CemWeek CemWee MAGAZINE
GLOBAL CEMENT INDUSTRY. KNOWLEDGE.
APPLIED RESEARCH
FEBRUARY / MARCH 2012
CemWee CemWee BMWeek GLOBAL CEMENT DEMAND
Dr. Davide Zampini, Cemex R&D Head
latest forecast from CW Research
PRICE WAR
tensions escalate in South Korea
WHEN CONCRETE FLOATS the world of cement ships
GREEN CEMENT exploring low carbon cement
News
|
Analysis
|
Market Coverage
|
Interviews
|
People Moves
Letter from the publisher and editor
MAGAZINE
INNOVATE - at home and abroad As winter wraps up in the northern hemisphere, CemWeek looks at how the industry’s big players fared in 2011, a year many faced with some trepidation. Now that the global cement company earnings season is largely over, we reflect on how fortunes have differed and form a grounding force for 2012. But along performance is anther side of the industry looking to find new and better ways of doing things: innovation and new products. Central is cement’s greener side that we explore in an issue that focuses solidly on innovation and research both new and old (in some cases very old). To set things off, the journal features highlights from a recent discussion between the CW Group’s Managing Director Robert Madeira and Dr. Davide Zampini, Cemex’s R&D Head about development, intellectual property and product innovation (“Applied Research” page 4). In a similar vein, in light of increasing pressure over rising energy costs and environmental initiatives, the big picture is increasingly green. “The Expanding Footprint of Low Carbon Cement” delineates new research into a former (2,000+ years former) Portland cement competitor, alkali-activated cement. Researchers believe the cement that built the Parthenon has a place in today’s construction industry, but adherence to standards based on Portland cement may prove problematic. On the lighter side—one might say “buoyant”—CemWeek presents a feature on concrete’s seafaring heydays (“The Surprising Secret World of Cement Ships” page 18). From military war horses to college racing teams, floating concrete may yet have a compelling future. And the lighter view aside, it serves as a reminder of the enormous versatility of the material and that unless we understand the usage potential of cement, we miss the big picture. In regional concerns, CemWeek unravels the Afrisam takeover in South Africa (42) and escalating price tensions in South Korea (40). And CemWeek partner CW Research offers the latest forecast on global cement demand (16). In line with our executive focus, CW Research also opens the discussion on “Utilizing an Expatriate Workforce” (44). Last, but not least, we take a moment to showcase a new exciting cement industry event in India that the GMI Forum and Prescon are organizing on October 10 and 11 in Mumbai. CemWeek is backing this premier forum that is set to bring business and technology together in a very compelling format—we hope to see you there! At CemWeek we are always interested in your feedback and contributions. To set up an interview for our Leaders Comment section or suggest content for a future issue, please contact us at editor@cemweek.com.
Robert Madeira publisher and head of research
CemWeek EDITOR'S NOTE CemWeek CemWeek CemWeek BMWeek BMWeek BMWeek
Jennifer Ridgeway project editor
To subscribe please visit www.cemweek.com/subscribe
www.cemweek.com
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
CW Group staffbox CW Group
Robert Madeira
cemweek publisher head of cw group research
CW Group
JENNIFER RIDGEWAY project editor
Paolo Dela Rosa art director
Anthony Fitzgerald advertising
Jennifer Adams Diana Heeb Bivona Uys Leo De Jager Mihai Musatiou Claudia Stafanoiu 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 ©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. Any submissions or contributions from readers shall be subject to and governed by CemWeek's Terms and Conditions, which are available upon request. The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the reader's particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of its contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review.
CW Group
CONTENTS FEATURES 4 Leaders Comment Applied Research: Dr. Davide Zampini, Cemex Research Group 10 The Expanding Footprint of Low Carbon Cement Alkali-Activated Cement is an old technology made new 18 The Surprising Secret World of Cement Ships From military vessels to racing clubs, a history of concrete that floats
4 18
10
DEPARTMENTS Numbers in Brief 2 Shedding Light on Cement Trade Prices
Tools & Analysis 44 Utilizing an Expat Workforce 46 HBS: Seven Strategy Questions
Research 16 Global Cement Demand Forecast 48 Market Update: Fiscal Year 2011
Regional Reports 24 Europe, Middle East & Africa 28 Asia Pacific 29 South Asia 30 America
Regional Focus 40 South Korea: Price Tensions Escalate 42 South Africa: Afrisam Takeover Approved
From our Industry Partner 32 Building materials update Projects & People 36 Notable projects 38 People on the move
Data Share Performance 50 Overview of stock performances for cement companies
42
cbi THE SHIFT FROM WEST TO EAST:
HARNESSING THE POTENTIAL CEMENT INVESTMENT IN INDIA AND BEYOND round 200 CEOs and industry stakeholders will assemble in Mumbai, India, to attend the 1st Cement Business & Investment India (CBI India) 2012 Conference on the 10th and 11th of October 2012. This is an international event with a unique focus on India’s cement sector that will emphasize the critical executive, investment, technology and fuel issues facing the sector.
“A new forum is needed in India to critically look at the industry’s issues. Not just as the ‘conference engines’ do today, but as industry analysts and technologists to build a real and insightful dialog, from the CEO down. The CBI event is set to become a forum of choice to hone competitive insights, form new business relationships and shape the industry agenda,” said Mr. Robert Madeira, Managing Director and Head of Research at the CW Group, the parent of CemWeek and owner of the India Cement & Construction Materials journal.
The two day interactive program, which is organized by London-based Prescon and the Global Management and Investment Forum, supported by CemWeek and India Cement & Construction Materials, will cover key aspects of India’s cement industry. Sessions will center on the principal issues facing the Indian cement sector today and in the future. In particular, industry leaders will take a closer look at the evolution and direction of the market, balance views on the ever critical fuel sourcing situation,
new policies and legislation, infrastructure plans, and technology maximization. The conference will also take a closer look at Indian’s growing role in the international markets as companies expand globally through acquisitions, greenfield units and exports as well as technological updates and best-practices. “So far the marketing of Indian cement has largely taken place inside the country to meet the great demand that arose from India’s infrastructure boom,” said Mr. Demsas Faloppa, CEO of Prescon. “But things are slowly changing and those companies that lead the Indian cement market are actively looking for investment and new ventures. This is the right time to discuss these dynamics and developments.” CBI India attendees will include not only cement companies but also investors, bankers and advisors, fuel traders and suppliers, engineering organizations, among many other constituents. The conference will include over 25 presentations by industry experts and government officials, a CEO led panel discussion, various networking breaks, an exhibition, lunches, cocktail reception, and a gala dinner. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek
CemWeek CemWeek
CW Group CW Group
Conference registrations are now open at a 25% early bird discount. Please e-mail bissirat@prescon-int.com or call 0044 207 1007940 for more information.
Organised by Prescon and the Global Management and Investment Forum. Supported by CemWeek and the India Cement & Construction Materials journal
GMI
GLOBAL MANAGEMENT & INVESTMENT FORUM
Coal Week Coal Week
NUMBERS IN BRIEF CW Group Research:
Shedding light on cement trade price, finally! 2011 vs 2010 Overall, 2011 brought a slight increase in global gray cement trade prices after a weak 2010 that registered a 4.5 percent decrease from the year before. ANNUAL CEMENT TRADE PRICES (GLOBAL AVERAGE FOB GRAY CEMENT PRICES IN $/TON) 100
50
0
2009
2010
2011
Note: Jan-Nov for full set of countries
Source: CW Group
2011 finish Preliminary figures show that prices softened somewhat in December 2011. All the same, the preliminary December figure is still 6.4 percent lower than the peak for the year. The near-term outlook has lost some momentum from mid-year, but may still be revised higher. 2011 CEMENT TRADE PRICES (GLOBAL AVERAGE FOB GRAY CEMENT PRICES IN $/TON, PRELIMINARY) 80
Jan ‘11
Feb ‘11
Mar ‘11
Apr ‘11
May ‘11
Note: Index based on advance reporting set
Jun ‘11
Jul ‘11
Aug ‘11
Sep ‘11
Oct ‘11
Nov ‘11
Dec ‘11 Source: CW Group
These figures are extracts from a new report from the CW Group: the Global Cement Market Trade Price Report. This unique industry first presents gray cement, white cement and clinker import / export prices for a key set of countries in a single musthave resource for analysts and practitioners alike. Contact the CW Group Research at sales@cwgrp.com to learn more.
2
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
SILO CLEANING Safer, faster and more efficient than other traditional silo cleaning methods Highly qualified crews, using our unique, non-human entry silo-clean system Fully certified rope access teams equipped to work at height Iso 9001, 14001 and atex certified silo cleaning operations
worldwide service
(+356) 3550 5657 info@blancon.net
Offices in Iberia and Brazil
www.blancon.net
LEADERS COMMENT
APPLIED RESEARCH A TWO-WAY PROCESS BETWEEN THE CENTER AND THE FRONT-LINE
Discussion with: Davide Zampini, Cemex Research Group In today’s knowledge-based economy where know-how and innovation define business success, forwardlooking cement and concrete producers have made knowledge management the cornerstone of their business models. Recently, Robert Madeira, M.D. and Head of Research of the CW Group, spoke with Dr. Davide Zampini, Head of the Cemex Research Group, about the key ingredients for successful innovation in the industry and about the role of the research group within Cemex. This article captures some of the highlights from this exchange. 4
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
5
Coal W Coal W Coal W
LEADERS COMMENT GLOBAL COLLABORATION NETWORKS Robert Madeira notes that "Innovation” doesn't have to mean a monolithic, centralized R&D machine. Rather, says Madeira, “Competitive advantage can be developed by shepherding vast amounts of ideas percolating throughout the organization in a manageable and systemic manner.” On that note, Dr. Davide Zampini, head of the Cemex Research Group, explained that Cemex decided early on to make the exploitation of knowledge and information a central part of its corporate strategy, He explains that the firm founded the research group in Switzerland in order to act as the operating unit responsible for leading research and development and generation of intellectual property (IP). Thus, the business model lends itself naturally to a central platform for leading, developing, managing, coordinating, sharing and monetizing of know-how and information across the company. When asked to describe the R&D processes and information flows within the global firm, Dr. Zampini points out that a R&D center resides at the heart of the Research Group in Switzerland and leads, manages and coordinates collaboration between the main technology stakeholders groups at Cemex. He contends that the primary role of the Research Group
6
www.cemweek.com
is one of leadership in the generation of intellectual property and R&D, as well as to act as a platform for the facilitation, coordination and central management of knowledge and intellectual property (IP) within the global firm. “The R&D group at the center is relatively small,” says Dr.
“People always refer to ready-mix as a local business and a local product, and that is something Cemex is trying to change in the industry.” Zampini, “but it is supported by a strong network of global collaborators.” He argues that the group’s size is a strength, for it enables the researchers to “collaborate very effectively and very efficiently,” unlike other large firms that “often have silos with people working in a corner.” When asked which research areas Cemex Research Group focuses on, Dr. Zampini explains that the center focuses on product innovation and production technology innovation, while important R&D
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
contributions are also being generated by the Business Process, Sustainability & Energy, IT Technologies, and Innovation areas within the Cemex Research Group He points out that one of the key areas the group works on is chemical admixtures research, work that has recently led to the launch of two new concrete technologies: Promptis and Hidratium. Promptis, a rapid-hardening fast-formwork removal ready-mix concrete technology, was launched on April 15, 2011. The second ready-mix concrete technology, Hidratium, was launched nine months later, on January 25 of this year. This second technology, notes Dr. Zampini, is highly innovative because of its self-curing properties, which are unique. “Both products are global initiatives,” he adds. He argues that global launches like these are only possible because the company’s new collaboration culture enables a very agile and efficient diffusion of an IP—different groups within Cemex now work together to render deployment phases more efficient. Since its creation, Dr. Zampini stresses, the research group has played a central role in stimulating and coordinating cooperation. “The dynamics of collaboration within our company have changed dramatically within a very short period of time,” says Dr. Zampini, “Cemex has started to believe in collaboration net-
product development and industrialization. “This has been made much faster thanks to Cemex’s new way of working,” Dr. Zampini says. “There is now a new culture within Cemex that fosters collaboration.”
works. We have embarked on a completely new way of working.” Dr. Zampini further makes the point that Promptis and Hidratium are global products, because effective communication and cooperation within this global collaboration network enabled the R&D innovations from the Research Group to diffuse and be deployed at a rate that is much faster than in the past. The readymix network is very broad in nature and aims to draw a wide range of people into the network so that it does not just consist of established ready-mixers and commercial people but includes “anyone who wants to be part of the ready-mix business provided that he or she understands how to evolve the ready-mix business and wants to develop it in a profitable and innovative way.” According to Dr. Zampini, the Cemex collaboration network consists of more than 500 people within the global firm connected through the Cemex Research Center. He adds that through this platform a wide range of people share information, know-how (best practices) and experiences in order to support the roll out of new technologies. TALKING TO THE FRONT LINE When asked to explain the ways in which R&D gets market information for innovation research and product development, Dr. Zampini points to the vital
part local operations play in the global collaboration network. At Cemex, the feedback of local operators constitutes a deciding factor when selecting product innovation ideas for global initiatives. This is because local operations provide Cemex with important information on “which products are the most promising for distinguishing oneself in the market or dealing with competitors, given local market conditions and local needs,” Dr. Zampini explains. Dr. Zampini further notes that collaboration with local operations is not only central to developing new innovations but is also crucial to rolling out new products and processes, commercializing them and integrating them into the industry. The Research Center ensures the roll out of new technologies developed, working closely with local operations to customize the product to the local market and industrialize it. Dr. Zampini argues that making sure that an innovation can actually be practically produced and offer value to the customer should be central to applied research. “A global brand and a global product only make sense when you do that,” he says. Along these lines, the Research Center makes it possible to quickly transfer information about technologies and markets, greatly speeding up the process of
Close interaction with the frontline is also invaluable when developing strategies for taking Hidratium to market in different countries, says Dr. Zampini. “People always refer to ready-mix as a local business and a local product and that is something Cemex is trying to change in the industry.” He contends that by working closely with frontline operations, the Research Center is able to transfer knowledge and develop technologies that are customized to local materials and address local market needs. This ensures that a global technology yields products that can actually be locally produced and commercialized in a reliable way. “Our approach enables us to turn a global product in a global market into a local product in the local market,” notes Dr. Zampini. Hidratium is not currently being rolled out in all countries. When asked why certain countries have been chosen for the initial launch but not others, Dr. Zampini explains, “Markets are complex: different markets are at different stages and have different needs. This affects the decision to distribute Hidratium.” For instance, France and Mexico have always been at the forefront when it comes adopting new concrete technologies, and this has reliably translated into high sales volumes for Cemex. He acknowledges, however, that in other countries Cemex concrete technologies are not as well established. OPEN INNOVATION Mr. Madeira points out that there is always a tension between “pure” or “fundamental” research and quick return on investment: “The challenge is how to balance the two as an organization and looking clinically where the shareholder value is maximized on the trade-off curve.”
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
7
Coal W Coal W Coal W
LEADERS COMMENT When asked how Cemex balances its long and short-term financial interests in terms of R&D, Dr. Zampini explains that since the Cemex Research Group was founded in 2001 its aim “has always been to develop the right portfolio of IPs.” This right portfolio of IPs enables the group to make immediate financial profit through licensing while simultaneously developing innovative products and processes that allow Cemex to differentiate itself in the market. Along these lines, Mr. Madeira suggests that “from a management perspective, a company-wide R&D function can be considered more an investment or portfolio management capability working to allocate resources to different ‘innovation’-related initiatives, be they in-house originated, acquisitions, or other financial arrangements such as licensing.” Cemex’s business model is also based on open innovation, Dr. Zampini stresses. That is, Cemex does not solely use inhouse processes to develop products and take them to market but also uses external paths for obtaining new knowledge and translating existing know-how into cash. He explains that the firm develops its own knowledge through independent R&D carried out in a collaborative corporate context. However, it also evaluates technologies developed by other sources with an eye to obtaining intellectual property rights. In addition, licensing IP to third parties is part of the firm’s knowledge management strategy. “Cemex regards its knowledge as an important and valuable asset,” says Dr. Zampini, adding that it is something firms in the industry “will want to get their hands on.” He notes that the firm does not jealously shield its knowledge from competitors. What matters is “balancing immediate financial profit against the long-term benefits of having a competitive product.” BEING PRACTICAL AND OFFERING VALUE “It should be practical to produce a new
8
www.cemweek.com
cement or concrete technology on a large scale, tailor it to local market needs and commercialize it,” says Dr. Zampini. That is to say, it should be possible to industrialize the new technology. “One can develop a lot of creative ideas and cool products in a laboratory, but the only
What matters is “balancing immediate financial profit against the long-term benefits of having a competitive product.” time an innovation becomes a true innovation is when it reaches the customers —and in order to do that you have to be able to industrialize the technology.” Dr. Zampini stresses that industrialization is central to Cemex’s approach to innovation and states that the firm considers
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
the issue a matter of social responsibility. “When Cemex says that it is going to offer products and make something available, it is going to act responsibly to deliver the product to the customer,” he insists. This is also the primary reason why Cemex has to date kept very quiet about the green technologies it has been working on for the past three years, Dr. Zampini explains. “We simply don’t want to make too much noise because we want to make sure that we can deliver those technologies seriously,” he says. “If we make something green, we make sure that our customers can then benefit from it—that they can buy it, that they can act with it and see value in it.” Dr. Zampini notes that some green technologies that have emerged over the years do not meet this key criterion: they cannot currently be practically industrialized. “I have been working in cement since 1988,” he says, “and I have seen things come and go. At the end of the day what matters is the earth’s crust composition.” He points out that some new green tech-
nologies require materials that are not easily accessible or not available in most countries, limiting the global potential of products based on them. Zampini says that he is “all for developing green technologies but we also have to be practical.” Although many people say that the industry is conservative, according to Dr. Zampini there is actually a lot of innovation taking place in the cement, concrete and construction materials sector. However, he contends that innovation in this sector will only be successful if it is based on market needs and if it yields products that are industrially robust and actually available. He explains that the Cemex Research Center plays a key role in leading, facilitating, and managing the indus-
One can develop a lot of creative ideas and cool products in a laboratory, but the only time an innovation becomes a true innovation is when it reaches the customers.
would be to generate value immediately. According to Dr. Zampini, the Center’s strategic focus to date continues to be focused on the short to medium term, aiming to generate value through centralized IP portfolio management and the development of products and processes that bring immediate benefit. Although the current innovation focus is on increasing the added value and industrialization of existing technology, an important effort is being dedicated to propose innovative solutions for sustainable construction. The incorporation of the Center’s role into the firm’s global strategy has been a step-wise process, “because Cemex has always been cautious when it comes to incorporating new elements into its business model,” Dr. Zampini explains. He expresses the view that “once the Research Center has established itself more firmly within the global company, the R&D group might be able to look for-
ward to more long-term projects,” but he adds that “at the moment we are focused on the short and medium term.” To emphasize, “we are conscious of the fact that whatever we do, we need to bring to the market as quickly as possible.” Looking forward, Cemex will continue to invest in acquiring and developing knowledge, says Dr. Zampini. “Although markets are difficult, Cemex understands that investing in technology is one of the key things that will differentiate it in the long term,” he says. He further points out that “Cemex is demonstrating this through its global launches. The company is very active in developing new products and has several product innovation projects in the pipeline.” Finally, Dr. Zampini concludes that “Cemex will continue on its current path because the company continues to believe very strongly in innovation and related activities.” BMWeek CemWeek BMWeek BMWeek
CemWeek CemWeek
trialization of new technologies through its support and close cooperation with front line operations around the globe. He adds that although it operates in the background and may therefore not be not be very visible to the outside world, the Center is of great strategic importance to Cemex. When asked to describe how the strategic focus of the Research Center fits with that of the wider global firm, Dr. Zampini explains that the center’s aim is to generate and acquire practical applied knowledge that brings profit to the firm within a short to medium term timeframe. When Cemex founded the Research Center in 2001, it envisioned that the center’s contribution to the wider firm’s strategy
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
9
Coal W Coal W Coal W
FEATURE
The Expanding Footprint of Low Carbon Cement
s the best-known and perhaps most trusted building material on the planet—Portland Cement—faces increased pressure from lobby groups and national governments over environmental and energy concerns, Alkali-Activated Cement is being heralded as a possible low carbon solution. 10
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
11
Coal W Coal W Coal W
FEATURE Into the heated debate about how to build greener, cheaper, and better comes the lesser-known Alkali-Activated cement (AAC). Used by Greek, Roman, and Egyptian builders, AAC performs as well or better than ordinary Portland cement (OPC) at a 50 percent energy savings and 95 percent less CO2 output. It can be made from recycled industrial wastes at room temperature and installed with the same equipment as regular OPC. The result is an explosion of interest, discussion, and debates about the real commercial potential of AAC and the possibility of expanding its footprint in a world focused on cutting back.
The Birth of Low Carbon Cement Low carbon cements are heralded as a hot new green technology, but the chemistry behind them is ancient. Archeologists have found AAC elements in the Greek Parthenon, Roman slag remnants, and even laced throughout the Egyptian pyramids. Although our ancestors had no problem building without heat-fired clinker, AAC is no longer considered a mainstream building product. Lay the blame at the feet of Portland cement. Ever since British bricklayers popularized the material in the early 1800s, the fast-hardening, durable, and inexpensive cement has dominated global construction markets. Its properties have become the standard for building codes, roadworks, and public infrastructure projects everywhere, with an estimated two tons of ordinary Portland cement produced annually for every person on the planet. Unfortunately, Portland is not perfect. It takes significant amounts of energy to heat clinker and produce a usable finished
product. The heavy energy grid demands of cement processing plants, coupled with rising energy costs and increased scrutiny on emissions, have regulators and governments pressuring the industry to reduce its energy needs, be greener with its
Archeologists have found AAC elements in the Greek Parthenon, Roman slag remnants, and even laced throughout the Egyptian pyramids. production practices, and lower overall costs. Producers have launched projects in alternative fuels, new mix ingredients, and ever-leaner plant practices. However,
Calera green cement constituent parts
12
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
despite solid efforts in all directions, there are upper limits in the technology and serious cost constraints to manage. Into a market hungry for alternatives comes AAC—again. The old technology is being put through its paces once more as industry and environmental groups search for a solution to the Portland production conundrum that could potentially make everyone happy. Leading the way are a team of researchers from Drexel University, Villanova University, and ITT Bombay, along with a group from the University of Bath, all working through a series of site tests and proof of concept grants to determine if AAC could once again have a place as a top global building material. Although AAC emerged briefly in the marketplace over 20 years ago, interest was limited at the time. Now the changed market environment has altered the perception of this “fringe” and “novelty” technology. Modern researchers are looking into AAC variants at a cellular level. The
stand OPC and what it can offer. Departing from that standard would mean a dramatic mind-shift for both regulators and the cement industry as a whole. AAC doesn't need to be heat-fired in a kiln at 1500 C; it can be mixed at room temperature in a bucket. And instead of a fixed recipe, it can be made from a wide variety of industrial byproducts and redirected landfill fodder. While this is a serious advantage from a recycling and carbon footprint reduction perspective, it is a real barrier for standardization and regulation. Different inputs lead to different set times and different levels of early strength, both key components in pacing construction work.
"Officials have a duty to give taxpayers the best, most-durable road or bridge or whatever possible." Drexel University group is primarily testing the nano-structure of AACs. They've worked multi-nationally, taking on a Proof of Concept project funded by the US Environmental Protection Agency and on-site testing in Bombay backed by the Indian government, laying down test sidewalks and sample low-income housing structures. Meanwhile, the Indian exploration of commercial applications is being mirrored by the team from the University of Bath, who is looking at low carbon structural concrete potential in the UK markets. Both groups hope to present findings that support a large-scale return to the building material of the past.
Will It Work? "Officials have a duty to give taxpayers the best, most-durable road or bridge or whatever possible," says Steve Kosmatka, Vice President of Research and Technical Services at the Portland Cement Association. "There's risk to trying new things." His statement sums up the skepticism about AAC on a number of levels. All currently existing building standards— whether the project is in Beijing, Bombay, Buenos Aires, or Boston—are based around the known elements of OPC performance. Though they lodge complaints about the production process, governments and regulators worldwide under-
All the same, for a world looking to find alternatives to OPC, there are a number of reasons adapting to AAC would be worth a bit of wait time and fine-tuning. Alkali-Activated Cements create an end product that mimics OPC in terms of durability, shrinkage, and curing. They can be installed with the same equipment currently used for OPC, requiring no additional investments from manufacturers. AACs even beat OPC in terms of overall lifespan, waste containment, resistance to acid attack, and a whiter appearance straight from the pour—to say nothing of the dramatically reduced input costs of recycled vs. raw materials and energy costs. Despite all this, AAC production remains small-scale and experimental. However, each new study drives acceptance, and certain emerging global markets like India are willing to accept the risks of leaving OPC for the significant savings of AAC. As a result, more mainstream players are putting resources behind AAC and low carbon cement development. Small Player, Big Backers The current market has moved beyond eco-dreamers and academic groups investing in AACs and other forms of low carbon cement production. Increasingly,
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
13
Coal W Coal W Coal W
FEATURE dozens of small-scale building materials players are announcing their participation in these alternative technologies, independently or with the support of major industry backers. The venture partnerships behind lower carbon cements span both the globe and the variety of carbon innovations in cement production outside pure AAC models. For example, US-based Solidia has a cement manufacturing process that uses CO2 as a reactant instead of water, a production innovation backed financially by BASF, the global chemical powerhouse. London-based Novacem uses magnesium silicate to create a carbon negative OPC, financed in part by traditional building materials leader Lafarge. Colombian cement maker Argos backs America's Ceratech, which uses 95 percent waste fly ash in production to lower the overall carbon profile of the finished product. Outside of these partnerships pushing incremental change in OPC production, independent producers are also making waves with big players by offering leading-edge carbon solutions in major global markets. In the United States, Californiabased Calera offers carbonate mineralization by aqueous precipitation (CMAP) to scrub carbon out of plant emissions, while Georgia-based Sriya Green Materials offers clinker-free cement products. On the other side of the world, Australia's Sydney-based Calix corporation offers flash calcination technology to stop 90 percent of plant CO2 emissions, while in Melbourne Zeobond offers geopolymer AACs to replace OPC with a product they call E-Crete. Collectively, each of these firms and ventures is breaking ground for a future that might not star OPC—or at least not an OPC formulated anything like what is used now. The work wins green awards and special contracts, making environmental teams and alternative thinkers happy. However, the next big leap is mainstream commercial availability.
14
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
Commercial Availability of Low Carbon Cement Large-scale commercial availability and acceptance of low carbon cement solutions remains the sticking point in the green dream for cement. Portland cement is a known and trusted material around which global standards are set. Alkali-Activated cements and low carbon cement blends are not. Regulators don't like the unknown. They have a duty to their tax bases and a sharp eye on potential litigation if things go wrong. As a result, broad commercial availability is limited to areas where regulators have been open-minded about OPC alternatives. Researcher Alex Moseson from the Drexel University team freely acknowledges these and other challenges to large-scale commercial acceptance of AAC products. He cites the variability in feedstocks and a need to have all elements of the mix working at the same time and to expectations as well as regulatory acceptance as the biggest barriers in commercial availability. Still, he is passionate that the potential is there for AAC. “We're competitive in cost and strength, it has a longer life, it's more durable, it's more versatile,” he says. “It is going to be certified.” When certification by global safety and standards agencies will occur is the big question. Test sites are critical in helping regulators see that AACs are just as safe— and perhaps safer—than OPC. With more evidence supporting long-term durability, lower energy usage, and greater cost effectiveness building up each season, the big breakthrough could be right around the corner. AAC Outlook The outlook for AAC hinges on making that leap, one that environmentalists and researchers like Moseson are hoping to see soon. They feel that the market demand is there for a lower-cost, more energy efficient version of OPC, particularly in emerging markets facing tight
Green mixers coming in the future?
"We're competitive in cost and strength, it has a longer life, it's more durable, it's more versatile... It is going to be certified." budgets and severe housing shortages. AACs and other low carbon cements could fill the gap perfectly if only they could get the needed regulatory approval and permissions.
That approval may be on the verge of happening. Multiple proof of concept ventures have passing the ASTM C1157 standard with formulations in their sights, with final test results due at the end of 2012. It may not be this year or next, but AAC and low carbon cement producers are determined not to give up before they've made their mark. Whether their mark will last as long as the original AAC structures in Europe and Egypt remains to be seen, but there is no restraining the current interest in a disruptive green technology every bit as old as the pyramids. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek
FEBRUARY/MARCH 2012
CemWeek CemWeek
CW Group CW Group
Coal Week Coal Week
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
15
Coal W Coal W Coal W
RESEARCH
CW Group:
Global cement demand expected to reach 4 billion tons by 2013 Courtesy of Demag
he latest Global Cement Volume Forecast* analysis by the CW Group shows global cement consumption growth will trend around six percent in 2012, reaching 3.78 billion tons. The increase is a decline from the nine percent consumption volume growth in 2011 when worldwide cement demand reached 3.56 billion tons. The chief driver of global consumption growth will continue to be China, which will consume 2.22 billion tons of cement by 2012.
Regional Forecasts Mixed On a regional basis, the results as well as the forecasts for 2012 are mixed with regard to consumption, capacity, and utilization. Western European consumption remained virtually stalled while North American consumption managed two percent growth in 2011. The CW Group expects little change in consumption growth for these markets through 2013. However, notable recoveries were seen in select core European markets, such as France and Germany. For Latin America, Central and Eastern Europe, and the Middle East regions, the forecast is more heartening as these regions will trend just slightly lower than the global average. Strength in Brazil, Saudi Arabia and Poland in particular is sustaining expansion in these regions.
Heatmap of relative 2012 growth
Projections for Africa and most of Asia have been resilient in light of unrest and economic headwinds. We note exceptions for 2011 in these regions where growth has been strong, such as Indonesia and Nigeria, but offset by weakness in
cement demand in Egypt, South Korea and the Philippines. When it comes to adding capacity, 2012 has followed a largely expected trajectory, though with a temporary hesitation
*Contact the CW Group Research at sales@cwgrp.com to learn more about the twice yearly updated (February and August) Global Cement Volume Forecast Report, covering global, regional and the CW Group Coal Week CemWeek BMWeek most important cement markets worldwide.
16
www.cemweek.com
CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
GLOBAL CEMENT DEMAND (mm tons) 4,000
China Asia ex-China Africa Middle East
2,000
Central & Eastern Europe Western Europe Latin America
0 2008
2009
2010
2011
2012
North America
2013
REGIONAL SHARE OF GLOBAL DEMAND 100%
China Asia ex-China Africa Middle East
50%
Central & Eastern Europe Western Europe Latin America 0.0
North America 2008
2009
in some markets, such as India. Generally, Africa and parts of Asia and Latin America are seeing the biggest capacity additions in the next few years. Low Utilization, Demand Growth Furthermore, several countries will struggle with low utilization rates—that is, below 50 percent of actual cement production output over total cement capacity, as opposed to only considering consumption over capacity that many in the global cement sector erroneously track. Countries seeing some of the greatest challenges include Greece, Spain, Bulgaria, Hungary, Iraq (though admittedly
2010
2011
2012
2013
more driven by maintenance issues), Jordan, and the UAE. In 2012, the regions of Asia, Latin America, and the Middle East will keep pace with the six percent global cement consumption average. North America and Western Europe will fall well below growth expectations, while Africa’s consumption growth will moderate at only four percent. Barring additional macro-economic shocks to a fragile global economic system, by 2013 the CW Group expects that global cement demand will be close to 4 billion tons, with China representing about 59 percent of the total tonnage. BMWeek
Worst and best performing markets* Growth leaders
Worst growth markets
Bolivia
Bulgaria
Brazil
Egypt
Chile
Greece
Colombia
Hungary
Kenya
Israel
Nigeria
Romania
Peru
South Korea
Poland
Spain
Saudi Arabia Vietnam CW Group CemWeek
UK
Coal Week CemWeek CW Group Coal Week BMWeek *Based on 2011-13 demand CAGR Coal Week CemWeek BMWeek CW Group
FEBRUARY/MARCH 2012
USA
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
17
Coal W Coal W Coal W
FEATURE
The Surprising Secret World Of Cement Ships From hush-hush military applications to local fan clubs, these ships operate in a world all their own
ement isn't known for its buoyancy, yet since the 1850's ships crafted from concrete have seen continuous use. From small, handcrafted dinghies to industrial tankers and barges, the vessels more commonly known as “cement ships” occupy a unique and rarely remembered niche in the boating world. Exploring this world is a bit like venturing into the unknown, except the unknown is right under your nose and may actually be tied up at dock near you.
Whose idea was this, anyway? Cement ships launched into the public consciousness at the 1855 World's Fair in France. Considered a novelty attraction, the World's Fair exhibit was a small dinghy built by Joseph Louis Lambert for use on ponds and lakes. Now known as the developer of reinforced concrete, Lambert had been experimenting with concrete boats on his family farm since 1848. His dinghy was built in the ferrocement style, poured around a frame of cables and wood.
18
www.cemweek.com
What possessed an otherwise sane Frenchman to think that his concrete would float? Later analysts point to history, claiming descriptions of sea-going vessels in ancient texts indicate that the idea for cement-based ships dates back more than 2,000 years. However, no single author or surviving example of such a vessel stands out, leaving Lambert the title of “inventor.” The original prototype for Lambert's dinghy remains on display at the Museum of Brignoles in his native Provence, where
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
he continued his experiments with ferrocement structures until his death in 1887. Lambert also freely shared his success, allowing interested parties from around Europe to dig into his designs. As a result, by the mid-1860's ferrocement barges designed by the Fabriek von Cement-Iger Werken of Holland were being used throughout Europe to haul goods down canal ways. These early ferrocement structures were readily accepted as viable vessels, though personal and independently powered cement ships remained drawing board dreams.
Early ventures After operating in limited capacities and as novelties for a few decades, cement ships caught the eye of industrialists around the turn of the century. This was helped in large part by the work of two pioneering engineers, one in Italy and one in Norway. Both showed that cement ships had greater capabilities than had previously been thought. In Italy in the mid-1890's, Carlo Gabellini dedicated himself to building up the sophistication of cement ship hulls. Previously, dinghies and barges were built using solid pour or basic ferrocement methods. Gabellini got creative, using rod netting, wire mesh and troweled mortar to make elaborate laminated hulls. Gabellini's methods addressed one of the
primary issues with cement ships: capacity. While a six ton cement ship displaced the same amount of water as a six ton wooden ship, the interior capacity levels were quite different. Cement ships generally have thicker hulls than wooden or steel vessels, a feature that was especially pronounced in early versions. Gabellini helped strip some of the extra pour out of the hull, increasing capacity for hauling goods or installing mechanical propulsion systems. Along with creating extra internal capacity, the next major technological leap was creating cement ships of significant size with ocean-going ability. The dominant ferrocement vessels at that time were mainly canal barges and dinghies for short lake or river outings, which were
towed or rowed. Their thick hulls altered their displacement-deadweight ratios, which made them somewhat less responsive in the water and kept them out of choppy ocean waves. However, as Gabellini's methods spread, engineers started to go larger and more adventurous with their pours. Still, it wasn't until 1917 that cement ships made a major leap forward into the oceans. On August 2, 1917, an 84-foot vessel weighing 400 tons launched itself into the fjords of Norway and the pages of history. Known as the Namsenfjord, it was a ferrocement ship poured by Nicolay Fougner. His ship was a self-propelled vessel specifically designed for ocean use, and the world was duly impressed. Coverage of the launch was positive and global,
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
19
Coal W Coal W Coal W
FEATURE Tanker, Toiler, Sinker, Spy:
SS San Pasqual
Built as a twin for the SS Cuyamaca in 1920, the SS San Pasqual was meant for a peaceful life as an oil tanker, yet the 434' ship, with its 7,500 ton deadweight, lasted less than a year in the oil business. In 1921, she was damaged by a storm and spent three years in the docks before being purchased by the Old Times Molasses Co. of Havana, Cuba. In Havana, the SS San Pasqual toiled as a storage boat and occasional molasses freighter. Short, heavily loaded trips between Havana and Santiago came to an abrupt end in 1933. Though reporters screamed that she sank, the ship actually ran aground off the coast of Cuba near Cayo Las Brujas. The majority of the structure is above the water line, where it remains to this day. The stability of this “sinker” brought another career to the SS San Pasqual: spy. During WWII, the stuck ship was outfitted with machine guns, cannons, and a crew who kept watch for German submarines. A bridge was built to temporarily connect the ship to the mainland, but after the war it was removed along with the armaments. After wartime service, some might consider retirement. Instead, the SS San Pasqual became a prison for Che Guevara's army during the Cuban Revolution. From there, it served as a fishing club headquarters, a diving spot, and finally a ten room hotel accessible only by boat. Though currently abandoned, the SS San Pasqual is still a popular spot for tourists. Boarding the ship is possible with the right charter boat captain, and visitors claim that if you catch it in the right wind, you can smell the perfume of the original cargo. Unsalvaged after 80 years, the holds of raw sugar cane have been fermenting, creating a rich Cuban rum eternally locked away below decks.
20
www.cemweek.com
leading world governments and industrial leaders to invite Fougner to come teach them about cement ships. He accepted a number of these invitations, most notably one in October of 1917 from the government of the United States. Wartime Uses Fougner's success with a large ferrocement vessel capable of ocean voyage was quickly replicated by industrial groups around the world. American W. Leslie Comyn took the record, launching a 6,125 ton steamer in the spring of 1918. The sudden upsizing of cement ship size was driven by shifting world dynamics and the escalation of the fighting in World War I. At the time, the world’s Navy fleets were almost exclusively wood or steel based vessels. Submarines existed in basic form, but most of the merchant marines were surface vessels which could be attacked by other ships or low-flying WWI aircraft. Losses were steep. The British averaged 25 percent losses per voyage in the first year of the war, and the Americans lost 122 ocean-going ships within two weeks of declaring themselves a part of the Allied Forces. Conventional shipyards were unable to keep up. Building steel and wooden ships took time, and material costs had gone through the roof as steel shortages spread. The previously novel cement ships took on a new aspect. Pouring ferrocement vessels cost very little relative to steel or wood production. Materials were readily available, and the ships could be created quickly. Once their ability to be viable ocean-going vessels was proven by Fougner, they were embraced in earnest by shipbuilders looking for an edge. The Europeans had a leg up on the Americans. While the Emergency Fleet Corporation approved by Woodrow Wilson was tasked with building 24 ferrocement warships, production didn't get underway until April of 1918. WWI ended that November, leaving the U.S. with just twelve ferrocement ships, none of which was fin-
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
ished in time to do any fighting. In contrast, British and Italian shipbuilders were able to complete a number of barges and replacement ships, though they served in a limited capacity due to the narrow time window between Fougner's fame and the end of the war. With WWI over, enthusiasm for cement ships waned. Shipbuilders found that their new creations were ugly ducklings in the market. Wood and steel were once again widely available at low prices, leaving no reason to adapt to the ferrocement sailing style now that traditional ship styles were convenient to build. Now little more than unwanted hulks, the Emergency Fleets of the world were sold cheaply to industrial interests, who re-purposed them as tankers or breakwaters. However, putting the ships out to pasture and mothballing the new technology was a mistake. When WWII broke out, steel shortages returned with a vengeance and submarine attacks ravaged existing naval fleets. Scrambling to get back in the game, Britain took new recruits, swore them to secrecy, gave a crash course in cement works, and put them to work feverishly churning out new ferrocement vessels. Between September of 1943 and May of 1944, Britain’s new shipbuilders created more than nine million tons worth of cement ships for war-time service In the United States, the Hooker's Point shipyard in Tampa employed more than 6,000 workers dedicated to the ferrocement ships. They were tasked with creating 24 self-propelled concrete ships, each of which was named after cement work pioneers and pressed into active service before the end of the war. Rumors of concrete submarines on both sides of the oceans abounded, including a 120 British submarine and an 84-foot vessel in California, but their existence remains unconfirmed. Rather than being novelty items or experimental pieces, the WWII ferrocement ships were generally workhorses. In the early years, many were supply freighters,
The Unlucky Sister:
Pollock's Moliette First Sea Lord “Jacky� Fisher was one of many British mariners impressed by the Norwegian Namsenfjord. As a result, he ordered James Pollock, Sons & Co. to build him sister ferrocement ships. Molliette and her sister, Violette, were experimental hopes for Britain's future. Molliette was a 125' vessel designed to carry 300 tons of cargo. She launched in 1918, sailing out sideways from Pollock's narrow shipyard on the Faversham. This was the custom at the time, but the lopsided start seemed an omen for her future.
particularly in the South Pacific, where some American ferrocement vessels became the world's largest floating refrigerators for perishable rations. At the end of the war, both U.S. and European cement ships were instrumental in the invasion of Normandy: ferrocement barges were hauled to Mulberry Harbour to serve as fuel and munitions warehouses, independently propelled ships transported soldiers, and more than 200 caissons served as defensive barriers. transition to mainstream WWII was the last great hurrah for giantsized ferrocement ships. As the war came to a close, the global shipyards were again shut down. However, learning from the past, the technologies associated with ferrocement shipbuilding were not abandoned entirely. Industrial groups and consumers picked up the torch, leveraging what had been learned over the combat years. One key lesson had to do with the type of concrete that could be used to successfully make the ships. The concrete had to allow for a smooth, even pour to create hull integrity. It also couldn't be too dense, or it would make the ship sail
sluggishly and create hulls that were not flexible enough to withstand ocean waves without cracking. These lessons had to be learned the hard way with fatal cracks and groundings, but the new concrete mixing strategies that came out of the shipyards had a broad influence. The lighter-weight concretes developed by shipbuilders in California, for example, were adopted by local builders who used them to quickly erect housing tracts in the population boom that followed WWII. Ships also transitioned from purely workhorse roles to more leisure pursuits. Even with thinner hulls and lighter concretes, the monster work ships from the war years weren't economically practical in peacetime. For smaller to mid-sized vessels, however, nothing else held the value of ferrocement, particularly for amateur class builders. Concrete yachts, local ferry boats and personal pleasure craft building surged, with the Hartley FerroCement Boat company offering kits and how-to guides. It is estimated that more than 11,000 Hartley boats have been built over the years, with the vast majority still sailing.
The ship never did quite sail right. Her ratio of displacement to deadweight was too high, and she handled sluggishly in the water. A challenge to captain in normal conditions, she was particularly hard to manage in any sort of bad weather. Molliette first ran aground the year after she launched, sticking herself at Calais. Rescued, she proceeded to ground herself on the Goodwins until she was freed by a rising tide. Weather was her excuse for both grounding incidents, but then she went on to hit London's Tower Bridge. Sold for a loss, she was grounded deliberately opposite the Victory Pub, where she served as the scandalous playground/annex to the West Mersea Yacht Club until a highly-publicized police raid. From there, poor Molliette was towed out over a shingle ridge, which broke her back and ended her sailing career. Ignored as a wreck until WWII, the ship was moved to Cocum Hills and used as target practice for young gunners when fighting broke out. Now, at low tide, the pitiful remains of this unlucky sister can still be seen, a reminder that not all experiments have a happy ending.
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
21
Coal W Coal W Coal W
FEATURE In the hands of the fans As ferrocement ships moved more firmly into individual markets, they acquired something of a cult following. With the major shipyards no longer interested in creating them, new cement ships were almost exclusively handcrafted by dedicated individuals of varying skill levels. Like any other group of artisans, cement ship fans quickly formed their own societies, operating actively yet under the radar of everyday publicity. The leading groups share boat creation and care tips, connect sellers with buyers, and troubleshoot the quirks of smaller cement ships, such as difficulties with adding or removing fittings. They tear apart new technologies and provide sourcing advice for parts and materials. Modern groups operate on Facebook, Ferrocement.org, and Ferroboats.com in dedicated formats, with “ferroboat” threads available on nearly every sailing enthusiast site. Most groups discuss personal yachts of 100 feet or less, though in Europe ferrocement barges have a firm following in the houseboat communities of Scandinavia. The definitive tome of the fan community is Ferrocement Boats, authored by Colin Brookes, whose 2nd edition was published in 2006. The dominant obsession remains with pouring techniques and concrete quality. Weight variance between materials is a key factor in ease of steering even now, and speed has taken on a new importance over the decades. Racing cement ships is gaining popularity, particularly for smaller yachts and personal vessels such as canoes and kayaks. Future potential Today in amateur ferroboat races the future potential of cement boats and cement boat technologies can be seen. Their utility and versatility remains of interest to major industrial and military organizations, but testing the materials and making breakthroughs in concrete is perceived as much less glamorous than working in rare earths or nanotechnol-
22
www.cemweek.com
ogy. Colin Brookes refers to this as the “ferroboat aversion” or “ferroboat stigma,” yet even the most high-tech groups are quietly keeping an active hand in the cement ship world. Take, for example, the American Society of Civil Engineers (ASCE) National Concrete Canoe Competition in which collegiate teams from the U.S., Canada and Mexico create and man concrete canoes, with prizes awarded for speed and design. It seems like a fun afternoon out—geeks floating on the nations’ lakes and rivers— but dig deeper. These “geeky” concrete canoers are underwritten by Congressional groups, the Department of Defense and NASA. They blend cement sand with fiberglass fabric, rice, perlite, or other fillers viewed as advantageous in any given competitive year, routinely achieving speeds unmatchable by traditional canoes. Each canoe is meticulously tested and evaluated by state-of-the-art equipment. The reigning champions at The University of Alabama at Huntsville use a customized version of the U.S. Army's Remote Readiness Asset Prognostic and Diagnostic System to quantify the dynamic performance of their canoes, a tool more regularly used for missile/munitions health monitoring.
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
Why bother? The answer lies with future construction needs in all industries. Analyzing the potential for concrete canoe technologies in The Structural Engineeer, writer Alan Burr noted that ultra-light and durable composites can be used for Earth-bound shelters, aircraft carriers or future space buildings. UAH's own webpage notes the potential of the blends used in their five national-championship boats for lunar colonization, earthquake resistant building or underwater exploration. Cement ships have therefore come full circle, from one amateur Frenchman floating reinforced concrete on his farm’s ponds to teams of dedicated “amateurs” floating composites that some might not even recognize as concrete. It's not what most of us are used to seeing on the water, yet there is no doubt that modern versions of these boats float with an elegance, speed and utility unable to match any competitor. Covered by traditional fittings and paint, cement ships can look identical to other boats. It's what lies beneath that makes their world so different. Flying under the radar, ferrocement ships and their fans are quietly but surely charting their own course into the future. BMWeek CemWeek BMWeek BMWeek
CemWeek CemWeek
CW Group CW Group CW Group
Co Co Co
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
REGIONAL REPORT:
environmental rules, making it difficult to establish new ones. Record outlays for the construction of roads helped to boost cement sales in Poland last year. Sales rose roughly 20.7 percent to 18.99 million tons while production rose 20 percent to hit nearly 18.6 million tons. Forecasts suggest that 2012 may be another good year, and January seems to support this, with cement production increasing 7.4 percent.
Europe The ongoing financial crisis threatens to further squeeze European cement firms, with few immune. In Spain, problems facing cement producers are expected to continue this year, as the construction sector remains depressed. With Spanish consumption dropping to 20.2 million tons in 2011, the lowest in 25 years, the cement sector has suffered nearly a 50 percent drop in size over the last few years. Still, several manufacturers struggle onward, making adjustments. Cementos Valderrivas is looking to offload overseas operations and Cementos Lemona temporarily shuttered. Cemex, Italcementi, Cimpor, Holcim and Lafarge have also taken steps to reorganize operations in the country. In the northern region of Spain, five cement makers were fined for colluding to fix cement and concrete prices. Cementos Portland Valderrivas, Canteras de Echauri (CETYA), Hormoigones Beriain, Cemex Espana y Canteras and Hormigones VRE must pay a combined fine of US$11 million.
benefit to Dyckerhoff, which reported a 13 percent increase in sales for 2011. The group reported cement volumes were up in all countries it operates in, with the exception of the U.S. Also in January, the German cement industry came together to form one association under the banner Verein Deutcher Zementwerke (VDZ). The newly formed group currently represents the interest of 23 domestic cement companies. In a somewhat surprising move, a new player entered the Greek cement market. According to reports, Stagakis Cement allegedly has millions to invest and hopes to gain significant market share through competitive pricing. The addition of a new cement plant is viewed favorably because there are only three cement facilities in Greece, and the EU has very strict
Lafarge France welcomed the appointment of a new CEO, Pascal Casanova, amidst its ongoing restructuring. Casanova assumes the reigns as Lafarge makes plans to close one of its French facilities and announces the layoff of 460 workers, including 90 in France. German cement manufacturer HeidelbergCement cites a mild winter that extended the building season as blunting the effects of the economic crisis. The warm snap may have also provided some
24
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
The Polish cement industry is however concerned about the EU’s planned tougher limits on CO2 emissions. In 2013, the emission limit will be 766 kg of CO2 per ton of Portland cement clinker produced, which is about 60 kg less that Poland’s current average. This would likely force manufacturers to buy emission allowances for between three and four million tons of CO2 per year. If the projected 30 to 40 euro per ton sticks, this could represent a huge expense for manufacturers. Russia & the Baltic Countries The Russian cement sector grew by nine percent in 2011, spurred largely by economic recovery. Strong growth in the urban construction areas like Moscow and greater infrastructure spending accounted for much of the growth. The top cement regions were Belgorod (4.9 mtpy), Krasnodar (4.6 mtpy) and Mordovia (3.8 mtpy).
regional report: europe, middle east, africa
Russia intends to hike its cement production to 31.2 million tons by 2015, with the volume of cement consumption expected to almost double from the current US$6.7 billion to $12.2 billion in 2015. Cement manufacturers are planning further expansions. For example, Eurocement plans to commission new lines and plants throughout Russia and the CIS totaling 15 million tons. Despite the stronger competition, Eurocement believes the annual growth of cement prices will be around 7.5 percent in 2015. The Russian Federal Antimonopoly Service gave Novoroscement’s takeover of Inteko’s Verkhnebakansky cement the green light, finding the deal no threat to competition. Verkhnebakansky is undergoing an upgrade that will raise its installed capacity to 2.3 mtpy, as is Novoroscement’s Pervomaysk facility. Once finished, the Pervomaysk facility will have an annual capacity of 2.5 million tons. Ireland-based CRH moved forward with the acquisition of the Odessa cement plant in the Ukraine. The company bought a 51 percent stake in the 500,000ton facility in December. CRH will use the plant to grind clinker for its Cement Podolsky facility, which has a 2.3 mtpy capacity. CRH has been acquiring cement companies as it seeks to expand its holdings in other countries. In the second half of 2011, CRH reported 23 acquisition and investment initiatives totaling approximately EUR 400 million. The company currently operates in 35 countries. Volyn Cement, a Dyckerhoff unit, recently completed its modernization program to convert its kilns from gas to coal
powered and now plans to increase the use of alternative fuels. The EUR 60 million project has allowed Volyn Cement to reduce its natural gas consumption from 108 million cubic meters per year to only 7.8 million, translating into a financial savings of nearly 20 percent. In 2011, cement production in Azerbaijan reached 1.4 million tons, up 12.4 percent from 2010. The country’s main producer of cement, Garadagh Cement, manufactures between one and 1.4 million tons of cement per year (50% of the market). Tajikistan is set to inaugurate two new plants in the first half of the year. The facilities, located in Varzob and Matcha, will have a combined capacity of 172,000 tons. Meanwhile, the commissioning of three cement plants in Belarus was
select PROJECTS IN THE WORKS: EUROPE & RUSSIA COMPANY (LOCATION) (Ukraine)
Ulyanovsk Cement (Russia) Eurocement Group (Russia)
PLANT
Table available in the CemWeek Magazine Print Edition.
OVERVIEW
Nikolaevtsement
Construction will start in Spring 2012 on a new plant in the Ukraine with partnership from the European Bank for Reconstruction and Development. Plant capacity will be 2.1 mtpy on 92 hectares of land. Commissioning is estimated for the second quarter 2015 with full production as of Q4 2012.
Ulyanovsk Cement has begun a modernization project valued at 650 million rubles. The project involves purchasing two walking excavators with a bucket capacity of 6 and 10 cubic meters.
Phased commissioning begins January 2012 of a 600,000 tpy cement plant
www.cemweek.com/subscribe with full production capacity (2 mtpy) reached by 2013.
pushed back. Originally scheduled for November 2011, completion is now set for no later than July 1, 2012. The new lines’ capacity will total 1.8 mtpy. Middle East Cement production in the GCC region is projected to increase this year and next, thanks in large part to higher infrastructure spending among major spenders such as Saudi Arabia and Qatar. Production is forecast to hit 120.7 million tons by 2013, a 13 percent increase over 2011, while demand is set to increase 6.6 percent to 88 million tons. The current construction boom in Saudi Arabia appears to support the projections. In the third quarter of 2011, over US$25 billion worth of construction contracts were awarded, representing a 104 percent increase over the same period a year ago. Concerned over potential supply shortages, the government ordered cement makers to boost capacity utilization rates and stop exporting to neighboring countries and focus on selling locally. The move met with protest from exporters, upset over the loss of business. A recent rise in cement prices resulted in the government implementing price freeze. The government, vowing to monitor market prices more closely, has intensified its efforts to investigate potential price fixing claims. In January, fourteen
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
25
Coal W Coal W Coal W
people were arrested in the western region for alleged violations. In contrast, the UAE government notes that there are no cement shortages on their side of the border. With total consumption in its domestic market ranging from five to 11 million tons and production capacity at 24 million tons, this confidence may be warranted. Still, the cement industry remains in a downturn due to declining demand. Cement manufacturers remain concerned with rising energy costs, with a few raising prices by as much as ten percent. Indian major Ultratech has indicated it wants to buy out its partner’s stake in Dubai-based Star Cement in order to make the company a fully-owned overseas subsidiary. Ultratech currently owns 80 percent. The buy-out would give Ultratech access to the western Asian market where Star operates two cement plants in the UAE with a production capacity of 2.3 mtpy. It also operates a 400,000 ton facility in Bahrain and a 600,000 plant in Bangladesh. With the intensification of reconstruction efforts in Afghanistan, cement demand, as well as prices, appears to be on the rise. Cement import prices are also on the rise, with Pakistani exporters raising prices from US$37-$40/ton to US$50/ ton. The Afghani government took steps to improve domestic production by signing two new agreements with Iran and India. The agreement with Iran allows Iranian company Pishgaman Sanaate Majd to invest roughly US$150 million in
the construction of a new cement plant in Afghanistan. A bilateral agreement with India, which will potentially strengthen several industries, allows Indian companies the opportunity to bid on infrastructure projects and encourages Indian cement manufacturers to sell cement and set up facilities in Afghanistan. The cement market in Iraq is projected to grow rapidly as rebuilding efforts intensify. The Iraqi Cement Company increased production in 2011 to one million tons, a ten percent increase, following the government’s investment of 17 billion dinars. The company hopes to increase production by as much as 25 percent in the coming years. Saudi-based A Jouf Cement is interested in establishing an Iraqi cement factory and recently signed a memorandum of understanding, with no end date. Despite the ongoing unrest in Syria, the cement market remains stable, and little black market activity has been detected. However, this is likely the result of relatively low to moderate cement demand. In related news, Egypt’s Asec Cement has decided to delay construction of its new 1.5 mtpy Syrian facility because of the current civil unrest. The Cement Manufacturing Association of Turkey (TCMA) is calling on the government to offer aid to combat soaring power costs. Electricity accounts for 40 percent of costs, and the organization claims that a proposed 20 percent increase in the power tariff would make the industry uncompetitive.
Turkish-based Akcansa and Cimsa are each planning acquisitions abroad this year. The companies seek inorganic growth opportunities as regulations do not allow any single company to control more than 25 percent of the domestic cement market. Both companies have sufficient equity to make purchases without borrowing. Africa Slow housing demand and delayed tenders for infrastructure projects have weakened cement demand in Egypt, but the cement industry is confident this year will be a good one. Capacity expansions will continue this year, despite last year’s eight percent drop in cement consumption. While continuing political and economic uncertainty may result in a further two percent decline in consumption in 2012, industry observers believe the government’s plan to build 75,000 residential units will help stabilize the sector. Egyptian investors are also confident in industry growth, with many expressing interest in purchasing new cement production licenses. Unfortunately, investors may have to wait up to three months to see who will be awarded the fourteen new cement licenses up for grab. Government officials have indicated that they will not block foreign companies from securing licenses but that the bulk of the licenses will be given to Egyptian companies. For the first time in four years, South African cement sales increased, signaling a construction rebound may be in the works. Sales climbed 3.2 percent to 11.2 million metric tons last year compared with 2010, which saw a 7.8 percent drop. One firm cautiously optimistic about this year is the Public Investment Corporation (PPC), which is relying on improving prices to boost its prospects in South Africa and Zimbabwe. Hoping to move forward with reorganization efforts, PIC has offered an additional 18 percent stake, worth 940 million rand (US$117 million), to Holcim and Bunker Hills in AfriSam. PIC reached an agreement with Holcim in early February to reorganize Afrisam’s debt to avoid
26
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
the cement maker defaulting on EUR 1.03 billion (US$1.3 billion) of bonds due next month. In an effort to protect local manufacturers and achieve self-sufficiency in cement, the Mozambican government is looking to implement an import quota system. Currently, there are five cement factories in operation and another three being built. The projected capacity increase is expected to reduce imports, thus necessitating a quota to avoid overimportation. The government also wants to bridge the price gap between local and imported cement, as imported cement is cheaper than local. Cement demand in Libya is high, with the sector pulling from neighboring Egypt to meet current demand. The reopening of the Asamer Group’s plants in Benghazi, Hawari and Al-Dernah Fataiah should, however, ease current importation levels. Asamer had withdrawn in March 2011 because of the civil unrest, shutting down six production lines with a capacity of three million tons per year. In Namibia, Ohorongo Cement, a new entrant to the market, alleges cheaper Chinese imports are costing them dearly. Ohorongo Cement sells for around N$60 per bag and is being undercut by imported Chinese cement selling at N$30 per bag. The company is asking the government to help infant industries like cement survive, calling for import duties on imported cement, among other measures.
A government study indicates Nigerian cement prices have increased 12.8 percent since the beginning of the year. An investigation revealed that prices rose from N1,950 in December 2011 to N2,300 in January 2012. One explanation for the rise may be the increase in the exchange rate of the Naira in international markets and escalating transportation costs. Nigeria's Dangote Cement is projecting a supply surplus by the end of the year and is asking the government to ramp up spending to spur demand. With the commissioning of its new six million metric ton cement plant in Ibese in February, the country would have enough cement to meet local demand and achieve self-sufficiency. In December, Kenya’s industrial minister fired the managing director and the
Meanwhile, Kenya is expected to experience a cement shortage after the closure of several mines threatened to cut the supply of raw materials to cement plants. All major cement manufacturers may be paralyzed following the closure of the mines by locals in Kajiado County. Maasai tribesmen have warned companies to stay away until further notice. The mines are a source for raw materials like gypsum, kunkur, limestone and pozzollana. The companies have requested government assistance to help deal with the situation.
regional report: europe, middle east, africa
board of directors of East African Portland Cement (EAPC) over what he considered poor governance. Since then, a nasty court battle has ensued over whether the company is subject to government dictates. Operations were suspended briefly and only partially resumed in late January. In early February, both sides remained under a gag order, as the saga played out in court.
Ethiopia has stopped accepting foreign investments in cement projects, instructing its agencies not to accept new applications. More than 40 cement companies are now licensed, with 22 having started work (either construction or production). According to a recent report, there are currently 15 facilities producing cement with a total production capacity of 7.8 mpty. Under the government’s fiveyear Growth and Transformation Plan, Ethiopia plans to boost cement production to 27 million tons. BMWeek CemWeek BMWeek BMWeek
CemWeek CemWeek
CW Group CW Group CW Group
select PROJECTS IN THE WORKS: middle east & africa COMPANY (LOCATION) Carthage Cement (Tunisia) Renaissance Cement (Egypt)
PLANT
OVERVIEW
Bir El Kassaa
Carthage has announced a new cement plant in Bir El Kassaa, but work has been stalled by security issues and worker problems. Facility capacity will be 150 m3/ hr. COST: 600 million dinars
Qena Industrial Zone
Dangote (Nigeria)
Work will resume at the new Qena industrial zone cement plant after work was suspended in 2011 during the Egyptian revolution. Plant capacity will be 6.1 mtpy. COST: 8 billion Egyptian pounds Dangote commission its 6 mtpy unit in Ibese. Upon completion of the third line at Dangote's Obajana plant, the company will have a total production capacity over 20 mtpy against 17 million tons of demand in Nigeria.
Forspak (Republic of Congo) Lafarge (Nigeria)
Table available in the CemWeek Magazine Print Edition.
China's Forspak will complete construction of a 300,000 ton cement plant in the
Republic of Congo in 10 months' time. COST: US$16 million www.cemweek.com/subscribe Ewekoro
Nigerian President Goodluck Jonathan has commissioned a new 2.5 mtpy cement plant to be built by Lafarge WAPCO.
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
27
Coal W Coal W Coal W
REGIONAL REPORT:
Cement demand and prices in China remained weak despite the end of the Chinese New Year holiday. Cement prices have dropped between ten and 40 yuan in recent weeks. Analysts contend the market is “resting” after its dramatic growth last year; therefore, prices will remain low for some weeks to come. The Chinese Cement Association claims the industry is grappling with overcapacity in the face of slowing construction activity. The slowdown means that companies will likely experience lower growth this year. Additionally, cement manufacturers’ costs will go up once the country implements its nitrogen control emissions standards that will require cement plants to be fitted with new equipment. In 2011, total domestic cement sales reached 47.9 million tons thanks in part to strong economic figures and infrastructure spending. Furthermore, export sales declined, indicating cement producers remained focused on
supplying the domestic market. January figures appeared to support a strong 2012 cement forecast with cement sales rising 15.2 percent to 4.06 million tons, as reported by leading producer Semen Gresik. The figure was slightly lower than 4.6 million tons recorded in December but was expected to improve thanks to recently passed land-clearing legislation and reduced benchmark interest rates. Thailand's Siam Cement Group (SCG) is expecting a moderate four to five percent increase in cement sales this year on forecasts that demand in the residential market will remain slow. The country’s housing market is set to slow as homebuyers delay their decisions due to flood concerns. SCG manufactured 23.2 million tons of cement last year, including 6.5 million tons for export. Domestic demand increased three percent to 27.3 million tons last year. SCG also announced it will pursue growth opportunities overseas. To that end, the company is studying a possible investment in a cement plant
and limestone mine in Myanmar and technology buys in the U.S. and Europe. The Vietnamese government, in an effort to stabilize the cement sector, has moved to restrict the number of cement plants. The Ministry of Construction announced it would temporarily delay work on several approved cement projects and would no longer approve new petitions. The country is struggling with a ten million ton cement oversupply this year, and the government believes the glut is the result of the uncoordinated construction of cement plants. The cement glut is further exacerbated by Vietnam’s slowing economy, which has reduced demand. A combination of a glut and maturing loan payments for cement plants is expected to drive some cement manufacturers into bankruptcy. As a result, many cement companies are ramping up cement exports to seven million tons this year, up from 1.5 million tons in 2011. Philippine cement sales slowed in 2011 as delays in government infrastructure spending negatively influenced dispatches. Local cement demand rose just one percent to 15.6 million metric tons in 2011 from 15.45 million a year earlier, according to a Cement Manufacturers’ Association of the Philippines (CeMAP) report. Finally, Australia’s Cement Industry Federation warned the government against a plan to limit foreign ships plying its routes, saying it could increase costs for the industry. The federation asserts that coastal shipping legislation due to be introduced to parliament this session will increase freight costs for member companies, as well as adding pressure to companies already threatening to close plants, cut jobs and move business offshore. Adelaide Brighton, which experienced a two percent drop in profits in 2011 because of a higher effective tax rate, indicated it was both stunned and shocked by the government’s plan, calling it a “backward step.” BMWeek CemWeek CW Group BMWeek BMWeek
28
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
CemWeek CemWeek
CW Group CW Group
Coal W Coal W Coal
South Asia Cement consumption in India is estimated to grow by 6.5 percent in FY12. According to a recent report by a leading brokerage firm, consumption growth in FY11 was 4.4 percent, down from 10.2 percent in FY10. Dispatches grew seven percent between April 2011 and January 2012, mainly led by 15 percent YoY growth during Nov-Jan. In contrast, demand was subdued between April and October 2011, growing just 3.5 percent YoY due to sluggish housing and infrastructure spending. Furthermore, the capacity utilization rate is expected to decline further to 76 percent in FY12, down from 77 percent in FY11 and 87 percent in FY10. Despite the current cement oversupply, Indian cement production is expected to continue to grow. The sector’s Planning Commission Working Group reported that the country’s capacity is set to hit 479 mtpy by 2017, and the group has projected ten to 11.75 percent growth in demand, production and installed capacity during the next five years. Cement manufacturing capacity reached 323 million tons last year, surpassing the government’s target of 298 million tons. Unfortunately, the growth in demand has not matched the growth in capacity,
regional report: asia pacific & south asia
REGIONAL REPORT:
which grew only 4.9 percent last year and is expected to drop to three percent this year. This has raised fears of a glut in the market leading to falling margins and underutilization among Indian cement companies. Underperformance is also a concern among Pakistani cement manufacturers. The sector continues to operate at only 70 percent of installed capacity, and the sector has struggled with rising production costs, which it has been unable to fully
pass on to consumers. Coal prices rose 18 percent in 2011, resulting in cement prices jumping 23 percent. However, despite rising raw material costs, inflationary woes and high interest rates, cement manufacturers still managed to grow cement dispatches 2.23 percent in January to 2.54 percent. Pakistani cement manufacturers remain bullish on the industry’s prospects for 2012, citing the relative stability of cement continued on page 34
select PROJECTS IN THE WORKS: south asia COMPANY (LOCATION)
PLANT
JK Cements (India)
Durg
OVERVIEW Work has begun on a 2.7 mtpy greenfield project at Durg, with commissioning set for October 2013.
TNPL (India)
Thatta Cement (Sri Lanka) SDIC (West Papua) Dalmia (India) JK Cements (Oman)
TNPL is building a 600 tpd cement plant set to be commissioned in January 2013. The plant will produce cement using lime sludge and fly ash waste generated during paper manufacture.
Table available in the CemWeek Magazine Print Edition.
Hambantota Port
Sri Lanka has approved construction of a cement plant near Hambantota Port by Pakistan's Thatta cement. Construction will last 6 to 18 months. COST: US$15.6 million
Manokwari
The State Development and Investment Corp (SDIC) is conducting a feasibility study for a 1 mtpy cement plant in Manokwari, West Papua. Construction would begin in 2013 and end in 2014. COST: US$200 million
Belgaum and Gulbarga Karnataka
Dalmia will start expansion in Karnataka and Meghalaya and will establish two plants in Belgaum and Gulbarga with an initial capacity of 2.5 mtpy.
India's JK Cement has plans to build a 3 mtpy cement plant in Karnataka in order
www.cemweek.com/subscribe to help increase output to 17 million tons (from a current 7.5 mtpy) by 2017. COST: 5,000 crore (mostly financed through loans)
Sonapur Cement (Nepal)
Dudhrash, Gogli of Dang
Nepal will commission two new cement units in Dudhrash and Gogli of Dang with a target capacity of 700 tpd.
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
29
Coal W Coal W Coal W
REGIONAL REPORT:
North America While Cemex posted a fourth quarter loss of US$146 million, not all the news is bad. Shares rose in the first week of February to its highest peak in two months. The revelation of concrete steps to cut US$800 million worth of anchored consolidated debt, including the possible sale of assets, contributed to the spike. Reports of new plant projects in North America have been sparse, but two recent announcements are being heralded. In Canada, a joint venture between McInnis and Cimbec Canada to build a cement plant on Port Daniel in the Gaspe Peninsula in Quebec is drawing attention. Additionally, in the U.S., the Ozinga Brothers announced plans to set up a US$250 million cement facility in Chicago, Illinois. The one-million ton capacity plant will be located at a former Cargill grain facility and is expected to be finished by 2015.
Essroc was found to be in violation of the Clean Air Act. Under an agreement with the EPA, the company agreed to pay US$33 million to upgrade six of its plants. Included in those upgrades is the installation of a selective catalytic system for two of its long wet kilns at its Logansport facility. In Mexico, retail prices rose 0.6 percent in January, hitting 123 pesos per 50-kilo sack. The increase comes on top of an average two percent price increase seen throughout most of Mexico in December. The higher prices appear to be in response to the significantly higher coal prices that many cement manufacturers, including Cemex, have been experiencing. Central America & Caribbean Another piece of good news for Cemex included the announcement that the company had secured the cement contract
The Lehigh Southwest Cement plant in Tehachapi was tapped by California regulators for emitting the most mercury in 2010. The plant produced 872 pounds, making it the largest producer of mercury in California and second in the United States. Lehigh faces more difficulties as the Bay Area Air Quality Management District announced plans to adopt regulations aimed at reducing nitrogen oxide, particulate matter and other pollutants. For Lehigh, this means an upgrade to its equipment.
30
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
for the Baha Mar Tourist Complex in Cable Beach Nassau. The facility, being built by CCA Bahamas, will be the largest entertainment center in the Caribbean once completed in 2014. In January, the Honduran government imposed a price freeze on cement, following a spike. The government is currently reviewing all prices and has given approval to a few companies to move forward with increases. Cement demand has been lower in recent years, but the industry is optimistic that the government’s plan to ramp up infrastructure spending will turn the market around. Lafarge is optimistic as well, starting a US$200 million modernization program, disbursed over three years and finished in 2014. Cementos Progreso Guatemala is also lured by the potential of the Honduran cement market. The company expressed its interest after the Honduran government announced in December that it would do more to facilitate the arrival of new cement companies. Currently, the Honduran cement market is dominated by two industries; thus more competition is good. South America Cement prices along with other building materials rose in Venezuela in January. The country is suffering from a cement shortage fueled by inadequate supply levels from the state-owned plants following nationalization. The shortage
regional report: americas
has grown so severe that even cement workers are urging the government for help with addressing the 2.1 million ton shortage. The Venezuelan government has committed to spending 2.4 billion bolivarians to fund the operations of the nationalized cement units throughout the country, and there are signs production is improving. Cement production grew by 7.79 million tons in 2011 and the government hopes to increase that to 11.54 million this year, which would represent a 27 percent increase. Tasso Cement started production at its facility in Villa Hayes, Paraguay, in January and hoped to produce 100,000 bags between January and February. The additional capacity should help avert the potential cement shortage and rising prices seen in the country. Meanwhile, low water levels on the Paraguay River were behind a price increase by INC. The cement manufacturer struggled to get raw materials down the river and instead hauled materials over land, a more expensive alternative. The company insisted it was producing enough to meet local demand but was unable to also get its products to customers because of the low river levels. As a result, INC’s shipments were down 55 percent in January. Cemento Andino in Peru is expanding its capacity at its clinker plant. The upgrades, which will increase production by 60 percent, should be completed by April of this year. The US$162 million investment will bring the company’s total capacity to 2.1 million tons. Bolivia’s Soboce, the country’s largest cement producer, saw a deal finalized for the sale of its shares by Mexico’s GCC to Peru’s Gloria Group. The move may tie in to the Peruvian company’s plans to address growing cement consumption in its neighboring country. Bolivia’s cement consumption is expected to grow at a rate of ten percent this year. Until then, the Bolivian government announced it would import cement from Peru to address the current supply shortage and rising cement prices. The shortage is
due in part to the inability of local gas producers to meet growing demand from the sector. In Brazil, the planned division of assets between Votorantim and Camargo Correa for Cimpor appears to be at a standstill. A shareholder’s agreement between the Portuguese bank CGD and Votorantim, executed in February 2010 and which requires Brazilians to maintain their position in Cimpor for ten years or face significant financial penalties, may stand in the way of the takeover bid. In the interim, Votorantim is looking to other funding sources to expand. The company announced plans to use its earnings from the sale of steelmaker
Usiminas to expand its mining and cement production. Intercement also has an eye to expanding, as it plans to hike production at its Bodoquena facility by 15 percent thanks to a US$40 million upgrade. Finally, in Colombia, Cementos Argos has confirmed its intentions to invest US$120 million this year in growing its operation on the continent, and it isn’t ruling out purchases. The company’s tonnage grew 18 percent in 2011, and it is expecting an increase of ten percent in 2012. Among its financial plans are to sell bonds and short term commercial papers to extend maturities and to pay off its bank loans. BMWeek CemWeek CW Group Coal Week CemWeek CemWeek
BMWeek BMWeek
CW Group CW Group
Coal Week Coal Week
select PROJECTS IN THE WORKS: latin america COMPANY (LOCATION)
PLANT
Holcim (Ecuador)
Guayaquil
Ehdas Sanat (Venezuela)
Cerro Azul
Votorantim (Brazil)
Table available in the CemWeek Magazine Print Edition.
OVERVIEW
Holcim is investing US$400 million to add a third clinker production line with a 5,000 tpd capacity to its plant in Guayaquil, with construction to begin December 2012 and completion in 24 months. The expansion will generate about 2,500 direct and indirect jobs.
Iranian Ehdas Sanat Company will inaugurate a 1 mtpy cement plant, named Cerro Azul, in Venezuela by July 2012. The plant will be the second largest of its kind in Latin America.
Rio Branco do Votorantim will expand the unit at Rio Branco do Sul from 4 mtpy to 6 mtpy Sul, Parana www.cemweek.com/subscribe with operations to begin in 2012, creating 1,000 direct and indirect jobs. COST: $US625 million
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
31
Coal W Coal W Coal W
SECTOR COVERAGE:
year, the U.S. construction value has declined two percent compared to 2010 to US$787.4 billion. In China, new construction starts, property investment growth and sales have all reportedly begun to slow. In terms of floor area, property construction starts in the country only increased 16 percent, reaching 1.9 billion square meters in 2011. This represents a sharp decline from the 42 percent sector growth experienced in 2010. Meanwhile, property development investment in China only rose 28 percent last year, while in 2010 segment growth was at 33 percent. In India, construction order inflows from the industrial sector are expected to weaken this year as corporate sector capital expenditures may be affected by slowing GDP growth. On the other hand, order inflows from the transportation sector and other related segments are expected to continue growing, thanks to the continued government interest in infrastructure development.
The construction spending prognosis for the current year remains cautious as the most important markets stagnated last year. Even China, the growth engine of the industry, is slowing down as the world outlook remains weak
Construction & Building Materials Construction output increased slightly last year in the 27 countries of the European Union, with a 0.7 percent increase according to recent data. Affected by the severe crisis of the common European currency, Euro-zone countries saw their overall construction output index decrease by 1.1 percent last year. Between November and December 2011, construction output rose in four European countries, dropped in nine and remained stable in one (Sweden). The best
32
www.cemweek.com
performances were recorded by Czech Republic (+5.5%), Slovakia (+3.8%) and Poland (+2.9%), while the largest decreases were reported by the U.K. (-10.%), Slovenia (-8.1%) and Germany (-6.4%). Across the Atlantic, the United States has reported the first yearly increase in construction costs since 2008. Costs for non-residential buildings increased 2.12 percent YoY during the fourth quarter of 2011. Compared to the previous three months, costs were also on the rise (0.49%). However, over the whole
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
A recent study in the U.S. showed that infrastructure development produces twice the initial spending in both direct and indirect economic output. The study, published by the College of William and Mary’s Thomas Jefferson Program in Public Policy, states that each dollar spent on infrastructure has the capacity to produce 35 cents in indirect economic activity for producers, 20 cents to the dollar for professional and business services providers and ten cents for insurance, real estate, rental and leasing sectors. It added that every dollar put in highways and streets returns around 35 cents in tax revenue over 20 years. Concrete Around 260,000 cubic meters of high quality concrete were used for the construction of a new bridge in Vladivostok, Russia. The concrete was supplied by USK MOST’s operation in the area. Mexican concrete producer Cemex recently provided ready-mix concrete for a new 89 meter tall office tower in Bochum,
In Scotland, a proposed Inverness County limestone quarry has similar problems and may be stymied by the provincial protected lands initiative.
sector coverage: construction materials
A limestone quarry is being criticized for environmental issues in Portugal. Cimpor’s proposed quarry in Arcena, Portugal, faces opposition from the local government due to environmental issues previously formulated by several organizations.
In Germany, a quarry expansion project was approved by the state of Lower Saxony despite objections from local residents. The state planning authorities have allowed the expansion of quarrying activity to 80 acres. Quarry operators had earlier applied to extend the quarry by 21 acres. The application had initially been rejected by local authorities for the damage it would cause to the environment. Germany. The company is currently supplying 7,000 cubic meters of concrete.
European construction takes strength from the East Q4-11 vs. Q4-10 (% change)
A study by the Ready-Mix Concrete Association of Ontario (RMCAO) stated that concrete continues to fare well against asphalt as far as road construction is concerned, as it has the capacity to handle heavier loads in its life cycle. The study also indicated that the two materials perform similarly up to a loading capacity of 2,000 trucks a day. After this threshold, concrete starts to become significantly cheaper.
Romania
5.8
Czech Republic
5.5
Poland
4.9
Lithuania
4.6
Meanwhile, Lafarge has launched a new type of concrete that can tolerate far colder conditions than standard concrete and allows for construction to continue even in wintry weather. The new product, Chronolia Weathermix, can be placed in temperatures between 3 and -7 degrees centigrade as its mix design allows it to produce more heat than conventional concrete. Gypsum and Lime China remains the main producer of gypsum in the world, with Iran, Spain and the U.S. following, according to data from the U.S. Geological Survey. China is
Table available in the CemWeek Magazine Print Edition.
Latvia
4
Hungary
4
Sweden
2.7
‌
Netherlands
-0.4
France
-0.8
Spain
-1.5
Portugal
-8.8
EU 27
-1.4
Aggregates The global market for construction aggregates is expected to rise 5.2 percent annually through 2015, reaching 48.3 billion metric tons. The growth rate, however, represents a decline compared to the growth in the 2005 to 2010 period, as non-building construction activity that is aggregate-intensive is slowing down. Currently, the Asia Pacific region is expected to register the highest increase in product sales. In the area, non-building, nonresidential building and residential building construction activity is expected to continue rising, especially in areas like India, China and Indonesia.
www.cemweek.com/subscribe
Source: Eurostat
currently producing five times more gypsum than the United States. As more cultures recognize the economy and efficiency of plasterboard use, worldwide production of gypsum is expected to increase. Demand for gypsum depends, however, on the strength of the construction industry.
Meanwhile, in Canada, an aggregates recycling initiative has been established in Ontario. The Aggregates Recycling Ontario (ARO) aims to bring attention and solutions to the rising aggregates stockpile in the area, which currently amounts to about three million tons. ARO was organized by the Ontario Sand and Gravel Association and the Toronto and Area Road Builders Association, and it currently has as members around 17 companies and seven groups that produce and reuse aggregates.
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
33
Coal W Coal W Coal W
CONSTRUCTION & MATERIALS BY BMWEEK.COM
Moving south, researchers in Cuba announced new developments in the production of aggregates. The Cuban Center for Research and Development of Structures and Materials developed local technologies to increase production of gravel, stone, and sand and expects these techniques to ease the country’s building material shortage. Around 18 municipalities have been provided prototype models of locally developed equipment that can produce eight cubic meters of aggregates daily. Back in Europe, the aggregate market continues to experience difficulty in the UK, where sales have fallen flat last year as volumes remain 30 percent below prerecession levels. “Green” and innovative building Chinese construction workers have established a new speed record, building a 30-story prefabricated building in 15 days. The building, a 183,000 square-foot hotel, was built by the Broad Group, a Chinese construction company specializing in sustainable architecture. Prefabricated materials with sections built off-site were used, and workers needed only 46 hours to finish the main structural components and another 90 hours to finish the building enclosure. The hotel is soundproofed and thermalinsulated, and a test by the China Academy of Building Research showed that the structure is designed to withstand a magnitude-9 earthquake. A new concrete recipe developed by researchers at Auburn University and the University of Alabama attempts to reuse toxic coal ash, a procedure which can aid in reducing greenhouse gas production. The concrete recipe currently includes carbon nanotubes, which add strength, durability and conducting properties to the concrete. According to a professor from Rutgers University in New Jersey, plastic may be used to build roads. A plastic polymer that makes use of shredded heavy plastics mixed with fiberglass is capable of replacing cement for road construction,
34
www.cemweek.com
continued from page 28
U.S. New Privately-Owned Housing Units Started (thousands of units)
Table available in the CemWeek Magazine Print Edition.
Jan-12
699
Dec-11
689
Nov-11
702
Oct-11
628
Sep-11
646
…
Feb-11
518
Jan-11
636 www.cemweek.com/subscribe
Source: U.S. Census Bureau
according to professor Thomas Nosker. Plastic polymer was already used to construct a 26 by 15 foot bridge in Maine. The material eliminates the need for steel and pressure treated hardwood during the construction process. A department at the USC School of Architecture has developed a new building material which will allow buildings to automatically respond to changes in the environment, like smartly adapting to sunlight. The material is called thermobimetal and is made of two sheets of metal laminated together. Each metal expands at a different rate when heated, curling as the temperature rises and flattening when cooled. Possible applications include “intelligent” bricks with tiny thermobimetal vents to let a breeze through, inspired by biological systems like insect spiracle. A similar invention was developed by Mitsubishi Chemical Holdings in Japan. A special external building material is able to draw power from sunlight, and, unlike the traditional solar panels, it can be used for the walls of buildings and other structures. The new material was developed through the company’s creation of solar cells that use organic semiconductors instead of traditional silicon. The cells’ power generation capacity is around 80 watts per square meter. BMWeek CemWeek CW Group
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
BMWeek BMWeek
CemWeek CemWeek
CW Group CW Group
prices despite a 12.8 million ton oversupply. In the first half of the 2012 fiscal year, Pakistan sold 15.4 million tons of cement, up four percent. However, a recent report asserts that the Pakistani cement sector has failed to pass on to consumers savings from the Sales Tax and Federal Excise Duty (FED) and the removal of the Special Excise Duty (SEO). According to sources familiar with the matter, cement manufacturers have continued to increase prices despite the removal of 2.5 percent SED and one percent FED (benefit of Rs200 per ton). Exports to India and Afghanistan, the two major markets for Pakistani cement, rose 62.64 percent and 10.35 percent, respectively, but the overall cement export market declined four percent in the first half of the fiscal year due to a sharp increase in local freight costs. An Inland Freight Subsidy for the cement industry promised by the Federal Board of Revenue (FBR) in 2010 has yet to materialize. The FBR is estimated to owe the cement industry Rs 335 million in freight subsidies. Cement prices in Nepal are on the rise, tracking increases in input costs. Cement has increased an average of Rs 30 to Rs 40 per 50-kg bag following an increase in the price of petroleum products, clinker, and increased hours of load-shedding. With the increase in prices, customers have to pay an additional Rs 30 to Rs 40 per bag. HeidelbergCement, which operates cement-grinding plants in Dhaka and Chittagong, officially inaugurated a new cement mill at its plant in the seaport city of Chittagong, Bangladesh. The ball mill has a grinding capacity of about 800,000 tons and cost approximately US$16 million. The company believes cement demand in Bangladesh will grow substantially in the next few years due to new government infrastructure projects. The IMF forecasts a GDP growth of 6.1 percent for the country in 2012. Bangladesh has one of the lowest per capita cement Coal Week consumption ratios in the world but is Coal Week also Coal Week one of the fastest growing markets worldwide. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek
CemWeek CemWeek
CW Group CW Group
Coal Week Coal Week
OUP CW GR
RESE
ARCH
CW Group 0-1748 T: +1-702-43 2-4762 F: +1-928-83 A US ch /resear w York, Ne w.cwgrp.com ww C eek LL d. CemW Rainbow Blv 848 N. 58 Box #16 Las Vegas USA NV 89107,
roup M
CW G
ARCH CW GROUP RESE
eport:
arket R
Januar
CW GROUP RESEARCH January, 2011 CW Group T: +1-702-430-1748 F: +1-928-832-4762 New York, USA www.cwgrp.com/ research CemWeek LLC 848 N. Rainb Box #1658 ow Blvd. Las Vegas NV 89107, USA
t Report:
CW Group Marke
Bangladesh cem market (2010 update)
ent a cem
fric East A t marke date) up (2010
CW Group T: +1-702-430-1748 2 +1-928-832-476 F: USA New York, h grp.com/researc www.cw CemWeek LLC 848 N. Rainbow Blvd. Box #1658 Las Vegas NV 89107, USA
y, 201
1
CW Group Ma
ent
rket Report:
CW GR
OUP
RESE
ARCH
Cameroon cement market (2010 update) January, 2011
CW T: +1Group
CW G
roup
Mark
et Re
port:
P e ru c (2010 ement m a rk e upda t te)
F: +1 -702-430 Ne -928-832 -1748 ww w York, US -4762 w.cw A grp.co m/res earch CemWee 848 N. Rak LLC Box #165 inbow Blv d. Las Ve 8 ga s NV 89 107, USA
Janu
ary, 20
11
Lates
t cem repor ent mark e ts inc lude t
India c report ement plant • Vietna Saudi Arab m•M i iddle E a cemen ast t plant report
We know the cement industry well. Let us guide you. For more information please contact us at inquiries@cwgrp.com or on +1-702-430-1748 www.cwgrp.com T: +1-702-430-1748 F: +1-928-832-4762 848 N. Rainbow Blvd. Box #1658 Las Vegas, NV 89107, USA
PROJECTS & SUPPLIERS Starlinger Delivers 100th Line Germany's Starlinger has launched a conversion line for its patented bags. The company says the Ad StarKon 60 is the efficient and reliable conversion line for the worldwide patented Ad Star bags developed by Starlinger. In December 2011, the 100th line for the production of block bottom valve bags out of woven polypropylene tapes was been delivered. With a production capacity of up to 60 sacks per minute and an efficiency of more than 85 percent, it achieves an output of 22 million sacks per year. Machineoriented operation with touch screen, an integrated quality assurance system and semiautomatic roll changeover ensure a smooth production process with reduced waste and high efficiency. Green Island Replaces Cement Ship Green Island Cement announced that it would replace its cement ship in the port of Oulu, Finland because the port is set to close. The company will decommission its old cement ship, the MS Envik, which arrived at the port to take in its last cement cargo last month. Green Island is building two silos at 42 and 46 feet high that can store up to 5,000 and 9,000 tons of cement to replace its cement ship. The silos are expected to be completed by the end of the year. Particle Size Analyzer at Holcim Holcim announced it will use an Insitec on-line particle size analyzer from Malvern Instruments in its facility in Heming, France to optimize the grinding circuits that mill the finished cement. By continuously monitoring its production lines, the Insitec supplies the data needed to optimize throughput and produce high quality cement. Laser diffraction techniques are used increasingly to meet the requirement for particle size information, replacing the traditional technique of Blaine measurement. The company says the device allows for quick transitions between different product grades very efficiently and without sacrificing product quality.
36
www.cemweek.com
Malvern Instruments' Insitec
The Heming site has two identical grinding circuits operating in parallel. The Insitec samples each one alternately, providing particle size distribution data for each line every ten minutes. Before its installation, the site relied on off-line analysis in the laboratory. This demanded greater manual input and meant a delay of around 15 minutes between sampling and receiving results.
turing and marketing rights, the agreement also includes provisions for knowledge sharing.
TRF to market Schade TRF and Schade Lagertechnik signed an agreement that will allow TRF to manufacture and market Schade's high capacity bulk material handling equipment in India. The company would be able to produce bulk handling equipment for the steel, mining, power, ports, and cement industries. The equipment will be manufactured at its Jamshedpur plant and will consist of stackers, portal scraper reclaimers, circular storage systems as well as wagon tipplers. Apart from manufac-
Reinert to Optimize Lafarge Reinert Logistic has chosen ORTEC to implement a transport optimization program for its client, Lafarge Gypsum. The company selected its advanced vehicle routing and dispatch solution, ORTEC Transport and Distribution. The system can be used to automatically assign incoming transport orders to routes and then re-optimize them in real-time where necessary.
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
The agreement is part of TRF’s strategy to expand its domestic and international presence. It had earlier acquired Hewitt Robins Fraser based in the UK and Singapore-based York Transport Equipment (Asia).
continued on page 39
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
worldwide service
(+356) 3550 5657 info@blancon.net
Offices in Iberia and Brazil
www.blancon.net
PEOPLE MOVES
Old CRH board
CRH Announces Board Changes Heather Ann McSharry was recently appointed non-executive Director of CRH. McSharry is Chairman of the Board of Trustees of Bank of Ireland Pension Fund and is a director of Ergonomics Solutions International, Ireland. She holds a Bachelor of Commerce and a Master of Business Studies degree from University College Dublin. The board also appointed Nicky Hartery as Chairman Designate to succeed the present Chairman, Kieran McGowan. McGowan, who has been Chairman since May 2007 and a Board member since 1998, will retire May 9, 2012. Hartery joined the Board of CRH in 2004 and was previously Vice President of Manufacturing and Business Operations for Dell Inc.’s Europe, Middle East and Africa (EMEA) operations from 2000 to 2008. Hartery is a Chartered Engineer, Fellow of the Institute of Engineers of Ireland, an electrical engineering graduate from University College Cork and holds an MBA from University College Galway. Lafarge Jordan new CEO Toufic Ahmed Tabbara was appointed head of Cement and Concrete operations at Lafarge Jordan. Tabbara takes his new position in February 2012. “I am very eager to support the Company in leveraging all of our expertise towards the development of the Jordanian construction sector,” commented Tabbara. Tabbara began his career as a Financial Analyst with the Republic National Bank of New York in London before joining Lafarge in 1998, where he has assumed
38
www.cemweek.com
a number of managerial posts in the U.S., Canada and Egypt. He holds a BA in Business Administration from the American University of Beirut and an MBA from the American Graduate School of International Management, Thunderbird in the United States of America. Eastern Province Appoints Chairman The Board of Directors of Saudi Arabiabased Eastern Province Cement Company held its first meeting of the current Board of Directors term on February 12, 2012 and appointed His Royal Highness Prince Turki Bin Mohammed Bin Fahad Bin Abdulaziz as Chairman and Dr. Abdulmohsen Bin Saad Al Rowaished as Vice Chairman for the new term. All committees were also formed at the meeting. Cementos Portland Has New CEO The Board of Directors of Spain’s Cementos Portland Valderrivas approved the appointment of Juan Bejar Ochoa as CEO of the group. Juan Bejar has a law degree from the Universidad Pontificia Comillas de Madrid (ICADE). He is currently CEO Globalvia, a company owned 50% by Bankia and FCC. Previously, he was chairman of Citigroup Infrastructure Management, a Citigroup subsidiary. Juan Bejar, 54, replaces Dieter Kiefer, who has served as chief executive since December 2008. Court blocks new EAPC chairman A Kenyan court has blocked the government's plan to install a new chairman for the East African Portland Cement. Judge Mohammed Warsame suspended the notice on the appointment of Isaac Mpapuluu ole Mapenay and the release of Mark ole Karbolo until a ruling is made to determine whether the cement manufacturer is a state corporation. In an urgent application lodged at the High Court in Nairobi, Mr Karbolo
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
Todd Swindermann Retires from Martin Engineering Martin Engineering, a worldwide supplier of bulk materials handing technology, has announced the retirement of Chief Technical Director Todd Swinderman as of December 31, 2011. He will continue to support key strategic initiatives with the company as an independent consultant. In his 32 years at Martin Engineering, Swinderman served as President of the company for 11 years and seven years as President and CEO. He developed a number of proprietary systems for the company and holds more than 140 active patents in 12 different countries. “Todd is a well-recognized expert in bulk material handling, with over 50 years of industry experience,” said Ed Peterson, Chairman of Martin Engineering. “He has been instrumental in establishing and strengthening our outstanding R&D team, which is among the best in the industry, and he led our entry into the international marketplace. We are deeply indebted to him for his dedication and outstanding contribution to Martin Engineering.” wanted the decision by President Kibaki to fire him suspended, saying it was against interim orders issued by a constitutional court on January 19 reinstating directors ousted from the firm in December. Trouble at the cement firm started on December 22 when Industrialisation
minister Amason Kingi fired directors over procurement flaws. New Solidia CEO, Thomas Schuler Tomas Schuler joined Solida Technologies, a green cement start-up, as the new president and CEO, bringing with him more than twenty-five years of research, engineering, sales and management experience in the building products industry. Schuler, the former President of DuPont's Building Innovations business, will focus Solidia Technologies on understanding customer needs to design and launch innovative materials that meet today's demanding market requirements but with minimum environmental impact, said a company statement. New President of India CMA India's Cement Manufacturers Association has elected a new President in the person of Chettinad Cement's Managing Director M.A.M.R. Muthiah. In a statement, Muthiah says that the association acts as a bridge between the industry and the Government with an objective to promote the former 's growth, protect consumer interests, promote technology development and collaborate with international counterparts. Lafarge France new CEO Lafarge France announced the appointment of Pascal Casanova as its new CEO. Casanova, who was the Director of R&D of the Lafarge Group since 2008, will handle the company’s operations in France. His appointment coincides with the company’s reorganization that places control of all its operations in a country in a single position to better meet the needs of its markets and customers.
continued from page 36
The company stated that it prioritized the need for the system to have the ability to interface with the Lafarge’s existing ERP system, JD Edwards Enterprise One. There was also a requirement to feed back information to Lafarge's customer service team regarding the status of the goods to be delivered. It was important to ensure that the system could handle additional route optimization requests in order to incorporate indirect customer orders at a later stage.
PPC Chooses Wonderware Solutions Pretoria Portland Cement announced that it has chosen to replace the 30-yearold electrical and control systems at its Hercules facility. The company chose to utilize Wonderware’s System Platform, InTouch (HMI), Historian and ActiveFactory suite of solutions for the facility. The company will upgrade the electrical and control systems of kiln 5 and raw mill Casanova joined Lafarge in 1999 as Tech- 3. It covers the replacement of all motor nical Director, having started his career as control center panels (MCCs) and conhead of projects in various construction trol panels (RIO) to improve the standard companies. In 2002 he was appointed of the MCCs, scada and PLC. The earlier Director of R&D of Roofing England, system was replaced for being too old and followed by Director of Business Compo- inefficient. The company expects the upCW Group Coal Week to make their production and opnents in Germany in 2005. BMWeek CemWeek grades CemWeek CW Group Coal Week BMWeek efficient. CemWeek erations BMWeek CW Group more Coal Week
CORPORATE NEWS FLSmidth Margins Bottom Out FLSmidth, said margins in its cement plant business will bottom out in 2012. The company says the cyclical cement plant business would reach a trough in 2012 and begin to recover next year. The company says that over the past few years it has exhausted much of its order backlog. The company adds that it expects to see the lowest margins in 2012 and then, it says, things will start improving again. Sinoma Profits Decline The net profit of Sinoma Science and Technology has declined on the back of a slower takeup for its products as well as weaker overall prices. The company’s net profit dropped 31.37 percent in 2011, reaching 121 million yuan. Last year, the company’s revenue has declined by 1.63 to 2.531 billion yuan. Meanwhile, the company’s operating profit declined by 76 percent to 66.56 million yuan. Previously Sinoma revealed that the company’s declines were due to the decline in prices and sales. BMWeek CemWeek
FEBRUARY/MARCH 2012
BMWeek BMWeek
CemWeek CemWeek
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
39
C C C
Coal W Coal W Coal W
REGIONAL FOCUS
Price Tensions Escalate in South Korea Cement price tensions appear to be deepening in South Korea, with stances hardening. Cement companies face closure if losses become heavier, while concrete and construction companies have halted operations in opposition to latest price increase
The conflict between cement manufacturers, ready-mix concrete companies and construction companies is becoming acute due to the recent cement price hike announcements. In January 2012, a new round of price increases was announced by South Korean cement producers, including market leaders Ssangyong Cement and Tongyang Cement & Energy. The companies revealed that the new cement price to customers would be around 15 percent higher, from 67,500 won (U$60) to 77,500 (U$68) at the beginning of 2012.
40
www.cemweek.com
Rhetoric and Boycotts The announcement led to angry responses from the big cement users, in particular independent ready-mixed concrete and construction companies. First, the Korean Federation of Ready-Mixed Concrete Industry Cooperatives, speaking on behalf of smaller companies that combine cement with raw materials in order to obtain concrete, threatened to cease their operations starting February 22 if the cement makers go ahead with the price hike. Such a move would essentially halt supply of the important construction material, bringing construction works over South Korea to a standstill.
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
With cement accounting for around 40 percent of the cost of concrete production, the entire industry depends on the cement makers. As of mid-February, South Korea’s large construction companies started a boycott on cement produced by the two leading cement companies, Ssangyong and Tongyang, although the two cement producers had in turn halted cement supplies to these construction companies the week prior to the announced boycott. According to construction companies, raising cement prices does not make sense in the current climate. The con-
SOUTH KOREAN CEMENT PRICES (2006-2012, won) 80,000
PEAK PRICE BEFORE SLOW DOWN
65,000
FIRST PRICE WAR
2012 H1
2011 H2
2011 H1
2010 H2
2010 H1
2009 H2
2009 H1
2008 H2
2008 H1
2007 H2
2007 H1
2006 H1
2006 H2
SECOND PRICE WAR
50,000
Source: CW Group Research
struction industry is already facing a difficult period, and prices were already subject to significant increases during 2011. Alternately, cement producers explain that their initiative results from the increase in international prices for bituminous coal, which comprises 35 percent of the cement production cost. The cement producers rely on bituminous coal to heat the kilns in which cement is produced. The price of bituminous coal grew by 55 percent in 2009 from U$90 to U$140.
Consequently, cement producers claim that current prices do not cover their production costs and thus, the more they sell, the more they lose. According to cement producers, several firms are in danger of closing down if cement prices do not increase soon. Appeals for Mediation The ready-mixed concrete companies also have cause for concern. According to them, although the prices of raw materials have gone up, they are unable to
receive more money per ton of concrete from construction companies, making their own profit margins increasingly precarious. Some ready-mix companies have repeatedly asked for governmental intervention to mediate this conflict. Finally, the Ministry of Knowledge Economy and other governmental officials stepped forward to resolve the issue. As a finalizing step in three weeks of negotiations and discussions, the Ministry presided over a February 20 conference in Gwacheon, Gyeonggi Province, to reunite the three industries. However, to date, government involvement in the discussions have not helped in settling the conflict. The conference was inconclusive and was unable to stop the ready-mixed concrete companies from ceasing their operations, as planned, on February 22. BMWeek CemWeek CW Group BMWeek BMWeek
FEBRUARY/MARCH 2012
CemWeek CemWeek
CW Group CW Group
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
41
Coal Wee Coal Wee Coal Wee
Coal W Coal W Coal W
REGIONAL FOCUS Investor Shares Diluted In October of 2011, Bunker Hills won an interim court order that blocked the PIC’s intended conversion. Until recently, both Bunker Hills and Holcim had opposed the takeover because, they claimed, it would dilute other investors’ shares to virtually nothing.
SOUTH AFRICA
AfriSam Takeover Approved The Public Investment Corporation (PIC) has finally reached an agreement with Swiss group Holcim to restructure the debt of South Africa’s secondbiggest cement manufacturer, AfriSam. Once the takeover is complete, AfriSam’s massive R12bn debt will be reduced to R6bn. A Hard-Fought Win for PIC “This development allows AfriSam to focus on its operational fundamentals, as well as grow the business and, most importantly, allows for the protection of the value of the Government Employees Pension Fund investment,” the PIC said in a statement. AfriSam was created in 2006 by Swiss cement maker Holcim, which sold 37 percent of its South African business to black investment firm Bunker Hills for R23bn, a deal funded with debt arranged by JP Morgan Chase and Citigroup. Holcim retained 15 percent of its South African business. Combined, Holcim and Bunker Hills controlled 52 percent of AfriSam.
R4.3bn earned it a 20 percent stake in the company while the remaining R1.7bn were to be used as a loan to sustain the company. Following infighting between shareholders and mounting debt due to the global economic crisis, the PIC decided to convert its R4.7bn debt into equity. The PIC also convinced other investors to follow suit, including Worldwide Africa Investment Holdings, which currently holds approximately 37 percent of AfriSam’s R12bn senior debt.
In 2008, AfriSam selected the PIC as its second-biggest shareholder because, of all other potential investors, it was most supportive of the cement maker’s blackcontrolled status. The state-owned investor injected R6bn into AfriSam, of which
42
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
But as of December 2011, Bunker Hills agreed to work with the PIC to restructure AfriSam’s debt, which has had a due date of February 2012. With Holcim now following suit, the PIC will control approximately 99 percent of the cement maker. According to reports, the PIC has indicated, however, that its intent was only to remain in control of 57 percent of the company once the restructuring is complete. This would allow Holcim and Bunker Hills, after restructuring, to increase their one percent stake in AfriSam. Earlier in January, the PIC was awarded conditional approval for the takeover by South Africa’s Competition Tribunal. The condition of the ruling states that the PIC, who also has interests in Pretoria Portland Cement (PPC), may not appoint directors to PPC’s board while it was in control of AfriSam in order to avoid a conflict of interests. AfriSam and PPC make up approximately 70 percent of South Africa’s growing cement market. AfriSam and Holcim tried to block the PIC’s takeover on a number of previous occasions, albeit unsuccessfully. A previous ruling by the North Gauteng High Court ruled in favor of the PIC, as did the Department of Mineral resources, which earlier in December of 2011 gave the nod for the conversion to go ahead. BMWeek CemWeek BMWeek BMWeek
CemWeek CemWeek
CW CW CW
RESEARCH
The CW Group publishes a series of unique data-rich reports on a periodic basis for the global cement sector. These must-have reports for cement traders, analysts, investors, equipment vendors are indispensable in understanding changing market conditions, monitor the latest cement prices, stay up to date on new cement capacity projects among many other key outlook and competitive dimensions. The reports are available on an annual subscription basis. Contact us at sales@cwgrp.com to learn more. Global Cement Market Data Service
Global Cement Retail Price Report
Global Cement Trade Price Report
Global Cement Volume Forecast Report
Cement Plant & Capacity Monitor
Statistical update on key cement markets worldwide
Comprehensive report on local retail cement prices worldwide
Detailed data and chart report on cement prices
Current and outlook for cement volumes
Tracking new cement plants and expansions
$475 per user / year
$1,200 + S&H per user / year
$2,300 + S&H per user / year
$1,200 + S&H per user / year
$1,300 + S&H per user per year
Rolling monthly updates (Monthly updates)
Quarterly updates (4 updates per year)
Quarterly updates (4 updates included)
Semi-annual updates (2 updates included)
Updated every 2 months (6 updates included)
48 countries covered*
25 key markets
70+countries covered*†
Individual countries & global
Global scope, ex-China
■■ ■■ ■■ ■■
Cement consumption Cement production Cement trade and/or Select cement prices
Online (CemWeek.com)
■■ Actual retail prices per bag ■■ Range of prices and avareges ■■ Gray and/or white cement ■■ Weekly price data points Hard copy
■■ ■■ ■■ ■■ ■■
Gray, white and / or clinker Monthly import prices Monthly export prices Regional price indices Monthly trade volumes Hardcopy
■■ ■■ ■■ ■■
3-year volume outlook Historical volumes Capacity utilization Annual volumes Hardcopy
■■ ■■ ■■ ■■
New cement plants Plant expansions Overview of project Location details Hardcopy
* Subject to change; † Actual country data reported on different lags; S&H: Shipping and Handling for reports distributed in physical hardcopy;Discounted group and corporate rates available upon request
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
TOOLS & ANALYSIS
Consider the Costs:
Utilizing an Expatriate Workforce A standard practice in the cement industry, international assignments take technical and managerial expertise to a global workforce. From training to repatriation, however, expatriates work at an often under-analyzed cost
f a company expects to outperform competitors in the global market place, it needs to ensure that it has the right people in the right positions. This also means that an employee must have the skill set necessary to perform his or her job effectively, as well as the appropriate training to do so. Global providers entering a new market are fortunate if they can find the skilled workers needed within a local market, but often this isn’t the case. Instead, a company must bring in staff either from its home country or from another location to meet its labor requirements. Hiring workers to staff projects in other countries has become a standard practice for many global companies. Take the construction industry for example. According to the Expatriate Explorer Survey 2010, the construction industry accounted for 15 percent of the expatri-
44
www.cemweek.com
ate workforce in Russia, 12 percent in Singapore, 12 percent in the United Arab Emirates and 9 percent in China. The global economic crisis slowed expatriate assignments in 2009 and 2010, but it by no means curbed the practice. the global advantage Several global and regional cement manufacturers draw heavily upon expatriate staffing in both managerial and technical roles. The Lafarge Group, for instance, employs 78,000 people in 78 countries. Interaction between its various subsidiaries and the corporate headquarters in France is mostly handled through 600 expatriate management placements, and a further 600 expatriates work in technical positions related to specific projects. The result is a series of multinational teams that effectively blend local and global knowledge, dispersing expertise worldwide.
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
Whether the aim is to transfer technical expertise or to ensure the integration of a newly established local subsidiary into the global framework, utilizing an expatriate workforce provides definite advantages, particularly for companies wanting to expand into countries that may lack an educated or skilled workforce. Using expat managers also helps a company transfer its core competencies more easily to the domestic market, create a more unified company culture, share a company’s best practices more efficiently. In short, expat managers assist in the integration of a national subsidiary. Obviously, there are disadvantages as well as costs that need to be weighed. If approached incorrectly, companies could find themselves facing resentment from the local labor force or struggling with cultural myopia. Furthermore, national immigration policies limiting the use of
Monetary costs should not be underestimated, as expat compensation packages often amount to three times the cost of a home country posting. To induce employees to accept foreign assignments, companies often have to pay a premium ranging anywhere from 10 to 30 percent of an employee’s base salary after tax. In addition, employees may require housing, cost of living, or education allowances. There is a possible bump for medical and pension benefits to compensate for what an employee would have received if they stayed in their home country. The high cost of compensation packages has become one of the main reasons why some companies have reduced their expatriate workforces in recent years, but depending on the industry and market, this isn’t always an option.
expat labor could prove to be a significant obstacle, as could the expense of operating an expatriate program. risks and costs The costs associated with implementing and managing an expat labor force is significant and often underestimated. Companies must consider expenses associated not just with the recruitment and selection process of employees, but also with the training and development, compensation system, and eventual repatriation of expat workers. Given the high risk of expat failure, training—whether cultural, linguistic or practical—is an essential component of any successful expat program. Expat managers often need cross-cultural training, while production workers look for instruction related to the various training systems used. Moreover, it has become
when expats come home Repatriation adds another layer of expense. Research suggests that expat mangers leave their company at roughly twice the rate as their domestic counterparts. Up to 15 percent do so within the first year, and another 40 percent within the next three years. It is therefore not surprising that the cost associated with expat failure is high.
Expat compensation packages often amount to three times the cost of a home country posting
One estimate suggests that the average cost per failure to a parent firm can be as high as three times the expat’s annual domestic salary plus the cost of the relocation. The development and addition of programs to reintegrate expats into work life within their home-country organization is consequently fundamental to an expat employee’s success as well as to the company’s bottom line.
increasingly common for global companies to provide general management development programs in addition to training for specific assignments, adjusted on occasion to the skill and education level of its workers.
Correctly accounting for the costs associated with an effective expat program contributes to its success, as well as the company’s profitability. Furthermore, such considerations help to ensure that the investment made in an expat assignment is truly beneficial for both the employee and the company. BMWeek CemWeek CW Group
FEBRUARY/MARCH 2012
CW Group CW Group
Coal W Coal W Coal W
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
Coal W Coal W Coal W
BMWeek BMWeek
CemWeek CemWeek
45
TOOLS & ANALYSIS
Seven Strategy Questions:
A Simple Approach for Better Execution author: Robert Simons
Business leaders can't develop and execute effective strategy without first gathering the right information, says Harvard Business School professor Robert Simons. In his new book, Seven Strategy Questions: A Simple Approach for Better Execution, Simons explains how managers can identify holes in their planning processes and make smart choices. The excerpt below outlines the seven strategy questions every manager should ask
1. Who Is Your Primary Customer? The first imperative— and the heart of every successful strategy implementation—is Robert Simons allocating resources to customers. Continuously competing demands for resources—from business units, support functions and external partners—require a method for judging whether the allocation choices you have made are optimal. Therefore, the most critical strategic decision for any business is determining who it is you are trying to serve. Clearly identifying your primary customer will allow you to devote all possible resources to meeting their needs and minimize resources devoted to everything else. This is the path to competitive success.
46
www.cemweek.com
It's easy to try to duck the tough choice implied by the adjective primary by responding that you have more than one type of customer. This answer is a guaranteed recipe for underperformance: the competitor that has clarity about its primary customer and devotes maximum resources to meet their specific needs will beat you every time. 2. How Do Your Core Values Prioritize Shareholders, Employees, and Customers? Along with identifying a primary customer, you must also define your core values in a way that ranks the priority of shareholders, employees, and customers. Value statements that are lists of aspirational behaviors aren't good enough. Real core values indicate whose interest comes first when faced with difficult trade-offs.
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
Prioritizing core values should be the second pillar of your business strategy. For some companies, shareholders come first. For others, it may be employees. In other companies, it may be customers. There is no right or wrong, but choosing is necessary. To illustrate this point, I'll contrast Merck's US$20 billion decision to pull Vioxx from the market with Pfizer's decision to continue marketing Celebrex. 3. What Critical Performance Variables Are You Tracking? Once you're confident that the foundation of your implementation is sound— you've allocated resources correctly and provided guidance for tough decisions— it's time to get everyone who works for you focused on the job at hand. Tracking performance goals—the third implementation imperative—requires you
to set the right goals, assign accountability, and monitor performance. It's easy to fail this imperative by focusing on the wrong performance indicators or monitoring scorecards that have an overload of irrelevant measures. Underperformance is the result. It's your job to ensure that your managers are tracking the right things by singling out those variables that spell the difference between strategic success and failure. Like the preceding two questions, the focus in this question is again on an adjective, this time the word critical. I will show you a simple but counterintuitive technique that you can use to be sure you're tracking the right things, and I will describe how companies such as Nordstrom and Apple illustrate some unorthodox performance measurement choices that provide the pathway to superior results. 4. What Strategic Boundaries Have You Set? Every strategy brings with it the risk that an individual's actions will pull the business off course. Here again, it's easy to fail to inoculate the business against this risk. As we will see, the trick is in setting clear boundaries. Controlling strategic risk is the fourth implementation imperative. Strategic boundaries—which are always stated in the negative—ensure that the entrepreneurial initiative of your employees aligns with the desired direction of the business. Strategic boundaries can also protect you from the types of errant actions that destroyed Enron and brought financial service firms such as Fannie Mae and Lehman Brothers to their knees.
that fail to innovate will eventually die. No company is immune. But sustaining ongoing innovation in organizations is notoriously difficult. People fall into comfortable habits, sticking with what they know and rejecting things that cause them to change their ways. To overcome such inertia, you must push people out of their comfort zones and spur them to innovate. I will provide a menu of techniques you can use to generate creative tension to ensure that everyone is thinking and acting like a winning competitor. 6. How Committed Are Your Employees to Helping Each Other? For most companies, it's critically important to build norms so that people will help each other succeed—especially when you're asking people to innovate. But there are exceptions. Some organizations can, and should, be built on selfinterest, with every man or woman working for him- or herself. I suspect that the choice between commitment to help others and self-interest is deeply ingrained in your organization yet has never been discussed. But if you haven't addressed this choice explicitly— and worked to make it happen—you have increased the potential that your strategy implementation will fail.
Building commitment is the sixth implementation imperative. I will offer a menu of techniques to foster commitment to achieving shared goals. Or, if rewarding self-interest is more appropriate for your business, I will explore alternative approaches you should employ. 7. What Strategic Uncertainties Keep You Awake at Night? No matter how good your current strategy is, it won't work forever. There will be booms and busts, customer preferences will change, competitors will introduce new products, and disruptive new technologies will emerge in unexpected places. This brings us to the final implementation imperative: adapting to change. Adapting is critical to survival, but it's extremely difficult to do. With change constantly surrounding us, employees often do not know where to look or how to respond. I will consider the techniques that companies such as Johnson & Johnson use to search for new information and ideas as markets inevitably change. Your personal attention is the critical catalyst to focus your entire organization on the strategic uncertainties that keep you awake at night. After all, everyone watches what the boss watches. I will discuss how you can use this principle to guide the emergence of new strategies for the future. BMWeek BMWeek BMWeek
Cem Cem Cem
5. How Are You Generating Creative Tension? Once you're satisfied that you are tracking the right performance goals and controlling strategic risk, it's time to turn to the fifth implementation imperative: spurring innovation. This imperative is woven into the fabric of every healthy organization, and we all know that companies
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
47
Coal W Coal W Coal W
MARKET UPDATE Fiscal Year 2011:
Stagnant Developed Markets, but Revenues Rise Worldwide When the 2011 numbers came in, sales volumes were up five percent over 2010. Lafarge takes lead position over Holcim, and Heidelberg rules aggregates. While difficulties continue in the mature markets, all segments find reason for optimism.
CEMENT: 2010 - 2011 TONNAGE CHANGE 12
0
-4
Buzzi Unicem
Cemex
Glimmers of Global Recovery After experiencing the first signs of global recovery in the first half of 2011, global building material companies kept pace in the second half to reach an annual growth rate of five percent for sales volumes (in EUR) compared to 2010. The companies under analysis include Lafarge, Holcim, HeidelbergCement, CRH, Cemex, Italcementi, Buzzi Unicem, Cimpor, Vicat, and Titan. Total turnover for these companies exceeded EUR 87.1 billion in 2011 compared to nearly EUR 83 billion reached in 2010. Every company declared growth rates for EUR turnover with one exception, Titan Group, that further deepened its first half 2011 decline of 18.2 percent to an annual negative evolution of 19.2 percent. The 2011 revenue growth was backed by increases within all business segments:
48
www.cemweek.com
Cimpor
Heidelberg Cement
Holcim
Italcementi
cement, aggregates, and concrete. The combined cement volume of analyzed companies, excluding CRH and Titan Group, amounted to 569 million tons, almost 29.5 million tons more than in 2010 (a 5.45% increase). The 2011 aggregates volume reached 853.2 million tons after increasing by 4.1 percent from the 2010 level of 819.5 million tons, while the 2011 concrete volume settled to 220.7 million cubic meters, registering the highest increase (8% over 2010). The factors leading to Titan Group’s negative evolution also form the difficult market landscape faced by all companies. The collapse of the Greek construction sector, stagnation of the U.S. market, and turmoil in Egypt represented the year’s main concerns. Other countries—Italy, China, Spain or Portugal—also contributed to the market’s grim scenario. On the posi-
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
Lafarge
Vicat
tive side, expansion in emerging markets, mild European weather both at the beginning and end of 2011, and positive evolution for Turkey, India, and Brazil placed the majority of the companies in a consistently upward pattern. Holcim, Lafarge Compete for No. 1 Exchange rates show yet another side of the story. The CHF exchange rate appreciated against main currencies, enabling Holcim, on a converted basis, to turn in robust growth. In EUR terms revenues rose 7.4 percent even as the company registered a 4.2 percent decline on a CHF basis. Holcim sold 144.3 million tons of cement in 2011 (up 5.6% from 2010) and obtained a comparable growth rate for its concrete division, selling 48.4 million cubic meters in 2011. Its aggregates division registered
CEMENT: 2011 SHARE OF MAJORS
BUILDING MAERIALS 2011 VOLUMES
Buzzi Unicem Buzzi Unicem
Cemex Cimpor
Cemex
Heidelberg Cement Holcim
Cimpor
Italcementi Lafarge
Heidelberg Cement
Vicat
Holcim
TURNOVER (MILLION EUR): 2010 - 2011 CHANGE 0.15
Italcementi
0.00
Lafarge
Vicat
higher growth by selling 173 million tons in 2011, a 9.6 percent increase compared to 2010. To counteract sluggish demand in mature markets, cost inflations, and natural disasters in Australia, Thailand, and New Zealand, Holcim continued its efficiency improvement actions by temporarily or permanently closing production facilities located almost exclusively in developed markets, such as Spain, Italy, Eastern Europe, or the United States. In the end, Holcim lost its leading position within the cement segment in favor of Lafarge, keeping a minimal gap of one million tons. Lafarge and Holcim own together a 50.9 percent share of cement majors. Lafarge strengthened its presence in emerging markets, thus managing to take the lead on the cement segment with 145.3 million tons sold in 2011. Emerging markets accounted for 57 percent of
Lafarge’s global presence in 2011, while in 2005 they represented only 32 percent. However, Lafarge is still falling behind Holcim on aggregates (192.7 million tons sold in 2011) and concrete (33.8 million cubic meters), seeing sales decline on both segments—by 0.3 percent and 0.6 percent, respectively. The third global cement producer, HeidelbergCement, sold 87.8 million tons of cement in 2011 and registered the biggest growth rate in terms of cement volumes (12%). The company continued to strengthen its leading position in aggregates with 254.1 million tons sold in 2011, a 29.8 percent share among the major aggregates producers. Other companies that managed to expand their cement sales in 2011 include Vicat (up 11.5% with 18 million tons sold), Buzzi Unicem (6% and 28.2 million tons sold) and Cemex (1.8% and 66.8 million tons sold). Cimpor and Italcementi, however,
CRH
Vicat
Titan
Lafarge
Italcementi
Holcim
2011 Concrete Volume
Heidelberg Cement
2011 Aggregate Volume
-0.20 Cimpor
2011 Cement Volume
300
Cemex
150
Buzzi Unicem
0
are on the negative side, selling 27.5 million tons (a 2.8% decline) and 51.1 million tons (down 1.9%), respectively. In the concrete segment, Cemex maintains its leadership with 54.9 million cubic meters sold in 2011, an increase of 3.9 million cubic meters compared to 2010. In terms of growth rates, Italcementi dominated the concrete market, boosting its concrete sales from 9.5 million cubic meters in 2010 to 14.6 million cubic meters in 2011, an increase of 53.2 percent. Outlook The outlook for 2012 once again favors emerging markets, expecting them to continue their positive evolution, while mature markets are seen to stabilize further. Greece, Egypt and Italy will continue to pose difficulties for cement companies, as the countries continue to lack the required ingredients for a complete recovery.
FEBRUARY/MARCH 2012
CW Group CemWeek BMWeek CemWeek CW Group BMWeek www.cemweek.com CemWeek BMWeek CW Group
49
Coal W Coal W Coal W
DATA SHARE PERFORMANCE 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)
3.39
2.22
-13.57%
31.98%
2.99
2.87
-2.12%
2.10%
BORAL LTD FPO (ASX)
5.42
3.13
-22.51%
34.19%
4.18
3.72
0.52%
12.85%
TITAN CEMENT (Athens)
18.36
9.32
-21.73%
54.18%
-
-
N/A
N/A
INDIA CEMENT (Bombay)
110.90
62.10
-10.14%
60.47%
88.63
75.90
12.43%
31.28%
JK CEMENT (Bombay)
154.00
96.05
-5.10%
52.16%
128.25
112.39
13.96%
30.04%
PRISM CEMENT LTD. (Bombay)
59.85
35.75
-19.55%
34.69%
45.56
42.72
5.69%
12.71%
SAGAR CEMENT(BSE (Bombay)
197.70
125.00
-19.32%
27.60%
156.84
142.26
1.70%
12.12%
SHIVA CEMENT (Bombay)
8.42
4.90
-38.00%
6.53%
5.30
5.76
-1.49%
-9.37%
FLSMIDTH & CO. (Copenhagen)
479.90
255.20
-7.61%
73.75%
427.09
345.33
3.82%
28.40%
WEST CHINA CEMENT (Frankfurt)
0.32
0.09
-52.98%
64.84%
0.14
0.13
6.21%
13.98%
SHANSHUI CEMENT (HKSE)
10.20
4.25
-30.88%
65.88%
6.44
6.01
9.42%
17.40%
ASIA CEMENT CH (HKSE)
7.34
2.81
-41.28%
53.38%
4.10
3.95
5.23%
9.18%
ANHUI CONCH (HKSE)
56.90
17.90
-54.39%
44.97%
26.69
25.80
-2.78%
0.57%
INDOCEMENT TUNGGA (Jakarta)
19,050.00
10,700.00
-6.82%
65.89%
17,416.20
15,753.70
1.92%
12.67%
HOLCIM INDONESIA (Jakarta)
2,400.00
1,650.00
2.08%
48.48%
2,302.21
2,043.67
6.42%
19.88%
SEMEN GRESIK (PER (Jakarta)
12,950.00
7,400.00
-11.58%
54.73%
11,408.80
9,869.63
0.36%
16.01%
TONGYANG CEMENT & (KOSDAQ)
3,775.00
797.00
-26.62%
247.55%
2,868.50
1,553.31
-3.43%
78.33%
ASIA CEMENT (KSE)
49,600.00
31,100.00
-16.83%
32.64%
39,875.00
35,998.20
3.45%
14.59%
LAFARGE MALAYAN C (Kuala Lumpur)
8.11
6.06
-9.37%
21.29%
7.75
7.52
-5.17%
-2.31%
YTL CEMENT BHD (Kuala Lumpur)
4.85
3.80
-1.44%
25.79%
4.76
4.40
0.40%
8.52%
CIMPOR R (Lisbon)
5.55
4.50
-10.34%
10.55%
5.07
5.08
-1.85%
-2.11%
STEPPE CEMENT (London)
48.93
30.00
-37.66%
1.67%
32.27
32.97
-5.47%
-7.49%
CEMENTOS PORTLAND (MCE)
17.19
6.10
-63.58%
2.62%
7.21
8.66
-13.17%
-27.73%
BUZZI UNICEM (Milan)
10.91
5.45
-19.71%
60.73%
8.31
7.00
5.41%
25.10%
CEMENTIR HOLDING (Milan)
2.31
1.28
-25.11%
35.37%
1.73
1.68
0.24%
2.94%
ITALCEMENTI RSP (Milan)
3.97
1.68
-38.04%
46.08%
2.25
2.14
9.20%
14.76%
ASSOCIATED CEMENT (NSE)
903.60
415.05
46.48%
218.89%
786.51
618.19
68.28%
114.10%
ANDHRA CEMENTS LI (NSE)
16.95
8.60
-32.15%
33.72%
11.56
10.50
-0.50%
9.48%
BINANI CEMENT LIM (NSE)
99.50
85.20
-9.05%
6.22%
-
-
N/A
N/A
BURNPUR CEMENT LI (NSE)
9.90
6.80
-32.32%
-1.47%
7.10
7.10
-5.61%
-5.67%
DALMIA CEMENT (BH (NSE)
284.80
134.00
-76.70%
-50.49%
216.64
225.53
-69.37%
-70.58%
DECCAN CEMENTS LI (NSE)
188.00
121.00
-14.89%
32.23%
156.01
147.26
2.56%
8.65%
MANGALAM CEMENT L (NSE)
128.00
46.25
7.70%
198.05%
112.25
73.90
22.80%
86.53%
SHREE CEMENTS LTD (NSE)
2,849.00
1,503.55
-1.96%
85.76%
2,384.00
2,020.78
17.16%
38.22%
CRH PLC AMERICAN (NYSE)
25.16
14.17
-14.23%
52.29%
20.59
18.36
4.81%
17.53%
CEMEX, S.A.B. DE (NYSE)
9.29
2.27
-13.13%
255.51%
7.49
5.24
7.80%
53.91%
EAGLE MATERIALS I (NYSE)
33.98
15.36
-10.06%
98.96%
31.27
23.25
-2.28%
31.45%
TEXAS INDUSTRIES, (NYSE)
46.45
21.89
-29.75%
49.06%
33.43
31.53
-2.40%
3.48%
CIMENTS FRANCAIS- (Paris)
77.49
53.42
-26.82%
6.16%
57.46
59.45
-1.30%
-4.61%
LAFARGE (Paris)
48.76
22.29
-26.49%
60.85%
32.37
28.27
10.74%
26.77%
ANHUI CONCH CEMEN (Shanghai)
43.05
14.40
-57.65%
26.60%
17.21
18.01
5.92%
1.23%
FUJIAN CEMENT CO. (Shanghai)
14.70
6.91
-39.32%
29.09%
8.41
9.45
6.04%
-5.57%
CHINA SINOMA INTL (Shanghai)
47.18
14.10
-59.18%
36.60%
18.18
20.67
5.94%
-6.84%
HUAXIN CEMENT CO (Shanghai)
5.48
1.51
-62.93%
34.48%
1.93
1.93
5.30%
5.14%
SIAM CEMENT -F- (Stuttgart)
10.54
6.58
-1.47%
57.92%
9.73
8.82
6.76%
17.79%
TAIWAN CEMENT TWD (Taiwan)
49.45
29.00
-25.18%
27.59%
36.88
35.61
0.34%
3.92%
ASIA CEMENT CORP (Taiwan)
48.30
28.25
-23.71%
30.44%
36.14
34.69
1.95%
6.23%
CHIA HSIN CEMENT (Taiwan)
20.30
11.15
-30.30%
26.91%
13.34
14.22
6.07%
-0.47%
LUCKY CEMENT TWD1 (Taiwan)
9.20
5.05
-35.33%
17.82%
5.67
5.91
4.88%
0.68%
HOLCIM N (VTX)
76.90
42.11
-21.00%
44.27%
56.17
51.63
8.16%
17.65%
HEIDELBERGCEMENT (XETRA)
52.81
23.92
-19.31%
78.19%
38.43
32.13
10.88%
32.62%
KHD HUMBOLDT WEDA (XETRA)
7.95
4.17
-23.00%
46.76%
5.64
5.07
8.47%
20.81%
50
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
The resource for global cement prices The CW Group's Global Cement Trade Price Report includes current pricing for cement delivered through the retail channel as well as import and export pricing for major markets around the world. Worldwide monthly cement prices
■■ Major market retail prices ■■ Regional retail price indices ■■ Covers grey and white products
Regional monthly cement price indices: ■■ ■■ ■■ ■■
Mediterranean basin North America & Caribbean East & Southeast Asia And other regions
Global import and export cement prices: ■■ Major market trade flows ■■ FOB export prices ■■ CIF import prices
Global market cement prices. Import & export trade prices. All in a single must-have resource.
Annual subscriptions include four quarterly 50+ page reports:
■■ Single user: USD2,300 ■■ Multi-user (max 3-users): USD3,800 ■■ Corporate use: Upon request
Contact us at sales@cwgrp.com to discuss this unique offering further.
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
FLASHBACK News flow on CemWeek.com last two months (darker red shows higher news volume)
India and the United States remain in the headlines, and Bolivia, Egypt, Nigeria, Saudi Arabia and South Korea have entered cement news as hotspots on cemweek.com.
IN THE NEXT ISSUE
Feature Japan: the cement industry one year after the earthquake and tsunami Leaders Comment A conversation with B.T. Shah, Director at Mombasa Cement, about the Kenyan market Research Global cement prices
52
www.cemweek.com
CW Group Coal Week CemWeek BMWeek CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group FEBRUARY/MARCH 2012 Coal Week
BUZZ TOP 15 STORIES
CEMWEEK.COM
From price increases to expansions, here’s what you’re reading on CemWeek.com: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Lafarge France has new CEO Three new cement plants to rise in Mozambique JK Lakshmi eyes expansion in 2012 Saudi's Al Jouf to build new production line CW Group: Global cement demand to reach 4bn tons by 2013 India Cements unveils expansion plans New cement plants to be built in Nigeria India cement prices remain flat in January Indian cement prices set to increase Alexandria Portland plant attacked by armed men UAE cement firms hike prices India manufacturing capacity to continue growing UltraTech reports 93% surge in profits Birla mulls Lafarge South Africa buyout Egypt: Cement industry faces challenges in 2012
input
facilities
intends
earnings energy
plans saudi infrastructure
area
daily
waste fourth costs
approval
cemex
outlook notes officials
growth
environmental
losses
better
council
asia
competition
arabia
ministry
operations
holcim
strike
drop
project increased
markets
levels
fontana groups exchange facility international brazil health improve
kilns kiln yuan agreed standards
export
spain
materials
burning
grinding
loss
significant
capital good shortage ebitda declined rise incinerator emissions
dividend workers reorganization permit coal producers building regions environment dropped nearly cimpor cash
india debt needs
labor trade
save
countries
rising chief profits positive
plants
financing statement
makers
lafarge
problems management performance issued financial process ship
letter
TOP 15 STORIES
BMWEEK.COM
New waves over Vulcan board, smuggling and new products. The most popular stories on BMWeek.com: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Shareholder to sue Vulcan board over Martin Marrieta deal Indian 2012 construction outlook stable Extension of Caleros Bran quarry discussed Lafarge expands in Ivory Coast GIA discusses possible recovery of concrete, gypsum, plaster Lafarge asset deal with Martin Marietta Cemex subsidiary enters talks on possible Readymix takeover Vinci acquires Carmacks Lafarge develops cold resistant concrete Readymix to sell non-core assets Cement smuggling continues through Gaza strip Martin Marietta reveals nominees to Vulcan Board New concrete product set to decrease carbon dioxide production Cardboard explored as building material Residents express opposition to Florida quarry
plants
offer reached
development
project areas
builders
vulcan
association
lafarge permits
plans
growth
cemex
planning roads costs price
quality asphalt
products
gravel
rise
include
recently developed
concrete says
reportedly
declined
represents
jobs
proposed
operation public markets
limestone
contract
buildings
ready gypsum marietta
sector facility government highway expansion known
china energy meters
board
quarry
mining
deal sustainable despite investment
contracts recovery
bridge
decline
housing
operations activity
sales
aggregate
study
continues
aggregates value
environmental
green
work
share
country’s
equipment
remain
infrastructure
recent
road
steel water
continue
county land
world
national
productrock martin concerning
facilities sand readymix
order previous
economic
spending