes have the greatest impact on carbon. In anticipation of tougher EPA the industry. emissions standards that will limit mercury emissions to 55 pounds per 1 million tons Starting August 1, 2011, Holcim will hike of clinker by 2013, Lehigh installed a carbon its prices to offset increasing energy and injection system at its BMWeek California plant CW inGroupoperating costs, and in anticipation of new Coal Week CemWeek 16

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environmental regulations. Meanwhile, Titan Cement remained hopeful that the PCA’s assessment of the industry’s growth of cement consumption of 2 percent in 2011, 8.5 percent in 2012, and 18.5 percent in 2013 were accurate.

Cement producers in Mexico were optimistic that sales would continue improving throughout this year and into next thanks in part to higher public sector spending generated by the upcoming 2012 elections. In the interim, Cemex, Cruz Azul, and Montezuma instituted price increases ranging from one to four percent.

The Buzzi Unicem-Cementos Molins Mexican JV Cementos Moctezuma had

Cemex moved forward with plans to reorganize operations, announcing a six percent cut to its global workforce. The company hoped the move to downsize would help to generate $400 million in additional cash flow by the end of 2012. Shareholders also received the news that while net sales were up 11 percent in the first quarter, the company had a $276 million loss. Cemex is expected to explore ways to raise additional funds to pay $8.3 million in debts in 2014, including selling more bonds, issuing more shares, and/or going back to lenders to request an extension on the maturities of its existing loans.

THE CARIBBEAN REGION Relations between Jamaica and the Dominican Republic (DR) went through a tense time after a quality dispute involving Caribbean Cement (CCC) quickly escalated.

ADOCEM, the Domincan Republic’s cement manufacturers’ association that includes Cemex, alleged that CCC was a low-grade product. These claims were made after CCC passed quality testing by both Jamaican and DR laboratories. ADOCEM’s outspoken efforts resulted in seizure of a US$250,000 CCC shipment in the DR. Jamaica warned it would retaliate if the shipment was not released. When the DR failed to act, Jamaica imposed its own license on all imported cement. Independent U.S. lab, Construction Technology Laboratories, tested CCC and found it to meet all international quality standards. By late May, the stand-off appeared to be winding down as DR authorities began offloading the detained shipment and the complaint was withdrawn.

While the news that its shipment was headed for the DR market was good, word of CCC hitting a particular milestone was not. After reporting one of its worst years of operation,

REGIONAL REPORT: AMERICAS

expansion on its mind when it opened a third cement plant in Apazapan in the state of Veracruz. The new US$260 million unit will supply the central and southern states of Mexico producing up to 3,300 tons of clinker a day. In contrast, it looks like divestiture, and not expansion is on the horizon for Cementos Cruz Azul. Reports suggested owners were putting out feelers for prospective buyers to sell the group’s eastern plants in Aguascalientes and Puebla.

Caribbean Cement acknowledged its operating losses – attributed to a lack of working capital and higher production costs -- had exceeded the J $2 billion mark. CCC parent, Trinidad Cement also reported a significant after tax loss of more than $80 million for 2010. Weak demand led to sales volumes that were down 16 percent. The company is however hopeful that recovery is around the corner.

Reflecting the continued strong demand for cement in Brazil, driven in part by infrastructure spending, Votorantim announced an 11 percent increase in total revenues, and a one percent increase in Brazilian cement sales volume for the first quarter. Votorantim continues to invest heavily in Brazil, with eight of its eleven new cement plants being built there.

Additionally, Votorantim is expanding complimentary businesses lines such as mortar. The company has 13 mortar plants CENTRAL & SOUTH AMERICA and will shortly inaugurate a new plant in In El Salvador, Holcim announced that a Limeira, the first of a series to increase the price hike due to rising oil costs was likely. productive capacity in this segment.

The company raised its prices in Colombia as well, blaming higher transportation and Manufacturers also pushed forward with fuel costs for its nearly 15 percent hike in efforts to expand capacity. Cimpor plans to bulk cement prices. Cemex Colombia and invest EUR 190 million to build a 1.2 million Cementos Argos also raised prices. Despite ton greenfield plant in the Parana state the price hike, cement manufacturers starting in 2012, slated to start production were optimistic the Colombian market in 2014. M. Dias Branco is interested in would grow ten percent in 2011, citing an building three cement units in Rio Grande do Norte, and if the national power producer improving construction sector. can ensure electricity to a proposed $400 Paraguay is in negotiations with Chile to million cement plant project in the Parintin import more cement. Daily demand has region, that project will move forward. reached 80,000 bags and National Cement Industry (INC) is only able to produce CACMARGO REBRANDS AS INTERCEMENT 40,000 bags a day. INC’s production may further suffer if it experiences any more In a move to establish itself as a global brand, fuel supply shortages. Between November Camargo Correa announced its rebranding.

2008 and April 2011, the company had 22 The company’s cement operations will stoppages in its clinker kiln, 18 of which now be known as InterCement. Camargo/ Intercement operates plants in Brazil, were from a lack of fuel oil. maintains facilities in Angola and Paraguay, In Peru, Cementos Lima’s expansion project and owns approximately 33 percent of the at Atocongco plant is expected to finish capital in Cimpor. ahead of schedule. Originally slated for a 2013 finish, the project will wrap up in Cement maker Nassau received bad news 2012. Once up and running, the facility will when it found out Brazilian authorities provide Cementos Lima with an installed denied its appeal to overturn a US $1.5 capacity of 5.5 million tons of cement, and million fine levied by the government for 4.8 million tons of clinker. Looking to also its late renewal of the environmental license expand its Peruvian market share, Cemex for the Itapuí unit. The sizable fine had is searching for limestone deposits large forced the company to suspend operations. enough to justify the building of a US $200 Itapui argued it had filed the renewal million cement plant with a capacity of request, but that the State Superintendent one million tons. Currently, Cemex ships of Environment’s (Semace) office had not 600,000 tons annually to Peru. The hunt may answered. Authorities did not accept its prove challenging however, as limestone claims, and ordered the fine be paid. is scarce throughout Peru and the Andean region. Cemex also took time to comment Taking advantage of the continuing strong on COMACSA’s allegations of white cement demand for cement in Brazil, Ecuador dumping, calling the accusations nothing prepared to export cement starting in July. more than harassment and a ploy to elicit a Direct water routes would be utilized to buyout proposal from Cemex.

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REGIONAL REPORT: CIS Renovation and expansion plans were in the works for the Ukraine. New cement units including a mini-plant in Kerch and a white cement plant in the Kharkiv region were announced. Ukrcement is expected to start production on the white cement plant in the second half of 2011 and finish in 2015.

HeidelbergCement raised its Ukraine cement production target by 15 percent for the year. The company, poised to grab 25 percent of market share, continued to invest in its operations. To date, it has converted furnaces to coal, replaced filters, and will transfer one furnace to the dry method this year, and another next year.

EXPANSIONS DELAYED IN BELARUS; ACCELERATED IN AZERBAIJAN

Russia With the 2014 Olympics on the horizon, construction efforts continued to ramp up spurring cement production throughout the region. Analysts rated Russian cement manufacturers as undervalued citing improved profitability and the restoration of production capacity. Russia’s cement market increased 14 percent in 2010, and was projected to reach a production capacity of 60 million tons in 2012.

Mordovcement and Nevyanskiy Cement outpaced set targets in the first quarter of 2011. Mordovcement surpassed its target by 15 percent in the first four months, and planned to produce 4.6 million tons this year, increasing to 5.8 million tons in 2012.

Nevyanskiy Cement exceeded its targeted output by 6.3 percent in the first five months.

MAJOR EXPANSIONS THROUGHOUT THE COUNTRY

Lafarge moved forward with plans to build a new plant in the Rostov-on-Don region, even after its Russian subsidiaries posted a RUB 69.9 million loss in 2010, while Eurocement, Russia’s largest cement manufacturer considered an IPO offering for the late 2011/early 2012.

One company shelving previous expansion plans in Russia was Dyckerhoff. The announcement came amid news of the company’s rising revenues and higher margins due to price increases. The company will however move forward with two new plants in the Ukraine totaling €5 million.

Sberbank also abandoned previous plans to acquire 51 percent of Iskitimcement.

Despite gaining government approval to buy the shares, and intentions to open an RUB 8.5 million credit line after acquisition, the bank declined to move forward claiming it knew nothing about the cement business and did not want to become involved.

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Cement production in Azerbaijan jumped 24 percent in the first four months of 2011. Holcim’s Gradagh Cement, hoping to further spur the country’s economic recovery announced plans to reduce its prices 25 percent. Gradagh, which produces 50 percent of the country’s cement, and has annual production capacities of 1 to 1.4 million tons of cement is planning to build a new kiln and increase capacity later this year.

Caspit Cement, HeidelbergCement’s operation in Kazakhstan is planning to move into Western Kazakhstan with a Greenfield, integrated cement facility in Shetpe. The IFC will review the investment opportunity in July. In Tajikistan, Pakistani officials offered to fund the construction of a new joint-venture cement plant.

Rising input costs led to cement price increasing throughout the region. Higher freight costs for cement in bulk climbed an average of 12 to 16 percent, spurring manufacturers to raise prices in May. Prices rose another 8 to 10 percent in June. The two-year decline in cement prices – 31 Europe percent in 2009 and 4 percent in 2010 – appears to have ended.

Demand for cement, particularly in Western Europe remained weak, as the industry CW Group Coal Week

Expansion efforts by several Russian cement manufacturers dominated the news. New plants were in the works for Uglegorsk Cement, Lafarge, South Korea Natural Cement Corp, and Ulyanovskshifer.

New production lines or upgrades were undertaken at Proletari, Novorossiysk, and Shchurovsky Cement.

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Belarus may need to depend upon cement imports a while longer as the expansion of its domestic production capacity is delayed.

Belarus officials pointed the finger at their Chinese partners, CITIC. The US$1.3 billion project, which includes three new production lines providing an additional 5.5 million tons of capacity, is stalled by poor preparation of project documentation.

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Large manufacturers expressed concern over energy and materials costs rising, just as cement sales began to recover from an improving European residential construction market. Holcim, Dyckerhoff, Cementos Portland, and Cementos Molin reported either first quarter losses and/or lower profits. In contrast, Cimpor and Vicat expressed confidence that strong export sales and international performance would help insulate from poor sales at home.

Despite news that French cement consumption was up 20 percent in the first quarter of 2011, Lafarge announced it was shutting down its plants in Burgundy and Yonne in 2012 due to over capacity. Holcim also announced the shuttering of its La Hulpe facility in Belgium because of stiff competition and a tight market.

While the UK’s FCC, a subsidiary of Spanish-based Cementos Portland confirmed it was initiating talks to sell its U.S. cement business, Giant Cement, in order to reduce debt, Lafarge was denying reports it intended to sell some of its cement plants, quarries, and ready-mix concrete mills from its joint venture with the UK’s Anglo America. Companhia Siderwigica Nacional completed its acquisition of Alfonso Gallardo for €1 billion, and Lafarge reported its purchase of a 35 percent stake in Elite Cements.

Africa The effects of Egypt’s civil unrest linger, with Egyptian cement sales falling 30 to 50 percent in May. Poor demand also led to a 50 percent drop in imports. Labor disputes dominated with workers at Torah Cement and Helwan Cement asking the government to renationalize the factories to ensure job security. While the government had yet to respond to the request, it did step into the labor dispute at Alexandria Cement where production had been shut down since May 31. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek

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notable Builds/Expansions Company (Location)

Plant

Cost

Mezhtopenergobank (Russia)

Voronezh region

New plant with annual capacity of 1 million tons; to finish in 4 years. Cost: RUB 12 billion

Vnesheconombank (Russia)

Kaluga Cement Plant/ Kaluga region

HSBC to finance EUR 160 million contract with FLSmidth to build a new 3.5 million cement plant. Cost: EUR 651.6 million

Uglegorsk Cement (Russia)

Rostov region

New plant will increase production five-fold to 1 million tons.

Novoroscement (Russia)

Proletariy plant

Upgrade existing production line from present capacity of 1,740 t/d to 6,000 t/d. FLSmidth to supply equipment and supervise.

Cost: EUR 55 million

Verkhnebakansky (Russia)

Novorossiysk

A new cement production line to be completed in first quarter 2011, raising capacity to 2.3 million tons, is underway.

Construction to commence in second quarter on a new captive 44 MW power plant. Cost: RUB 1 billion for power plant

Lafarge (Russia)

Rostov-on-Don region

A new 2 million ton plant will be completed in two phases, finishing in 2015. Cost EUR 250 million.

South Korea Natural Cement Corporation (Russia)

Ugranskom area

Agreement signed to build a one million ton unit, which will include a power plant.

Ulyanovskshifer (Russia)

Ulyvanovsk region

New 1.2 million ton plant to include a 26W power plant. Cost RUB 13.7 billion

Ukrcement (Ukraine)

Kharkiv region

New white cement plant with a 340,000-ton capacity; completed by 2015

Volyn Cement (Ukraine)

Installation of a separator for the plant’s two cement mills; construction started in Spring 2011 and expected to finish in April 2012.

Cost: EUR 3 million

Yug Cement (Ukraine)

Renovation of an electrostatic furnace at the plant will be completed later this year.

Cost: EUR 2 million

Lide Ta Te Luxin (Kazakhstan)

Kazakhstan

The Russian Federation and China Building Materials Engineering Group signed a contract for the construction of a new 5,000-tpd cement production line.

Tajikistan

Village of "Kharangon", Varzob district

A new 72,000-ton mini-plant that uses coal went online at the end of May.

Kercim Cements (France)

Montoir-de-Bretagne (LoireAtlantique)

New clinker grinding unit will have a 600,000-ton capacity; to be completed in 3 years. Cost: EUR 50 million

Lafarge-Strabag (Hungary)

Királyegyháza in SW Hungary

The 750,000-ton plant comes online in June, and is a JV between Lafarge and Strabag. Cost: EUR 270 million

Cementos Blancos de Aragon (CBA) (Spain)

Azuara

New plant to be built in two phases with the expectation the facility will be fully operational by 2013. Cost: EUR 170 million

Joint Venture (Iraq)

Diwaniya province

Iraqi government has approved an investment license for the establishment of a cement unit in partnership with an Italian company. Investment of US $692 million.

Lafarge (Morocco)

Bouskoura Plant

New white cement plant with 136,000-ton capacity scheduled to come online at the end of May 2011. Production will start with 20,000 tons. Cost: DH 52 million

Kassala Plant (Sudan)

Maman Bhmhkourib region

Government approved the construction of what will be the largest cement factory in the region. Cost: US $200 million

Sino-Zimbabwe (Zimbabwe)

Nyanda region

A Chinese firm has signed a deal with the government for a multi-million-dollar cement-producing plant. Subject to government’s ability to supply water to the plant.

Dangote (Zambia)

Masaiti District

New 1.5 million ton facility, which is expected to be constructed within three years. Cost: US $400 million

Nouvelle Cimenterie Niger-Diamond (Niger) Edo Cement Plant BUA Group (Nigeria)

REGIONAL REPORT: EUROPE, MIDDLE EAST AND AFRICA

struggled. France showed signs of recovery, but the markets in Austria, Spain, and Greece moved downward. In Spain, cement consumption fell by 17.5 percent in April, the worst in 22 years.

Government gives approval for new 540,000 ton facility. Cost: CFA franc 39 billion Okpella, Edo region

Construction started on new plant with an installed capacity of 2.5 million tons; projected finish date: August 2013. Cost: US $500 million MAY/JUNE/JULY 2011

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REGIONAL REPORT: EUROPE, MIDDLE EAST AND AFRICA

pending operation of Dangote’s newest plant set to begin operation at the end of 2011. With domestic consumption already at 2.4 million tons, oversupply is already a problem. Dangote’s additional 2.5 million ton capacity will likely have manufacturers scrambling to build its export market.

Middle East Over the last five years, Iran has managed to more than double its capacity, with volume increasing from 33 million to 72 million tons. With cement exports hitting 16 million tons in 2010, Turkey is also contemplating a further capacity increase from its current 65 million tons.

As Ciments Francais hinted at selling some of its 51 percent stake in Turkey’s Afyon Cimento, Raysut Cement purchased a 50 The government’s announcement it would undertaken by Chinese firms. Africa Great percent stake in Oman Portuguese Cement likely raise natural gas supply prices to Wall Cement, China International Fund, expanding into the production of ready-mix cement plants by 55 percent was met and GS Cimento will build three new units and pre-cast concrete, blocks and pavers. with opposition. Cement manufacturers with a combined capacity of 1.85 million predicted the move would drive up tons.

In Jordan, workers threaten to strike at the Arab Company for White Cement production costs by 15 percent, and result in higher prices.

Cement shortages were experienced in demanding better working conditions. The Cameroon and Togo. In the northern region government was called upon to mediate.

North Sinai resumed operations after of Cameroon, the shortages led to a rise in Meanwhile, Lafarge’s application to the winning its court battle to reclaim its license speculation and cement prices. Cement Jordanian government for protection and Misr Beni Suef contemplated exporting prices were also on the rise in Ghana while against imported clinker was denied on a again to neighboring countries. Chemical in Nigeria cement prices fell 21 percent technicality, with the government suggesting Industries was also tossing around the idea on the heels of a government directive to a recent study found no causal relationship of a public float for as much as 30 percent lower prices. Namibian consumers wanted of damage caused by imported clinker. of its 95 percent share of National Cement. to know why prices continued to rise after the opening of its own local plant at Otavia. A lack of fuel resulted in the temporary SALES DECLINE IN S. AFRICA; MOZAMBIQUE Grumblings persisted despite assurances shuttering of three kilns at Yanbu Cement ADDS CAPACITY from market leader Ohorongo Cement and a loss of 12.7 million riyals. The supply prices were actually a bit lower. of fuel was a prominent point of discussion In South Africa, Pretoria Portland Cement in Saudi Arabia with the cement industry watched domestic sales decline 38 percent, Angola plans to double production capacity requesting an increase and oil company prompting it to look externally to boost sales. to 7.5 million tons by 2013 and is doing so Aramco insisting manufacturers had more The expected increase in domestic cement by renovating old plants and building new than an adequate supply. Aramco called prices in July because of higher input costs ones. Doing its part, the local industrial on the government to halt the issuance of is not likely to help. Yet, AfriSam announced association proposed an import tax to any further cement producer licenses and plans to build a new 2.2 billion rand cement protect local producers. Meanwhile, in expansion plans, arguing the industry was unit on the Cape West Coast. The first phase the Democratic Republic of the Congo, not even utilizing its existing capacity. The of the project will include the expansion the government was looking to sell its government was considering the request. of the limestone quarry. Construction of controlling stake in National Cement a cement milling and packaging plant will Company (CINAT).

The government was also questioning Saudi follow. Meanwhile, Pakistan’s Lucky Cement cement manufacturers as to why cement was banned from importing to South Africa Nigerian-based Dangote reported prices were rising when there was an pending an investigation into its quality higher first quarter profits, as it expands estimated surplus of 9 million tons. Cement throughout Africa. Not everyone however is firms denied claims of a supply crunch and standards. pleased with their expansion plans. Cement rising prices citing artificial influencers, Mozambique plans to triple its capacity manufacturers Sococim and Ciments du i.e. unregulated trade, and not a spike in with several new construction projects Sahel in Senegal are not welcoming the demand, as driving prices upward. BMWeek CW Group Coal Week CemWeek BMWeek 20

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REGIONAL REPORT: million tons when it completes production on three new lines in Shanxi province.

Meanwhile, China’s government announced ongoing efforts to cut obsolete capacity in 18 industries, including cement. As much as 133.55 million tons of backward cement capacity is to be eliminated this year.

Other Asia-Pac While Taiwanese cement manufacturers are looking to take advantage of the growing Chinese market and several companies are profiting from the higher prices of cement in China, Taiwan is less than thrilled with the amount of cheap Chinese cement imports coming into the country. At the end of May, the Taiwanese government slapped a 95.29 percent anti-dumping levy on cement products from China. The tariff will remain in effect until September 30, 2011.

China

eager to acquire new plants in China to reach its 55-million ton capacity target. In addition to its purchase of Gagan Cement in March, 2011, the company is currently searching for another cement company in southern China for its portfolio. It is also launching a new production facility in Guizhou province, with construction on the two production line facility set to finish at MALAYSIA DEMAND EDGES CLOSER TO the end of the year.

CAPACITY

Demand for cement in China climbed 19 percent fueled in part by a steady investment in real estate. Demand, however, was not the only item on the rise. A limited supply of power available in the summer months restricted cement production in China, causing huge drops in inventory levels. Rising production costs, including coal prices, contributed to the increase in cement prices throughout the country. Holcim is also looking for opportunities Prices rose 13.6 percent, and were expected to expand in China via acquisitions, but is proceeding cautiously. The company to climb more. acknowledges it sees several challenges China’s double-digit growth has attracted including hiring and managing margins, investment from outside the country , but notes Holcim is one of the companies particularly from Taiwan. Taiwanese cement approved to take part in consolidation manufacturers including Asia Cement efforts in China.

Corporation, Goldsun Construction & Development Corporation and Chien Kuo Anhui Conch Cement, which acquired Group signaled their intent to expand Yunnan Zhuangxiang Cement, is building capacity as well. Looking to expand its further into the Chinese market. capacity to 300 million tons over the next five years, the company is building a new ACQUISITIONS, EXPANSIONS, INVESTMENT 2,000-tpd production line as part of that Taiwan Cement, which acquired Prosperity plan. China Resources Cement Holding willCoal also increase its annual capacity by 3.47 International HoldingsBMWeek last year, is also CW Group Week CemWeek 22

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home, top Taiwanese cement manufacturers were gearing up for a new round of possible capacity expansion projects in anticipation of higher infrastructure spending later this year. The increase in public construction has manufacturers looking to boost capacity and purchase land. Goldsun indicated it wants to set up two or three new plants in central Taiwan, and Universal Cement’s new plant in Changhua County will be operational sometime in July or August. The company is also searching for a new plant site in the Taipei area.

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Domestic consumption in Malaysia was expected to grow 2 million tons by 2012 to reach 18 million tons. With no existing plans by manufacturers to expand, the existing capacity would remain at 20 million tons. The current overcapacity of 4 million tons would then reduce to 2 million tons by 2012. Malaysia’s cement market was good to Lafarge and YTL Cement who both posted higher pre-tax profits.

Vietnam exported 1.6 million tons of clinker and 200,000 tons of cement in the first five months of 2011. With public infrastructure spending projected to be lower, clinker and cement exports may increase further. Thang Long Cement is one company looking

Reconstruction efforts in Japan are likely to benefit the country's cement industry, which has declined in recent years. In an effort to further reduce costs and assist in cleanup efforts, Taiheyo Cement’s Andou Kunihiro plant announced in May it would start incinerating factory debris for its production. The plant expects to operate 24 hours a day, burning 5 tons per hour.

At present, debris in the surrounding area is piled as high as 5 meters. Taiheyo’s Oohunato plant will begin incinerating 300 tons of debris a day as well starting in October.

INDONESIA ENCOURAGES NEW CAPACITY Indonesian consumption hit 40 million tons in 2010, spurring expansion efforts by several manufacturers. Cement capacity was projected to increase 4 percent in 2011 with Semen Gresik, Semen Tonasa and Holcim Indonesia undertaking major expansion plans. The government has encouraged further competition and expansion efforts, but requested that manufacturers consider building outside of Java in order to enable cement supplies to be distributed more efficiently and to keep cement prices in check.

Semen Gresik reported its long-term plans included expanding to other parts of Indonesia to reduce reliance on its Javabased Sumatra and Sulawesi facilities.

However, the company’s short-term plans include building one more production unit in central Java starting later this year.

Continued from page 17: Americas

Lafarge, which started initial production at its $300 million factory in Lhok Nga in March 2011, sought government approval for a new facility in East Java. It also plans to build another plant in Langkat Regency in North Sumatra.

BOLIVIA PROJECTS SUPPLY DEFICIT

Finally, Thailand-based Siam Cement, a subsidiary of SCG Building Materials Company, entered into agreements to purchase controlling stakes in Keramika Indonesia Assosiasi (93.47%) and PT Kokoh Inti Arebama Tbk (70.35%) in Indonesia.

BGC, looking to offset the risks of manufacturing in Australia in the midst of rising costs, specifically a possible carbon tax, is in the early stages of developing offshore cement production capacity.

Meanwhile, Australia’s Department of Environment and Conservation ordered Cockburn Cement to dramatically reduce dust emissions – a directive that will likely cost the firm A$20 million.

move the cement. Ecuadorian officials were also courting Chinese investors to expand the country’s cement sector. Current capacity is 5 million tons, but demand is at 6 million tons.

Bolivia is projecting a cement deficit in the coming months of roughly 250,000 tons.

Demand estimates suggest consumption

REGIONAL REPORT: ASIA PACIFIC

to export its surplus, already fulfilling a 300,000-ton export contract for Africa and exploring other opportunities. Considering Vietnam’s domestic market is expected to consume 52 million tons, though the industry is targeting 54 to 56 million tons this year, with a current capacity at 60 million tons, exports may prove an important option for many manufacturers.

could reach 2.8 million tons in 2011. If projections hold true, Bolivia will consume 12 to 15 percent more this year than in 2010. Manufacturer Soboce concedes it cannot produce and import enough to cover the gap. In the first quarter of 2011, the company imported 76,500 tons of clinker to augment the local cement supply in the hopes of meeting higher demand during the peak season. In comparison, last year, Soboce imported 40,000 tons of clinker to maintain its average production of 32,000 bags a day between August and December.

Relations between Soboce and the Bolivian government remained strained, with the government pursuing what appeared to be a negative campaign against the company in the press. The most recent volley had the government alleging the company violated numerous labor standards and 38 technical standards. It went so far as to suggest Soboce should be fined thousands of Bolivians, even though the proper judiciary authority has made no legal determination as such.

A final decision on Holcim’s proposed $400 million plant in Weston, New Zealand is expected sometime this year. Despite slower than expected first quarter results in New Zealand, Holcim’s executive committee recommended that the project proceed. It is now awaiting approval from the company’s Coal Week board of directors. BMWeek CemWeek CW Group Observers viewed the move as another ploy CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group inCoalthe Week government’s fight over Soboce’s former unit, the now state-owned Fancesa.

In that dispute, a civil suit against Soboce notable Builds/Expansions in Asia-Pac (excluding China) alleging unfair compensation practices has Company (Location) Plant overview been filed, and an arrest warrant for Samuel Grobogan Semarang, Indonesia City New cement plant with a 6,000-tpd capacity to be built by CNMB. Doria Medina related to Soboce’s 1999 (Indonesia) Grobogan County Project estimated to take 27 months. purchase of a 33 percent stake in Fancesa Cost: US $350 million became the latest salvos launched by the government against Soboce and Medina.

NSCI Sinoma will build a clinker production line with a daily capacity of The most recent round of events appeared (Malaysia) 5,000 tons and will also upgrade NSCI’s two existing cement mills.

Cost: US $207 million to have been triggered by the higher-thanexpected valuation of Fancesa. The Bolivian Mitsubishi Cement Mitsubishi Cement Building a waste incinerator to process municipal waste to power its government had originally agreed to an (Japan) (Japan) kiln. The facility will be able to burn 30,000 tons of municipal waste independent and external valuation by a per year. Project should be completed by April 2012.

Chilean company for the now nationalized Cost: 1.194 billion yen stake, but apparently balked at the larger CW Group Coal Week price tag. BMWeek CemWeek CW Group CemWeek BMWeek BMWeek BMWeek

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REGIONAL REPORT: Holcim expanded its position in India by securing majority stakes in two local units. It now holds a 50.002 percent share of Ambuja after acquiring another 3.562 percent, and 50.1 percent in ACC after purchasing an additional 0.8 percent. Observers speculated over the possibility of a merger between the two companies, but both companies denied any such discussions were in the works.

Ambuja acquired a controlling interest (85%) in Nepalese cement maker Dang Cement, and planned to purchase another 5 percent. Dang Cement Industries holds limestone-mining leases in Nepal, but was not currently carrying out any business activity.

Once its expansion program is complete, ACC expects its cement capacity to increase to 30 million tons, up from its 21.29 million tons in 2010. Expansion efforts include a 12,500 ton per day capacity kiln at Wadi, which is the largest cement kiln in the world, and a new clinkering line of 7000 tons per day at Chanda.

by 8 to 9 percent annually; however, the short-term outlook differs slightly. In May, cement demand was down 0.9 percent, In June, the government’s Serious causing prices to fall for the second month Fraud Investigation Office (SFO) began in a row.

Dalmia, which controls roughly 15 percent investigating allegations against major of India’s market, announced its intention cement manufacturers UltraTech Cement, HOUSING DRIVES DEMAND GROWTH to grow its current cement capacity of 14 Ambuja Cements and ACC for anticompetition practices. These companies The housing sector is the primary driver million tons to 30 to 40 million tons over control over one-third of the country’s total of cement production, consuming close the next five years. The company is looking manufacturing capacity of 300 million tons. to 65 percent of total production. The at both inorganic and organic options recent good harvest is likely to drive rural including Greenfield projects, acquisitions, The Builders Association of India had cement demand up, and the government’s and increasing sales in new markets outside previously asked the government to redemption of pledge program to build of India. establish a cement regulatory authority to houses for the slum population is expected prevent alleged cartelization, which has to generate incremental, but ongoing Other South Asia allegedly inflated prices through unfair demand for cement. The current housing trade practices. Rising prices appeared backlog is estimated to be a conservative 25 In the first nine months of its fiscal year, the to be the motivation behind the Builders million units.

Pakistani cement industry accumulated net Association's desire to build a new 10 losses of Rs 1.4 billion resulting in an appeal In southern India, manufacturers were from cement makers to the government for million ton plant for its members. encouraging the exploration of more assistance. Capacity utilization was at an Overcapacity is expected to plague India export opportunities as a means to increase 8-year low of 74.86 percent, and exports for several quarters as new expansion production. The region had a current declined 12.99 percent. With production projects come online. In the last 3 to 4 years, capacity surplus of 30 million tons, but only costs trending higher than the level of sales India has added over 100 million tons of exported 0.1 million tons in fiscal year 2011. generated domestically, manufacturers capacity which has exerted pressure on both price and capacity utilization. Cement notable Builds/Expansions production is forecast to increase to 320 Company (Location) Plant overview million tons by the end of 2011 and India’s Builders Association Anantpur, Andhra Pradesh Construction of a new cement unit with a 10 million ton capacity.

Cement Manufacturers Association believes of India Project is expected to be completed in 2 years. Cost: Rs 3,000 550 million tons is achievable by 2020.

(India) crore

India

Current consumption is almost 80 percent Ultratech (India) of capacity and demandBMWeek is projected to grow CW Group Coal Week CemWeek 24

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Pupunki area of the Chas Block

Surveying land to potentially construct a 2.1 million ton cement unit.

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REGIONAL REPORT: SOUTH ASIA

A Tec Greco conference in Brazil draws

found it impossible to raise prices.

Subsequently, plants have closed, and the industry together for expert insights capacity of the Pakistani cement industry has fallen by three million tons.

On June 9th and 10th, the Fourth Ccement and Lime Conference brought together Latin EXPANSION AT PAKISTAN'S FAUJI CEMENT America and the world in Sao Paulo, Brazil, for a review of technical updates in one the Undeterred by this market news, Fauji world's hottest cement markets, Brazil. The Cement opened its new plant. The facility, hundreds of attendees made the event one which has an installed capacity of 7,200 tons of the best attended in the world, with a very of clinker a day, increased the company's high participation of professionals from the But it won’t stop, he added, until Brazil total installed clinker capacity from 1.1 cement industry, notably in Brazil. becomes a developed, rather than million tons to 2.2 million tons. The plant developing, country. has been able to reduce production costs by The conference opened with remarks from utilizing a new power plant with German Votorantim's industrial operations director Mr. Robert Madeira, Managing Director and technology, which replaces roughly 170 Edvado Araujo Rabelo. Votorantim, which Head of Research at the CW Group, which tons of coal per day. also was the main sponsor of the seminar, is also the parent of CemWeek, presented fielded a substantial set of delegates as highlights from recent research on the state While all cement manufacturers are well as did many other important cement of the Latin American cement sector. The expected to benefit from the building of the manufacturers in Brazil. presentation was a non-technical addition Diamer Bhasha dam, Fauji is likely to receive to the largely technically-oriented event the most benefit because of its proximity to Adriano Greco, CEO of A Tec Greco, and helped provide context for the need for the project. The Asian Development Bank offered a very optimistic appraisal of the expansions in Brazil and plant upgrades.

(ADB) is shelling out the US $4.5 billion Brazilian cement market. He said the It added grounding for the widespread construction cost for the dam, which is superheated growth is not driven primarily optimism permeating the Brazilian cement estimated to consume 5 million tons of by infrastructure for the upcoming World sector as the market was discussed from a cement a year.

Cup and Olympic games, but rather by the supply-side perspective , with a reminder government’s much lengthier commitment that no party lasts forever.

HeidelbergCement Bangladesh paid to erase the country’s six million unit investors dividends, reporting an increase housing deficit.

The host team did a great job as usual in bringing together the South American in sales volume of 15 percent in 2010.

For Lafarge, concerns over supplying its “It is clear that we will have an average industry as well as equipment suppliers US $255 million Bangladesh plant with cement production growth of 6% per year from around the world, including Fives limestone from the Meghalaya region of for the next 10 years, which means that we FCB, Loesche, Scheuch, Bedschi, Claudius India continued, as an Indian court halted its should reach at least 100 million tons per Peters, Donaldson, Hazemag, as well as mining operations citing those operations year in 2020,” said Mr. Greco. “After that, Brazil's cement industry association ABCP Continued on page 44 were undertaken in an environmentally who knows?” / SNIC. sensitive zone. Cement prices were on the rise in Bangladesh because of soaring KHD built Buzzi Unicem plant featured at IEEE's global fly ash and clinker prices, and higher transportation costs were an added concern 53rd Cement Industry Technical Conference in the northern region of Bangladesh.

One of the highlights of the recent Cement With the new and changing environmental Finally, Pakistani cement exporters believe Industry Technical Conference was a regulations, the cement industry faces a they are being denied the opportunity walking tour of the KHD-designed Buzzi wave of new challenges. Responding and to trade fairly with India, identifying Unicem plant in Festus, Missouri, not overcoming these challenges was the focal several non-tariff trade barriers erected by far from the conference site in St. Louis, point of the event.

India. The Trade Development Authority followed by a sampling of the region's During the evenings, attendees were invited to visit the independently sponsored of Pakistan (TDAP) identified several famous barbecue cooking. hospitality suites. potential areas of concern including delays in granting certification from the Bureau The 53rd Cement Industry Technical of Indian Standards, restriction on cement Conference, sponsored by the IEEE, IAS, The KHD attendees included Rick Cusick, exports via train and trucks, and the and PCA, was held from May 22nd to 26th. Ralf Slomski, Daniel Uttelbach, Andreas bureaucratic process of obtaining marketing With over 950 technical participants from all Hand, John Schureck, Jorge Portocarrero, Week over the world, the event was packed full of Guy Mitchell, John Mulholland, Dwayne permits in India. BMWeek CemWeek CW Group Coal CemWeek CW Group Coal Week BMWeek tutorials, workshops, and technical sessions Holland, and Katie Michel. BMWeek CemWeek CemWeek BMWeek CW Group Coal Week CemWeek BMWeek with a focus on environmental issues.

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Sector coverage: Construction & materials

SECTOR COVERAGE: the best performing sector with an increase of 8.5 percent in the first four months of the year.

India is also seeing impressive growth in infrastructure projects. According to a report from JPMorgan Asset Management, infrastructure could be a major driving force behind India’s economic growth for the next five to 10 years. The country, which is expected to grow at 8 percent this year, is seeing an increased demand for housing and infrastructure development. In particular the government is looking at expanding the national highway network and modernizing airports.

Concrete Spain’s ready-mix concrete industry continues to suffer due to the economic crisis with a production decline of 20.32 percent in 2010 compared to 2009. In 2010, the sector had a turnover of around €2,350 million. The sector has also seen loss of over 10,000 jobs during recent years. ANEFHOP, a union of concrete producers in Spain, has sought government assistance in revitalizing the sector. One suggestion that has been put forth is that concrete be used While the U.S. and some countries in Europe are showing signs of improvement for the construction of new roads in order in construction output levels, the April results show that the pace of recovery to aid the industry. has been extremely sluggish. Brazil and India continue to offer significant growth opportunities in the housing sector and infrastructure development. Innovations A development that spells trouble for in ‘green building’ products have been fuelled by growing demand for greener the beleaguered industry is the decision construction methods. of the Hungarian competition authority Gazdasági Versenyhivatal (GVH) to initiate antitrust proceeding against six companies: slowest pace during the last 20 months.

Europe and U.S. continue to struggle Concrete Partners UK, Cemex Hungaria Overall, analysts believe it may take around The construction market in Europe continued to feel the effects of spending cuts four years before the U.S. construction Building Materials, DBK-Earth Machine and savings. The continent’s construction industry returns to stability with spending Construction, Fresh Concrete Production and Distribution, Holcim Hungária Cement industry suffered a fourth consecutive reaching about US$1.5 trillion annually.

Co. and TBG Hungaria Investor Concrete, yearly decline in 2010. Countries like Spain, Manufacturing and Trading Co. The Mixed bag for developing economies Portugal and the UK have shown declines. authority reportedly found evidence that The value of building materials is set to Meanwhile, the housing sector in Europe these companies were engaging in cartel increase in Russia, resulting in concerns has been in the negative with new housing behavior to limit competition and that that higher production costs may stall construction dropping by around 40 percent officials of these companies had conducted construction projects in the country.

In to about 1.5 million units (compared to the negotiations to fix concrete prices in the particular the prices of concrete, cement and sector’s peak in 2007). The downturn in period 2005 to 2007. asbestos are a cause of concern.

Previously, construction is expected to end in 2011, the average price of concrete had risen by with Poland and the Scandinavian countries 3 percent while the price of ceramic bricks In the meanwhile, in the U.S., the leading the recovery. increased by 2.1 percent. The price of wood construction of the One World Trade Center Meanwhile in the US, construction spending alone has increased by 40 percent in the last is being done using a ‘new super concrete’ that promises to be stronger and more ecoremained low following the 0.4 percent year. friendly than regular concrete. The new rise reported by the country’s Commerce In Brazil, on the other hand, growth in concrete is produced by blending fly ash, Department. Government construction construction will be mostly due to the slag cement and silica fume with concrete. projects have declined and manufacturing government housing program.

Mortar was And since the concrete uses 40 percent less activity in the country BMWeek has increased at its CW Group Coal Week CemWeek 26

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EUROPEAN CONSTRUCTION OUTPUT country

construction output in aprill 2011 mom change

Slovenia

27.3 percent decline

Bulgaria

22.8 percent decline

Spain

16.9 percent decline

UK

13.4 percent decline

Germany

5.7 percent decline

Portugal

4 percent decline

Sweden

1.6 percent increase

France

0.7 percent increase

Poland

0.5 percent increase

Source: Euroconstruct

Gypsum and Lime The fate of Lafarge’s gypsum unit sale is to be decided in September, with at least 10 firms reported to be interested in acquiring the €800 million business (the exact sale price has not been revealed). The U.S. operations of the unit are valued at €400 million.

Lafarge had decided to sell its gypsum unit in order to minimize its debt of €16 billion.

In other related news, the company has opened a new limestone quarry in Signes, Var, France. The new site facility spans around 73 hectares, of which 33 hectares is dedicated for the extraction process. It is also set to produce sand and gravel.

In similar news, U.S. Gypsum, whose main product is wallboard, is yet to emerge from the after- effects of the financial crisis on the construction industry. Wall Street analysts predict further losses for the company for the next two years. USG’s chief executive also declined to predict when the company will return to the black.

countries and is currently considered as one company is seeking to add more than 573 of the largest global producers of lime. acres to its mining operations in Hernando County. The company’s application is one of In environment-related developments, the largest expansions for mining in recent the Zambian government has ordered the years. closure of Ndola Lime Company's plant for failing to meet emission standards In France, aggregates production is expected following the suspension of the company’s to grow by 3 per cent in Q1 following licence for the rotary kiln. The decision to a rise in demand for public works. The close the plant came after Ndola residents aggregates market in the UK has shown an complained about excessive dust emissions. improvement of 6 percent in the first quarter The Zambian government warned that of 2011 compared to the corresponding other companies violating environmental period in 2010. The improvement was laws also risked being shut down. primarily because of general change in weather conditions and improving demand.

In light of current trends that give focus to sustainable construction, lime producers in Green Building Brazil have renewed their commitment to The U.S. demand for green building materials an environment-related program. Several (that contribute to LEED certification) companies have renewed their deals with is expected to grow exponentially, up to Programa Selo ABPC de Responsabilidade US$70 billion by 2015. Currently, the Socioambiental, which is a program started market is at US$39 billion with an expected

by Associação Brasileira dos Produtores de increase of 13 percent every year. The Cal (ABPC) to require high standards of increase is expected to be sparked as green quality and accountability in all stages of materials take over the market share of nonlime production. green materials. Water efficient fixtures, energy efficient lighting fixtures, permeable pavements and recycled-content gypsum and concrete are expected to see double digit growth through 2015.

Aggregates Aggregates consumption in Spain has declined by 70 percent in the last 4 years.

However, recovery is expected to come in 2012 with the sector improving by 2.3 percent. The Spanish construction industry is one of the main countries suffering due to Notwithstanding global cues, Nordkalk the construction slowdown. is looking to enhance its lime production facilities in Finland. The company is The United States’ aggregate production planning to reconstruct a number of its increased by 2 percent to 205 million tons facilities as it seeks to improve its lime in the first quarter of the year. A noteworthy production from 40,000 tons of lime per project this past month has been the year to an annual production of 100,000 decision by Cemex Constructions Materials, tons. The company operates in eight to expand its Florida quarry operations. The

Sector coverage: Construction & materials

cement, using it would also save 33,000 tons of carbon-dioxide gas emissions. The new World Trade Center, designed by architects at Skidmore, Owings & Merrill, will include a core of cast-in-place reinforced concrete, an extra-strong backbone running the full height of the building. The safety features have led its builders to label it as the ‘the world’s safest skyscraper’.

The concept of green building is catching on across the developing world as well. An ongoing project in Mumbai is making use of recycled materials to build an airport terminal. The Mumbai International Limited said that the airport terminal is being built with fly ash blocks, the earth dug from the land where the facility stands, and environmentally friendly wood products.

The facility is also being developed to ensure sustainable power usage in the future.

There have also been new innovations in green building materials. BASF has developed X-Seed, a product that reduces the carbon emissions and energy consumption of prefabricated concrete production. In another successful example, NCC Roads, of Sweden, decreased carbon dioxide emissions in 2010 by 9,500 tons. This reduction was facilitated by the company’s reusing of asphalt coupled with the production of the company’s Asphalt Green. The savings amounted to the emissions of around 3,500 gasoline-powered cars in a year. BMWeek CemWeek BMWeek BMWeek

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TOOLS

& ANALYSIS

It's Not Nagging:

Why Persistent, Redundant Communication Works

By Kim Girard harvard business school working knowledge

Managers who inundate their teams with the same messages, over and over, via multiple media need not feel bad about their persistence. In fact, this redundant communication works to get projects completed quickly, according to new research by Harvard Business School Professor Tsedal B. Neeley, and Northwestern University's Paul M. Leonardi and Elizabeth M. Gerber. t's the rare child who follows a parent's order to do an unpleasant task the first time she's asked. Upon second request, she might listen, but again ignore the prod. It's often the third time, a more urgent "Brush your teeth, now," that does the trick.

escalating sense of urgency, is integral to communicating because it gets the job done.

New research shows that getting employees to listen up and deliver isn't so different.

over, via multiple media to team members.

At first blush, this strategy may sound like nagging or a waste of time. But as it turns out, asking multiple times gets results.

In a paper forthcoming in Organization Science, Professor Tsedal B. Neeley and Most parents understand that redundant coauthors delve into why many managers communication, coupled with an tendCoaltoWeek send the same message, over and CW Group CemWeek BMWeek

Titled "How Managers Use Multiple Media: Discrepant Events, Power, and Timing in Redundant Communication," Neeley and Northwestern University's Paul M. Leonardi

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TOOLS & ANALYSIS and Elizabeth M. Gerber found that managers who are deliberately redundant as communicators move their projects forward more quickly and smoothly than those who are not.

over team members used redundant communication, compared to 12 percent of managers with direct authority. And 54 percent of managers without direct power combined an instant communication (via IM or a phone call) with a delayed Neeley's research evolved out of an communication (e-mail), compared to 21 ethnography of managers' use of technology percent of managers with power. used to persuade their team members to meet their deliverables on time and on budget. To do so, managers were engaging in redundant communication.

"We started to notice very quickly that some project managers were sending the same message three or four times using different media," she says, citing an example of a manager speaking to an employee face-toface, then sending her an e-mail and later a text message about the same thing.

Research showed that asking employees to do something multiple times, whether in person or via technology, is especially common for managers who are under intense pressure to finish particular projects.

Considering how busy most managers are and the fact that their employees are inundated with information daily, the repeated communications seemed puzzling to Neeley, at least at first.

Those without power were much more strategic, much more thoughtful about greasing the wheel

"Those without power were much more strategic, much more thoughtful about greasing the wheel" to get buy-in and to reinforce the urgency of the previous communication, Neeley says. "Managers without authority enroll others to make sense of an issue together and go for a solution."

The researchers also determined that clarity in messaging, while not a bad thing, was not the goal for redundant communication.

Even if a powerful manager is clear and direct with an employee, it's still the redundancy that counts. "I didn't think we'd find this. I was stunned," Neeley says.

While both sets of managers ultimately got the job done, the managers without power moved the team faster, she says. Managers with power spent more time on damage control after assuming an employee had finished the work. That said, the results didn't show that either group was more successful with deadlines or meeting budget requirements.

Recognizable Behavior

When Neeley shares these findings with managers she says there's a relief among many to learn that all that communicating A lack of direct power is common in does work—that they aren't spinning their companies today, Neeley says, because so wheels during the workday. many people work on teams that form and disband on a project-by-project basis. Yet "People are like, 'Oh, my gosh, there is a team leaders are still on the hook to achieve name to what I do. I do this all day.' It's a their business imperatives despite this great thing to have [something] this obvious pointed out to them." absence of authority.

The researchers moved forward to investigate what sort of events triggered managers to deploy multiple messages.

They studied the communication patterns of 13 project managers in six companies across three industries (computing, telecommunications, and health care) by shadowing them at their jobs. The team recorded every activity in the managers' "People are like, 'Oh, my gosh, there is a workday, collecting a total of 256 hours' name to what I do. I do this all day'" worth of observations.

While managers with power did use e-mail, "As we analyzed data we started to see the same sense of urgency and persuasion differences in strategies and intentions wasn't there in the follow-up, the researchers depending on whether the manager had found. These managers typically followed up power," Neeley says. A story started to come with just a single communication, sending together. more reminders only in desperation.

The results also provide a concrete strategy for managers in Neeley's Executive Education classes who are struggling with how best to communicate with workers. "This is an actual strategy—a communication persuasion strategy that they will go and try," she says.

In the future, Neeley plans to expand this line of research, perhaps analyzing how Managing Without Power Managers lacking direct power, however, managers collaborate with employees Power, it turns out, plays a big role in how assumed nothing. They proactively used globally using technology. managers communicate with employees redundant communication to convince when they are under pressure. team members that their project was under "This is what people use every day to relate, threat and that they needed to be part of the to get work done, to achieve their goals, so it's crucial to understand it." BMWeek CemWeek The research showed that 21 percent of solution.

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C C C

PROJECTS EQUIPMENT & NOTABLE PROJECTS FL Smidth confirms order for 6,000 tpd Nigeria plant FLSmidth has received an order from BUA International Limited to supply a complete 6,000 tons per day cement plant in Nigeria.

The plant will be located some 100 km from Benin City, the capital of Edo State in southern Nigeria.

The order includes equipment supplies, engineering, supervision and training. The scope of equipment supplies includes EV crushers for raw material preparation, an ATOX 50 mill for raw meal grinding, a pyro system consisting of a five-stage In-Line Calciner preheater, a two-base kiln, UMS mills for cement grinding and four packing plants as well as FLSmidth's latest design Cross-Bar 16x50 clinker cooler.

Novoroscement awards 55 million euro plant upgrade to FLSmidth The order entails an upgrade of the existing production line from its present capacity of 1,740 tons per day to 6,000 tons per day. The modernization of the production line will lead to a more environmentally friendly and energy efficient production process. The plant is located at Novorossijsk in southern Russia, near the Black Sea. The equipment to be supplied includes an Atox 57.5 raw mill, a 5-stage preheater, modification of the existing kiln shell, new filters, FLSmidth's latest design Cross-bar cooler, a clinker storage and a complete new control system.

The new mill will have a capacity of 150 tons for a cement plant of the Turkish firm in per hour and will increase the capacity of Gümüshane. Loesche said on its website the cement plant in Jazan by 50%. that it is now preparing new quotations for the Gümüshane plant.

Saudi Arabia's Hail Cement orders 52MW power unit In February, the two companies forged a Wärtsilä's scope of supply under this deal for a CRM and a Coal Mill for a new turnkey contract includes seven 20V32 brown field 3.500 tpd clinker production generating sets, providing a total output of line at VAN in the Eastern part of Turkey, some 52 MW. The engines will run on heavy close to the Iranian border. fuel oil (HFO), but can switch to light fuel oil (LFO) as a back-up. The equipment is To execute the project, Askale Cimento has scheduled to be delivered during 2012, and contracted the consortium Terbay-Aybars Is the complete construction of the plant is Ortakligi (TeAy) to build the new line. scheduled to take approximately 15 months.

Approximately 70 per cent of Saudi Arabia's Votorantim improving efficiency with cement manufacturing facilities are powered ABB system

by Wärtsilä power plants.

ABB signed a contract with Votorantim Cimentos to provide its cpmPlus Expert J&K Cements to switch fuel systems Optimizer process optimization system for J&k Cements says it will adopt petcoke fuel eleven new cement plants being built in for its production process in the next three Brazil and other Latin American countries. months, according to a report from Greater ABB will also upgrade the prior generation Kashmir. The firm has set aside Rs 5.30 Linkman system with Expert Optimizer at crore to buy equipment, which it hopes will eight other existing plants. reduce input costs.

Some of these units are part of Votorantim's The government asked management of the ongoing "third wave" project, which further company to adopt all available modern develops a mining exploration technique to technology to enhance market acceptability optimize low content ores on large deposits. of its product.

To optimize cement production, ABB's Expert Optimizer uses neural networks, Falcon Cement adds cargo ship fuzzy logic and predictive control models.

Bahrain based Falcon Cement says it has Divided into areas such as milling, kiln and bought a cargo ship which will enable it cooler, Expert Optimizer becomes a virtual to expand its product's reach. The ship will operator, making decisions and defining have a capacity to carry as much as 40,000 the best control strategies automatically for tons of cement. each specific area of the process.

Lafarge installs new clinker loading Officials noted that FLSmidth originally system in Spain erected the plant in 1914.

Lafarge has introduced a new loading technology for clinker in its plant in Saudi Arabia's Southern Cement to Sagunto, Spain. The new system entailed add new mill at Jazan plant an investment of half a million euros. It Saudi Arabia's Southern Region Cement improves air quality in the surrounding Company has signed a purchase agreement areas of the loading stations by eliminating with a German firm for the establishment the bulk cargo through the movement of of a third mill in its production facility in trucks and shovels.

Jazan.

The company said the system works almost The 8.7 million euro deal was signed by a automatically and also enhances worker Prince of Saudi at the head of the company safety by improving the circulation of and Erich Pichlmaier, chariman, and vehicles within the premises.

Christian Pfeiffer, general manager, of the German firm.

Askale, Loesche negotiate new deal Askale Cimento Sanayii and Loesche The contract will be completed in 10 months. are Coal negotiating a new supply contract CW Group Week CemWeek BMWeek 30

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Polysius secures contract from PPC South Africa's Pretoria Portland Cement has contracted for the supply of kiln shell and splined tyres as well as indirect firing equipment.

The equipment is bound for the De Hoek cement factory. The current contract will replace the kiln shell and riding rings and convert the coal milling system to indirect firing. The solution will re-use of the existing kiln piers in order to reduce construction time and capital outlay for the client.

The indirect firing contract involves the conversion of the semi indirect firing coal milling circuit to indirect firing and the installation of the state of the art Polflame burner.

PEOPLE MOVES CORPORATE NEWS FLSmidth misses profit goal, seeks acquisition, licenses technology FLSmidth has reported a Q1 profit that missed analysts' estimates, a report from Reuters said. According to the report, operating profit fell to 305 million Danish crowns (US$58.87 million) for the first quarter from 359 million a year earlier.

This result was below a 414 million average forecast in a Reuters poll of analysts. The firm says it was hurt by falling revenues and lower orders during the period. However, for 2011 the group kept its outlook unchanged.

At the same time, the equipment maker's CEO says the company is constantly on the lookout for acquisition opportunities that will strengthen its operations. Jørgen Huno Rasmussen says he expects the greatest growth opportunities to be in the minerals area.

In a related move, FLSmidth has signed an exclusive licensing agreement giving it the right to offer the Kalina Cycle waste heat technology to the cement an lime manufacturing industries globally, with the exception of a few countries where existing licenses are in place.

Elex to specialize in gas cleaning for cement plants Elex CemCat has formally entered the market, and will specialize in gas cleaning of cement plants.

The firm, based in Schwerzenbach, Switzerland, says its services would result in power savings and help customers comply with environmental requirements. Elex CemCat was founded in 2010 as a joint venture between Elex and Polysius. BMWeek BMWeek BMWeek

Holcim Croatia installs new officers Holcim Croatia has promoted two people to take up the posts vacated by the retired Jadranko Garilović. The new board member is Nenad Juretic, director of sales of cement and logistics. Nenad has been in the sales department since 1997. He was a director of Holcim subsidiary TransPlus, after which he became director of sales and management.

Virna Višković Agušaj is the new technical director and a member of the management team. Virna has a degree in chemistry from Zagreb, and also studied in Switzerland, the report said. She also worked for a Holcim unit in the United States.

HeidelbergCement worker is Maintenance Manager of the Year Frédéric Deleuze has been named the Maintenance Manager of the Year by Maintenance Magazine. Deleuze is the maintenance manager at the cement maker's Lixhe unit in Belgium.

the last year.. The election occurred at the association's General Assembly held on 7 June 2011 in Brussels (Belgium). He takes over from Mr Jean-Paul Méric (France).

Madridejos is a member of the Executive Committee of Cemex, responsible for the company’s Northern Europe Region as well as for Energy and Sustainability globally.

Jaime Ruiz de Haro is new Cemex Spain CEO Haro replaces Joaquin Estrada, who has been tapped to head Cemex's Asia unit and international marketing. De Haro has occupied top posts in Cemex’ Asian units and was active in various corporate social responsibility projects.

De Haro was born in Barcelona and holds a degree in Economics from the University of Barcelona.

Oficemen names Dieter Kiefer as new President He replaces Cemex Spain's Joaquin Estrada Anhui Conch elects new director at the helm of Spain’s cement association.

In its annual general meeting (AGM) Kiefer is currently the president of Cementos held on 31 May 2011, the Chinese cement Portland Valderrivas. major elected Ms. Zhang Mingjing as a new Director up to 2 June 2013.Ms Zhang At the same meeting, Oficemen approved Mingjing is a senior economist. the appointment of four vice presidents: the CEO of Holcim Spain, Vincent Lefebvre; New appointments at general manager of Lafarge Cement, José Eurocement Antonio Primo; the CEO of Cemex Spain, Eurocement has appointed Vladimir Jaime Ruiz de Haro; and CEO of Cimpor Sokoltsova as general director of its Spain, Angel Longoria.

Lipestkcement unit. Igor Zvyagin was appointed deputy director general and Kiefer, born in Switzerland, joined technical director of the firm.

Cementos Portland as CEO in 2008 and was appointed chairman of the board of Sokoltsova graduated from Kharkov State directors in January 2009.

Technical University of Civil Engineering and Architecture. He started his career in Lafarge Spain appoints new sales CW Group Coal Week CemWeek the cement industry at Balcem grinding manager CemWeek CW Group Coal Week plant and CW then technical director of Luis Ferrer-Vidal was appointed sales CemWeek Groupbecame Coal Week Lipetskcement. manager, replacing Patrick David who will now move to work on development projects Zvyagin graduated from the Lipetsk for the company. Ferrer-Vidal, who joined Polytechnic Institute and started as a the company 24 years ago, previously held replacement shop foreman in Lipetskcement the post of commercial director for the and technical director of Savinsky Cement Levante area.

Plant.

Cemex UK appoints new CEMBUREAU appoints new president president Cemex UK has appointed Jesus Gonzales Mr Ignacio Madridejos was elected as president, replacing Gonzalo Galindo.

President of CEMBUREAU for a two-year Gonzalez was previously stationed in Continued on pageCW46 term after serving as Vice-President over Panama, where he BMWeek Group CemWeek MAY/JUNE/JULY 2011

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31

PROJECT

PROFILE

Every bit counts

Why the silo matters to the CEO Contributed by Blancon

he silo, a seemingly operational and mostly static element in the production line, is mostly taken for granted and left to its own devices. Plant and logistics teams monitor discharging and as long as raw meal, clinker or cement keeps flowing, all is good. The problem is when it stops or discharge performance is compromised.

For example, Blancon supported a complex raw meal silo cleaning operation for Portuguese cement manufacturer Secil at the Outão integrated cement plant in Setubal, Portugal, while the kiln was still in operation for most of the project. This allowed the unit to continue production for longer than they would have with other

It may seem like a question of “just having the maintenance guys do it”, but trivializing the challenge can have major implications all the way up the chain to the CEO. There are two aspects to getting the silo back in working order quickly: sales & production on one side and safety on the other. Here we explain how leading silo cleaning firm Blancon helps the CEO through both, and why it is not “just something for the maintenance guys”.

While silo cleaning frequently seems like a minor detail, the costs of doing it wrong are simply too high...

For this complex project requiring multiple techniques, Blancon used powerful nonentry systems to break down the hardest of buildups, as well as specialized rope access technicians, industrial vacuum trucks and inspection services.

Other solutions would likely have taken longer and/or not been able to keep the kiln going while the silo was being cleaned.

Less downtime, days of extra production and sales with higher asset utilization are certainly something that the company leadership is focused on.

The Hidden Cost Of Safety

One of the greatest costs is the loss of human life. Second is the cost of damaged equipment and third is loss of production.

Silo cleaning is often seen as something easy to do (remember “just get some maintenance guys to do it”) and a cost to Sales And Production be avoided. All too often this still leads to As with any integrated process industry, fatalities as inexperienced teams take a keeping your asset operating at maximum too-casual approach to the job. With safety utilization is paramount. Temporary kiln being such a big focus for the industry, any shutdowns are costly and disruptive to the accidents quickly travel up the chain to the entire manufacturing process. It is obvious top. And on the more mundane side, lost that downtime leads to lost sales. But production due to damaged equipment or equally true is that you have to maintain silo cleaning solutions and companies. In slowed or halted down production quickly your equipment. The challenge is to do this manner the client not only reused good shows up on the P&L. both – which focuses on minimizing the material in the silo, but also minimized shutdown window. For your silos, it means any kiln downtime. This translated into Blancon, drawing on its experiences cleaning them insofar as possible while they continued sales and a shorter shutdown in military and chemical plant work, window than other solutions and methods including explosive environments, knows are still in operation. presented. the difference and approaches each job just CW Group Coal Week CemWeek BMWeek 32

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PROJECT PROFILE Project By the Numbers The large raw meal silo was 48.28 meters high and 28 meters in diameter with an overall capacity of 25,000 tons. The design layout included seven inverted cones, one in the center with six cones around the perimeter of the middle cone, making for a complex job with specific safety considerations.

Rope access helps address specific tasks once silo is safe for entry

Safe operations throughout the process

When the project started, the silo contained an estimated 15,000 tons of material that needed to be removed.

The projected time to complete the project was 235 consecutive hours with multiple teams, using multiple techniques specifically chosen for each phase of the project.

In the end, over 11,000 tons of material was evacuated from the silo in just 11 days straight, working 24 hours per day.

The full crew included 18 workers on the ground and 4 truck drivers.

High power vacuum trucks support material remove and handling

Interior of silo once made safe for human entry as the company would if working in a tank with residual volatile compounds.

From the start, rigorous safety planning and coordination efforts helped ensure the safe execution of the large-scale project.

Blancon’s teams and Secil’s management met every eight hours throughout the project to ensure continued safe operations.

Additionally, the project was supported 24 hours a day by a team of external safety consultants, attesting to Blancon’s excellent

Creating safe work environment and protected space

Hundreds of tons later

Work crews and equipment for the project included four vacuum trucks running non-stop, simultaneously, throughout the duration of the project, and a team of skilled rope climbers. Two of the trucks utilized in the operation were top-of-the-line Vacu-Press HiLift, each with a capacity of 8,000 cubic meters per hour.

The final stage of the project was a visual inspection of the silo interior itself. The purpose of the final inspection was not only to confirm that the work was completed properly, but also to check for any structural issues in the silo.

the silo”. All three are different examples of a CEO-event to happen, be it safety, direct safety record and reliance on standard ISO expense or a public relations issue. While 9001 procedures certified by Lloyd’s. we are of course biased in thinking our approach is safer, more professional, as well as more economical, our experiences show Detail Or Disaster that it is not hyperbole and that it is true. BMWeek BMWeek So while silo cleaning frequently seems like BMWeek a minor detail, not doing it the right way should matter to the CEO. The tangible and Blancon’s powerful non-entry silo intangible costs of doing it wrong are simply cleaning system is ISO 9001 and 14001 too high. Blancon often hears comments certified and safety is a top priority for like “we’ll just use some local guys”, “ will the firm. You can find out more about send manual labor into the silo to clean it”, Blancon at www.blancon.net or even “we’ll throw some dynamite into CW Group CemWeek BMWeek MAY/JUNE/JULY 2011

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33

UAE

COUNTRY SNAPSHOT

UAE Cement market:

Ripe for Restructuring

UAE

Slip-forming of silos at Fujairah cement (courtesy Slipform Middle East) percent through 2018. The construction industry’s total value was projected to be AED 71.6 billion in 2010, and this number was expected to grow to AED 99 billion by 2015 in nominal terms (in real terms it was AED 32.9 billion in 2010, rising to AED 39.9 billion by 2015). Some projects, such as a planned metro in Dubai and a nuclear power plant project in Abu Dhabi, were The global financial crisis, tighter expected to fall by the wayside during the international credit and lower asset prices economic crisis but have instead survived took their toll on the UAE’s economy, and continue to attract investment. slowing GDP growth. The economy is estimated to have shrunk four percent in The Cement Sector 2009. The outlook is optimistic, however, that the economy will continue to recover, The United Arab Emirates’ cement industry projecting a growth of around 2.4 percent is one of the oldest manufacturing industries for 2010 and 3.2 percent for 2011. in the UAE, dating from the mid-1970’s. By 1998, the country’s eight cement plants had After the oil and gas sectors, the reached a Portland Cement output of nine construction industry remains one of the million tons. The country also benefitted UAE’s largest sectors. For most of the last from one white cement plant located in the decade, construction boomed as it played a Ras Al-Khaimah region. key role in the country’s quest for economic diversification. However, the global crisis The cement capacity expansions continued took its toll on the industry, especially in with great anticipation in the decade. By 2009 and 2010, as many building projects 2010 output capacity had surged over 200 were either cancelled or put on hold. Even percent compared to the 2005 levels of 13 so, the industry accounted for roughly 7.6 million tons. The biggest expansion projects percent of GDP in 2010 and was expected were finalized between 2007 and 2009 as to continue trending between six and eight the Coal country witnessed an unprecedented CW Group Week CemWeek BMWeek For over thirty years, oil has been the major revenue driver for the UAE economy with oil exports accounting for around 25 percent of total GDP. The country is endowed with vast on and offshore oil reserves estimated to be 98.8 billion barrels, the third largest in the world after Saudi Arabia and Iraq.

34

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construction boom. Some of the notable initiatives included Union Cement Company, Fujairah Cement Industries and the entrance of new competitors such as Pioneer Cement Company and the National Cement Factory.

A MAJOR DOWN YEAR IN 2010 With the expansion of the construction industry, cement sector demand has grown accordingly, reaching in 2008 a consumption per capita level that is among the highest in the world at 4.8 tons compared to the already elevated 2.5 tons in 2005. However, after a meteoritic construction boom between 2005 and 2008, economic and construction activity in the United Arab Emirates came to a grinding halt on the back of the global recession. This translated into more than half of construction projects being canceled; after several years of seemingly insatiable cement demand, the UAE was faced with a mounting production capacity oversupply. As a result, in 2009, all cement market indicators weakened due to the financial crisis; cement consumption decreased by over 15 percent. In 2010, demand is estimated to have fallen even further, though the fourth quarter finally saw signs of a turnaround.

COUNTRY SNAPSHOT: UAE The real economy and construction sector (LH: Construction spend; RH: Real GDP; local currency in bn)

Price evolution (year-on-year change)

600

40

20 30

500

20

0

2006

400

10

2005

2006

2007

2008

2009

2010E

The softening trend in demand has led companies to compete more aggressively for the remaining volumes. Many companies have focused on reducing production costs, prices and production levels. As a result of the sudden surge of rivalry in the market, many cement companies have struggled with heavy financial losses and eroded margins.

Cement imports have traditionally played an important role in meeting demand in the UAE. In 2005, imports represented about ten percent of domestic and export demand.

Even though demand accelerated into 2008, imports logically waned as new domestic capacity came online. Once demand collapsed into 2009, imports dwindled and now represent a smaller part of demand.

Clinker imports are much more consistent because the country’s grinding stations rely on it for production.

2011E

2012E

2013E

2014E

2015E

300

which started work to raise its production capacity in 2009 to 5.7 million tons by 2012 compared to its former 2.2 million tons capacity. Another important cement company, Fujairah Cement Industries, also embarked on an effort to increase capacity to 4.6 million tons in 2009 after reaching a 3.1 million tons capacity in 2008.

The industry has not been without its casualties, however, and several projects have been put on hold or abandoned. For example, the Sharaf group has indefinitely delayed its planned entry into the sector and Binani shelved plans to expand its operations.

2007

2008

2009

2010

-20

Capacity additions (mtpy) 50

0

2005

2005-2010

2010-2015

Cement demand (mtpy) 50

In 2010, the United Arab Emirates was confronted with a large excess capacity measured in tens of millions of tons.

However, some improvement on the demand side is projected for 2011 as the economy and construction projects revive.

0 2005 2005-2010 2010-2015 Pricing has also improved as demand from New capacity Qatar keeps rising and manufacturers have Despite the economic constraints that maintained a relatively high degree of and further pressuring the sector. At our estimated 2015 demand level, the UAE’s emerged in 2009, companies continued production discipline. cement companies will use less than 50 to expand their production levels, either percent of installed capacity. The remaining With so many projects in the United Arab expecting the market to revive or hopeful 50+ percent will need to find somewhere to Emirates canceled or on hold, the demand that export markets would absorb the excess go. This is a sector ripe for restructuring and outlook is far from what some had projected supply. The financial crisis has pushed the consolidation, unless new mega-projects during the construction boom; cement biggest players to find new export markets. across the region materialize faster than demand was expected by some analysts For example, Lafarge exports up to 40 anticipated and on a big scale. BMWeek CemWeek and regional investment banks to climb percent of its production to Oman, Kuwait CemWeek BMWeek towards the 50 million ton mark by 2013. and Iraq, and is looking to expand to Indian CemWeek BMWeek Ocean islands like Mayotte and Mauritius. This would have implied an almost doubled More information about this and Similarly, Union Cement announced plans level compared to the 2008 levels. However, other CW Group research reports on since the economic crisis, demand has to export to other Gulf Coast Conference cement markets can be found at consistently been revised downwards. countries, while Binani Cement Company www.cwgrp.com/research, or expressed its desire to export to West by contacting the CW Group at Though the CW Group expects that the Asia since Dubai demand has decreased inquiries@cwgrp.com. worst is behind the UAE cement market, this considerably in the last years. does not mean that cement companies will One of the bigger new capacity projects is face easy pickings any time soon. We expect the Arkan Building Materials Company, the supply-side to continue expanding CW Group CemWeek BMWeek MAY/JUNE/JULY 2011

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35

LEADERS

COMMENT

High Potential for Growing Use of RDF in African Cement Plants

Refuse Derived Fuel (RDF) has been slower to take hold in the African cement industry than in other parts of the world, however there are indications that the continent’s use of this money-saving technique is on the verge of significant growth. To examine the issues involved, CemWeek and Prescon spoke with Mr. Boris Sassenrath, sales leader for Cement/RDF at Vecoplan. Vecoplan develops, manufactures and markets machines and plants for grinding, conveying and processing primary and secondary raw materials in the production process and recycling.

For an alternative fuels program to be effective for a cement manufacturer, a broader infrastructure needs to be in place to collect, process, and deliver the fuels.

What are some of the pre-requisites in the community for an African alternative fuel program to be effective?

not so much to collect and prepare waste as certain preparation technologies to ensure continuous fuel quality, but they can be it is to find adequate waste resources. introduced. With such solutions we are able In the case of industrial waste, for example, to compensate for any variations between successful cooperation between the cement developed and less developed countries. plant and recycling companies has been established in several countries. They are In case of bigger waste volumes, new very often based on long term contracts, technology is able to identify moisture, Generally speaking, a range of sources and an important pre-requisite is that these density, calorific value, and PVC. The need to be available locally to create waste waste streams for RDF preparation are cement plant is then able to receive RDF streams for RDF preparation. These are for available long term to assure a reliable fuel from many different suppliers, as it has now obtained the flexibility to separate different example MSW (Municipal Solid Waste), supply.

RDF streams into different storages – based C&I (Commercial & Industrial waste), on their quality. Those streams then need to Does a country need a certain degree of C&D (Construction & Demolition waste) be mixed before combustion; the blending development before cement companies and Biomass, which will all be handled process is especially important while using can more effectively adopt RDF and other within different treatment systems.

RDF to maintain fuel quality. Experiences alternative fuels? from North Africa have shown that RDF In some African countries, for example in produced from household waste with such There are many solutions available to Tunisia, Morocco, and Egypt, Vecoplan technologies is of good quality and can be prepare RDF and they can be adapted in a has already installed RDF preparation used effectively for cement production on way to overcome certain capacities lacking technologies or is working actively on technical solutions to prepare RDF. In many in less developed countries. In respect to the continent. for example, you need African countries however, the CemWeek challengeCWisGroupRDFCoalpreparation Week BMWeek 36

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LEADERS COMMENT

Does the view on RDF and other alternative fuels vary between developed nations and African nations?

The main driver for using RDF substitution is clearly the reduction of production cost.

If we consider that 40 percent of the cost of production of cement is fuel , it is easy to understand why there is a big interest to use RDF and we therefore find cement industries worldwide working on projects to prepare RDF. This is an important ecological and economic driver for the cement and recycling industry because it offers a big potential to save money.

Germany for example has proven that the use of RDF can effectively reduce production costs. The average substitution level in Germany is approximately 50 percent (many cement plants frequently use up to 70-80 percent of secondary fuel) in order

to reduce fuel costs. Further, emissions are proven to be kept within the legal range.

In many African countries the challenge is not so much to collect and prepare waste as it is to find adequate waste resources

After more than 20 years experience in production and use of RDF in cement plants, it is clear that mistakes were made in the beginning, but these can now be avoided in developing countries. We know now that major cement groups feel a growing responsibility to use RDF, defined by global frameworks and emission targets as well as cost. This is also the case for Africa; and the question is therefore not “if ”, but “when” a cement plant will use secondary fuel. This is further accelerated by the rising costs of primary fuel worldwide. And incidents like the atomic power plant disaster in Japan will have a demand-driven cost impact on traditional fuels such as coal. BMWeek CemWeek BMWeek BMWeek

MAY/JUNE/JULY 2011

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37

DATA

SHARE PERFORMANCE

As of June 30, 2011. All share prices in local currency Company (Exch)

52 WEEK HIGH

52 WEEK loW

% from 52Hi

% from 52Lo

50d Mov Avg

200d Mov Avg

% from 50d Mov Avg

% from 2000d Mov Avg

ADEL BRTN FPO (ASX)

3.72

2.54

-16.94%

21.65%

3.09

3.24

0.12%

-4.49%

BORAL LTD FPO (ASX)

5.73

4.15

-23.21%

6.02%

4.51

4.91

-2.54%

-10.34%

TITAN CEMENT (Athens)

18.36

13.92

-9.59%

19.25%

-

-

N/A

N/A

INDIA CEMENT (Bombay)

127.80

81.00

-44.44%

-12.35%

81.90

93.21

-13.31%

-23.83%

JK CEMENT (Bombay)

214.30

105.90

-49.39%

2.41%

110.53

128.42

-1.88%

-15.55%

PRISM CEMENT LTD. (Bombay)

65.90

44.85

-29.97%

2.90%

48.47

51.16

-4.79%

-9.78%

SAGAR CEMENT(BSE (Bombay)

170.00

113.00

-18.82%

22.12%

144.14

138.76

-4.26%

-0.55%

SHIVA CEMENT (Bombay)

11.49

5.50

-47.35%

10.00%

6.27

6.85

-3.53%

-11.74%

FLSMIDTH & CO. (Copenhagen)

549.00

328.80

-20.44%

32.85%

421.36

463.03

3.67%

-5.67%

WEST CHINA CEMENT (Frankfurt)

0.34

0.11

-31.20%

108.33%

0.25

0.27

-6.51%

-11.69%

SHANSHUI CEMENT (HKSE)

9.04

3.29

-1.66%

170.21%

8.15

6.92

9.11%

28.48%

ASIA CEMENT CH (HKSE)

6.68

3.30

-8.68%

84.85%

5.87

4.81

3.85%

26.70%

ANHUI CONCH (HKSE)

56.90

22.20

-35.68%

64.86%

33.52

38.29

9.19%

-4.41%

INDOCEMENT TUNGGA (Jakarta)

19,400.00

12,750.00

-12.11%

33.73%

16,871.20

15,883.30

1.06%

7.35%

HOLCIM INDONESIA (Jakarta)

2,575.00

1,800.00

-14.56%

22.22%

2,156.82

2,084.89

2.00%

5.52%

SEMEN GRESIK (PER (Jakarta)

10,350.00

7,250.00

-7.25%

32.41%

9,515.15

9,106.67

0.89%

5.42%

TONGYANG CEMENT & (KOSDAQ)

3,100.00

1,380.00

-54.35%

2.54%

1,511.43

1,845.56

-6.38%

-23.33%

ASIA CEMENT (KSE)

49,900.00

41,350.00

-2.61%

17.53%

46,337.10

45,408.10

4.88%

7.03%

LAFARGE MALAYAN C (Kuala Lumpur)

8.11

6.06

-8.14%

22.94%

7.75

7.52

-3.88%

-0.98%

YTL CEMENT BHD (Kuala Lumpur)

4.85

3.80

9.90%

40.26%

4.76

4.40

11.95%

21.01%

CIMPOR R (Lisbon)

5.49

4.27

-4.03%

23.37%

5.23

5.04

0.71%

4.49%

STEPPE CEMENT (London)

59.86

39.00

-34.01%

1.28%

40.17

46.53

-1.66%

-15.11%

CEMENTOS PORTLAND (MCE)

17.19

11.06

-25.19%

16.27%

13.34

13.84

-3.62%

-7.07%

GRUPO CEMENTOS (Mexico)

56.50

38.00

-23.58%

13.63%

40.76

43.22

5.93%

-0.09%

BUZZI UNICEM (Milan)

11.01

7.00

-12.76%

37.21%

9.35

9.58

2.73%

0.30%

CEMENTIR HOLDING (Milan)

2.65

1.76

-28.19%

8.37%

1.96

2.12

-3.09%

-10.20%

ITALCEMENTI RSP (Milan)

3.97

2.83

-22.47%

8.92%

3.34

3.57

-7.72%

-13.67%

ASSOCIATED CEMENT (NSE)

903.60

415.05

5.18%

129.00%

786.51

618.19

20.84%

53.75%

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Coal Week Coal Week Coal Week

DATA As of June 30, 2011. All share prices in local currency Company (Exch)

52 WEEK HIGH

52 WEEK loW

% from 52Hi

% from 52Lo

50d Mov Avg

200d Mov Avg

% from 50d Mov Avg

% from 2000d Mov Avg

ANDHRA CEMENTS LI (NSE)

23.70

8.60

-52.74%

30.23%

12.58

12.91

-11.00%

-13.27%

BINANI CEMENT LIM (NSE)

109.00

76.55

-16.97%

18.22%

90.29

87.98

0.23%

2.86%

BURNPUR CEMENT LI (NSE)

13.95

6.80

-45.16%

12.50%

7.81

8.56

-2.03%

-10.62%

DALMIA CEMENT (BH (NSE)

284.80

134.00

-76.70%

-50.49%

216.64

225.53

-69.37%

-70.58%

DECCAN CEMENTS LI (NSE)

189.80

121.00

-25.71%

16.53%

143.74

143.96

-1.90%

-2.06%

ITD CEMENTATION I (NSE)

282.00

148.10

-43.74%

7.12%

164.52

201.22

-3.57%

-21.15%

MADRAS CEMENTS LT (NSE)

134.00

80.00

-39.14%

1.94%

88.34

96.54

-7.68%

-15.53%

MANGALAM CEMENT L (NSE)

128.00

46.25

-15.86%

132.86%

112.25

73.90

-4.06%

45.74%

SHREE CEMENTS LTD (NSE)

2,350.00

1,500.00

-24.83%

17.76%

1,790.18

1,837.84

-1.33%

-3.89%

CRH PLC AMERICAN (NYSE)

25.16

14.76

-10.49%

52.57%

21.58

21.94

4.33%

2.63%

CEMEX, S.A.B. DE (NYSE)

11.47

7.46

-25.02%

15.28%

8.14

9.09

5.66%

-5.40%

EAGLE MATERIALS I (NYSE)

33.22

21.16

-16.10%

31.71%

27.42

28.91

1.62%

-3.58%

TEXAS INDUSTRIES, (NYSE)

47.42

27.28

-12.21%

52.60%

39.00

41.29

6.74%

0.83%

CIMENTS FRANCAIS- (Paris)

74.09

57.85

-1.50%

26.15%

70.13

69.82

4.07%

4.52%

LAFARGE (Paris)

48.76

35.57

-9.87%

23.55%

45.27

45.40

-2.94%

-3.20%

ANHUI CONCH CEMEN (Shanghai)

43.05

14.50

-35.61%

91.17%

33.16

33.85

-16.40%

-18.11%

FUJIAN CEMENT CO. (Shanghai)

12.98

6.35

-6.63%

90.87%

10.85

9.66

11.72%

25.48%

CHINA SINOMA INTL (Shanghai)

50.50

16.81

-45.90%

62.52%

29.32

38.74

-6.82%

-29.48%

HUAXIN CEMENT CO (Shanghai)

5.48

1.95

-54.70%

27.33%

3.03

3.46

-18.11%

-28.29%

HUAXIN CEMENT CO (Shanghai)

5.48

1.95

-54.70%

27.33%

3.03

3.46

-18.11%

-28.29%

SIAM CEMENT -F- (Stuttgart)

9.70

6.28

-10.11%

38.82%

9.17

8.68

-4.88%

0.43%

TAIWAN CEMENT TWD (Taiwan)

42.90

26.20

-0.23%

63.36%

40.15

35.40

6.61%

20.91%

ASIA CEMENT CORP (Taiwan)

40.95

26.95

0.12%

52.13%

38.78

34.38

5.73%

19.25%

CHIA HSIN CEMENT (Taiwan)

19.00

13.75

-4.74%

31.64%

17.61

17.06

2.79%

6.11%

LUCKY CEMENT TWD1 (Taiwan)

9.20

6.89

-21.85%

4.35%

7.52

7.57

-4.42%

-4.98%

HOLCIM N (VTX)

76.90

59.65

-17.49%

6.37%

65.23

68.68

-2.72%

-7.62%

HEIDELBERGCEMENT (XETRA)

54.00

30.86

-18.47%

42.66%

46.70

48.29

-5.72%

-8.83%

KHD HUMBOLDT WEDA (XETRA)

8.24

3.61

-25.96%

69.16%

6.37

7.03

-4.25%

-13.29%

MAY/JUNE/JULY 2011

CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group

39

SURVEY

An Exclusive CW Research Report:

Climate Change and Safety Rank Highest in Industry Concerns Over Sustainability As one of the CW Group’s research initiatives, the CemWeek Sustainability Survey takes the pulse of the global cement industry on sustainability. The objective of the initiative is to gauge the industry’s perceptions on a range of sustainable issues and current implementation across the industry. The highlights of the survey are presented in this update.

Participants were asked a series of questions related to sustainability issues facing the industry, specifically climate change (CO2), emissions (other than CO2), safety, occupational health, and biodiversity.

Besides offering an opinion of how important these issues were to the industry, they were also asked to rank the importance placed on these issues by their company, as well as whether their company was up to meeting these challenges and a series of other questions.

Nearly 500 industry professionals worldwide participated to varying extents in the survey conducted online by CemWeek, with over 300 completing the full survey. Granted, there is a selection bias in that professionals holding positive views toward sustainability efforts were more likely to respond than Do industry leaders take Sustainable Development seriously*?

(1=yes, it is at the top of the executive agenda; 5=no, they only pay "lip service" / limited genuine interest)

4 12% 3 19%

40

5 7%

those who were not as interested or viewed cement industry committed to the idea of it as less important. Nonetheless the results sustainable development? serve as an indication of what the industry is viewing as priorities.

This question was put to respondents and the majority believed they were “completely Top sustainability issues ranked clear” on the concept of sustainable development. Only 7 percent indicated they 1 Climate change had only a general idea of what sustainable 2 Safety development was. Participants also believed 3 Emissions other than CO2 that industry leaders took the idea of 4 Occupational health sustainable development seriously, with 62 percent suggesting it was “at the top,” 5 Biodiversity or “near the top,” of the executive agenda.

However, when asked if companies placed Is There A Real Commitment? more importance on short-term profitability “Sustainable development” is widely than on sustainability, the majority (65%) discussed; however, do cement indicated sustainable development was industry professionals have a definitive often sacrificed for short-term profitability. understanding of what it really entails? Of the various issues relating to sustainable More importantly, are leaders within the development — climate change, safety, In your opinion do companies place more importance on short term profitability than on sustainability?

(1=yes, companies regard short term profitability as of paramount importance; 5=lower profitability is entirely acceptable to support sustainable development) 5 4 4% 7%

1 29%

3 24%

2 33%

www.cemweek.com

2 29%

CW Group CemWeek BMWeek CemWeek CW Group BMWeek CemWeek BMWeek CW Group MAY/JUNE/JULY 2011

Coal Week Coal Week Coal Week

1 36%

Do you feel as if you understand what Sustainable Development means in the context of the cement industry?

(1=fully clear; 5=only a general notion) 5 4 7% 5% 3 9% 2 30%

1 49%

SURVEY emissions other than CO2, occupational health, and biodiversity — respondents ranked climate change in the context of CO2 emissions as the most important. Safety was the other major area of concern within the industry, while biodiversity was universally ranked as being the least important.

Roughly 62 percent of survey participants believed that it was either “extremely important” or “important” that the cement industry influence and address the reduction of CO2 emissions, and just over half (56%) were confident that the industry was either fully equipped, or at least equipped to reduce emissions. The flip side is that 46 percent of When asked to rank these issues in terms of respondents still believe the industry will importance by their respective companies, a struggle to address the issue. different list of priorities emerged. Safety, as opposed to climate change, was suggested Climate change due to CO2 emissions was to be the biggest issue for companies. identified as one of the biggest challenges This response may not be too surprising, for the industry, reaffirming the need to considering the long-standing and visible develop consistent techniques utilizing effort by the industry to promote safety. state of the art technologies to reduce Fifty-seven percent of the respondents chose these pollutants. Furthermore, the ability either “important” or “most important” to of the cement industry to control the describe the commitment attached by their emission of various pollutants is perceived company to safety. The least important areas as crucial. Ironically, few respondents again turned out to be occupational health were as confident that the industry was and biodiversity. fully equipped to address this particular issue, possibly given its complexity; no On-site health working conditions appeared simple solutions exist, and the issue often to be a lower priority, with two thirds of transcends national boundaries, requiring the respondents reporting on-site health collective responsibility and action. conditions were not as important. Another 37 percent indicated it held very little ROOM FOR IMPROVEMENT REMAINS importance for the industry.

Moreover, while larger global operators with significant resources at their disposal What Can Actually Be may be better equipped to address many Accomplished? of the sustainability issues discussed here, Respondents were unsure, however, if their most respondents agreed that room for companies were up to the challenge of improvement remained within both their meeting the issues related to sustainability. companies and the industry as a whole.

This uncertainty was especially high Undoubtedly, suppliers to the cement when it came to the issue of climate industry also play an important role in change. Surprisingly, respondents were bringing new equipment and processes to less confident in their companies’ ability bear in the effort to reduce emissions. to meet workplace safety challenges.

In contrast, participants showed more The economic conditions of the past two confidence in their companies’ ability to years have placed many manufacturers meet occupational health challenges, and under pressure. Thus, it is likely that were somewhat optimistic that biodiversity successfully achieving lower CO2 emissions could be effectively addressed. will require renewed focus, cooperation, and collaboration by all industry stakeholders.

To achieve a better understanding of But overall, the survey reaffirms that the controlling the emissions of various cement industry is generally committed pollutants, respondents were asked to to finding solutions that will drive down rank just how important it was to reduce CO2 and other climate change emissions, emissions from CO2, NOx and SOx, and but that much work still remains to reduce organic pollutants. In each case, the majority CO2 emissions at production sites, as well as of respondents, not surprisingly, indicated logistics and transport operations. the reduction of these emissions within the industry were either “extremely” important Overall, respondents confirmed that or “very important.” sustainable development within the industry

is a priority for its stakeholders, and that companies and the industry as a whole are focused on sustainability. However, while the issues explored in this survey were viewed as important, they had yet to receive top priority in the industry, and often took a back seat to short-term profitability. BMWeek BMWeek BMWeek

Survey respondents represented a variety of industry segments and positions. The majority (60%) of participants were cement producers, followed by consultants/analysts (16%) and equipment vendors (14%). Twenty-five percent of respondents were senior executives while 33 percent held management positions.

Survey respondents were geographically diverse, weighing in from all regions with the largest number hailing from Europe (42%). Another 20 percent were from North America, followed by Asia and the Pacific (18%), the Middle East and Africa (11%), and South America (9%).

GEOGRAPHIC PARTICIPATION MIDDLE EAST & AFRICA 11%

SOUTH AMERICA 9% EUROPE 42%

ASIA PACIFIC 18%

NORTH AMERICA 20%

SECTOR PARTICIPATION EQUIPMENT VENDOR 14%

OTHER 12%

CONSULTANT / ANALYST 15%

CEMENT PRODUCER 59%

To discuss the survey and all of its findings further, contact CemWeek at inquiries@cemweek.com.

MAY/JUNE/JULY 2011

CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group

41

Ce Ce Ce

FLASHBACK News flow on CemWeek.com last two months (darker red shows higher news volume)

Based on CemWeek.com daily news service, the news flow in the last few markets as usual reflected the larger markets. Additionally, Nigeria, Egypt, Saudi Arabia and Spain saw particularly high event flow during the period reflecting their quite different, but big issues.

IN THE NEXT ISSUE

Centenarians

CemWeek Survey

Food for thought

CARIBBEAN CEMENT MARKET

100 years and still going strong Are we thinking too little, or too much?

Highlights from the Brazil-Americas survey New currents among the islands

Country focus

Russia and CIS production units

Continued from page 31: People Moves served as president for Cemex in Central America, covering operations in Costa Rica, Guatemala, Nicaragua, El Salvador and Panama. Galindo will become the regional president for Cemex USA East.

In the UK, Gonzales will be responsible for a business that generates over £1 billion in annual sales and employs approximately 4,000 people across a network of over 400 locations. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek

CemWeek CemWeek

CW Group CW Group

Continued from page 25: A TEC...

Coal Week Coal Week

“This year we had one of the biggest cement conferences in the world,” said Mr Greco. “And hopefully we will attract an even bigger number of delegates in 2013.” BMWeek BMWeek BMWeek

100 years and still going strong Cemex Castillejo plant

Russia and CIS production units

Cem Cem Cem

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