CemWeek Magazine, Issue 20

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

APRIL - MAY 2014

FEATURE

THE LEGACY OF A VISIONARY LORENZO ZAMBRANO ( 1944 - 2014 )

INTERVIEW

Mr. Muhammad Ali Tabba An executive view of a leader of Pakistan’s cement industry

CW Research GCTPR Q1 2014

prices fluctuate but no clear trend News

•

Analysis

•

Market Coverage

•

Interviews

•

People Moves

20

CONTENTS FEATURES

11

5 THE LEGACY OF A VISIONARY LORENZO ZAMBRANO ( 1944 - 2014 ) 11 INTERVIEW: Mr. Muhammad Ali Tabba - ceo, lucky cement An executive view of a leader of Pakistan’s cement industry 17 CW Research GCTPR Q1 2014 Prices fluctuate but no clear trend

5

FEA

17

DEPARTMENTS LETTER FROM THE PUBLISHER 1 The cement industry loses a leader numbers in brief 3 Africa hits a new milestone in cement capacity

39 From our industry partner Construction and building materials update 42 equipment Equipment and notable projects

research 23 Cement Volumes 26 Cement Energy Markets

43 cw group meeting agenda Group’s upcoming events

people 31 People on the move

44 BUZZ Top 15 CemWeek and BM Week stories

32 35 36 38

regional reports Europe, Middle East & Africa Central & South-East Asia Asia Pacific Americas

EDITOR’S NOTE Letter from the publisher and editor

The cement industry loses a leader

C

W Group is proud to release a new issue of the CemWeek Magazine that brings a tribute to Mr. Lorenzo Zambrano, Chairman of the Board of Directors and Chief Executive Officer of Cemex, who passed away on May 12, in Madrid, Spain.

Mr. Zambrano, a visionary and a leader, dedicated his life to transforming CEMEX from a regional company in Mexico to a worldwide player with a major impact on the industry. He was admired not only for his exceptional professional skills, but also for the great human being that he was. The special feature of this issue presents his legacy and recognizes the amazing achievements he made in his career in Cemex.

CemWeek Magazine has also the pleasure of publishing in this issue of the magazine an exclusive interview with Mr. Muhammad Ali Tabba, CEO of Lucky Cement. We are honored to have him and present our readers an in-depth view of the management behind the company.

Lucky Cement, founded in 1996, is one of the youngest yet the largest cement producer and exporter of Pakistan with an annual capacity of 7.75 million tons of cement per year. Besides being an industry innovator in terms of technological advancements, marketing efforts, cost efficient and sustainable energy and production practices, Lucky is one of the largest in terms of CSR efforts running a state of the art cardiac hospital, a kidney dialysis center, a dispensary for males and one for females and children, its own school in the plant vicinity, scholarship fund for higher education and many more.

Our last feature of this issue is dedicated to the 1Q2014 TPR report recently released by CW Research. This extensive quarterly report includes current and historical prices for cement, clinker and granulated slag traded internationally and well as volumes shipped in a list of more than 35 countries worldwide.

The CemWeek Magazine is published by the CW Group LLC 132 Larchmont Ave, Suite 12, Larchmont, NY 10538, USA T: +1-702-430-1748 F: +1-928-832-4762 www.cwgrp.com www.cemweek.com

STAFFBOX ROBERT MADEIRA CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

CRISTIAN DUMITRU DESIGNER

LIVIU DINU ADVERTISING PROJECT MANAGER

CLARE ASLAN ROXANA CHISCOP LAURA GOLDNER CLAUDIA STEFANOIU CONTRIBUTING WRITERS & RESEARCHERS

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

Robert Madeira

PUBLISHER AND HEAD OF RES EARCH

Liviu Dinu

PROJECT MANAGER

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

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CW Group CW Analytics

In Europe, Asia and Africa alone, we have completed and delivered more than 100 plants in the past 8 years.

A proven process for project execution With more than a century of experience in major cement plant projects, FLSmidth offers excellent protection for your investment: a proven process for successful execution. Throughout the project, a dedicated project manager oversees and tracks every step and meets with you on a regular basis. We never leave the site before all the equipment operates according to specifications. And we are available for a comprehensive range of support services long after the plant is completed.

From process design and project management to equipment supply and commissioning, FLSmidth offers you one source for everything it takes to design, build and operate successful plants.

Read more at www.flsmidth.com

numbers

First signs of weakness noted in Russian cement market Russia’s economic climate suffered a significant setback in the first quarter of 2014. A GDP contraction, mounting sanctions, political uncertainty, and a falling ruble led to grim projections for the country. Additionally, investments of approximately US$100 billion are expected to be withdrawn from the country during 2014. Due to these conditions, the IMF reduced its 2014 GDP growth forecast to a marginal 0.2 percent.

Russia Cement Production (million tons)

Dwellings put in place (mln sq meters) 40%

68 66

30%

64

20%

62 60

54 52

LTM Feb 2012

LTM Feb 2013

LTM Febr 2014

0% -10% -20%

Jan-Febr 2010 YTD

Jan-Febr 2011 YTD

Jan-Febr 2012 YTD

Jan-Febr 2013 YTD

Jan-Febr 2014 YTD

Source: CW Research

56

Source: CW Research

10%

58

After three years of double-digit growth, the combined cement production for January and February 2014 declined 1.5 percent, yearover-year. Even though construction of new dwellings measured in the million square meters of total floor space, representing an almost 34 percent increase in the first two months of 2014 over the corresponding period of 2013, the increase came as compensation for a softer December 2013. In terms of construction works expressed in RUB billion, the country experienced a mere 0.4 percent increase, year-on-year. The difficult conditions in the cement industry will be further exacerbated by declining cement prices, a trend that began in 2013.

Comparative Producer-Consumer Cement Prices (RUB/ton) Consumer Cement Price (RUB/ton)

Construction worth activity (Billion RUB)

Producer Cement Price (RUB/ton)

6,000 5,800

2013

5,600 5,400

2012

2010 0

3

500

1000

1500

APRIL / MAY 2014

2000

2500

3000

3500

4000

4500

www.cemweek.com

5,000 4,800 4,600

2011

2012

2013

Source: CW Research

2011

Source: CW Research

5,200

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CW Group

FEATURE

The legacy

Lorenzo Zambrano 1944 - 2014

o f a v i s i o n a ry

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APRIL / MAY 2014

www.cemweek.com

He was a visionary and a leader who dedicated his life to grow CEMEX from a regional company in Mexico to a top-class world player.

Admired not only for his tenacity but most of all for the great human being he was, his legacy will live on. Lorenzo H. Zambrano, Chairman of the Board of Directors and Chief Executive Officer of CEMEX, passed away May 12 in the city of Madrid, Spain.

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APRIL / MAY 2014

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FEATURE Early start CEMEX was born in 1906 when Cementos Hidalgo started operations near Monterrey in northern Mexico. In 1920 Lorenzo Zambrano, grandfather of Lorenzo H. Zambrano, founded Cementos Portland Monterrey also in Monterrey and eleven years later, in 1931, he was the mastermind behind the merger of the two companies, creating Cementos Mexicanos, known today as Cemex.

Lorenzo H. Zambrano followed his grandfather’s steps and joined CEMEX in 1968.

He got involved in all operational aspects of the business and held several positions prior to his appointment as Director of Operations in 1981. In 1985, Mr. Zambrano was appointed chief executive officer, and in 1995 he was elected chairman of the board of directors.

From the mid-seventies to the mid-eighties CEMEX expanded its operations in Mexico and became the leader in the local market. Also during the same period the company doubled its exports, went public on the Mexican Stock Exchange and increased its presence in the central and southern regions of Mexico.

In 1985, with the signing of the GATT agreement, CEMEX starts its transformation process. The company decides to divest non-core assets and focus on the cement value chain. In 1987 the company

acquires Cemento Anahuac and dispatches the first post-merger-integration team to consolidate the new operations. Two years later in 1989, with the acquisition of Cementos Tolteca, CEMEX became one of the ten largest cement companies in the world with net sales slightly below US$1 billion.

First steps into the internationalization Despite being very successful in Mexico, CEMEX opportunities within the country started to shrink with the rapid and aggressive expansion of other competitors and the executives started rethinking the future of the company. It was from the hand of Lorenzo H. Zambrano that CEMEX initiated its international expansion into the European market with the acquisition in 1992 of Valenciana and Sanson, Spain’s two largest cement companies. The transaction was closed at US$1.84 billion.

In 1994 the company turns its eyes into the Latin American market. In 1994 it acquires Vencemos, Venezuela’s largest cement company, and begins operations in South America. The same year CEMEX acquires Cemento Bayano in Panama for a price of $60 million initiating activities in Central America and the Balcones cement plant in Texas, United States. By mid-nineties CEMEX’s debt was at US$4.8 billion, making it Latin America’s biggest corporate debtor and restricting the company’s cash flow.

Net Sales (US$ billion)

Net Sales (US$ billion) 20.9 15.3

14.0

15.2

8.1 5.6

7

1.0

1.2

1989

1995

APRIL / MAY 2014

2000

2004

2005

2007

2010

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2013

The growth strategy in the Latin American market continued when CEMEX acquired Cementos Nacionales, the leading cement company in Dominican Republic, establishing operations in the Caribbean region.

The consolidation was completed in 1996 when Colombia’s Cementos Diamante and Samper were added to the list. With this US$ 700 million transaction the company became the world’s third largest cement company. The operations in Colombia were later renamed to CEMEX Colombia.

Between 1997 and 1999 CEMEX positioned itself in the Asian market buying a participation in Rizal Cement and the assets of APO Cement in the Philippines.

Before the decade ended it also added two terminals in Haiti, 95 percent of Cementos del Pacífico, the leader in Costa Rica, and the first acquisition in the Middle East, a 77 percent stake in Assiut Cement Company.

largest acquisition in the history of the company. The same year the company launched its CEMEX Way initiative to identify, incorporate, and execute standardized best practices throughout the organization.

Between 2001 and 2002 the company consolidated its position in the Latin American and Asian cement markets. In 2001 it increased its presence in Central America by initiating operations in Nicaragua and entered the Thailand market with Saraburi Cement. In 2002 CEMEX enhanced its position in the Caribbean by acquiring Puerto Rican Cement.

In late 2004 CEMEX agreed to purchase England-based RMC Group, the world’s

The next big step came in October 2006 when CEMEX announced a US$12.8 billion offer to acquire all of the outstanding shares of Australia-based Rinker Group.

Operating EBITDA (US$ billion) 4.5

It was also in 1999 that CEMEX listed for the first time on the New York Stock Exchange under the ticker symbol “CX”.

Three big moves: Southdown, RMC and Rinker CEMEX hit the first big milestone through real internationalization in 2000 with the acquisition of Southdown, North America’s largest cement producer, for US$ 2.63 billion. Southdown’s plants had a production capacity of 11 million tons. This was the

biggest supplier of ready-mixed concrete and double the company revenue and expand into European markets. This was the biggest acquisition ever by a Mexican company. Including debt the purchase was valued at US$5.8 billion. The integration of the RMC assets into the operations has been one of the most successful mergers that CEMEX has closed since its expansion race started. Net sales sky rocketed from US$8.1 billion in 2004 to US$15.3 billion in 2005 while EBITDA grew 40 percent to reach US$3.6 billion in 2005.

3.6 2.5 1.8

2.0

2.4

2.6

CEMEX in Victorville, California www.cemweek.com

APRIL / MAY 2014

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FEATURE

CEMEX won control of Rinker with a final offer of US$14.2 billion and rapidly moved to the top of the worldwide producers of ready-mixed concrete. The year following the closing consolidated net sales and EBITDA hit an all-time record of US$20.9 billion and US$4.5 billion respectively. The Rinker acquisition though increased CEMEX exposure to the United States market.

The global recession developed in time with the Rinker transaction and the housing crash and financial crisis in the US particularly affected the recent purchased operations. The crisis also found CEMEX with an enormous net debt load. By 2010 CEMEX net sales had decreased 33 percent versus the 2007 record and EBITDA plummeted 48 percent to US$2.4 billion.

CEMEX however was able to maintain its EBITDA margin relatively under control thanks to the aggressive implementation of cost reduction programs. Margins have remained stable in the 16% to 18% range since the crisis hit in 2009. The company also embarked in a divestiture program and sold off the entire Australian operations as well as assets in Austria and Hungary.

Life after Rinker After several periods of earning declines CEMEX is starting to recover. The company rescheduled US$7 billion in 2014 payments to 2017 and most analysts expects CEMEX to turn its first quarterly profit since 2009 in the next report. In one of his last interviews Lorenzo H Zambrano expressed his confidence in the recovery of the company and in the transformation of Mexico into a world power. “Battles are won with productivity and a good management”, he said, and that is exactly what we expect the next generation of CEMEX executives to do, continue the battle that Lorenzo H. Zambrano started almost 15 years ago.

The legacy: CEMEX bets on his own talent On May 15, 2014 CEMEX announced the promotion of Fernando A. Gonzalez, chief financial officer, to chief executive officer of the company. He joined CEMEX in 1989 as Corporate Vice-president of Human Resources. He subsequently held positions in Strategic Planning & Business Development and as President of CEMEX’s business in Latin America, Europe, Africa, Middle East, and Asia. In 2011 he was named Executive Vice-President of Finance and Administration and served as CFO. “It is a great honor and responsibility to take the lead of CEMEX. I firmly believe we have the best people in the industry, who can insure our continuing success,” stated Fernando A. Gonzalez. We have a

Fernando A. Gonzalez

Chief Executive Officer

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APRIL / MAY 2014

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CEMEX has presence in more than 50 countries worldwide with approximately 43,000 employees. Annual production capacity reaches 94 million metric tons of cement. In 2013 it achieved annual production levels of 55 million cubic meters of ready-mix concrete and 162 million metric tons of aggregates. The company footprint includes 55 cement plants (plus 12 cement plants with a minority participation), 1,784 ready-mix concrete facilities, 362 aggregate quarries, 222 land-distribution centers, and 63 marine terminals.

solid business strategy, and most importantly, we provide the best building solutions and value-added products. Furthermore, we are encouraged by the positive outlook and the improving business environment in the markets where we operate”.

The selection of Fernando Gonzalez as CEO is a clear message of CEMEX’s business continuity plans, the high quality of its executives and the commitment to a smooth transition.

Rogelio Zambrano

Chairman of the Board of Directors

On the same day CEMEX appointed Mr. Rogelio Zambrano as Chairman of the Board of Directors. He has been a member of CEMEX’s Board of Directors since 1987 and President of CEMEX’s Finance Committee since 2009. He is also a member of the Advisory Board of Grupo Financiero www.cemweek.com

Banamex Zona Norte, and a member of the Boards of Directors of Carza and Tecnologico de Monterrey, among others. He graduated in Industrial Engineering from the Tecnologico de Monterrey and holds a MBA from the Wharton School of Business, University of Pennsylvania.

After the announcement Mr Zambrano declared “We will stay focused on creating value for all our stakeholders. Our new CEO and the whole of CEMEX’s Executive Committee have the vision, skills, and experience to do exactly that, and I am very optimistic about CEMEX’s future.

Lorenzo Zambrano’s legacy will endure and his vision and passion for excellence will continue to inspire us in the years to come.”

APRIL / MAY 2014

10

INTERVIEW

INTERVIEW WITH

Mr. Muhammad Ali Tabba ceo, Lucky Cement Limited

Photo: Lucky Cement Limited

An executive view of a leader of Pakistan’s cement industry

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APRIL / MAY 2014

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Lucky Cement is one of the youngest yet the largest cement producer and exporter of Pakistan, along with being an industry innovator in terms of technological advancements, marketing efforts, cost efficient and sustainable energy and production practices. It is the first Pakistani cement company to become an MNC with a JV grinding unit in Iraq and plans for an integrated plant in DR Congo. In addition, Lucky Cement is also the only cement company in Pakistan to make voluntary sustainability disclosures as per the GRI guidelines, one of the largest in terms of CSR efforts running a state of the art cardiac hospital, a kidney dialysis center, a dispensary for males and one for females and children, its own school in the plant vicinity, scholarship fund for higher education and many more.

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INTERVIEW

In our conversation with Mr. Muhammad Ali Tabba, he speaks of the accomplishments achieved by Lucky Cement and introduces the expansion plans that the company has undertaken recently, such as being the first Pakistani cement company to become an multinational corporation with a joint venture grinding unit in Iraq, and development plans for an a new plant in Congo. He also highlights the relevance of sustainability for the cement industry and how Lucky Cement has put in place sustainable practices at their plants.

CW Groupdo What

you think are your most recent accomplishments CW Group and what are your priorities Analytics in CW technology and production practices that position Lucky CW Advisory as a leader in industry innoCemWeek vation?

We have recently started production in Iraq at our joint venture grinding plant, called Al Mabrooka Cement, becoming Pakistan’s first multinational cement company with an operational production facility abroad. This can be called one of our recent accomplishments. We faced many challenges as getting the right human resource at the plant, as well as material resources on site, proved to be complicated due to various reasons including government regulations, market structure and support infrastructure weakness. This is our first phase of development and if we succeed in our projections, we may go for a full cement production line of 1.25m tons. For us that would be a greater achievement.

Our priority in technology is to attain operational efficiency with innovation and environmental cognizance. Our pro-

“ 13

environment efforts are continuously enhanced to keep up with the pace of technological proliferation of the modern era.

Besides several pro-environment power generation projects that have significantly reduced our carbon footprint and accredited us with carbon credits, we have recently invested in state of the art vertical cement grinding mills for our Karachi plant.

CW Group You recently opened a plant in CW Iraq and you are finalizing Group construction on a new cement CW Analytics plant in the Democratic Republic CW of Advisory Congo. Is Lucky cement considering additional projects CemWeek in Pakistan and in other countries in the region and what do you believe are the key factors that can make Lucky cement grow in the region?

We have a multifold strategy for the local Pakistani market as well as the international arena. Foremost is to hold and grow our local dominance by further strengthening our capacity. At the same time we are spreading our arms in the international

Our priority in technology is to attain operational efficiency with innovation and environmental cognizance.

APRIL / MAY 2014

www.cemweek.com

Photo: Lucky Cement Limited

emWeek Magazine has the pleasure of presenting you a special and exclusive interview with Lucky Cement’s CEO, Mr. Muhammad Ali Tabba, and offer our readers an in-depth view on the management behind the company. Lucky Cement, founded in 1996 and currently the largest cement producer in Pakistan with a production capacity of 7.75 million tons of cement per year, is listed on the Karachi, Lahore, Islamabad and London Stock Exchanges.

LUCKY CEMENT PLANTS MAP

PLANTS CURRENTLY IN CONSTRUCTION

OPERATIONAL PLANTS

This two pronged strategy is supplemented by attaining efficiency in terms of cost, energy and resource utilization. Efficiency is reflected in all our business approaches, giving us an edge over competitors.

All this has successfully resulted in giving us a lead in the region.

CW Group Lucky

cement has gone through multiple expansion CW Group projects in the last 10 years.

CW latest Analyticsplant in the DemoYour cratic Republic of Congo was CW Advisory commissioned to FL Smidth.

CemWeek What approach does Lucky Cement follow to select its suppliers? What does Lucky Cement looks for when choosing its suppliers?

Lucky Cement has adopted Chinese and European technology for all its expansion plans in Pakistan. We had the experience of Chinese technology since we started

our first production line in 1996. When we underwent expansion plans in 2004, we opted for Chinese technology but selected European equipment’s and parts for all critical areas of manufacturing. We have a highly qualified technical team that has excelled in using the Chinese technology.

For our Iraq plant we also chose Chinese equipment.

“

As far as sustainability is concerned, it is at the heart of our core values.

For DRC, we went for FLS technology because of its reliability and efficiency.

The country has a very under developed infrastructure and support services. We could not take any risk in our selection of plant and machinery. We finally opted for FLS and we are sure it will help us to optimize our production and efficiency.

CW Group From

your point of view, howCWimportant is sustainabilGroup ity for the cement industry Analytics andCW how Lucky Cement puts in place sustainability practices CW Advisory at its plants?

CemWeek

The world is at a critical juncture. Today, not only the manufacturing sector but every human around the world is posed with a moral dilemma; should we continue our lifestyles the way they are or should we make a little sacrifice for our generations to come? Lucky Cement has adopted a futurwww.cemweek.com

Photo: Lucky Cement Limited

market as well. By investing in the Middle East & Africa, we have engaged our resources to the unconventional markets becoming accessible to the construction industry worldwide.

APRIL / MAY 2014

14

INTERVIEW istic approach in this regard knowing that a little responsibility now can make life easier for future generations.

One of our duel fuel projects also qualifies under Kyoto Protocol of United Nations Framework Convention on Climate Change. Similarly we have invested heavily in pro-environment green energy projects such as Tyre derived fuel and Refuse Derived Fuels, which have gained Lucky Cement carbon credits.

It is noteworthy to mention that not only does Lucky Cement follow sustainable practices; it is also the only cement company in Pakistan to voluntarily report its sustainability disclosures as per international

particulars

Half Year 2013-14 (tons)

Half Year 2012-13 (tons)

Increase / (Decrease)

Clinker Production

3,105,692

2,894,304

7.30%

Cement Production

3,112,828

2,923,945

6.46%

Cement Sales

3,055,579

2,786,742

9.56%

your business priorities for next year and what CW Group are your expectations for the CW Analytics cement industry in Pakistan in CW DoGroup you foresee any further the long term?

CW Advisory consolidation in the Pakistani CW Group We foresee strong cement demand in the CemWeek cement market? guidelines. We are proud to be the first and only organization in Pakistan to receive an A+ rating from the GRI Institute, Netherlands on our Sustainability Report 2012.

coming year which means we have to expand our production capacities. At the The Demand for cement in Pakistan is same time we see an increase of utility cost CW Advisory witnessing a growth pattern with positive therefore we will also focus on maintaining outlook for the industry in the near to long our position as a low-cost producer. termCemWeek future. That coupled with Pakistan’s geo-strategic position also has a huge I can see some good signs for the future potential for exports. There will be some divestment in the cement industry that will allow existing players to consolidate its position.

CW Analytics

HY 2013-14

HY 2012-13

% Change

Revenue

19,575

17,511

11.8%

GP

8,509

7,690

10.7%

OP

6,432

5,351

20.2%

EBITDA

7,440

6,255

18.9%

NP

5,161

4,290

20.3%

EPS

15.96/share

13.27/share

20.3%

All figures in PKR Millions except EPS

15

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Source: Lucky Cement Limited

Financial Performance particulars

CW Groupare What

“

We foresee strong cement demand in the coming year which means we have to expand our production capacities.

Source: Lucky Cement Limited

For me and my team, it is embedded in our hearts and minds that we do not just stand for profits rather we stand for our Core Values at Lucky Cement, and as far as sustainability is concerned, it is at the heart of our core values. Lucky Cement has revolutionized the concept of pro-environment investments in the cement industry of Pakistan. We have acquired technologies like Waste-heat-recovery and have converted our furnace oil based engines to more sustainable energy sources.

Production & Sales Volume Performance

of the cement industry in Pakistan. Major driver for cement consumption can be infrastructure development and housing projects. A number of mega water and power sector projects are in the pipeline, including Diamer Bhasha multipurpose project and two additional Chashma Nuclear Power projects, while almost 12 other large projects are planned for initiation during this financial year.

Overall I think the future is very promising for the Pakistani cement industry as well as for Lucky Cement.

A Brief profile of Muhammad Ali Tabba Vision, humility and ambition are the traits of a great man. Mr. Muhammad Ali Tabba, the Icon amongst Pakistani entrepreneurs possesses these traits in abundance. Chief Executive of Pakistan’s largest cement company and CEO of one of the leading textiles concerns in Pakistan, Mr. Tabba is a man known for his proactive thinking, futuristic approach, and strategic vision.

Mr. Muhammad Ali Tabba is a distinguished leader and a leading philanthropist. He serves as a Board Member of the Trade and Development Authority of Pakistan (TDAP), the premier trade organization of the country which works under the Federal ministry of Commerce. In addition to this, Mr. Tabba is also Chairman of the All Pakistan Cement Manufacturers Association (APCMA), Convener of Cement Sectoral Committee in the Pakistan India Joint Business Council (PIJBC), and is on the board of Pakistan Business Council (PBC).

Mr. Muhammad Ali Tabba is associated with the Yunus Brother’s Group (YBG), one of the largest business conglomerates in Pakistan having interests in the field of textiles, energy, chemicals, cement, real estate, commodity trading and pharmaceuticals. The Group’s annual turnover is to the tune of US$ 1.50 Billion with over US$ 600 Million contributed from exports.

Due to his extensive engagement in many community welfare projects, he has received numerous recognitions and awards for his social interventions. Mr. Tabba is on the Board of Governors of various Universities, Institutions and Foundations. He also manages the Group’s own Aziz Tabba Foundation with welfare projects in the field of education, health, housing and other social needs.

Having started his career as a Director in the group’s trading business, Mr. Muhammad Ali Tabba has successfully reformed and expanded the companies he heads in the Group, which include Yunus Textile Mills, a leading name in the home textiles industry of

Acknowledging his professional accomplishments, distinguished leadership and commitment to shaping a better future, the World Economic Forum bestowed Mr. Muhammad Ali Tabba with the honor of Young Global Leader 2010.

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Photo: Lucky Cement Limited

In terms of exports, Pakistan has recently emerged as a significant regional exporter of cement. There exists a promising potential in export markets. Renewed development trends are shown in the Middle East and East African markets. Projected sales to India will grow. Bangladesh and Sri Lanka are steady markets for export of clinker. As political and security situation improves in Afghanistan and Iraq, demand of cement will increase. We will also explore new markets, like Egypt and Myanmar.

Pakistan with subsidiaries in the US, Europe, France and Canada; Lucky Cement Limited, the largest cement producer and exporter of Pakistan; and ICI Pakistan, where Mr. Tabba serves as the Vice Chairman of the Board of Directors, providing strategic vision to steer the company towards success.

FEATURE

CW Research

Global cement trade prices Q1 2014: prices fluctuate but no clear trend

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lobal FOB gray cement trade prices pulled back in February 2014 to US$74 per ton after rising to a six-month high of US$76 per ton in January, CW Research’s Global Cement Trade Price Report Q1 2014 shows. The average for the last available set of 9 countries has been enjoying a large period of stability, with prices ranging between US$70 to US$75 for the last two years. On a global basis, including more than 30 countries in the average, the price has hovered around US$77 to US$80 since the beginning of 2012.

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FEATURE

Stability in Scandinavia, the Baltics and America Price in the Scandinavia & Baltics region, whose cement demand is highly seasonal, has been resilient falling only 4 percent versus a year ago and increasing 4 percent from January 2012.

Two opposite sides of Europe: East and West Weak economic conditions in some countries in Eastern Europe continue to affect cement demand pushing down FOB gray cement export prices in the region.

However, favorable weather conditions this winter and higher consumption in selected markets have driven up cement trade flows. Despite the slight recovery observed at the end of 2013 and sustained mild weather, price declined 35 percent in February from January 2014.

In North America & Caribbean FOB gray cement export prices have been swinging between US$78 and US$86 per ton since the beginning of 2012. The region continues to see signs of solid recovery, especially in North America.

Eastern Europe has been the most affected region with prices plunging 31 percent in the last 12 months while in Western Europe FOB gray cement export price has grown steadily to US$100 per ton in January 2014.

Asia-Pacific-Japan and the Mediterranean Basin prices remain depressed FOB gray cement export price in the AsiaPacific-Japan region remains the lowest worldwide. January price closed 71 percent below Western Europe and 26 percent below Eastern Europe. However, price has been resilient during the last 12 months compared to other regions.

Eastern Europe has been the most affected region with prices plunging 31 percent in the last 12 months

In Thailand FOB cement and clinker export prices remained rather stable at the beginning of 2014 at around US$58 per ton and US$41 per ton, respectively.

Cement export volume in Thailand went up in January and February of 2014, as companies focused on supplying the

FOB Gray Cement Export Price Month on Month Variance (%) Asia-PaciďŹ c-Japan

12%

Mediterranean Basin

North America & Caribbean

Scandinavia & Baltics

Western Europe

8% 6% 4% 2%

-6% -8%

19

Nov-13

Dec-13

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Jan-14

Feb-14

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Source: CW Research

0% -4%

booming markets of Cambodia and Myanmar, however clinker exports have been contracting and suffered a setback in 2013 dropping 60 percent below 2012 due to lower shipments to Bangladesh.

In Taiwan cement exports experienced a slowdown with lower volumes dispatched to both Singapore and Malaysia.

The Mediterranean Basin FOB gray cement export price dropped to US$61 per ton in January 2014, the lowest price among all the reported regions, while clinker prices remain at US$41 to US$45 per ton in FOB terms for countries like Turkey and Portugal and around US$45 to US$47 per ton for Spain. Prices has been remarkably stable during the last twelve months. Market pressures by an on-going

ALHANDRA cement plant - Cimpor, Portugal

10%

-2%

Price in the Scandinavia & Baltics region has been resilient falling only 4 percent versus a year ago

Denmark White Cement Export Price Month on Month Variance (%)

Denmark White Cement Export Price Month on Month Variance (%) 25% 20% 15% 10% 5% 0%

-10% -15% -20% Jul-13

Aug-13

Sep-13

Oct-13

Cement export volume in Thailand went up in January and February of 2014, as companies focused on supplying the booming markets of Cambodia and Myanmar

Nov-13

Dec-13

Jan-14

Feb-14

Source: CW Research

-5%

sluggish demand in some countries in the region as well as an increased competition has kept prices from rising.

Cement trading volumes have declined significantly, mostly driven by a 45 percent drop in Turkey’s gray cement exports during the first two months of 2014. Lower volumes were sent to Libya, Iraq and Russia.

However Turkey’s clinker exports gained momentum at the beginning of 2014 as cement companies in the country diversify

their portfolio and add new destinations.

In 2013 Turkey reduced its clinker exports by 27 percent following a decline in the volume sent to Ghana and Brazil. Turkey’s reduction in clinker supply was offset by an increase of 43 percent in volume out of Portugal and 11 percent higher dispatched from Spain. Both countries have not been able to sort the economic crisis out and keep pushing up exports to maximize plant utilization. First quarter 2014 Spain’s cement consumption dropped 2.2 percent from last year while in Portugal the construction industry underperformed in the first months of 2014 and showed a less favorable result than the one observed during the year 2013. Despite the increase in volume orders in some market segments, particularly the non-residential building sector, it is expected that the construction industry will further deteriorate.

White cement exports surge amid price volatility After reaching a two-year low in December 2013, Turkey’s FOB white cement export price recovered at the beginning of 2014 and reached almost US$91 per ton by the end of February.

Denmark’s FOB white cement export price has suffered from severe volatility since 2013

Brassac River - Cambodia

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FEATURE

White cement exports increased by almost 16 percent in 2013 driven mostly by higher output from Turkey and Spain. Turkey exported slightly over 1 million tons of white cement in 2013 and a total of 0.15 million tons in the first two months of 2014, 26 percent above the same months of last year. Most of the product was delivered to Libya.

Turkey’s FOB white cement export price recovered at the beginning of 2014 and reached almost US$91 per ton by the end of February

Japan Granulated Slag Exports (% of total volume 2013)

While Denmark and Canada reported stable volumes over 2012 and 2013, Spain increased its white cement exports by 69 percent in 2013 with higher volumes sent to some of the country’s traditional destinations – France and Israel.

Taipei, Chinese United Arab Emirates Korea, Republic of Bangladesh Australia

Granulated slag trade prices stable, volumes rise Japan’s FOB granulated slag export price has been around US$10 and US$11.5 per ton since January 2013, with prices bottoming down during mid-2013.

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APRIL / MAY 2014

Source: CW Research

with prices reaching levels over US$200 per ton at the beginning of 2014. The average price for 2013 was reported at US$170 per ton while in North America, 2013’s main white cement exporter Canada delivered price hit US$137 per ton in FOB terms.

United States of America Other

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Masdar City - Abu Dhabi, UAE

The world’s largest granulated slag exporter, Japan, managed to dispatch 7.8 percent more product in 2013 year over 2012 reaching almost 11 million tons.

Most of the increase was driven by higher deliveries to United Arab Emirates (UAE).

UAE, and in particular its capital Abu Dhabi, one of the fastest growing cities in the world, has been heavily investing in renewable energy and increasing the use of green construction materials, specially granulated slag. As part of the initiative the UAE, in partnership with Sweden,

have created Masdar – the world’s most energy efficient and sustainable city.

Ground granulated blasted slag ‘Green concrete’ was used in the construction of MasdarCity, reducing the carbon output in relation to using conventional concrete by 30-40%.

Other top destinations for Japanese granulated slag are Taiwan, Korea, Bangladesh, Australia and United States. While slag exports to Taiwan and Bangladesh waned in 2013, the latest due to

Global Cement Trade Price Report GCTPR

political instability threatening the cement market growth, shipments to the United States grew for the third consecutive year in a row.

Export volume growth decelerated at the beginning of 2014. During the first two months of the year volume totaled 1.7 million tons, down 4 percent from the same period of 2013. Sharp declines were observed in the product moved to UAE, Korea and Bangladesh offset with higher sales to United States and Qatar.

CW Research

The Global Cement Trade Price Report (GCTPR) is the source for cement and clinker prices, as well as for market information for most regions worldwide. This extensive quarterly report includes current pricing in comparable units for cement and clinker traded internationally through imports and exports, and compares price trends in five continents.

The Global Cement Trade Price Report, the source for global cement and clinker price data. Each report is approximately 80 pages in length and includes gray cement, white cement and clinker import and export prices from all major regions of the world.

The key factor determining a cement trader’s global price competitive position remains its pricing strategy. This applied to vertically integrated cement traders, independent traders, shippers as well as buyers.

Timely knowledge of global cement prices and trends remains a cornerstone for competent internal strategic planning within the cement industry. Join a global group of international cement companies, analysts and others in subscribing to the only publication that consistently tracks cement trade prices.

For questions, inquiries and orders please contact your CW Group Client Service Coordinator or sales@cwgrp.com .

For a complete table of contents of the report, please visit the CW Research website: http://research.cwgrp.com .

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CEMENT MARKETS

CW Research

CEMENT VOLUMES The cement industry delivers good performance

In Germany, cement producers saw an increase in demand of more than 35 percent over the same month of 2013

Spain’s cement consumption rose 21 percent in March 2014 from the previous month, the first positive growth since the crisis broke out in the country. Volume reached 936 thousand tons, 24 percent over the same month in 2013. The increase from last year, however, was attributed to milder weather conditions and more selling days this year. March 2013 was one of the wettest in history in Spain, surpassing the record rainfall of 1947. Also in March 2013 the country celebrated Easter, causing a temporary suspension of activities in construction sites. There is still a long way to go for the cement sector in Spain to pick up, and current requirements in infrastructure investment could provide the country a much awaited economic boost: according to the Spanish Highways Association (SHA) Spain needs around US$8.9 billion spent on its road infrastructure to bring it back to a ‘reasonable’ quality standard. However the industry will need to wait at least another year to see any signs of recovery as recent forecast models estimate 2014 total consumption to fall between 7 and 8 percent versus 2013.

In Germany, cement producers saw an increase in demand of more than 35 percent over the same month of 2013. Favorable evolution of construction projects for both residential and commercial buildings, as well as a renewed interest of public investment in transportation infrastructure in the country are expected to bring an increase in demand for cement in 2014.

Cement production in Poland increased 74 percent in March 2014 compared with the same month of previous year, reaching 1.4 million tons. March cement sales rose 100 percent year on year to 1.4 million tons due to a mild winter and warm weather in March, which allowed the continuation of construction works. First quarter 2014 cement sales rose by 64 percent year on year to 2.7 million tons driven by increased public and private investment in infrastructure, including roads, industrial and housing projects.

Cement production in the Republic of Belarus in March this year was 410.5 thousand tons, 9 percent more than March of 2013 and 35 percent higher than February. Total for the first quarter reached

Mar 2014/Mar 2013 Cement Production Growth Rate (%) 80.0% 60.0% 40.0%

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Source: CW Research

Vietnam

Saudi Arabia

Poland

Peru

Kyrgyzstan

-20.0%

Cyprus

0.0%

Belarus

20.0%

CW Research

Reduced demand in the Cyprus’s cement market still affects sales and there aren’t positive signs that the sector will recover. Demand decreased by 20 percent in March 2014 to 38 thousand tons compared with the same month of 2013, signaling further reduction in construction activity. For the first quarter sales decline was 21 percent to 110 thousand tons. The decrease in cement sales raised the number of unemployed in the construction sector.

Cement sales in Indonesia increased by 9 percent to 4.9 million tons in March 2014 compared with the same month of the previous year. Sales increased in all regions in Indonesia, except Sumatra. This is largely due to infrastructure projects in Java with his best-selling sale of property and apartments, as well as the concretization of streets in major cities. Cement demand in March 2014 raised total cement sales by 4 percent to 14 million tons in the first quarter year on year. The government has started construction on the toll road connecting Medan, the capital city of North Sumatra province, to Kuala Namu Airport in the North Sumatra province. It is expected that the legislative election, will bring a positive reaction in public and private implementation of projects.

Domestic cement sales in Pakistan declined by 4 percent from 2.6 million tons in March 2013 to 2.5 million tons in March 2014, as a result of heavy rain in various parts of the country. The industry has also been affected by reduced demand following an increase in prices due to an overall tax charge imposed by the government last year. The cost of transportation has also increased substantially due to diesel rates and limiting on trucks to load cement and coal, according to the approved axle weight.

Cement demand in the Kingdom of Saudi Arabia in March 2014 has improved and registered an increase of 14 percent from the previous month, supported by heavy infrastructure development in the Kingdom. Year on Year sales declined by 8 percent as a result of lower construction activity during last few months primarily due to labor market pressures.

During the first quarter in Peru, cement production totaled 2.5 million tons, representing a decrease of 0.3 percent compared to the same period of 2013. But domestic cement consumption rose at a faster pace than the previous month, based on a dynamic economic activity in the first half of this year due to a major thrust of construction, a higher rate of mining unit works, road infrastructure and housing projects, offices and shopping centers.

Belarus has plans to ship 65 percent more cement to Russia in 2014 in comparison with 2013

Domestic cement sales in Pakistan declined by 4 percent in March 2014, as a result of heavy rain in various parts of the country

Mar 2014/Mar 2013 Cement Demand Growth Rate (%) 120.0% 100.0% 80.0% 60.0% 40.0% Source: CW Research

Spain

Saudi Arabia

Poland

Peru

Pakistan

Indonesia

Germany

Ecuador

-40.0%

Cyprus

0.0% -20.0%

Brazil

20.0%

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CEMENT MARKETS

940.7 thousand tons, 5 percent over the same period of 2013. Belarus has plans to ship 65 percent more cement to Russia in 2014 in comparison with 2013, with the support of an agreement signed between the country and Russian company Eurocement. The latest is ready to invest between US$70 million and US$80 million in the modernization of Belarusian cement plants. Belarus has had some preliminary discussions to set up a cement company with Eurocement, a massive merger between the two markets.

MARKET DATA SNAPSJOT

CW Research

Saudi Arabia declines sharply in the first four months of 2014 registering a 7 percent contraction in cement consumption. Excluding Spain, which also dropped marginally, all tracked countries reported increases in cement demand. Germany notched the highest one, expanding by 22 percent in the first four months of the year over the corresponding period of 2013.

Cement Production (million tons)

Cement Consumption (million tons)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

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Cement Production MoM (%)

Cement Consumption MoM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

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Cement Exports (million tons)

Cement Imports (million tons)

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Cement Exports MoM (%)

Cement Imports MoM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

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MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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CEMENT ENERGY MARKETS

CW Research

CEMENT ENERGY MARKETS Coal Market Update South African exports recover, Colombian exports plunge Total coal trading volumes recovered 8 percent in March following higher exports from South African ports. Deliveries from Richards Bay terminal to Asian destinations increased 2.2 million tons to 6.9 million tons, the highest since October 2013, after a week activity in February when the port facilities were affected by a nine-day power outage that halted all operation at the terminal. Richards Bay operators already reduced its 2014 forecast export volume from 75 million tons to 73 million tons.

Colombia’s coal shipments plunged in February and March after Drummond was forced to halt its operation in the port in early January. Volume exported dropped 44 percent in February and an additional 18 percent in March. The total for the quarter closed at 14.7 million tons, 33 percent below the last quarter of 2013 but 18 percent over the first quarter of 2013. The beginning of 2013 was a difficult period for the Colombian coal industry.

Production was severely affected by a one-month strike at Cerrejon, Colombia’s biggest coal mine. As a result of the strike 2013 year-to-date coal exports declined 23 percent from previous year. For 2014, Cerrejon, a joint venture between Anglo American Plc, BHP Billiton Ltd and Glencore Xstrata PLC, already announced plans to increase exports and the government set a production target of 89.1 million ton, 4.2 percent over the total produced in 2013.

Colombia’s coal shipments plunged in February and March after Drummond was forced to halt its operation in the port in early January

In Australia, the volume exported remained fairly unchanged from February but increased 29 percent from March 2013. Last year Australian shipments were disrupted after strong rains battered parts of Queensland and forced the closure of mines and ports.

Indonesia’s coal deliveries were up 9 percent in March following higher shipments to India, as the country continues to rely on foreign product to offset the deficit in local production.

Coal Global Trading (million tons)

120

Indonesia

Australia

Russia

South Africa

Colombia

US

Rest

100 80 60

0

Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14

20

Source: Customs data

40

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CEMENT ENERGY MARKETS

CW Research

Energy Prices Update Coal April coal trading prices remained at its minimum since the end of 2009 averaging US$77 per ton for the main export hubs. The Indonesia HBA coal export index price closed at US$74.81 per ton, down 3 percent versus March and 13 percent from a year ago. In Australia price lost US$ 50 cent from the previous month. Poor demand in most markets, mild weather in Europe and oversupply are the major factors affecting prices.

Power companies from Japan, the second largest coal importer after China, recently negotiated coal import contracts forcing 15 percent cut in price. Glencore Strata and Tohoku Electric Power Company set a reference price of US$82 per ton for the year, down US$13 from 2013 price but still higher than the US$77 average spot price. Volume is coming out of Glencore’s operations in Australia. Japan imported around 121 million tons of coal from Australia in 2013. Tohoku also signed a thermal coal import contract with Russia’s biggest coal supplier SUEK. The settled price is around $87 per ton for the 12-month period starting in April.

The China’s Bohai-rim Steam Coal Price Index (BSPI) kept unchanged in April and closed at US$85 per ton

The China’s Bohai-rim Steam Coal Price Index (BSPI) kept unchanged in April and closed at US$85 per ton (532 Yuan per ton). Local prices in China are still at their lowest since the beginning of the year amid a weak demand and increased competition with cheap imports. Ordinary mixed coal (4,500 kilocalorie) price lingered at around US$65 per ton from the end of March to the end of April.

In Europe, whose main coal suppliers are Colombia and the United States, sticky prices remain low. With demand in the region still weak and with anticipation of a mild spring, there is still a wide spread bearish sentiment in the market.

Steam Coal FOB Average Prices (US$/ton)

US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

150 140 120 110 100 90

80 70

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Apr-14

Feb-14

Dec-13

Oct-13

Aug-13

Jun-13

Apr-13

Feb-13

Dec-12

Oct-12

Aug-12

Jun-12

Apr-12

Feb-12

Dec-11

Oct-11

Aug-11

Jun-11

Apr-11

Feb-11

Dec-10

Oct-10

Aug-10

Jun-10

50

Apr-10

60

Sources: EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces

130

CEMENT ENERGY MARKETS

CW Research

Petcoke Price of U.S. uncalcined petcoke for export markets slightly recovered in April from last month and reached US$76 per ton, driven mostly by a 3 percent increase in the price of petcoke delivered to India. Price level has remained at its 4-year low but fairly stable in the US$76 – US$80 range since the end of 2012. Petcoke prices, which closely follow steam coal prices, will remain depressed during the second quarter due to ongoing uncertainty around coal prices and economic recovery in China.

US Petcoke Export Price (US$/ton) rolling 12-month average

120 100 80 60

March exports grew 49 percent from February to 3.6 million tons. Shipments to most destinations raised, particularly Turkey (106 percent), Italy (77 percent) and India (43 percent). Volume to Mexico pulled back 13 percent after a moderate recovery in January and February. Year-over-year volume remains considerably behind and hit a 59 percent drop due to the slowdown in the country’s economy. Shipments to Brazil surged in March but are still below 2013 following a deceleration in the economic growth in the country.

In China, Hualian Petrochemical officially started its new 800,000 tons coking unit. The facility is producing petcoke with 1 percent sulfur and 0.13 percent ash content. It is reportedly selling the product at around US$190 per ton. Local demand in China remains sluggish and under tight environmental pressures. Domestic production has remained stable and in the middle of an oversupplied market, prices continue to fall. In mid-March to mid-April, petroleum coke prices in the Shandong Province dropped 5.9 percent and by the end of April, the Sinopec opening price for high-sulfur coke also dropped substantially. Sinopec is one of the largest integrated energy and chemical company in China.

A-14

M-14

F-14

J-14

D-13

N-13

O-13

S-13

A-13

J-13

J-13

M-13

A-13

M-13

F-13

J-13

D-12

N-12

O-12

S-12

A-12

J-12

J-12

M-12

0

A-12

20

Source: Customs data

40

In China, Hualian Petrochemical officially started its new 800,000 tons coking unit. The facility is producing petcoke with 1 percent sulfur and 0.13 percent ash content

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CEMENT ENERGY MARKETS

CW Research

Natural Gas The Henry Hub spot price pulled back to US$4.4/mmBtu at the beginning of April amid milder temperatures and a decline in residential and commercial demand, mainly in the Northeastern and Mid-Atlantic regions, where prices dropped below the national benchmark. The price recovered at the end of the month following increased cooling demand as the temperatures reached very high levels in some states. Largest gains occurred in Texas and Louisiana. The average price for April closed at US$4.7/mmBtu, 5 percent below the March price but 12 percent over a year ago.

In Europe warm weather has caused natural gas price to drop to its lowest level since June 2011

In Europe warm weather has caused natural gas price to drop to its lowest level since June 2011. The average price for the month of April reached US$10.7/mmBtu, one percent below March and 17 percent down from a year ago. Russia’s Gazprom has announced it will force upfront payments from Ukraine for natural gas deliveries in June. Since the beginning of the conflict both countries have engaged in a dispute over supply and prices.

Russia supplies about one-third of the Europe’s natural gas, more than half of which travels through Ukraine (to Slovakia, Germany, Italy and Austria). According to Russia’s Energy Minister if Russia cuts supplies to Europe, gas prices in the region could spike at least 50 percent.

Natural Gas Prices (US$/MMBtu)

18

US

Europe

16 14 12 10 8 6

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APRIL / MAY 2014

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Apr-14

Aug-13

Dec-12

Apr-12

Aug -11

Dec-10

Apr-10

Aug-09

Dec-08

Apr-08

Aug-07

Dec-06

Apr-06

Aug-05

Dec-04

Apr-04

Aug-03

Dec-02

Apr-02

Aug-01

Dec-00

Apr-00

Aug-99

Dec-98

0

Apr-98

2

Source: EIA, World Bank

4

Coal and petcoke prices remain depressed in most export markets affected by poor demand, mild weather in Europe and oversupply. In terms of volumes, total coal trading recovered in March mostly due to higher exports from South African ports to Asian destinations. In Australia, output remained fairly unchanged from February but increased substantially from last year when shipments were disrupted after strong rains battered parts of Queensland and forced the closure of mines and ports. Indonesia also recovered with higher shipments to India, as the country continues to rely on foreign product to offset the deficit in local production.

Petcoke - US Exports (million tons - Aug)

Coal - Exports (million tons)

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Coal Exports MoM (%) US petcoke exports prices MoM (%)

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Coal - Imports (million tons)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE

Petcoke - US export prices (USD/ton - Aug)

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Coal - Global export prices (USD/ton)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE Coal export prices MoM (%)

Natural Gas Prices (US$/mmBtu)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE

Natural Gas prices MoM (%)

Source: CW Group analysis estimates LM: latest month April except where not specified; MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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MARKET DATA SNAPSHOT

CW Research

people

RAK Cement has new General Manager

Germany’s VDZ elects set of officers The member companies of the German Cement Works Association in Berlin have elected a new board.

President Gerhard Hirth of Schwenk Cement was reconfirmed in office after three years. Christian Knell of HeidelbergCement was elected as Vice President, and Dr. Dirk Spenner of Spenner Cement GmbH & Co. and Eric Wittmann of CEMEX Germany were also selected for the board. The past few years have been difficult for the German cement industry, but favorable trend in building permits in residential and non-residential construction point to rising cement demand in 2014.

Spain: Votorantim installs new Communications executive The industrial group Votorantim has appointed Isabel Videres to handle its Communication and Marketing for the Spanish market. Videres has a degree in Economics and an Executive MBA from IE Business School. Over the last twelve years, she has been the Director of Communications and Institutional Relations of the Association of Cement Manufacturers of Spain.

Russia’s Novotroitsk plant appoints new CEO Russia-based Novotroitsk cement plant has installed a new CEO, Andrew Zemcov. The new head replaces Vasily 31

APRIL / MAY 2014

R

as Al Khaimah Company for White Cement and Construction Materials has tapped Engineer Ali Hasan Jakka Al Mansoori as its new general manager. The factory is located near the port of Mina Saqr, which is 25km north of the Emirate of Ras Al Khaimah. The plant commenced operations in 1986, with Blue Circle Industries acting as consultant and providing technical management. Recent uprating by the addition of a third kiln line enables the production of 450,000 tons of cement per year.

Korobkin. Zemcov was born in 1965 in the Sverdlovsk region. In 1987, he graduated from the Ural Polytechnic Institute. He brings more than 20 years of experience in the cement industry.

Holcim Spain slashes more jobs Holcim Spain has introduced a new record of employment regulation affecting 141 workers, or 23.5 percent of the company’s workforce of about 600 employees.

This adds to the multinational cement job cuts made in Spain since 2011, which have affected more than 2,000 employees and have reduced the staff by 80 percent.

Melon (Chile) names new HR Director Cynthia Bravo Ayarce has assumed the position of HR Director at Melon, reporting directly to the Corporate Finance Department and Human Resources.

Cynthia is an Industrial Civil Engineer from USACH and possesses a diploma in HR and a Master’s in People and Organizations Management from U. Adolfo Ibáñez.

She also has extensive experience in HR Management after working previously for large companies such as Soprole, PPG Industries, and Monsanto Chile.

Venezuela fires President of Cemento Andino Venezuela’s Minister of Industries, José David Cabello, has revoked Resolution No. 028-14 appointing Gilberto Barrios Contreras as president of Cemento www.cemweek.com

Andino. Barrios, who was appointed to the post by General Wilmer Barrientos, then-head of the Ministry of Industry, lasted a week in office.

Sephaku announces death of alternate director Sephaku Holdings has announced that its alternate director, Johannes Wilhelm Wessels, has passed away. Wessels, who had been an alternate director since 2007, began working with Sephaku in 2005, providing legal counseling on the emerging business structure. He later joined Sephaku as head of corporate affairs, holding key responsibility for group legal counsel, transaction structuring advice, and contractual negotiations. Wessels led the group’s unbundling strategy and, in particular, the legal and tax components of the process.

He played a critical role in the company’s successful repositioning from a multiple minerals exploration company to a construction and building materialsfocused company.

Director quits Arabian Cement Arabian Cement Company announced that a member of the Board of Directors, Dr. Adnan Abdel-Fattah, is leaving the company. He offered his resignation to the Board of Directors on March 19, 2014. The company did not disclose a reason for the resignation.

REGIONAL REPORT:

europe Extensive review for Lafarge, Holcim merger plan In Europe, Holcim’s merger with French peer Lafarge will be subject to an extensive review.

The merger will help the combined company slash costs, trim debt, and better cope with soaring energy prices, tougher competition, and weaker demand. If approved, the combined group would be worth just under $60 billion, have a joint EBITDA profit of EUR 6.5 billion, and would be the largest cement company in the world.

Lafarge and Holcim may have to sell off as much as 43 percent of their capacity in Romania as part of their merger plans. The companies plan to sell assets that generate about EUR 5 billion, or roughly $6.9 billion, in annual revenue.

Contraction in French cement space The French cement sector is shrinking, with declining consumption of 3.8 percent to 19.2 million tons in 2013 compared to 2012. In 2014, the French Union of the Cement Industry expects a contraction of cement consumption in France, with a decline of 2.5 percent to 18.7 million tons. In Q1 2014, the cement market rebounded 6 percent, but only compared to Q1 2013, when the market had fallen by 11 percent.

Lithuania’s Akmenes Cementas tests new production line Akmenes Cementas is nearing completion of a 375 million Litas production line in Lithuania. The line is currently in intense testing. The project kicked off in 2007

and raise the plant’s total cement capacity to 1.5 million tons. The new production line combines equipment and technology delivered by KHD Humbolt Wedag, Siemens, Italy’s BEDESCHI, and CTP team.

Eurocement Ukraine increased shipments Cement sales by Eurocement Ukraine in January-February 2014 reached 73,767 tons, up year-over-year by 10.7 percent from the same period last year.

Croatia’s Našicecement Cement reports slower sales Croatia’s Našicecement Cement Factory, part of Našice Nexe Group, sold 620,000 tons of cement last year, down approximately 7 percent from 2013. Našicecement partly offset its flagging domestic sales by increasing exports, so that during 2013 it exported 45 percent of the total sales volume of cement. To date, the cement market in Croatia has fallen to 56 percent.

Russia AND CIS Russia experiences variable cement sales trends The merger of Lafarge and Holcim will change the structure of the Russian market. The combined company’s market share in Russia could reach 9.1 percent, which would allow it to enter the top three largest players in the industry. Average wholesale prices of bulk cement fell by 0.4 percent in March in Russia, whereas the average retail price grew by 3.3 percent.

The average price for ceramic bricks rose 1.2 percent, while the sand-lime brick rose by 1 percent.

Sberbank of Russia has funded Achinsky Cement, one of the leading manufacturers of the Cement Division of Basic Element Group. Funds equalling 70,632.11 rubles have been allocated for 1.5 years and will improve the quality and efficiency of the production process.

EUROPE, RUSSIA AND BALTIC REGION

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MIDDLE EAST

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE Russia-based Pikalevsky Cement reports that sales in February rose, with production of limestone mines also picking up. The firm sold 89.5 thousand tons of high quality and environmentallyfriendly cement, up 1.6 percent from February 2013. Cement production in February was 89 thousand tons. Shipment of bagged cement was 3,740 tons, up 10.3 percent from last February.

Cement production in Russia in JanuaryFebruary 2014 decreased by 2.2 percent yearover-year. In the Siberian Federal District, output rose by 14.2 percent or 107,000 tons.

In the Southern Federal District, there was a decline in production of 17.8 percent, and in the Urals Federal District a drop of 11 percent. Cement consumption in JanuaryFebruary 2014 in Russia has decreased by 2.7 percent year-over-year.

Belarus taps Eurocement for modernization roadmap Belarus has tapped Russian Eurocement to help it come up with a roadmap for the modernization of existing production lines for cement in the country. Lines will be translated into more energy efficient technology.

Meanwhile, Arabian cement has unveiled plans to install a new, 10,000 ton-per-day production line at its plant in Rabigh.

Najran Cement completes clinker imports Najran Cement Company has finished unloading the last shipload of clinker imported at the port of Jizan. The financial impact of the eight shipments is expected to be about 60 million Saudi riyals, in addition to production costs. The company has imported a total of 384,768 tons.

Syria cement demand declines The production capacity of Syrian plants is up to about 9.15 million tons per year, while the current production totals 7.20 million tons. The country decided to ban the export of Portland cement for three months for all countries, due to the decline in demand from 8.66 million tons in 2010 to 3.60 million tons in 2013.

Middle East Saudi cement sales tumble in Q1 Sales of cement companies in Saudi Arabia in Q1 2014 decreased by 7.5 percent year-overyear. Sales dropped in March by only 4.9 percent. The quantities produced by Saudi companies, 14.57 million tons, were down 6.8 percent for Q1 after falling in March 2014 by 9 percent. The size of the stock rose to 867 thousand tons, an increase of 24.7 percent.

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Cement price hike looms in Iran In Iran, the Cement Producers Association plans to increase cement prices by 14-21 percent in the next Iranian calendar year.

The country produced 58.23 million tons of cement in the first ten months of the current Iranian calendar year, which began on March 21.

Africa Tunisia’s Carthage Cement releases Q1 earnings In the first three months of 2014, Tunisia’s Carthage Cement achieved a turnover of 41.9 million dinars, a figure up 337 percent over 2012. The ratio of income during the period and the number of days allows only 617,000 dinars per day. Due to a work stoppage, sales fell 34 percent in Q1 2014, while sales of Ready Mix activity increased by 10 percent.

Tunisia’s government has begun a gradual cessation of support for cement factories, even as the construction sector confronts difficulties stemming from the high costs of labor and raw materials.

Morocco’s March cement sales released In Morocco, domestic production capacity is currently around 21 million tons for

demand that does not exceed 15 million tons. In the first two months of the year, sales were down 9.1 percent. After completing a difficult 2013, the cement industry is still struggling to get back on track. Cement sales in Morocco were up year-on-year in March, but declined on a monthly basis. Changes in cement sales by region leave Oued Ed-Dahab-Lagouira recording the largest decline in cement sales during Q1 2014 at 19.9 percent.

Cement production expands in the Congo and Nigeria In the Congo, Nyiragongo Cement has installed a new cement plant in North Kivu.

Product was officially launched on April 1.

Nigeria-based Dangote Cement wants to double its cement production capacity across Africa to 40 million tons this year.

The firm plans to add 9 million tons to its Nigeria operations, bringing them to 29 million tons, and to open plants across Africa, adding a further 11 million tons.

Dangote Cement’s 2013 profits increase by 40 percent to 190.76 billion naira ($1.16 billion). Cement prices in Nigeria have increased on the back of higher input costs.

This has pushed up the price of a 50-kg bag of cement to between N1900 and N2200, from between N1600 and N1700.

Egypt cement production increased in February A recent report pointed out that the production of gray cement rose yearover-year in February by 11.2 percent.

Production reached 3.95 million tons, compared to 3.55 million tons in February 2013, and compared to 3.86 million tons in January. Sales of gray cement in February rose to about 3.89 million tons compared to 3.77 million tons in January, an increase of 3.1 percent, and compared to 3.53 million tons in February 2013. The average domestic price of gray cement reached 722.4 pounds per ton last February, compared with 707.8 pounds in January and 676.7 pounds in February 2013.

and 760 pounds per ton, while the price of imported cement is 670 pounds per ton.

In the Egyptian market, cement prices differ considerably from one major cement maker in the country to another. The price per ton at Helwan Cement is 720 pounds, and Torah Cement sells a ton for the same 720 pounds. At Beni Sued, a ton of cement is sold for 690 pounds, at National Cement and Sinai Cement for 700 pounds per ton, and at Arabian Cement for 730 pounds per ton. The price at Arish Cement is 700 pounds, at Lafarge Cement is 735 pounds, at Suez Cement is 710 pounds, and at ASEC Minya is 690 pounds.

Cement industry stabilizes in Zambia The Competition and Consumer Protection Commission (CCPC) of Zambia has finished a market study on the causes of intermittent increases to the cost of cement. The study results will be made public during an ACF conference to be held in Morocco, in June of this year.

Zambian Commerce minister Miles Sampa says ZEMA is a threat to the

planned commissioning of the US$400 million Dangote Cement plant in Ndola.

ZEMA recently directed the halting of construction of the plant, which currently is 92 percent complete.

In Zambia, the local unit of Lafarge is looking to open cement depots in the central and western Provinces at a cost of about $1 million.

Algerian cement production expands A new cement plant under construction in Algeria will have a total cost of â‚Ź350 million, with a production capacity of 2 million tons per year, and is expected to generate 500 direct jobs and more than 2,000 indirect jobs. The production capacity of the future cement plant, whose commissioning is scheduled for 2017, is equivalent to that of three former units of cement production.

Tanzania to hike cement production In Tanzania, cement production is expected to increase significantly to 8.65 million tons this year after the commencement of a new factory in Kisarawe District, Coast Region.

AFRICA

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A number of importers in Egypt are looking to contract for the import of 50 thousand tons of cement from Turkey. Prices of local cement have risen to between 750

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REGIONAL REPORT:

Cement prices subdued In India, cement prices remained stable in March, at Rs 305/bag, but they are expected to pick up after the elections. The highest recent price increase occurred in the western region, by Rs 7/bag month-over-month, led

by Gujarat. In all other regions, price changes varied from Rs -1/bag to Rs 1/bag. In the northern region, prices remained higher than the previous month due to continued supply constraints on the back of operations suspension at two of the Binani plants.

The January-March period, usually the peak season in India for cement companies, witnessed muted demand as slowdowns emerged in real estate and infrastructure.

The cement sector has witnessed only 3-4 percent growth in 2013-14, compared to 5-6 percent in 2012-13, as demand continued to remain subdued. JanuaryMarch prices remained flat, with marginal increase in the northern and central regions. Prices are expected to further decline from the current levels with the advent of the monsoon in the next couple of months.

Indian operations of Lafarge-Holcim, which will comprise about one-fifth of the total business, will be significant on the global map. Lafarge is not listed in India. Holcim, however, has a presence through two listed companies, Ambuja Cements Ltd and ACC Ltd, which account for 16 percent of global sales and about 13 percent of global operating profit. India’s ACC, whose Swiss parent is Holcim, says its brand name will remain intact after the merger. Holcim holds a 50 percent equity stake in ACC.

Slowing demand for cement may force consolidation among Indian cement companies. Consolidation activity is particularly likely in South India, driven by the region’s over-capacity issues. The two acquisitions in the cement industry post-January 2014, totaling $474 million, suit expectations.

Lafarge, Holcim merger to have wide effect on Indian market Lafarge and Holcim have announced their global merger, which will create a $60 billion company that will be the largest cement maker in the world. In India, news of the merger is being keenly watched for its effect on the local cement market. The combined

Cement makers express concerns In Pakistan, cement makers are concerned about DG Khan expanding its capacity, as this may lead to a price war. DG Khan plans to construct a 2.5 million-ton, $250 million plant in the south of the country.

India

AFRICA CENTRAL & SOUTH EAST ASIA

Pakistan

Cement makers in Pakistan have asked the government to delist the industry from the ‘3rd Schedule’ of the Sales Tax Act 1990, which has increased the overall tax burden and resulted in increased prices on the local market. The industry wants the government to bring cement back into the normal sales tax regime.

Tajikistan

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New cement plants on horizon Construction of two cement plants with a total installed capacity of 1.8 million tons has begun in northern Tajikistan. The first factory, Ghayyur-Sugdtsement, will have an annual capacity of 1.2 million tons. The new plant will be built for more than $100 million by the Tajik Ghayyur, together with a Chinese partner, Aisha Huaksin Central Investment. The plant will employ up to 1,000 people.

REGIONAL REPORT:

Fluctuating cement prices in China In China, cement prices fell from 373 to 361 yuan per ton between January 20 and February 28, 2014. The downturn was largely a product of weakening prices in Central Southern and Eastern China. The industry’s inventory ratio had climbed to 72 percent by the end of February, up from 62 percent on November 8, 2013. This trend follows an acceleration in production growth late in 2013. Output rose by 10.8 percent year-on-year in December 2013, marking the first double-digit growth since October 2012.

Cement prices in China rose 0.5 percent week-on-week between March 31 and April 6 of this year, accelerating from the 0.2 percent rise the week before. Prices rose 1.4 percent in eastern China and 0.7 percent in the southwest, and were largely flat in other regions. Nationwide cement inventory declined 0.8 percentage points to 68.8 percent, amid a steady recovery in shipment. China’s listed cement makers have lowered 2014/15 capital expenditure on limited construction of new production lines. The industry’s future capital expenditure will be driven by mergers and

acquisitions. New supply is expected to grow 4.7 percent/3.1 percent in 2014/15, with demand rising 5.4 percent/5.5 percent, supported by urbanization-related construction.

Taiwan-based Asia Cement has agreed to acquire a cement company in Sichuan, China. The acquisition will make Asia Cement (China) the largest cement supplier in Chengdu, the capital of Sichuan province, because of the significant expansion in annual production capacity.

The company will spend 2.05 billion Chinese yuan (US$331 million) to acquire a 100 percent stake in Sichuan Lanfeng Cement Co.

increased from 330,000 VND to 380,000 VND/ton in April, whereas cement transported from Da Nang has increased from 250,000 VND to 450,000 VND/ton.

Vietnamese Prime Minister Nguyen Tan Dung has stated that there is excess cement on the local market, and the government cannot guarantee loans to investors to construct new plants as long as cement sales remain stagnant. This opinion may affect the proposal of Tan Thang cement sent to Nghe An province and the Ministry of Finance for consideration

Freight charges rise in Vietnam, but sales are stagnant Freight charges for some items such as cement, sand, stone, gravel, and agricultural production materials have recently increased in Kon Tum, Vietnam, rising between 60 and 100 percent. The cause of the increase appears to be tight management of oversized loads. The price per ton of cement transported from from Quy Nhon (Binh Dinh) to Kon Tum has

ASIA PACIFIC

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and approval. The basic infrastructure is already completed for this project, which has a capacity of 2 million tons/year, will be located in Quynh Luu district, with Nghe An and CP Tan Thang Company as investors, and is expected to deliver products to the market by 2016.

In Vietnam, the cement plant Xuan Thanh Quang Nam has launched the Kaito brand of cement for export. The firm says evaluation expertise will strive for balance between the northern, central, and southern markets, to address concerns that the supply does not meet demand in the markets of the central provinces and the central highlands. Xuan Thanh is also increasing the total capacity of the Group to 10 million tons/year.

Operations at Vietnam’s Xuan Thanh Quang Nam cement plant have commenced. Xuan Thanh Cement Factory was started in Quang Nam in July 2010, in the Thanh My commune, with a total investment of VND 4 billion. After completion of the buildings and infrastructure in January 2013, Xuan

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Thanh Group and the Bank for Investment and Development of Vietnam (BIDV) signed a VND 2 billion credit agreement for the installation of production lines and complete equipment.

Cement sales picking up in Indonesia Cement sales volumes for Semen Indonesia in the first quarter of 2014 totaled between 6 million and 7 million tons. This figure rose 8 to 9 percent, year-over-year, from 6.37 million tons.

In Indonesia, cement consumption is picking up after road networks were cleared following heavy flooding and rains. Cement sales rose 2.9 percent year-over-year, to 4.4 million metric tons. In February, cement sales in Java rose 4 percent year-over-year, to 2.4 million tons, despite the eruption of Mount Kelud in East Java on Feb. 13 and the resulting disruption in flights and economic activities in surrounding areas. Sales in East and West Java rose more than 12 percent, while sales in Yogyakarta rose 0.1 percent. Sales in Banten, however, dropped 11 percent. Sales in Sumatra, Indonesia’s

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second largest domestic market, rose 6.4 percent.

Mahaphant Group to build plant in the Philippines Thailand’s Mahaphant Group is building a $20 million cement plant in the Philippines and expects it to be operational by 2017.

This will be the group’s first manufacturing plant to be located outside Thailand. The company currently operates three plants in Thailand, with a cumulative capacity of a million metric tons. It will set up a local office in the Philippines by mid2014, which aims to employ 10 Thai office personnel and around 200 locals for the manufacturing plant.

Japan cement prices rise Japanese cement prices are rising between 5 and 10 percent, year-over-year, and reaching about 10,000 yen per ton. This has occurred in the wake of the expansion of public works and reconstruction projects.

In addition to a rise of about 1,000 yen (or 10 percent), the spot price in the Northeast was up by 500 yen.

REGIONAL REPORT:

Cement sales pick up in Puerto Rico, Nicaragua, Argentina, and Venezuela The sale of cement in Puerto Rico rose in March to 1362.2 bags, each containing 42.5 kg of cement, after several months of decline. The March value was the highest material production since April 2013, when 1457.4 sacks were produced.

In Nicaragua, Holcim anticipates growth in construction of 10 percent this year, with corresponding increases in sales of cement. The company has just opened its new Center Automated Dispatch. The $680,000 facility has the capacity to store more than 12,000 tons of cement with its 2,100 square meters of extension.

months of last year, an increase of 7.4 percent year-on-year. Sergipe, the largest producer in the northeast, has high cement production potential. Consumption of cement in the state reached 52,700 tons in November 2013.

Positive signs boost Brazilian cement industry activity Brazil cement sales hit 70 million tons last year, up 2.4 percent over the previous year and up 10.2 percent over 2011, when 63.5 million tons were sold. The market has warmed up further so far this year, up 6.8 percent compared to January 2013.

Brazil’s Votorantim Cimentos plans to take advantage of the recent rally in emerging markets to reduce the costs of its debts.

On Wednesday, the company announced its plans to repurchase up to 750 million euros ($1.03 billion) in bonds. At the same time, Votorantim Cimentos hired a group of banks to coordinate a road show to promote a new debt sale. In August, the company scrapped plans for a multi-billion dollar initial public offering due to adverse conditions in the capital markets. The deal comes amid challenges for Brazilian cement companies. Fines totaling US$3.1 billion may be imposed on six producers that were allegedly part of a cartel. Votorantim Cimentos was fined U.S. $1.56 billion.

The French multinational Lafarge inaugurated its new unit Cimento Rio in Santa Cruz, in the West Zone of the city of Rio de Janeiro. The unit’s production will reach 500 thousand tons by 2015, and eventually reach full capacity of 750 thousand tons.

Bolivian firms register activity The Bolivian cement factory Sucre has adopted new regulations for load distribution, allowing the company to reduce its dependence on Heavy Union markets for transport to the hinterland. Transport regulations, backed by two of the three coowners, the mayor of Sucre and the public university, stipulate among others that drivers interested in transporting cement must sign individual contracts with the factory.

The company Polysius-Sacyr-Imasa, a German-Spanish consortium, has been selected by the government of Bolivia to construct a cement plant in the department of Oruro. The project will cost $244,159,751, In Argentina, the sale of construction maincluding the construction of an electrical terials to the private sector increased 7.1 substation, valued at $2 million, which was percent, month-over-month, in MarchAMERICAS Cement production by Brazil’s Sergipe not within the technical conditions and 2014, rising 8 percent year-on-year in the reached 302,500 tons in the first eleven means savings for the Bolivian State. first quarter. The sale of materials in March rose 0.1 percent year-over-year. Volumes shipped in March were 7.11 percent higher AMERICAS than in February.

Venezuela’s Táchira Company Limited has increased its cement supply to keep pace with current cement demand in its region of Venezuela.

Lafarge, Holcim merger will reduce cement prices in Mexico The likely merger between Holcim and Lafarge will encourage greater competition in the cement sector. In Mexico, the merger could favor the adjustment of local cement prices against international. The price of bulk cement, the main input of concrete, is about 20 dollars higher in Mexico than in the United States.

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Aggregates Breedon Aggregates expresses interest in divestments In the UK, Breedon Aggregates is interested in UK assets sold as part of the LafargeHolcim merger. The firms are planning £4 billion in divestments to ease concerns of competition regulators.

Gravel and mining operations are evaluated Lafarge’s operations at its Placitas gravel mine in New Mexico are under scrutiny, after residents complained about noise and dust from the area. For more than 25 years, the company has been extracting gravel and sand from a several-hundred-acre site about 1.5 miles northeast of the Interstate 25/N.M. 165 intersection, under agreements first with the town of Bernalillo and later with Sandoval County. Residents of the half-dozen upmarket subdivisions that have grown up around the gravel pit say the intensity of the operation appears to have accelerated in the last couple of years, with work extending into the weekend and starting earlier in the mornings.

Cement maker Schwenk plans to redevelop

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a former quarry in Kühberg in Allmendingen. The company is seeking permission to bring rock material that accumulates at the new Ulm-Wendlingen line into the crater. As part of the plan, around 120 trucks would arrive each day in Allmendingen.

This corresponds to an increase in traffic of around 1.4 percent.

Officials in the Ilocos Region of the Philippines have denied that black sand mining is rampant in the area. There is no magnetite sand or black sand mining in Region 1, which comprises the provinces of La Union, Ilocos Sur, Ilocos Norte, and Pangasinan.

Construction Reforms needed in South Africa infrastructure programs In South Africa, the head of Pretoria Portland Cement (PPC) has called for a reform of South Africa’s infrastructure procurement processes and proposed the creation of professional oversight bodies to fasttrack infrastructure projects. The construction sector has bemoaned the lack of work from the state despite continued undertakings by the government to lift economic growth rates and job creation through in-

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frastructure investment programs. Existing infrastructure procurement processes are considered cumbersome‚ expensive, and subject to corruption.

Russia looking to repave damaged roads In Russia, Nerudnik says it is willing to reach an agreement with the regional government for the rehabilitation of roads around the Leningrad area. The effort will involve 930 km of regional roads in 20132014 in the Leningrad region. The government would allocate 7.5 billion rubles, compared with 4.2 Construction and real estate show variable trends The situation of the construction industry is set to improve this year in Poland. New investments will be financed from the EU budget. Meanwhile, the industry brought to life the Union Construction and Investment Market. The GDP share of the domestic construction sector is 7, and it could increase to a level at which it could have a decisive influence on the development of the whole economy.

In Australia, the national construction

The real estate industry was worth $296 million in Campina Grande, Brazil, in 2013. The year ended with 1,212 new properties sold, and every month about 2,000 units were available for trading. Another US$150 million should be moved during the fifth edition of the Campimóveis Fair in April. At the fair, 4,000 properties will be made available for sale, purchase or exchange.

Concrete Lafarge-Holcim merger will affect Luxembourg The mega-merger of Holcim and Lafarge will have a major impact on the Luxembourg market. Only one of two groups, Holcim, is active in Luxembourg and only in the area of ​​ready-mixed concrete.

Lafarge improves quality and efficiency In Zambia, the local unit of Lafarge has

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commissioned a $1 million concrete laboratory that will help improve quality assurance in the construction industry. The laboratory will offer concrete and aggregates tests to enhance the quality of various infrastructure projects. Strict quality assurance measures are important for buildings and other infrastructure projects to stand the test of time.

The Board of Directors of Lafarge Cement Morocco has proposed a merger with Lafarge Aggregates and Concrete. The move would allow the deployment of an integrated development strategy and offer constructive solutions and stronger cooperation. In accordance with new guidelines for consolidations, this absorption merger will be accompanied by a set of investments with the aim of consolidating its leadership in the Moroccan market and offering customers comprehensive services.

Mixed production trends in Russia A $8-10 million brick factory is under con-

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struction in Penza, Russia. The factory will produce 60 million bricks per year and is expected to create about 100 new jobs. The plant will begin operations in the spring of 2015. Construction of the facility is led by a Turkish company.

Meanwhile, experts say that the installed nameplate capacity of concrete production in St. Petersburg is 6.5 times greater than the market demand for ready-mixed concrete. Industry participants discuss increased competition and suggest that many manufacturers could reduce their activities. In 2013, St. Petersburg consumed about 6 million cubic meters of ready-mix concrete. The market grew by 5 to 7 percent. 2014 is expected to be more difficult than 2013.

Consolidations on the horizon The company Betomar is set to be absorbed by its mother unit Ciments du Maroc.

Australia’s Boral will close some brick operations if it doesn’t get approval for its proposed joint venture with rival CSR. The two companies plan to combine their east coast brickmaking and distribution businesses in a joint venture designed to save between $7 million and $10 million per year.

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industry continued to decline in March according to the seasonally adjusted Australian Industry Group/Housing Industry Association Australian Performance of Construction Index, which registered 46.2 points in the month. This is the third consecutive month that the Australian PCI has been below the critical 50-point level that separates expansion from contraction, following the industry’s return to growth in the final quarter of 2013.

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Mexican concrete prices decline In Mexico, La Asociación Nacional de Concreteros will support the adoption of the initiative and antitrust law that would lower concrete prices by up to 40 percent.

The new law will boost investment and will bring greater dynamism to the industry that expects a growth of 8 percent by the end of 2014, with a rise in the second half of the year. The industry registered a sales decline of 10 percent in 2013.

CEMEX continues rollout of the Ready Mix Solution CEMEX continues to lead the way in innovations with a technological platform that enhances its capabilities and efficiencies across the entire concrete value chain: Ready Mix Solution (RMS). RMS has been implemented successfully in CEMEX operations in Costa Rica, Panama, Guatemala, Nicaragua, Colombia, Dominican Republic, Puerto Rico, Argentina, and Haiti.

It is available in more than 300 plants in South/Central America and the Caribbean, Northeastern Mexico, China, and Malaysia. This year, the global rollout is displaying strong progress in the UK and Germany.

Other USG to redeem senior convertible notes USG Corporation has issued a notice of redemption to redeem the remaining $75 million in the aggregate principal amount of USG’s outstanding 10 percent contingent convertible senior notes, due in 2018.

The convertible senior notes would be redeemed at a stated redemption price equal to 105 percent of the aggregate principal amount of such notes, plus accrued and unpaid interest to the redemption date, for a total payment of $1,087.77 per $1,000 principal. In lieu of redemption, holders may elect to convert their convertible senior notes into shares of USG common stock. The notes are convertible into 87.7193 shares of USG common stock per $1,000 principal, equivalent to a conversion price of $11.40 per share.

Bamburi will produce heavy-duty cement Bamburi will start producing heavy duty cement to tap into public and private infrastructure projects. The firm will re-launch

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a premium range of cement dubbed Powercrete as it seeks to cash in on big-ticket construction projects lined up in Kenya and the region. Bamburi began producing the specialist cement in 1999, but stopped in 2008 following a slowdown in large infrastructure projects in the region.

Skanska’s profits edged up last year Skanska’s profits in 2013 increased by 3 percent. However, the order backlog fell to SEK139.6 billion from SEK146.7 the previous year, an adjusted drop of 4 percent.

equipment

New contract for SCHADE from Brazil SCHADE will deliver a circular column equipped spreader with a flow rate of 1,800 t/h (max 2,000 t/h) and a 23 metre beam as well as a belt width of 1,400 millimetres.

The scope of delivery includes a SCHADE bridge scraper equipped with a harrow covering the entire area of the stockpile’s profile. The bridge scraper can be operated with a flow rate of 700 t/h.

The structural steelwork was sourced

by AUMUND Brazil based in Sao Paulo through AUMUND Asia in Hong Kong and delivered to Brazil. With its in-house quality control AUMUND Hong Kong guarantees the meticulous selection of the parts. The supervision of construction is provided by AUMUND Brazil in close cooperation with SCHADE alignment supervisors.

Initial operation at CIPLAN Cimento Planalto at Sobradinho is planned for this year. The plant produces about 1.6 million tons of cement per year.

Loesche wins new order in Saudi Arabia United Cement Industrial Company (UCIC) ordered a LM 56.4 raw mill for its cement plant in Al-Sadiya, 150 km south Source: Eurostat of Jeddah, Saudi Arabia.

On behalf of UCIC, the contract was signed by Jeddah-Tianjin Cement Industry Design and Research Institute.

The order includes the design engineering and supply of a LM 56.4 raw mill. The Loesche mill will grind cement raw material at a product rate of 420 t/h with a fineneness of 12% R 90 μm / 2% R 200 μm. Furthermore Loesche will deliver the gearbox which will have a capacity of 3,600 kW. The very hot ambient conditions in the Kingdom of Saudi Arabia causes very dry raw materials. Therefore a grinding bed sprinkler system will be also installed on the raw mill for condition of the grinding bed.

Delivery for the key parts of the LM 56.4 is scheduled FOB in August 2014. The commercial production of cement is expected in the 2nd half of 2015.

UCIC’s project is a greenfield plant with 6,000 tpd capacity.

KHD wins new order in Turkey KHD’s activity in the Turkish market is continuing to produce positive results, with an order for a new 3,500 t/d clinker production line at the Bolu Cimento’s Kazan plant, located near Ankara and successfully completed recent performance test for KCS Kahramanmaras Cimento’s Maras Kiln Line II. www.cemweek.com

The Bolu Cimento contract awards KHD the order for engineering, equipment supply, as well as advisory services for erection and commissioning. Core KHD equipment to be supplied for the Pyroprocessing system includes: 5-stage KHD Preheater with PYROCLON®-R LowNOX calciner, equipped with PYROTOP® compact mixing chamber, tertiary air duct with dust settling chamber, and PYROBOX® calciner firing system for coal dust; PYRORAPID® two-tire rotary kiln, with a diameter of 4.4 m; PYRO-JET® kiln burner for petcoke; PYROFLOOR® clinker cooler equipped with a PYROCRUSHER® System.

The new kiln line will be erected next to the existing cement grinding unit and commissioning is scheduled for the spring of 2015.

The recently commissioned KCS Kahramanmaras Cimento’s Maras Kiln Line II was installed next to the existing Maras I Line, which was also installed by KHD. The new line, which has KHD supplied main equipment and state-of-the-art KHD technology for alternative fuel firing, produced impressive results at its recent performance test. The test was conducted using a mixture of approximately 40% petcoke and 60% lignite (of the same quality and fineness) for the main burner and calciner burner.

APRIL / MAY 2014

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FLASHBACK NEWS FLOW IN CEMWEEK.COM LAST TWO MONTHS (darker red shows higher news volume)

CW Group Meeting Agenda The CW Group will be hosting and participating in a number of webinars and conferences. We invite you to join us on-line or in person at the events to discuss our views of the industry. To learn more, please visit http://research.cwgrp.com/meetings

CW Group Hosted Executive Summits CW Summit Americas

October 15-16,2014

Houston, US

CW Summit Middle East

December 9-10, 2014

Dubai, UAE

Conferences where the CW Group will be presenting Cement Business & Industry (CBI) Africa 2014

June 12-13, 2014

Hyatt Regency Johannesburg, South Africa

AshTrade Americas 2014 Fly Ash Industry Conference

October 15-16, 2014

Houston, United States

Cement Business & Industry (CBI) India 2014

November 12-13, 2014

Holiday Inn New Delhi International Airport, New Delhi, India

43

APRIL / MAY 2014

www.cemweek.com

CW Research Webinars: Petcoke review H1 2014

July 8, 2014 at 2:00 PM GMT

buzz TOP CEMWEEK STORIES 1

New cement plant proposed in Congo

2

Holcim and Lafarge explore potential merger

3

India: Hi-Bond Cement to build plant in Rajasthan

4

Lafarge, Holcim merger to have wide effect on Indian market

5

Switzerland: Cause of Holcim fire still under investigation

6

HeidelbergCement says Crimea crisis could hurt earnings

7

India: Binani shutters Rajahstan plants on tax row

8

Buzzi employees anxious about plant sale in Italy

9

Peru cement shipments sputtering

10

India: Cement prices in Andhra Pradesh plummet

11

China: Zhejiang Province reports lower prices

12

Kyrgyzstan proposes duties on imported cement

13

India’s ACC installs waste heat recovery unit

14

Dangote Cement seeking to double production

15

Lafarge, Holcim tap advisers for merger

TOP BMWEEK STORIES 1

Bamburi to commence production of heavy duty cement

2

Argentina construction costs increased in March

3

India infrastructure numbers improve in February

4

UK: Cemex has launched new brick product

5

Russia: Concrete production surplus in St Petersburg

6

Lafarge Zambia has new concrete laboratory

7

TCL Guyana awarded by GMSA

8

Holcim introduces new product in Azerbaijan

9

Australia construction market declines anew in March

10

Lafarge seeks to merge operations in Morocco

11

HeidelbergCement notes signs of recovery

12

New potash unit to rise in Belarus

13

Colombia construction employment picks up

14

Jiangxi Evergreen to acquire Yugan Concrete

15

Lafarge, Holcim to have scant effect in Luxembourg

CEMWEEK.COM africa

algeria annual approval

board brazil capital cemex chairman chief cimento consumption continue contract costs crore daily dangote decided decline declined development director directors domestic earnings economic egypt ended engineering estimated executive expand expansion financial gray grinding growth heidelbergcement held holcim housing impact increased india indonesia assets association bags

infrastructure investment

java

lafarge

loss major makers

operations output pakistan plans plants pounds process products project province rapid rate rates reach reached recent recently region rise rising romania saudi sees sell shareholders shares sold stake subsidiary times turnover volumes white 2017

markets materials meeting merger minister ministry national nigeria numbers

BMWEEK.COM activity addition

association australia boral brick built canada africa aggregates agreement arabia

cemex china coal completed

concrete

continue contract contractors contracts costs cubic development director dubai economic energy engineering environmental e xecutive factory firm fletcher france future general government gravel growth gypsum housing india industrial infrastructure investment joint lafarge land launched limestone mining minister ministry mixed national noted operations order output people plans plants power price private products program project public qatar quality quarry ready real region residential rise road roads russia sales sand saudi says sector significant times union units value venture work workers working world zealand 2014

www.cemweek.com

APRIL / MAY 2014

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A GMI GLOBAL INDUSTRY CONFERENCE CBI India 2014 Conference will focus on the various aspects of India’s cement industry from a business growth & investment perspective. Notably, the program will take a dual-track business and technical approach to the issues around: Market perspective, forecast and competitive outlook Alternative fuels, new business models Environmental performance management Finance and capital markets Coal as mainstay fuel option and outlook Efficiency, innovation, new developments Technology, operations and best practices

A GMI GLOBAL CEMENT AND LIME INDUSTRY CONFERENCE AND EXHIBITION

CEMENT BUSINESS & INDUSTRY

2014

NOVEMBER 12-13, 2014 • Holiday Inn New Delhi Int'l Airport • NEW DELHI, INDIA

For attendance, speaking opportunities or general questions about the conference please contact the CBI Client Service team at sales@gmiforum.com or via phone at +1-203-516-7424.

India contact: Dr. SN Pati dr.snpati52@gmail.com 09891415719 Global contact: Beatrice Ene be@gmiforum.com +40-722-764-802

Organized by GMI Global and again with the great support from the India Cement & Construction Materials (ICCM) journal the event is expected to bring together more than 200 cement and lime professionals. GMI is excited to build on the success of the CBI series to expand the scope to include participants from the entire region this time around.

PAST PARTICIPANTS: ACC Ltd. | Alley-Cassetty Companies, Inc. | Alliance Polysacks Pvt. Ltd. | Alternative Resource Partners | Ambuja Cements | Argus Media | ASEC Trading | Beroe Consulting Pvt. Ltd | BEUMER Group GmbH & Co. KG |Bharathicement Corporation Pvt. Ltd -| Binani Cement | Browz | Burundi Cement (BUCECO) | Cachapuz Cement Manufacturers Association (CMA) | Cimpor | Claudius Peters India | Coal Insights | Credit Suisse | CRH India | CW Group | Dalmia Cement | Evonik Degussa India | Fives FCB | FLSmidth | FLSmidth Maag Gear AG | Golder Associates Canada | Golder Associates India | Golder Associates UK | HeidelbergCement Group | Hi-Bond Cement India | IFC | India Cements Ltd | J.K.Cement Ltd | JK Sons | KHD-| Lafarge Inda | Larsen & Toubro Limited | Loesche | Loesche India | Madras Cement Limited | Magnesita Refractories | Mapei Construction Products | McKinsey & Co | Middle East Green Energies | Mitsui & Co. India Pvt. Ltd. | Mjunction Services | Mondi Oman LLC | Oman Cement -| Orient Cement | Promac India | RAMCO - Enterprise Process Solution | Ready Mixed Concrete Manufactureres | Association (RMCMA) | Refratechnik | Reliance Cement Company Pvt. Ltd. | Rexnord | Sagar Cements Limited | SAIF | Sanghi Industries Ltd. | Segezha Packing | Shree Cement Ltd. | SKF India Limited | Somi Conveyor Beltings Ltd | Starlinger & Co. GmbH | String Automation Pvt. Ltd. | The Crescent Group | Timken India Limited | UltraTech Cement Ltd. | Union Cement | Vicat | Vyankatesh Chemical Industries | W.R. Grace | Zuari Cement, Italcementi Group

Organized by GMI Global LLC To learn more visit the GMI website: www.gmiforum.com