CemWeek Magazine (vol. 1 / issue 32)

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

APRIL / MAY 2016

32

Q&a: LEADERS

WALTER DISSINGER GLOBAL CEO VOTORANTIM CEMENT

CW RESEARCH:

OIL WELL CEMENT MARKET OUTLOOK FEATURE:

GLOBAL FOB PRICES UNDER PRESSURE IN 1Q2016 News

•

Analysis

•

Market Coverage

•

Interviews

•

People Moves

The must-have cement and clinker

price intelligence

(C) http://maritime-connector.com/

chartbook

Global Cement Trade Price Report We know that the everyday challenge for cement traders, independent traders, shippers as well as buyers in cement sector is the pricing strategy. The Global Cement Trade Price Report is CW Research’s benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag market prices, imports, exports and ex-works.

+ 1 - 7 0 2 - 8 6 6 - 9 4 74 research.cwgrp.com inquiries@cwgrp.com sales@cwgrp.com

Published on a quarterly basis, the GCTPR brings you all the cement sector's insights and helps you gauge what’s driving the cement market. We consistently track cement trade prices to keep you informed, so that you can make the best strategic decisions. For more information visit: http://goo.gl/eib8fE

We know the industry. let us guide you.

FEBRUARY / MARCH 2016 2 global Our presence: Greenwich (US) www.cemweek.com • Mumbai (IN) • Porto (PT) • Bucharest (RO) • Sao Paulo (BR)

EDITOR’S NOTE Letter from the editor

The CemWeek Magazine is published by the CW Group LLC PO Box 5263 Greenwich, CT 06831, USA T: +1-702-866-9474 www.cwgrp.com www.cemweek.com

BLEAK PRESENT, BRIGHT FUTURE?

A

bleak economic scenario weighs down on cement demand.

The decline in global sales, coupled with overcapacity in some exporting markets, will pressure exporters to find other markets, therefore affecting cement prices. Global cement consumption is expected to decline, following the slowdown in China. This 32nd issue of our magazine covers gray cement, white cement, clinker and granulated slag prices and market evolution.

Cement companies face both local setbacks, such as the unfavorable economic scenario in Brazil, and universal challenges, such as climate change and other environmental issues. Mr. Walter Dissinger, Global CEO of Votorantim, agreed to speak about the challenges and opportunities that the company faces, about current issues and future solutions, in a detailed interview for our Q&A: Leaders section.

The oil industry is undergoing its worst contraction in decades and the drop in rig counts is expected to continue until prices stabilize. Even so, the demand for

STAFFBOX

the specialty oil well cement is expected to show a modest recovery in the near future.

The 32nd issue of the CemWeek Magazine also features a detailed analysis of the global market from the CW Research team and a five year forecast of the oil well cement sector.

ROBERT MADEIRA CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

GABRIEL BURETE

CONTENT EDITOR AND ONLINE COORIDNATOR

LUCIANA MURARASU

MARKETING & COMMUNICATIONS MANAGER

And as usual, CemWeek Magazine provides all the relevant news about the main indicators of the industry, including the latest facts and figures about cement volumes, energy prices, relevant people in the business, regional developments, equipment and construction projects.

Don’t miss out the numbers and the trends laid out in the special sections.

RALUCA CERCEL STEFANA ABICULESEI SILVIU STEFANESCU SUSHMITA RAI

CONTRIBUTING WRITERS & RESEARCHERS

ALEXANDRA PAUN SANTOSH SHETTYE DESIGNERS

LIVIU DINU ADVERTISING

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GABRIEL BURETE Content Editor and Online Cooridnator

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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.

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CW Group CW Group

CONTENTS FEATURES

15

9 LEADERS Q&A Mr. Walter Dissinger Global CEO of Votorantim, speaks about the challenges and opportunities that the company faces 15 GLOBAL CEMENT TRADE PRICE REPORT (GCTPR) Global FOB prices under pressure in 1Q2016 19 CW RESEARCH Five year forecast of the oil well cement sector.

25 ASHTRADE EUROPE The challenges of the combustion by-products market were debated in Rome at the 7th edition of Ashtrade Europe

19

DEPARTMENTS 1 EDITOR'S LETTER CONSTRUCTION & BUILDING Q&As on the future of the cement MATERIALS BY BMWEEK.COM industry 45 Construction and building materials update 3 NUMBERS IN BRIEF Global shipping rates update EQUIPMENT 46 Equipment and notable projects 31 RESEARCH Cement Volumes Cement Energy Markets 35 PEOPLE People on the move 37 39 41 43

REGIONAL REPORTS Europe, Middle East & Africa South-East Asia Asia Pacific Americas

2

CW GROUP MEETING AGENDA 48 CW Group’s upcoming events BUZZ 48 Top 20 CemWeek and BMWeek stories

REGISTER NOW! A CEMENT AND LIME INDUSTRY CONFERENCE AND EXHIBITION BY

2016 June 13-14, 2016

Johannesburg South Africa

GLOBAL CONTACT Beatrice Ene Client Development & Marketing Director be@gmiforum.com +40 722 764 802

SUPPORTED BY:

NUMBERS IN BRIEF

Q12016 RESULTS POINT TOWARDS A FAVORABLE YEAR FOR GLOBAL CEMENT MANUFACTURERS The first quarter of 2016 surprised with increasing demand and a more stable and favorable pricing environment, giving major cement manufacturers hopes of maximizing cash flow generation during the rest of the year.

Q1 2016 REVENUE (MN USD) 7,000 5,000 3,000 1,000

LafargeHolcim

Cemex

HeidelbergCement

Cementos Argos

Source: CW Group, Quarterly Financial Reports

Across the board, global cement manufacturers witnessed both increasing volumes and revenue from markets such as North America, Asia and Africa. In Africa, unfavorable market conditions in Nigeria impacted first quarter results. In Europe, sales remained stable, with the UK and Spain surfacing as hot spots of cement demand growth.

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FEBRUARY / MARCH 2016

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Though unsurprisingly, the United States market has bolstered the revenues of cement manufacturers on account of the pickup in residential and infrastructure activity, as well as weather conditions uncharacteristically favorable for construction activity.

Q1 2016 EBITDA MARGINS (%) 25%

15%

5%

LafargeHolcim

HeidelbergCement

Cemex

Cementos Argos

Source: CW Group, Quarterly Financial Reports

Global cement manufacturers are confident that the start of 2016 is marking sound progress towards an increase in EBITDA margin for 2016. Cementos Argos registered a 38.4% increase in EBITDA due to price recovery in Colombia and its performance in the United States.

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FEBRUARY / MARCH 2016

4

Q&A: LEADERS

Mr. Walter Dissinger joined Votorantim Cimentos in June 2013 as President of the company’s operations in Brazil. As Global CEO of the company, Mr. Dissinger agreed to speak about the challenges and opportunities that the company faces, about current issues and future solutions.

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APRIL / MAY 2016

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GLOBAL CEO

WALTER DISSINGER

VOTORANTIM CIMENTOS

CLIMATE CHANGE HAS TAKEN AN EVEN MORE SIGNIFICANT PLACE IN THE DISCUSSION OF INTERNATIONAL POLITICS IN 2015. IN THE ON-GOING COP21, HOSTED BY FRANCE, WE HAVE SEEN DEVELOPED AND DEVELOPING COUNTRIES PLEDGING INVESTMENTS TO CURB THE CARBON EMISSION. IN THIS CASE, WHERE DOES BRAZIL STAND, ESPECIALLY CONSIDERING THE CEMENT SECTOR? According to the Brazilian Ministry of Science and Technology, the cement industry CO2 emissions account for 2.6 percent of the national total, about half the global average.

Energy efficiency and alternative fuels are some of the key factors for reducing emissions among the cement producers.

As the largest building materials company in Brazil and among the largest players in the world, we have contributed significantly to the reduction of emissions in recent years.

As part of our Environmental Policy, we are committed to the use of alternative low-carbon fuels, the responsible use of raw materials and the efficient use of energy. We are pioneers in the country and since 1991 we are continuously investing in co-processing to achieve, by 2020, 40 percent use of alternative energy in Brazil and 30 percent globally.

The action plan launched at COP21 by the Cement Sustainability Initiative (CSI) is an important step towards a low carbon economy. We www.cemweek.com

signed along with the largest cement companies an agreement on low carbon technology, which represents an opportunity for Votorantim Cimentos to positively influence the national agenda on climate change.

Besides that, Votorantim Cimentos has just signed the "Open letter to Brazil on Climate Change", in an initiative of the business sector led by ETHOS Institute, to further enhance initiatives for carbon emissions reduction.

THE CEMENT INDUSTRY, AS YOU MAY AGREE WITH ME, IS RESPONSIBLE FOR THE INCREASE IN GREENHOUSE GASES. AS A LEADING PLAYER IN BRAZIL, HOW YOU ARE SETTING AN EXAMPLE AMONGST YOUR COMPETITORS, APRIL / MAY 2016

6

Q&A: LEADERS WHEN IT COMES TO REDUCING THE SAME? DECLINE IN CEMENT CONSUMPTION OF 6.3 structure to adapt our operations to the curIS IT ONLY VOTORANTIM CIMENTOS TAKING PERCENT Y-O-Y. SO GOING FURTHER, DO WE rent market environment, implementing a SUCH INITIATIVES OR OTHER CEMENT PLAY- SEE A MORE DECLINE IN THE CEMENT CON- simpler and more agile structural design. In ERS ARE CONTRIBUTING TO IT, AS WELL? SUMPTION? IF YES, HOW ARE YOU MITIGAT- addition, we suspended several production Votorantim Cimentos is aware of its impor- ING THIS CHALLENGE? lines, temporarily shut down two plants and tant role as leading player in Brazil. As part In 2015, the sector experienced a 9.5 percent converted them into distribution centers and of the important industry association SNIC decline in apparent cement consumption in divested non-strategic assets. we ensure that the overall CSI strategy and objectives are transferred to BraOn the other hand we have We have contributed significantly to the zil. An example is the Cement Techstarted up two new cement nology Roadmap which intends to reduction of emissions in recent years. plants in the central and scale up the technologies defined by northern Brazilian regions CSI into our cement plants. where long term overage Brazil, as reported by the SNIC (National growth will occur. We continue to maintain Votorantim Cimentos is committed to lev- Cement Union). The industry expects 2016 a long-term perspective investing in strategic erage sustainable practices and we consist- to be as challenging as 2015, with contin- markets, in the modernization and automaently invest in Research and Development to ued reduction of cement consumption in the tion of our plants, in geographic and portforeduce the clinker factor in cement produc- country. lio diversification including continued investtion, one decisive step to enable the reduction of emissions. Furthermore, the company's Santa Helena unit overall goal is to reach 30 percent of use of (SP) non-fossil fuels globally by 2020.

In 2014, the company defined the parameters of sustainability in a new plan called “Our Commitments 2020”. The document was based on expectations of the stakeholders of Votorantim Cimentos and on major international tendencies in environmental impact reduction. Our commitments are clear and

include measurable objectives and targets in the areas of eco-efficiency and innovation.

APPRAISE US ON THE OVERALL SCENARIO OF BRAZILIAN CEMENT INDUSTRY? THE QUESTION THAT WE HAVE RAISED IS MAINLY BECAUSE 1H 2014 TO 1H 2015 SHOWS A

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APRIL / MAY 2016

Faced with this difficult situation in Brazil and in order to maintain our competitiveness and productivity we have proactively executed a series of actions to further enhance our operational efficiency and preserve our financial strength, ensuring our long-term future strategy. We adjusted our organizational

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ment in mortars and agricultural lime, so that we are well prepared for the rebound of the Brazilian market.

THE CONSTRUCTION CONFIDENCE INDEX (CSTI) MEASURED BY THE GETULIO VARGAS FOUNDATION DECREASED 4.7 PERCENT

BETWEEN JUNE AND JULY 2015, REACHING 70.2 POINTS, THE LOWEST LEVEL OF THE SERIES STARTED IN JULY 2010. SO, IF THE CONSTRUCTION SECTOR IS UNABLE TO CREATE A DEMAND FOR BRAZILIAN CEMENT MAKERS, WHICH ARE THE AREAS THAT YOU SEE AN OPPORTUNITY TO TAP? Innovation and productivity are the main drivers of the Votorantim Cimentos strategy in Brazil helping to face a challenging environment. This also includes innovating via new business models and in customer interactions. We have strongly invested in a new product portfolio this year in the Brazilian retail segment, marketing our cement according to the consumers necessity. We conducted a survey with hundreds of construction professionals (workers, retailers, clerks, construction companies, consumer associations and others) throughout the country. For the nonspecialist consumer, buying cement will now be easier, more convenient and safer. Retailers now can recommend the right cement for each application, - enhancing customer productivity and construction quality. If the market does not help, you have to innovate and reinvent yourself.

Shredded tires ready for co-processing

um term. We are currently starting up a new cement plant in the state of Para, close to the city of Belem. This is a clear example of our long term strategy.

Geographic diversification also holds true for our worldwide operations balancing investments in emerging markets as Turkey, Morocco, Argentina and Bolivia as well as in mature markets as the US.

Votorantim Cimentos differentiates itself IN MAY 2015, IF YOU RECOLLECT, THE GOV- through high capillarity and national covERNMENT ANNOUNCED THAT IT WAS GOING erage in Brazil. We can serve national conTO FREEZE BILLIONS (UP TO BRL 70 BILLION) struction companies as well as each and every OF REAIS IN SPENDING, INCLUDING BRL 5.6 local infrastructure project due to our omniBILLION FOR THE HOUSING PROGRAM. IN presence in the country. Financial solidity in SUCH SCENARIO, THE MAJOR QUESTION these times is also a very important differentiIS, HOW CEMENT COMPANIES, INCLUDING YOU ARE The company's overall goal is to reach 30 SURVIVING? WHAT ARE THE use of non-fossil fuels globally by 2020.

STRATEGIES, CURRENTLY, YOU ARE WORKING ON IT, TO SET AN EXAMPLE FOR OTHERS? ating factor. This solidity is based on a healthy Despite the unfavorable economic environ- debt structure and strong productivity and ment in Brazil, our strategy is geographic and cost improvements implemented to maintain portfolio diversification. In Brazil we have profitability in decreasing markets. been expanding our mortars and agricultural lime businesses successfully, - showing inter- AND IMPORTANTLY, DO YOU THINK THAT esting growth rates even in these challenging WITH A MAJOR EVENT—OLYMPICS—HAS times. We will continue to invest especially in BEEN LINED UP, THIS YEAR, IT WILL BOOST the North and North East of Brazil, - where THE CURRENT SUBDUED CEMENT SECTOR? higher housing and infrastructure deficits We welcome and support all projects and will lead to over average growth rates medi- partnerships to enhance infrastructure and

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address the substantial housing deficit in Brazil. As the Olympics will be starting in a few months the positive impacts for the cement industry have already occurred in the past years.

ACCORDING TO YOU, OTHER THAN BRAZIL, WHICH ARE THE INTERNATIONAL MARKETS THAT YOU THINK PROVIDES BETTER BUSINESS OPPORTUNITIES? percent of IN THIS CASE, WHICH ARE THE MARKETS THAT THE COMPANY IS LOOKING FORWARD FOR AN INVESTMENT? There are currently ongoing expansion projects in Bolivia, where we are building a new cement plant in the city of Yacuses, starting up end 2016 with capacity of 0.9 million tons/year. In Turkey, we are increasing our capacity in Anatolia by 1.2 million tons / year at our Sivas unit. In the United States, we are expanding the Charlevoix plant by 0.6 million tons / year.

These last two projects will be completed by 2017. We are currently also planning

APRIL / MAY 2016

8

Q&A: LEADERS to expand our capacities in Morocco and Argentina.

Santa Helena (SP) unit

ARE YOU LOOKING OUT TO EXPAND MORE IN THE U.S. MARKET, WHICH IS PROJECTED TO GROW 10 PERCENT IN 2016?

I doubt that we will see 10% growth in 2016, - but certainly growth will be way over global average. In the United States, we have restarted our plant in Dixon and we are increasing capacity by 0.6 million tons / year in the Charlevoix unit.

NOW, AS FAR AS THE COMPANY IS CONCERNED, TELL US ABOUT THE COMPANY’S PERFORMANCE IN THE LAST COUPLE OF YEARS. GOING FURTHER, GIVE US GUIDANCE FOR THE CURRENT FINANCIAL YEAR IN TERMS OF THE COMPANY’S GROWTH PERFORMANCE? The year 2015 was marked by a decline of 9.5 percent in the apparent consumption of cement, as estimated by the National Cement Union (SNIC), mainly as a result of a retraction of segments linked to the construction industry. Our company anticipated the deterioration of the economic scenario and we prepared ourselves by reducing cost and enhancing productivity, preserving liquidity, - while maintaining all our strategic investments.

TO ACHIEVE THIS? TELL US ABOUT YOUR TOTAL MARKET SHARE IN BRAZIL? Votorantim Cimentos is present in 14 countries, with a total installed capacity of 55.5 million tons. In Brazil, where we are market leader, we increased our annual capacity by over 50 percent in the past 8 years, from 21.4

ING CEMENT COMPANIES IN THE REGIONS THAT YOU WOULD LIKE TO FOCUS ON? Our current strategic plan is based on organic growth in all regions. However, we are constantly evaluating business opportunities in markets with interesting growth persepectives also via M&A.

Our consolidated net revenue increased by 7 percent compared to 2014, totaling R$ 14 billion, with a significant contribution from the results of our international operations, which WHAT IS THE COMPANY’S were favored by the depreCURRENT CASH POSITION? We continue to maintain a long-term perspective ciation of the Real. EBITIF SO, HOW ARE YOU investing in strategic markets, in the modernization AND PLANNING TO FUND THE DA totaled R$ 3.2 biland automation of our plants, in geographic and EXPANSION PROJECTS AS lion, 7 percent lower than WE BELIEVE, THE CASH in 2014. The unfavorable portfolio diversification.

BALANCE MAY DROP TO A situation in the Brazilian CERTAIN LEVEL? market was partially offset by the good performance of our international million tons to 33.3 million tons. Since 2010 Votorantim Cimentos put in place a liability operations. we have increased our international relevance management that further extended its short with now 40% of our total capacity producing and medium term debt, avoiding concentration of debt maturing until 2018 and enhancTELL US ABOUT YOUR CURRENT INSTALLED outside of Brazil. ing its liquidity position. Faster deleveraging CAPACITY AND GOING FORWARD, HOW YOU INTEND TO INCREASE IT UPTO? WHAT WILL BE ALSO, AS A STRATEGIC MOVE, ARE YOU LOOK- is expected in the medium term as our curTHE TOTAL INVESTMENT WILL ACCUMULATE ING AT AN INORGANIC GROWTH BY ACQUIR- rent expansion capex cycle is concluded. For

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APRIL / MAY 2016

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2016 the company continues working on its Liability Management plan to further extend its 2017 and 2018 maturities.

In addition to maintaining our discipline in cost control, we have a comfortable debt profile and the liquidity that is needed to ensure the continuity of our extensive program of investments, ensuring the fulfillment of our long-term strategy. It is important to highlight that the majority of our expansion plan is already funded.

HOW WAS YOUR EXPERIENCE, WHEN THE COMPANY, FOR THE FIRST TIME TESTED THE INTERNATIONAL DEBT MARKET? WHAT WERE YOUR LEARNING EXPERIENCE AND HOW MUCH FUNDS THAT YOU HAVE RAISED? ARE YOU PLANNING TO RAISE A SIMILAR TYPE OF FUND IN THE FUTURE? HOW MUCH WOULD BE THE AMOUNT? Considering Votorantim Cimento´s experience in the capital markets, our favorable liquidity ratios and active liability management, investors and creditors were more likely to fund further investments. Therefore, in May 2015, we issued € 500 million in bonds maturing in 2022 at a rate of 3.5 percent being the first Brazilian entity to access the capital market after a 6 month period with no issuances. It was the second time that the com-

pany has carried out an operation of this size ON THE OTHER HAND, THE COMPANY HAS without the guarantee of our parent compa- INAUGURATED A NEW PLANT? HOW DO YOU ny in the main financial centers in Europe. In COMMENT? April 2014, € 446.5 million in bonds maturing in 2017 at a rate of 5.25 percent were Although the Brazilian environment will repurchased, and securities were issued total- remain a challenge, the company will coning € 650 miltinue to invest in lion maturing strategic markets The company will continue to in 2021 with and regions and a rate of 3.25 invest in strategic markets prepare for future percent.

In demands.

We addition to the believe in the funaccess to the Capital Market, the company damentals that drive cement consumption in has recurring access to bank loans with com- Brazil in the long term, such as the infrastrucpetitive tenor and rates. ture deficit, housing deficit and a still low per capita consumption of cement. We always MEANWHILE, THE COMPANY HAS INAUGU- optimize our plant network and this can RATED A PLANT IN CAMAÇARI. WHAT WAS lead to the temporary shutdown of plants in THE INITIAL INVEST HAS GONE INTO IT the same region. The new operations that we AND WHAT WILL BE THE TOTAL INSTALLED have just inaugurated are located in CentralCAPACITY? North and Northeast regions, where we are The mortar plant inaugurated in Camaçari, increasing production due to the overaverage in northeastern Brazil, which exclusively pro- regional growth potential in the construction duces mortar, received investments of R$ 25 sector and in cement consumption. million, generating 80 direct and indirect jobs. The Camaçari plant has a production Use of biomass at capacity over 200 thousand tons of mortar Nobres (MT) unit per year. The Northeast region of Brazil has high growth potential in the construction sector and in cement consumption.

LASTLY, THE COMPANY HAS SUSPENDED THE PRODUCTION OF ITS PLANT IN RIBERÃO GRANDE (SP), WHICH HAS RESULTED IN SACKING OF 128 EMPLOYEES, CITING THE MACROECONOMIC SITUATION. HOWEVER,

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10

FEATURE THE USE OF AUTOMATIC DOSING AND APPROXIMATE SAMPLE WEIGHTS – A TIME SAVING AND SMART WAY TO USE FUSION PREPARATION

NAVAS

THE FUSION SYS

Traditionally fusion methods have required pain staking and tedious weighing to within 0.000 1mg for both sample and flux addition.

The sample had to be pre-dried, ignited and desiccated to ensure no moisture content during the fusion process, since this would influence the final sample: flux dilution ratio.

This has made sample preparation for fusion tedious, lengthy and labor intensive.

The Navas Instruments AF 5000 system allows for quicker, approximate sample additions, automatic flux dosing and can be run on samples as received.

11 APRIL / MAY 2016

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S

STEM

his potentially cuts down the sample preparation time by several hours and allows accurate and precise results just as though you are using the traditional preparation steps described above but with a fraction of the sample preparation time.

HOW DO THEY PREPARE BEADS WITHOUT PRECISE WEIGHING? Preparing the fusion instrument

Flux used does not contain non wetting agent.

The buoyancy factor for each moldable is established once off to compensate for the weight variance at operating temperatures Operator will calibrate flux contamination (not evaporation) by fusing a bead with only flux, this done with every new flux container.

Preparing the non wetting agent for addtion

Operator will prepare a set of pieces of cellulose with no ash and add 1 mg of lithium bromide for further use, this operation can be done during beads being fused, the cellulose ball added after the bead has been fused and LOI results provided.

Weighing a sample for fusion

Operator places in external balance moldable, software will take this weight.

The automatic dosser adds 50 % of flux no precision flux dosing here – the exact weight will be measured automatically.

Operator adds 500 mg of sample, no precision weighing needed here.

Software will present the needed flux to obtain the proper ratio for example 1-10, automatic dosser doses flux and observes number going down to zero +- 0.3 mg or better.

The initial sample mass is recorded, the mass of flux added is recorded.

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Fusing the sample and flux

Moldable with sample and flux is placed in auto loader.

Repeat the process until loader is full or no more samples.

Add the job by clicking add so the system will know you are done.

The instrument will load each one of the moldables automatically into the furnace that is at 1050 C and start the fusion cycle.

Moldables will stay for about 3-5 minutes for the flux to melt.

Moldables will be inclined (with a patent pending system) and occasionally being agitated by rotation and reverse operation of the ceramic carousel that holds the moldables, this dual agitation and mixing system provides very homogeneous beads Simultaneous to the fusion process weights are taken inside the furnace on every moldable until the programed time has expired, those weights indicate if any flux evaporation (normally none) , LOI on the sample and final bead weight calculated as flux minus sample minus LOI taking into consideration moldable buoyancy and flux contamination weight loss.

After the LOI result is obtained the furnace plug will open and the lithium bromide of only 1 mg ( or other non-wetting agent). Operator places one ball at the time by tongs inside the moldables that are just below the furnace ceramic plug, carousel rotates at every addition, this ensures the uniform release of the fused bead from the surface of the platinum moldable.

Beads come out automatically from the auto loader for cooling.

No moldable cleaning needed, the moldables can be reused again as they are perfectly clean, no residues are left in the moldable after fusion.

Beads are measured by XRF and the weights of the sample and flux or the

APRIL / MAY 2016

12

FEATURE weights of the sample and final bead weight can be entered and made available for XRF calculations.

FIGURE 1 - WEIGHT CHANGES IN FUSION

HOW DO THE XRF CALCULATIONS WORK?

In order to obtain highly accurate results, it is necessary to provide a constant fluxto-sample ratio (flux ratio) in each sample preparation definitely. Even though the weighing is performed precisely, variation in flux ratio may occur owing to loss on ignition (LOI) or gain on ignition (GOI) in samples, evaporation of flux and decomposition of oxidizing agents and non-wetting agents added during fusion.

These variation factors can cause analytical errors in the fusion bead method as well as introduce matrix effects.

absorption characteristics. The equation consists of alpha coefficients computed by Attempts to correct for variations in weight a fundamental parameter (FP) method. based on flux weight and The software computing sample weight and to correct alpha coefficients is capable for LOI/GOI have been We have established a unique, easy-to-use, of calculating coefficients applied in the calibration universal fusion bead correction method for weight ratios of flux or method to eliminate these bead to sample and oxidizing error factors in the fusion agent to sample as well as method for ore analysis matrix effect by components in samples. It (ISO9516-1: 2003(E)), but the application of The advanced correction equation has is also possible to calculate coefficients for these corrections is limited and not flexible. been derived from the theoretical intensity the composition of bead, which the total We have established a unique, easy-to-use, equation based on the principle of X-ray content exceeds 100% owing to GOI, where oxidization of elements in samples occurs.

This correction method can be used in correcting LOI/GOI, flux evaporation and variations in flux ratio due to weighing variations. We have demonstrated that the method accurately corrects these effects for iron ore and copper concentrate. universal fusion bead correction method for the empirical calibration method with matrix correction for fusion bead analysis.

Figure 1 shows changes of component weights during fusion, which can cause analytical errors. In the model in Figure 1, weight change of oxidizing agent is also considered. For example, when sodium nitrate is added as an oxidizing agent, sodium nitrate (X) breaks down during fusion and sodium oxide (X’) is left in bead while nitrogen oxide is evaporated. X’ can be obtained by simple calculation from X because the decomposition reaction of oxidizing agent during fusion is known.

13 APRIL / MAY 2016

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L represents the total of LOI and GOI. When the GOI of sample during fusion is larger than the LOI of sample during fusion, L is negative value. For simplicity, decomposed oxidizing agent X’ is expressed as X. Henceforth, in this paper, the weight of decomposed oxidizing agent is calculated from the original weight before fusion described above.

THE BEAD WEIGHT IS EXPRESSED BY EQUATION

In addition to those changes during fusion, variation of weights of sample and reagents, which causes variation of flux ratio to standard ratio, has to be included in correction factors.

SAMPLE

1

2

3

4

5

Sample Weight, g

0.3790

0.5462

0.4293

0.3236

0.3178

Final Bead Weight,g

5.3000g

5.7091

5.3415

5.2313

5.1552

13.98

10.45

12.44

16.16

16.22

B/S ratio Source: CW Research

The replicate results were compared for each element measured for Low and High readings and a difference was calculated for the five replicates. These were compared to allowable differences between successive replicates as referenced in ASTM C 114.

SUMMARY

This provides a quick method using fused beads to eliminate the mineralogical variations from source materials and provide a robust method for analysis from any source.

the use of approximate additions in the sample preparation step with the internal balance and the automatic flux dosser carefully measuring the exact dilution parameters.

These are then used in the final calculations to accurately account for intrinsic moisture, loss on ignition and losses associated with the fusion process.

CONCLUSION

Using the Navas Instruments AF 5000 Fusion system allows for • Ease of use • Multiple data acquisitions by measuring both the elemental conTo show the efficacy the sample preparation time by several hours centrations and loss on ignition data of the approach where applicable used by the Navas and allows accurate and precise results • Unprecedented control over your Fusion Maker, five fusion process. replicate beads of Substantial time savings in your the same Portland cement were made and The ability to get sample weights, flux • read on a Rigaku Supermini 200 using five weights and final fused bead weights from sample preparation steps by eliminating different sample weights and flux weights. the fusion instrument software allows for the requirement for exact weighing.

THE USE OF VARIABLE WEIGHTS AND FLUX DOSING ON THE RESULTS The Navas Fusion System cuts down

SAMPLE

Na2O

MgO

Al2O3

SiO2

P2O5

SO3

K2O

CaO

TiO2

MnO

Fe2O3

mass%

mass%

mass%

mass%

mass%

mass%

mass%

mass%

mass%

mass%

mass%

1

0.153

1.454

5.081

19.928

0.193

3.105

0.561

65.16

0.276

0.090

3.49

2

0.165

1.507

5.012

19.937

0.201

3.127

0.555

65.03

0.281

0.088

3.50

3

0.147

1.421

5.042

19.999

0.197

3.097

0.536

65.04

0.263

0.089

3.49

4

0.177

1.467

5.180

20.09

0.193

3.12

0.531

64.98

0.267

0.081

3.49

5

0.163

1.504

5.028

20.07

0.182

3.110

0.566

65.07

0.270

0.079

3.40

Minimum

0.147

1.421

5.012

19.93

0.182

3.097

0.531

64.981

0.259

0.079

3.40

Maximum

0.177

1.507

5.180

20.09

0.201

3.127

0.561

65.16

0.282

0.087

3.50

Difference

0.030

0.09

0.17

0.16

0.02

0.03

0.03

0.18

0.02

0.008

0.10

Source: Navas Instruments

www.cemweek.com

APRIL / MAY 2016

14

FEATURE

global cementitious fob prices remain flat in 1q2016 15 APRIL / MAY 2016

www.cemweek.com

The decline in global sales, coupled with overcapacity in some exporting markets pressures exporters to find other markets. Global cement consumption is expected to decline, following the slowdown in China. www.cemweek.com

APRIL / MAY 2016

16

FEATURE lobal FOB prices for gray cement Global consumption of the building ma- Madeira, CW Group Managing Director are estimated to have declined to terial will decline by 1.9 percent in 2016, and Head of Research.

March 2016 by 0.3% as compared primarily driven by slowdown in China. to December 2015, according to “The decline in global sales, coupled with The global trade of cementitious prodpreliminary figures presented in the CW overcapacity in some exporting markets, ucts has generally seen a declining trend in both volumes and prices Research’s 1Q2016 upin the quarter to December date to its benchmark Global consumption of the building material will 2015. Notably, the global price assessment for average for gray cement, worldwide trade of gray decline by 1.9 percent in 2016. aggregated in December cement, white cement, 2015 for a set of 25 reportclinker, and slag, as well ing countries, fell by 12.6 percent YoY. as ex-works and effective market prices: Global Cement Trade Price Report will pressure exporters to find other markets, therefore affecting cement prices. “On top of declining demand for cement, (GCTPR).

The global economic growth scenario re- the decline in FOB prices for cement can CW Research expects FOB rates to re- mains bleak due to China’s slower growth also be traced back to currency deprecover marginally by June 2016, when the model, commodity price declines, and ciations in most major cement markets.

global average is projected to improve at overhangs from past rapid credit growth. Global FOB prices for gray cement are a 0.1% rate from March levels. On the Advanced economies are pointing to a projected to drop further in most areas, while regions such other hand, estimations Asia-Pacific-Japan and indicate that slag export Global FOB prices for gray cement are projected to as Western Europe could see prices have fallen by 3.2% marginal recovery in exin March 2016 as op- drop further in most areas. port prices. Median prices posed to December 2015, have declined further in while the quarter to June 2016 is projected to bring about a further stronger outlook when compared to the January 2016.” says Stefana Abiculesei, recent past, while developing and emerg- Consulting Analyst with the CW Group’s 1.8% decline. ing ones are under pressure”, says Robert European team.

17 APRIL / MAY 2016

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CW Research’s Global Cement Trade Price Report projects export prices in Asia-Pacific-Japan to continue recovery at a modest pace by June 2016, up 0.7 percent as compared to estimated prices for March 2016. In the Mediterranean Basin, prices are under more pressure. CW Research analysts expect prices to decline by 0.2 percent as compared to estimated levels in March.

This average selling prices decline is most severe in China where ex-works price were down 23 percent QoQ, according

Median slag prices on a global level registered an 18.3 percent QoQ decline in December 2015, while global slag export volumes fell by 2.8 percent YoY. Asia-Pacific-Japan continued to be the leading region with a share of 90.9 percent of global slag exports. Notably, Japan is the main slag exporter in the world, with the lowest export price in 4Q2015, while India and France were the second and the third largest exporters of slag.

“Several developments that marked 2015 will continue to leave their imprint in 2016,

The most pressing issues in 2016 will be sluggish capital flows to emerging and developing countries, anemic trade and continuously weakening commodity prices. to CW Research’s Global Cement Trade Price Report. The U.S. saw stronger pricing on account of sustained economic recovery. Average ex-work prices reached more than USD 100 per ton in 4Q2015, up 9 percent as compared to the previous quarter.

but by far the most pressing issues in 2016 will be sluggish capital flows to emerging and developing countries, anemic trade and continuously weakening commodity prices.” added Stefana Abiculesei.

ABOUT THE REPORT The Global Cement Trade Price Report (GCTPR) is CW Research’s benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag prices and volumes. The 180+ page report, published on a quarterly basis, serves as the industry go to source for monthly price data for 70+ individual markets worldwide, including multiple cornerstone data series: import, export, ex-works and market prices. Additionally, the GCTPR includes extensive discussion of key players’ price strategies as well as trade price forecast and select trade volumes for each country. The report also provides regional price indices as well as a quick review of trading dynamics and drivers in the different regions.

More information about the report can be found here: http://www.cwgrp. com/research/

White cement export volumes totaled 4.1 million tons in 2015, with export prices posting a slight decline in terms of median prices, but with more stable FOB prices than for gray cement. CW Research’s benchmark price assessment projects prices to decline in June 2016 in Asia Pacific-Japan to USD 129.9 per ton, down from an estimated USD 131.5 per ton in March 2016. Stable pricing is expected in the Mediterranean Basin.

As far as clinker is concerned, total global traded clinker volumes (including countries with incomplete data sets for the period) decreased by 11.1 percent QoQ in 4Q2015. For the set of reporting countries with complete data for the fourth quarter of 2015, the trade volume for clinker increased by 14.5 percent QoQ and the global average FOB price declined by 3.7 percent QoQ. www.cemweek.com

APRIL / MAY 2016

18

FEATURE

Outlook stabilizing, but remains uncertain

Oil well cement use facing multi-decade lows on plummeting drilling activity Robert Madeira, CW Group Managing Director and Head of Research

19 APRIL / MAY 2016

www.cemweek.com

e g well The oil industry is undergoing its worst contraction in decades and the drop in rig counts is expected to continue until prices stabilize. Even so, the demand for the specialty oil well cement is expected to stabilize into the coming year and show a modest recovery in the near future. The CW Research’s World Oil Well Cement Markets & Outlook analyzes the global market, providing a forecast from 2016 to 2020. www.cemweek.com

APRIL / MAY 2016

20

FEATURE

GLOBAL NEW WELL COUNT AND CEMENT

(Well count in units; Cementitious requirement in ton

4,500

Total Wells

90,000 4,000

80,000 3,500 70,000 3,000 60,000 2,500 50,000 2,000 40,000 1,500 30,000 1,000 20,000 500 10,000 0 0

Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08

lobal API, API-equivalent and we have seen periodic mini-rallies, folnonconforming oil well cement lowed by reversals and more uncertainty. demand is down by more than 30 Consequently, well drilling activity and rig percent from the peak nine mil- operations, particularly in North Amerilion ton volume reached in 2013 to low can shale fields, have come to a grinding five million tons, including extenders. halt as exploration and oil field service Based on the prevailing crude oil price companies reduce expenses,” says Robert outlook and associated activity in oil, gas Madeira, CW Group Managing Director and thermal well drilling, the demand for and Head of Research. the specialty oil well cement is nonetheless expected to stabiThe oil industry is undergoing its worst lize into the com- contraction in decades, with crude demand growth ing year decelerating on Chinese slowdown and global and show m o d e s t economic uncertainty recover y between 2015 and 2020, according to CW Re- THE TOTAL GLOBAL WELL DRILLED search’s study on “World Oil Well Cement LENGTH IS EXPECTED TO DECLINE Markets & Outlook”.

BY 25 PERCENT CW Research’s World Oil Well Cement “The oil industry is undergoing its worst Markets & Outlook expects the drop in rig contraction in decades, with crude de- counts to continue until oil prices stabilize. mand growth decelerating on Chinese The two major drivers for oil well cement slowdown and global economic uncertain- demand are the number of wells drilled and ty . In 2016, crude prices have hit some of the average depth of these wells, which the the lowest levels in 15 years, even though report details by region and their relative

2015E

2016E

Source: CW Research

cement consumption rates. The decline in shale drilling in the United States and the slowdown in Chinese demand are among the most important drivers behind the decline in oil well cement consumption; the two countries accounted for 69 percent

GLOBAL RIG COUNT VS. CRUDE PRICE (2005-2015) (USD/ barrel)

4,500

Global Rig Count

4,000

Crude Price

3,500

160 140 120

3,000

100

2,500

80

2,000

60

1,500

40

500

20

0

Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15

1,000

Source: CW Research

21 APRIL / MAY 2016

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0

TITIOUS REQUIREMENT PER WELL (2015E-2020E)

ABOUT THE REPORT

ns)

160

Cementitious metric Global Rig Count Crude Priceper well(in Tons)

120 140 120 100 80

95 60 40

May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15

20

2017E

2018E

2019E

of total wells drilled and 63 percent of total oil well cement consumption in 2015.

CW Research estimates that new oil well drilling declined by 25 percent globally to 72,262 oil wells (onshore, offshore and shale wells) in 2015 and expects drilling to improve moderately over 3-5 years.

“Looking at the oil well cement demand estimate models, we model the outlook

2020E

0 70

This oil well cement decline is most severe in North America wherein planned capital expenditure in 2016 is expected to be 27 percent below 2015, and 52 percent below 2014, according to CW Research’s World Oil Well Cement Markets & Outlook. After North America, the Central and South American markets were the worst affected, seeing year-on-year declines of 38 and 33 percent, respectively.

At the other end of the spectrum, drilling activities in Russia were the least affected among global producers due to a multitude of reasons including the low cost of production, currency devaluation, and exclusion of gas industry from sanctions imposed by EU. Notably, Russia is expected to maintain its capital expenditure on new oil discoveries and exploration as the oil and gas sector continues to account for a major portion of government revenues.

Pricing for oil well cement has compressed significantly as demand has waned based on multiple macro-economic factors, detailing usage segments, well types, and regions so that we can distill out factors that differentiate activity in different markets. It is clear that high-cost extraction and production regions are heavily impacted with sharp slowdowns, but the picture is more nuanced as the oil exploration market is materially driven by national policies and agreements struck when oil price expectations were significantly different than today’s reality ,” says Prashant Singh, CW Group Associate Director.

Demand for oil well cement fared better in some regions including Sub-Saharan Africa, MENA, and the CIS, which saw eswww.cemweek.com

The CW Research’s World Oil Well Cement Markets & Outlook analyzes in detail developments in the world oil well cement market from a regional perspective with a focus on key markets.

The report provides a forecast from 2016 to 2020 prepared with detailed and wideranging discussions with industry players.

The forecast provides worldwide oil well cement market outlook, regional market shares, demand, imports, exports and types of oil well cement used, as well as price trends. CW Research’s report highlights detailed and specific demand by main types of oil well cement for key countries, and trends in the oil well segment. The World Oil Well Cement Markets & Outlook presents the role of extenders and onshore, offshore, and shale well counts with trajectory, depth, and well type to help ascertain oil well cement usage.

The report brings together the CW Group’s principal research team to address important market dynamics about API certified oil well cements including a global capacity overview (market and major producers), regional market shares, demand, imports, exports, the types of oil well cement, and pricing trends.

For more information or interview inquiries, please contact Luciana Murarasu, Marketing & Communications Coordinator, CW Group (Europe), by phone at +40-748-91-84-50, or e-mail at lm@cwgrp.com. timated declines of less than 20 percent in 2015 from peak demand in 2013 and 2014.

Oil well cement is on a relative basis much more traded between countries than regular ordinary Portland cement. The principal reason is that there are relatively fewer specialized production facilities for oil well cement worldwide. Dyckerhoff (part of the APRIL / MAY 2016

22

FEATURE Buzzi Unicem group), is the world leader in the segment, with other global groups, such as LafargeHolcim, HeidelbergCement and Cemex, and many regional companies (e.g., Dalmia, Eagle Materials and Argos) serving the segment. Thus, not surprising with a decline in global demand, in 2015 global oil well cement trade dropped by almost 50 percent relative to 2010.

Pricing for oil well cement has compressed significantly as demand has waned . What

edented – and unsustainable – discount to ordinary Portland.

CW Research believes this is a temporary phenomenon as oil well cement producers adjust production to the “new normal” and marginal producers exit the market. However, it also depends on the structure of the oil field services segment. “If we go from three major oil field cementing companies, that is Schlumberger, Haliburton and Baker Huges, to two There is also a longer-term trend for producers to with the forgo API oil well monogram certification altogether“, m e r g e r of the added Robert Madeira. latter two, the is typically a premium product to ordinary pricing pressure will ratchet up further“, Portland cement due to its unique proper- explained Robert Madeira. ties, certification investments, quality assurance costs and higher production costs GLOBAL OUTLOOK FOR OIL WELL (resulting from batch production, kiln outCEMENT CONSUMPTION REMAINS put decrease and high clinker content), oil well cement premium pricing to ordinary BIASED TOWARDS NEGATIVE Portland cement has come down by a fac- The downward growth revision by institor of two, even three in some markets to tutions like the IMF and the World Bank in some cases even selling at an unprec- has had a negative effect on markets, and

GLOBAL NEW OIL WELL DRILLING DISTAN (In million meters)

250

North America

C&S Ameri

200 150 100

50 0

2014

2015E

Source: CW Research

concerns of further oversupply by Iran and other countries are causing increased volatility in prices. Additionally, OPEC decisions on production quotas will likely determine the crude price outlook, with a direct impact on the oil well cement market. Considering these drivers, the CW Research expectation for crude prices is to average around USD 34.1 per barrel in

GLOBAL TOTAL OIL WELL CEMENT AND EXTENDER USAGE (2015-2020E) (OWC demand in kt; Extender demand in kt; Change in OWC demand in percent)

110,000

OWC Onshore

Extender offshore Offshore

shale Shale

% Change OWC

100,000 8,000

20%

7,000 90,000

10%

6,000 80,000 5,000

0%

70,000 4,000

-10%

3,000 60,000 2,000

-20%

50,000 1,000

-30%

0 40,000

-40%

2014 2015E

2015E 2016E

2016E 2017E

Source: CW Research

23 APRIL / MAY 2016

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2017E 2018E

2018E

2019E 2019E

2020E 2020E

NCE OUTLOOK (2014-2020E)

ABOUT CW RESEARCH

ica

Europe

2016E

MENA

2017E

Sub Sahara Africa

2018E

2016 and thereby gradually increase to an estimated USD 53 per barrel by 2020.

As a result, the global outlook for oil well cement consumption remains biased towards negative as is not expected to retrace peak consumption levels of 2013 and 2014 over the forecast period due to the supply glut situation in the global crude market and volatile price movement of crude.

GLOBALLY, NEW WELL DRILLING AND EXTENDER USE WILL DRIVE OIL WELL CEMENT DEMAND IN FUTURE

Asia Pacific

2019E

CIS

2020E

quality, the current crude price regime has led to a long unseen price sensitivity which is leading to drillers pitting oil well cement producers against each other for price improvement on cement, a pick-up in using fly ash as a substitute to portion of the oil well cement. There is also a longer-term trend for producers to forgo API oil well monogram certification altogether“, added Robert Madeira.

“While in a post-Macondo well drilling world there is a clear and heightened focus on oil well cement product and service

CW Research is a leader in syndicated and data-driven market research solutions.

The company offers independent perspectives on multiple industrial market segments (e.g., cement, metals & minerals, and specialty chemicals) and deep functional expertise in market intelligence, sourcing intelligence, commodity pricing intelligence. CW Research also provides custom industry and competitive research programs for operating companies, financial analysts, consultants, governments, suppliers and many others as well as tailored studies together with CW Advisory.

ABOUT CW GROUP The Greenwich (Conn.), USA headquartered CW Group is a leading advisory, research and business intelligence boutique aligned along three pillars: Advisory, Research and Media. CW Advisory supports senior management in addressing their most challenging strategic, financial and operational issues as well as providing M&A advice. CW Research provides value added industry reports, multi-client studies and business research services. The Media pillar is based on rigorous and up-to-date information and data management, providing market updates to our clients in a self-service format through our industry portals as well as industry meetings.

The CW Group, with a presence in the US, Brazil, India, Portugal and Romania, has a multi-industry orientation, with particularly recognized sector expertise in up-stream building materials (cement, lime), downstream building materials (aggregates, ready-mix, cementitious fly ash, slag), power and energy, steel, minerals & mining, agriculture and commodities, paper & pulp, ports, logistics & transportation. www.cwgrp.com

North Sea drilling rig

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APRIL / MAY 2016

24

FEATURE

CHALLENGES AND NEW PERSPECTIVES FOR THE COMBUSTION BY-PRODUCTS SECTOR DISCUSSED AT The 3rd edition of Ashtrade Europe marked a new milestone for the global Ashtrade event series, bringing together in Rome industry specialists from more than 20 countries for a discussion on the key burning topics shaping the combustion by products sector.

25 APRIL / MAY 2016

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www.cemweek.com

APRIL / MAY 2016

26

FEATURE

“The conference provided very interesting, different topics"

he event took place between 2122 April at NH Villa Carpegna Hotel in Rome, providing an excellent opportunity for networking and developing new business relationships, matched by a complex event agenda integrating the latest market trends and technology applications.

The conference was sponsored by Enefit – Eesti Energia, Ecotrade and supported

by Enel, Ibau Hamburg, Claudius Peters and CW Research.

“The increasing number of registrations received this year from international specialists and the positive feedback from the sponsors of the event confirm that our efforts to constantly improve the qual-

27 APRIL / MAY 2016

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ity of the program and create a memorable experience for the delegates have been successful.

Our focus was also on offering varied networking opportunities to the professionals attending the event, to provide a platform for meeting new customers and expanding their ongoing business”, declares Beatrice Ene, Client Development and Marketing Director, GMI Global.

The event set the global picture for the fly ash and cement industry, with focus on “Coal and EU energy policy” presented

by Mr. Brian Ricketts, Secretary-General, EURACOAL and a valuable local insight presented

by Mr.

Daniele Gizzi, Environmental Manager, AITEC on "Resource Efficiency in Italian Cement Sector: use of alternative fuels and raw materials”.

The agenda of the event integrated varied international case studies on the fly ash market, including the US perspective, by Mr. Rafic Minkara, Vice President – Research & Development, Headwaters Resources on “The future of fly ash in the US”, an extensive case study on the Indian fly ash market on "Increased utilization of Fly Ash for High Performance GREEN Concrete" presented

by Mr. Georg Dirk, Chairman of Dirk Group of Companies, Dirk India and a study shared by Mr. Miguel Ángel Sanjuán, Head of the Cement and Mortars Area, The Spanish Institute of Cement and its Applications (IECA) on the "Fly ash characteristics of Spanish coal-fired power plants and potential use of bottom ash as cement constituent".

A comprehensive perspective of the future of the cement market was introduced by Mrs. Raluca Cercel, Consulting Analyst, CW Group, presenting the "Cement markets forecast and supplementary cementitious materials".

From a global overview to more specific aspects of the fly ash market, the focus switched to alternative materials and ash management: Mrs. Arina Koroljova, Burnt Oil Shale Projects Manager, Eesti Energia AS presented an interesting case study on ““Burnt Shale - a material to use in different applications”, while Mr. Matteo Spaziani, Head of Global Fuel Logistics and Ashes, Enel Group – Enel Trade SpA discussed “Ash management from a utility perspective”.

On a more technical note, Mr. Martin Wichern, Key Account Manager Power Plants, Claudius Peters Projects shared his expert opinion on "Fly Ash Separation and Handling Technologies". www.cemweek.com

“A good opportunity to meet the main players on the cement and fly ash market"

APRIL / MAY 2016

28

FEATURE

"It was very convenient and useful. I’m looking forward to next year"

The logistical challenges of transporting fly-ash were brought into discussion

by Mr. Dimitris Georgantis, Chartering Broker, Howe Robinson Shipbrokers, who presented “Methods of carrying Fly ash by sea and an introduction to cement carriers”.

The discussion on alternative materials also focused on revealing the potential for new perspectives: Mr. Alessandro Massalin, Shareholder and member of the board of Officina dell’Ambiente, Ecotrade Spa offered a valuable insight on “An industrial network for the recovery of FAs IBAs in the cement industry”, Mr. Lewis Baker, European Technical Manager, ST Equipment & Technology focused on future opportunities, presenting: "Beneficiation; Securing Future Supply, processing fresh fly ash and reclaiming landfilled ash and Mr. Arno Keulen, Project manager Science & Technology, Van Gansewinkel Minerals discussed “Inorganic polymer production and characterization, using industrial waste materials”.

The technical perspective on the future of the fly ash industry was complemented by academic insights presented by Mrs. Maria Visa, Professor, Faculty of Product Design and Envir o n m e nt , Transilvania University of Brasov on "New developments in substrates based on fly ash collected from Romanian

29 APRIL / MAY 2016

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combined heat and power plants", Mr. Fabio Montagnaro, Professor, University of Naples discussing "Reuse of spent ashes from CO2 capture & storage calcium looping processes as a source of raw materials for the synthesis of ordinary and calcium sulfoaluminate cements" and Mrs. Maria Chiara Bignozzi , Professor, University of Bologna, with a study on “Use of carbon fly in geopolymer”.

The 2016 Ashtrade Europe edition reviewed the essential, key items that challenge this sector, in an interactive format that encouraged discussions and revealed international different approaches for delegates to take home and use in their businesses.

The event enjoyed numerous off-site discussions among the participants during the coffee breaks and cocktail, in a more relaxed setting, with assistance offered by the organizers for all delegates interested in getting in contact with specific company representatives and arranging postevent meetings.

The next edition of Ashtrade Europe will take place next year in April. For more information and tailored offers, please contact us at sales@ gmiforum.com.

www.cemweek.com

APRIL / MAY 2016

30

CEMENT MARKETS

CW Research

CEMENT VOLUMES

Demand for cement in Argentina fell 8.5 percent year-on-year in March 2016 to 0.9 million tons and posted a 9.5 percent increase on a monthon-month basis. On the other hand, production of cement dropped 12.9 percent year-on-year.

The Colombian cement market remains subdued as demand for cement fell 6.7 percent year-onyear in March 2016 after having increased by 6.2 percent in the previous month. Total volumes for the first three months of the year were at the same level as last year. In terms of cement production, volumes posted a 1.2 percent increase in the first three months of the year.

Cement Demand March 2016 YoY (%)

In Spain, cement consumption fell 5.6 percent year-on-year in March 2016, but volumes for the first quarter of the year were marginally above volumes in the same period last year as February brought about a 10.0 percent year-onyear increase in demand.

Japanese demand for cement fell in March 2016 by 3.4 percent year-on-year, but production levels remained above those for last years as cement producers have boosted exports. In March 2016, demand in the domestic market was 3.55 million tons, up 3.4 percent as compared to the 3.43 million tons posted in the previous month.

Cement production in Saudi Arabia remained virtually flat in March 2016, posting a 0.4 percent year-on-year increase, while sales in the domestic market fell 0.5 percent.

Though cement volumes in Cyprus have seen drastic changes as opposed to last year, this is due to steep falls registered in the similar periods in 2015. Still, overall cement demand in the first quarter of 2016 was 73.8 percent above demand in the same period last year.

Cement Production March 2016 YoY (%) 120%

40% 30%

100%

20% 10%

80%

0% -10%

40% 20%

Source: CW Research

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 31

APRIL / MAY 2016

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Cyprus

Vietnam

China

Thailand

Saudi Arabia

Japan

-20%

Colombia

Cyprus

Pakistan

Thailand

Morocco

Saudi Arabia

Peru

Source: CW Research

France

Spain

Japan

Colombia

Argentina

Brazil

0% Ecuador

-20% -30%

60%

Peru

The Colombian cement market remains subdued as demand for cement fell 6.7 percent year-onyear in March 2016 after having increased by 6.2 percent in the previous month.

Cement demand in Brazil continued to decline, posting in March 2016 a 16.6 percent yearon-year decline to 4.9 million tons. However, cement demand in Brazil has posted a 6.5 percent increase as compared to the previous month. The country remains under pressure from political unrest and weak economic development, which brings about limited investments in construction, imposing a further decline in cement consumption. By the end of the year, cement volumes in Brazil are expected to remain subdued.

CW Research

CEMENT PRODUCTION (million tons) Country

LM

MoM (%)

CEMENT CONSUMPTION (million tons) YoY (%)

YTD

YTD (%)

LM

MoM (%)

YoY (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

CEMENT PRODUCTION MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

LM

YTD

YTD (%)

YTD

YTD (%)

CEMENT CONSUMPTION MOM (%)

CEMENT EXPORTS (million tons) Country

Country

CEMENT IMPORTS (million tons) MoM (%)

YoY (%)

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

YTD

YTD (%)

Country

LM

MoM (%)

YoY (%)

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

CEMENT EXPORTS MOM (%)

CEMENT IMPORTS MOM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

Source: CW Group analysis estimates MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 www.cemweek.com

APRIL / MAY 2016

32

CEMENT MARKETS

Volume variation analysis for selected countries that are major consumers, producer, importers and exporters of cement. This is a selection of notable markets. Additional detail is available from CW Research as well as on-line at http://www.cemweek.com to the market data section.

CEMENT ENERGY MARKETS

CW Research

ENERGY PRICES UPDATE compared to April 2015’s price of $62.24 per ton.

It decreased slightly by 0.5 percent as compared to March 2016’s price of $52.75 per ton.

COAL: The average coal price for April 2016 closed at $52.50 per ton, falling 15.6 percent YoY as STEAM COAL FOB AVERAGE PRICES (US$/TON) US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

120 110 100 90 80

Global trading volumes for Indonesia, Australia, South Africa, Russia, Colombia and the US increased to 83.25 million tons in December 2015,

70 60 50 Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr ’12 ’12 ’12 ’12 ’12 ’13 ’13 ’13 ’13 ’13 ’13 ’14 ’14 ’14 ’14 ’14 ’14 ’15 ’15 ’15 ’15 ’15 ’15 ’16 ’16

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

PETCOKE: US petcoke exports increased by 21.7 percent to 3.45 million tons in December 2015 as compared to the previous month, and up by 2.6 percent as compared to December 2014. The US export price for petcoke for December 2015 closed at $44.29 per ton, decreasing 10.6 percent as compared to November’s price of $49.53 per ton and down 33.8 percent as compared to December 2014’s price of $66.85 per ton.

COAL TRADING VOLUMES: Global trading volumes for Indonesia, Australia, South Africa, Russia, Colombia and the US increased to 83.25 million tons in December 2015, increasing 7.6 percent in comparison with 77.37 million tons recorded in November 2015.

An increase in coal trading volumes was seen in all the observed six major coal countries.

US PETCOKE EXPORT PRICE (US$/TON) 90 70

Rolling 12-month average

50 30

D ‘15

N ‘15

S ‘15

O ‘15

A ‘15

J ‘15

J ‘15

M ‘15

A ‘15

M ‘15

F ‘15

J ‘15

D ‘14

N ‘14

O ‘14

S ‘14

A‘14

J ‘14

J ‘14

M ‘14

A ‘14

M ‘14

F ‘14

J ‘14

10

Source: customs data

NATURAL GAS: The US Henry Hub spot price traded at $1.92 per MMBTU in April 2016, increasing 11 percent as compared to March 2016’s price of $1.73 per

MMBTU and down 26.4 percent as compared to April 2015’s price of $2.61 per MMBTU. Price in Europe decreased 3.1 percent MoM, reaching $4.13 per MMBTU in April 2016.

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 33

APRIL / MAY 2016

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Volume variation analysis for selected countries that are major importers and exporters of coal and petcoke. This is a selection of notable markets. Additional detail is available from CW Research as well as on-line at http://www.coalweek.com/ to the market data section.

COAL - EXPORTS (million tons) - Dec 2015 Country

LM

MoM (%)

PETCOKE - EXPORTS (million tons) - Dec 2015 YoY (%)

YTD

YTD %

Country

LM

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

YTD %

COAL EXPORTS MoM (%) US PETCOKE EXPORTS PRICES MoM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

COAL - IMPORTS (million tons) - Dec 2015 Country

LM

MoM (%)

YoY (%)

YTD

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

YTD %

PETCOKE - GLOBAL EXPORT PRICES (USD/ton) - Dec 2015 Country

COAL - GLOBAL EXPORT PRICES (USD/ton) - Apr 2016 LM

MoM (%)

YoY (%)

YTD

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

COAL EXPORT PRICES MoM (%)

MoM (%)

YoY (%)

YTD

YTD %

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

Country

LM

WWW.CEMWEEK.COM/SUBSCRIBE

YTD %

NATURAL GAS PRICES (US$/mmBtu) - Apr 2016 Country

LM MoM (%) YTD TABLE AVAILABLE IN(%)THE YoY CEMWEEK MAGAZINE PRINT EDITION.

YTD %

WWW.CEMWEEK.COM/SUBSCRIBE NATURAL GAS PRICES MoM (%)

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

Source: CW Group analysis estimates LM: latest month Jan 2016 except where specified; MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-866-9474 www.cemweek.com

APRIL / MAY 2016

34

CEMENT ENERGY MARKETS

CW Research

DEPARTMENTS

PEOPLE MEXICO: CEMENT DISTRIBUTED AT DISCOUNT PRICES

HEIDELBERGCEMENT SITS DOWN WITH ITALIAN WORKERS Heidelberg Cement sits down with its workers to discuss layoffs at its plants affected by the merger with ItalCementi. By the end of April, Heidelberg Cement referred to 415 works of its Bergamo plant, and to 250 workers from other plants, as redundant, and refuse dialogue with the workers’ unions.

This resulted on a call for strike on April 29. The company has now agreed to meet the workers and to discuss their demands. Unions have asked for a revision of the company’s business plan in order to reassure its workers.

They have also asked for central and regional governmental intervention to help keeping production in the current Italian sites at least until 2020.

Distribution of cement through the Banco de Materiales has begun in Sabinas, Coahuila. Each person can take up to 10 packages of cement at discount

HOLCIM ROMANIA APPOINTS NEW CEO

sound financial capital - will continue this trend.

Holcim Romania has appointed Canadian-Algerian Sofiane Benmaghnia as the new CEO of Holcim Romania. He will replace François Petry, who recently became CEO of Aggregates Industries subsidiary LafargeHolcim UK.

I pledge to keep the position of Holcim Romania as a company that creates value for all stakeholders, from employees to customers, partners and communities," said Sofiane Benmaghnia.

Prior to this, Sofiane Benmaghnia led Meftah Cement Operations, Aggregates & Concrete in Algeria since 2011, and he was CFO of Lafarge Concrete and Aggregates in the Middle East for three years. "The team from Romania, along with the opportunities that the new group brings - research and innovation capacity, global expertise,

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prices upon presenting its certificate of residency and the electors’ card. The program will last for at least 15 to 20 days, or until the existing packages run out. According to the social development coordinator in Sabinas there are 12,000 packages allocated to the program.

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Sofiane Benmaghnia

PEOPLE LAFARGEHOLCIM ANNOUNCES CHANGES IN LEADERSHIP IN INDIA Switzerland-based LafargeHolcim has appointed Martin Kriegner, currently Area Manager Central Europe, as Head of India. Martin took the new position from March 1, 2016. He will report to Eric Olsen, Group CEO and he succeeds Bernard Terver who has decided to retire.

Martin has held several leadership positions in the Group, including CFO and CEO of the Group operations in Austria as well as Head of Lafarge India and Regional President Cement for Asia. The Group has a distribution network that extends across the entire country and continues to see opportunities to further build its business in India through the network of over 100,000 dealers and retailers.

STRIKE ENDS AT LAFARGEHOLCIM SOUTH AFRICA

DOMINICAN REPUBLIC: ADOCEM CONDUCTS CONFERENCEWORKSHOP Santo Domingo-based Adocem conducted a conference-workshop in this week. The workshop was aimed at giving a better understanding and awareness among professionals in construction and related areas. "It’s essentially to spread and raise awareness among stakeholders and industry players on the progress and solutions reached in the design, construction and maintenance of concrete and cement structures, in the context of research in this field," said Julissa Baez, Executive Director of Adocem. "And in

NIGERIA: ASHAKACEM APPOINTS NEW MANAGING DIRECTOR A subsidiary of Lafarge Africa, AshakaCem, has appointed Alhaji Rabiu Abdullahi Umar as a new Managing Director. He will succeed Leonard Palka, who has resigned from the company.

LafargeHolcim will raise the salary of its South African workers by 8 percent in order to stop a strike that was going to enter its second week. Over 2,000 workers were struggling for a 13-percent wage increase and for other conditions like a living allowance. Now the workers will receive an 8 percent increase, together with housing benefits.

HOLCIM ROMANIA DONATES TO HOUSING PROJECT Holcim Romania agreed to donate 190,000 kilograms of cement to the Habitat for Humanity Romania projects. 520, 40-kilogram, sacks will go for housing projects in Moinesti, destined to four lowincome families.

our status as an integral link in the value chain of the construction industry, we are committed to providing solutions that result in significant improvements to infrastructure construction in concrete, and in turn, refine the methods of building and design in existing infrastructures," added the Executive Director of Adocem.

Umar's appointment is effective from April 13 when Palka's appointment ends. Umar is currently the Energy and Strategy Director for Lafarge Africa.

1000 sacks will go to a building renovation in Ploiesti that will become a vocational training center and an apartment building with 15 units. Several localities in Moldova will receive 600 sacks for projects related with flood prevention. The remaining 440 sacks will be used to renovate poor families’ houses and two schools in Olt, Dolj and Gorj.

CEMENTOS ARGOS APPOINTS NEW REGIONAL VICE PRESIDENT Environmental Engineer Camilo Restrepo Restrepo is the new regional vice president of the Caribbean and Central America of Cementos Argos. Camilo has joined the new position immediately.

He has a vast knowledge of the cement industry as he has been working in the field since 2005. Camilo will play an important role in consolidating the market position of the company in the regions, while also designing strategies for the company.

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REGIONAL REPORT

EUROPE, MIDDLE EAST AND AFRICA GERMANY'S CEMENT DEMAND DECREASED IN 2015 Cement consumption decreased in Germany, during 2015, by 2.2 percent to 26.6 million tons. German producers covered almost all the country’s cement needs. The country imported 5 percent of its demand, the equivalent to 1.2 million tons (6.5 percent less than in 2014). Meanwhile, cement and clinker exports increased by 6.5 percent to 6.6 million tons. The data is provided by the Germany’s Federal Statistical Office.

The German Cement Works Association thinks that the cement sector was affected by a generalized weak investment in trade and industry. In the fourth quarter of 2015, consumption fell by 4 percent year-on-year, even with good weather and two more working days for the construction sector. For 2016, the industry expects some improvements with government promises of improving housing and transport infrastructure.

TANGA CEMENT, TANZANIA TO FREIGHT CEMENT BY RAILWAY The Tanzanian government will facilitate Tanga Cement’s intention of using the Tanga-Moshi railway. Tanga Cement wants to transport 35,000 tons of cement per month or 500,000 tons per annum, from its factory in Maweni to Arusha through the Tanga-Moshi railway. The railway was

RUSSIA IMPOSES CEMENT CERTIFICATION According to the Russian Ministry of Construction, 50 percent of all cement sold in the Russian Federation is substandard. Apparently, this is one of the reasons why the Russian government opted to introduce a compulsory quality certification in the cement sector. This certification will be imposed to all cement produced and sold in Russia.

Counterfeiting normally includes bagging cement under the specified

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already part of a state investment rounding the USD 100 million that improved its services. The government is worried with the effects trucks transporting cement have on the country’s road. In the fiscal year 2014-15, Tanga Cement transported 44,000 tons of cement. In the second half of 2015, the company transported 24,960 tons of cement via railway. amount or adding products that were not supposed to be part of the cement mix. These forgeries are then sold in small batches to private consumers.

REGIONAL REPORT GHANA TO IMPLEMENT MEASURES ON CEMENT IMPORTS The Ghana’s Ministry of Trade will make an announcement concerning measures to protect local cement manufacturers. The cement sector in Ghana has the capacity to produce 9 million tons of cement per annum, to which new projects might add an

additional 3 or 4 million tons. Currently, the demand for cement in the country is at 7 million tons per annum. The local cement industry has been asking for limitations in imports given the current oversupply situation. In the last months, several advertising campaigns have been running nationally to promote local cement consumption.

EGYPT: SUEZ CEMENT PLANS TO LIMIT IMPACT OF DOLLAR SHORTAGE Egypt-based Suez Cement is designing a plan to minimize the impact of Egypt’s dollar shortage. We are doing what we can to finance our operations locally and to work with local suppliers while getting extended credit facilities from our international suppliers and our group,” said Bruno Carre, Managing Director of the company. He added, “Our key priority is to maintain our operations and to minimize the outflow of dollars to support authorities addressing the foreigncurrency shortage.”

BAN ON CHEAP IMPORTS FROM CHINA MAY AFFECT BRITAIN The European Commission is planning to cancel the tariffs on cheap imports from China. The economic shutdown in China may affect Britain’s cement sector along with other heavy materials industries.

“Some 18 percent of the cement used in this country is imported and that figure is rising. It’s the same with heavy clay products – such as roof tiles – where 25 per cent of the market is now imported,” said a spokesman for the Energy Intensive Users Group.

COUNTERFEIT CEMENT REMAINS AN ISSUE IN POLAND Counterfeit cement remains an issue in the Polish market. The local Association of Cement Producers estimated that 700,000 tons of cement with reduced material parameters enters the market annually. These products are sold for unrealistically low prices that attract many clients. Concrete made out of this cement does not acquire the required stability, putting constructions in danger.

Last year, 15.4 million tons of cement were sold in Poland, a 2 percent increase compared to the previous year. For 2016, predictions say that the sold volume can reach between 15.8 and 16 million tons.

CIMPOR PLANT IN PORTUGAL HALTS KILN OPERATIONS The cement plant in Alhandra, Vila Franca de Xira, Portugal halted production operations at its sixth kiln, in order to strengthen maintenance operations. The plant, operated by Cimpor, has allegedly been involved in

The country also has to deal with dumping of various products. As dumping products involves offering the commodity at a level that is far below market prices.

pollution due to an existing leak in the clinker storage. However, the issue has been resolved.

Ongoing maintenance works at the cement plant are aimed at ensuring the proper functioning of the plant, as well as preventing possible leaks in the clinker storage units.

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REGIONAL REPORT

SOUTH EAST ASIA INDIA: MAHAGENCO TO MANUFACTURE CEMENT

CHINESE CEMENT SECTOR RECORDS FALL IN PROFITABILITY Several cement companies in China recorded a significant decline in profitability on a quarterly and yearly basis. In 2015, Anhui Conch Cement and Jiangxi Evergreen Cement recorded a 31.6 percent decline in profit, Huaxin Cement’s profit fell by 54.8 percent. The profits of the companies also continued to fall in the first quarter of 2016.

Several cement companies also recorded an increase in losses.

Meanwhile, several cement companies recorded a fall in operating earnings, operating costs and operating profits.

The profit fell due to lower product prices and the ongoing economic slowdown. The Chinese cement sector has witnessed lower cement prices since November 2015.

Maharashtra-based Mahagenco, state-run power generation company, is planning to begin manufacturing cement by teaming up with other cement companies. The move is expected to provide huge revenue for the company and help in bringing down costs of power generation. Earlier, the company was losing hundreds of crore every year by giving away flyash for free.

APRIL / MAY 2016

MFMCL will form joint ventures with private cement companies. The latter will be majority partners in the joint ventures.

Mahagenco's contribution will be its land and flyash. Other investment will be done by the private partner.

The company produced around 100 million ton of flyash every year. "This is provided to cement companies free-of-cost. About a third of the raw material used in cement production is flyash. If this is not enough we have to pay 50 percent of the cost of transporting flyash from our power plants to cement factories," said an official from

RISE IN CEMENT INVENTORIES, IN CHINA China recorded a significant increase in cement and clinker inventories in the first few months of the year. In the first quarter, cement production recorded an increase of 3.5 percent to 440 million tons. Meanwhile, the cement prices stabilized in the country, but certain regions recorded a increase in cement prices including Hebei, Hainan, Sichuan, Anhui and the prices fell in Yichang, Hubei, Guizhou Zunyi regions. However, the cement demand increased at the end of April due to commissioning of new construction

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Mahagenco. Therefore, Mahagenco has decided to set up a subsidiary company for cement production, by the name of Mahagenco Flyash Management Company (MFMCL).

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projects in Northern China. The cement demand in the Southern region continued to be mellow due to unfavorable weather conditions.

REGIONAL REPORT INDIA TO REVIVE STATE-RUN CEMENT PLANTS The Indian government is considering reviving state-run cement factories across the country to meet demand for the infrastructure sector.

The Minister of Transportation says that the move would facilitate the current road and highway projects by making cement cheaper, by cutting the price of a cement bag from INR 200 to INR 120.

road transport and highway ministry and Cement Corporation of India will be signed soon for assured take off of cement. An unspecified government source says that the state may want to start competing with the private cement market given the current cartel-like situation.

The state-owned Cement Corporation of India has six idle cement plants. Last fiscal year, the company produced 9 lakh ton, or 66 percent of its capacity utilization. A memorandum of understanding (MoU) between the

ILLEGAL CEMENT IMPORTS FROM CHINA THREATEN SOUTH AFRICA’S MARKET South Africa’s cement sector is likely to be threatened by the illegal imports from China.

PAKISTANI CEMENT COMPANIES RECORDS BOOST IN PROFIT Several cement companies in Pakistan recorded a 26 percent boost in profit in the third quarter. In the same period a year earlier, the companies had recorded a profit of 14 percent. During the third quarter, earnings of cement companies grew to PKR 16.3 billion compared to PKR 12.9 billion in the corresponding quarter a year ago. The profit increased due to higher sales and local demand. The boost was also supported by an uptake in gross margins due to declining energy and power costs.

The domestic demand remained strong due to an increase in the number of private housing projects and intense construction activities under the China-Pakistan Economic Corridor (CPEC) program.

One Chinese cement plant has received the approval to export cement and several others are on the waiting list. “It won’t be long before a number of other Chinese factories are approved and we see Chinese cement simply replacing the Pakistani cement in South Africa,” said Donald Mackay, a director at XA International Trade Advisers.

FOREIGN COMPANIES TO INCREASE INVESTMENT IN NEPAL Cement companies investing in Nepal already announced the intention to further increase their production capacity in the country. The cement sector in Nepal was given a boost, with a large USD 1,45 billion investment coming from companies like Dangote Cement (Nigeria), Hongshi Cement, Huaxin Cement (both from China) and Reliance Cement (India).

The companies will create the capacity to produce 22,000 tons of cement per day.

Meanwhile, Hongshi Cement already promised to double its production capacity in a second development phase, while Huaxin plans to triple its capacity through three development phases.

Dangote Cement had initially planned to produce 3,000 tons per day, but since then doubled its approved capacity. Only Reliance Cement stuck to its initial plan of producing 7,000 tons per day. Internal demand is currently fulfilled at 80 percent, and the Cement Manufacturers’ Association of Nepal wars for the danger of reaching the saturating point, but companies are confident that the postearthquake reconstruction efforts and the projects for big infrastructures will boost the sector.

The market is currently growing at the rate of 12-15 percent annually and predictions are that it will increase a further 20 percent in the next 2 years. Exports are also an option for companies operating in Nepal.

All cement bags have to be certified as being compliant with the South Africa’s compulsory specification before it can be sold into the domestic market.

Fearing a competitive threat from China, several local cement companies have lodged anti-dumping duties on China’s cement.

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40

REGIONAL REPORT

ASIA PACIFIC MALAYSIA: CMS WON’T BE NOMINATED AS A CEMENT SUPPLIER FOR PAN BORNEO HIGHWAY

COMPETITIVENESS INCREASES IN INDONESIA

Sarawak-based Cahya Mata Sarawak Cement is unlikely to be nominated as a cement supplier for Pan Borneo Highway.

The cement company was expected to get a larger share in the tenders, however, they have to share a big portion of it with others, possibly its peers in the peninsula or even foreign producers. Previously, CMS was the nominated supplier of sand, cement and aggregates for the Sarawak portion of the highway, spanning 1,089 km, from Telok Melano to Merapok.

However, according to the amendement, the companies submitting the tenders are required to submit a list of aggregates and raw materials used along with the capacities.

The amendment allows construction companies to source cement elsewhere. Some market analysts believe that the cement company might not be able to supply cement to such a large cement considering the ongoing shortage of limestone in the market.

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New players in the Indonesian market are offering cement at lower prices than their competitors.

According to a recent report, cement companies that installed themselves in Indonesia during the last two years are selling cement at prices 5 to 10 percent lower when compared to the three established cement companies (Semen Indonesia, Holcim Indonesia and Indocement Tunggal Prakarsa). This data was collected in the Jakarta area.

The practice is also common outside Jakarta: in South Kalimantan, Anhui Conch gives a 10 percent discount on its bags, and is gaining market share with the move. The new players on

the Indonesia cement market include Pan Asia, Siam Cement, Cemindo Gemilang and Jui Shin Indonesia.

These new companies are forcing the installed capacity up, and are likely to also increase competitiveness.

Semen Indonesia is losing some of its market share, with a year-on-year decrease of 5.8 percent on sales during February 2016.

HOLCIM INDONESIA GIVES LOAN TO LAFARGE CEMENT INDONESIA

VIETNAM ANTICIPATES OVERSUPPLY

Holcim Indonesia (SMCB) will give a loan of IDR 200 billion to Lafarge Cement Indonesia (LCI). "This loan will be used to finance working capital and operational LCI. The interest rate set by the company is lower than the interest rate in the market," said Helianti Sastrosatomo, Corporate Secretary of Holcim Indonesia.

The loan is expected must be repaid by March 22, 2017.

The local cement producers in Vietnam are anticipating an oversupply in the market, hence are looking for new markets. The current consumption capacity in the region is 81.5 million tons per year. The locals are expected to use around 75-76 million tons of cement. Therefore, the domestic cement producers would face oversupply and the situation has forced the producers to seek solutions for selling more in foreign markets.

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REGIONAL REPORT TOKYO CEMENT RESTARTS IMPORTING CLINKER FROM JAPAN Sri Lanka-based Tokyo Cement has restarted importing clinker from Japan.

The imported clinker will be used to manufacture the high-performance cement NIPPON PRO, specially designed for high risers and super structures. “We at Tokyo Cement, having identified the demand for a high performance cement, tied up with a leading Japanese manufacturer to import Clinker with high specifications,” said Dashantha Udawatte, Group Marketing Manager at Tokyo Cement.

He continued, “Tokyo Cement recently launched the NIPPON-PRO brand to meet the demand of Class 1 contractors who have undertaken challenging construction projects that are part of the Government’s initiative to stimulate economic growth in the country.”

INDONESIA: SEMEN GRESIK PLANS TO EXPAND BUSINESS TO AUSTRALIA

SIAM CEMENT WANTS ANOTHER PLANT IN VIETNAM The Thai company Siam Cement wants to buy another cement plant in Vietnam. Siam Cement entered the Vietnamese cement market in March 2012 after opening a plant under its subsidiary Buu Long Industry & Investment. The company’s CEO announced its intention of entering the capital of another cement plant in the country, through a merger or joint venture, given the current oversupply of the Vietnamese market, but he did not advance any more details.

of 2016 and Laos in mid-2017. Vietnam has the installed capacity to produce 81.56 million tons but demand in 2016 is predicted to stay between 75 and 77 million tons.

A new plant in Song Lam will add 4 million tons per annum to the country’s capacity.

Siam Cement is also present in Cambodia and Indonesia, and the company is starting production at plants in Myanmar, in the third quarter

VIETNAM FIRMS FACE INTERNAL AND EXTERNAL COMPETITION

Indonesia-based Semen Gresik is likely to expand its activities to Australia. The company is exploring the market before exporting its products to Australia.

The cement company has received requests from several prospective buyers in the region. Semen Gresik’s export destination countries include Mauritius, Maldives, East Timor, Bangladesh and Sri Lanka. For exports, SMGR still rely Semen Padang and Tonasa.

Cement industry in Vietnam will continue to face some difficulties in 2016. Vietnam will continue to produce more cement than it actually consumes.

It was estimated that the cement plants in the country have the capacity to produce 81.5 million tons of cement in 2016, while internal demand will only rise around 4 percent from the 56.46 million tons consumed in 2015. It will not be easy trying to export the excess supply. In 2015, the country exported 16.25 million tons, a 20 percent drop compared to the 21 million tons exported in 2014. The Chinese market is

also facing an oversupply of 670 million tons, putting an additional strain to the global exports’ market. Cement exported for China can be up to USD 10 per ton lower that the one exported

by Vietnam. Internal competition is also increasing, with companies struggling for market share, especially in the Northern region. Companies like VICEM are now trying to improve their technology incorporation and production efficiency. Some attention is also being put on retail efficiency, creating new sales policies around different discounts and promotions.

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REGIONAL REPORT BOLIVIA: FANCESA EXCLUDES CHINESE FIRM FROM TENDER

AMERICAS ARGENTINA RECORDS A DROP IN CEMENT SHIPMENTS The Argentine Portland Cement Manufacturers Association (AFCP) recorded a 27 percent drop in cement shipments in April as compared to the same period a year earlier. The cement shipments fell by 13.7 percent in the first quarter of 2016 as compared to the same period a year earlier.

The cement shipments are likely to fall even further in the next few months.

The corporate executives attributed the slowdown to the recession and the newly introduced changes in the laws of audit in the region. Meanwhile, the domestic consumption reached just

CEMENT SALES CONTINUE TO DECLINE IN BRAZIL The cement sales in Brazil maintain the downtrend. In the first quarter the sales fell by 14.5 percent to 13.9 million tons as compared to the same period a

over 756,000 tons in April, indicating a decrease of 14.5 percent from March and 27.6 percent compared to April last year. The monthly declines in local demand for the main construction input had been 12.1 percent in November, from 5.9 percent in December and, from 8 percent in January, 6.6 percent in February and 10.4 percent in March. year earlier. "The drop in sales was not surprising [...] The worst is that we can not see the bottom. If we were seeing a reversal here a few months... but it's not the case. We are in downward trend," said Jose Otavio Carvalho, the President of the National Union of the Cement Industry (Snic). He added, “The industry expects for the whole 2016 a drop of between 13 and 15 percent in sales, to below the level of 60 million tons.

The forecast, if confirmed, represents an acceleration of the decline observed in 2015, of 9.2 percent.� The officials expect a slight recovery in the cement sales in the second half of the year, if ongoing construction works are completed.

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Bolivia-based Fancesa confirmed exclusion of Chinese firm, Catic Beijing, from its equipment tender.

The company is planning to award tender to an international firm to install machinery at its proposed cement plant in Sucre region in Bolivia. The company will likely invest USD 220 million in the cement plant. "[We] will invite European, American and Japanese companies, [and] will exclude Chinese, " said Eduardo Rivero, the Chairman of Fancesa.

Amongst the several companies, Fancesa has sent invitation proposal are FLSmidth (Denmark), Polysius (Germany) and Fives Group (France).

SURGE IN CEMENT PRICES RECORDED IN MEXICO The Mexican cement sector saw an eight percent hike in cement prices. The increase in cement prices is likely to affect the profit margins of the construction companies in the region. "In addition to this there are others that are trading at price and dollar necessarily have to buy inputs, which also comes to affect the finances of those who are dedicated to this activity," said Roberto Salinas Ferrer, president of Mexican Chamber of Construction Industry (CMIC). Meanwhile, the cement prices are likely to increase even further in the next few months.

REGIONAL REPORT

CEMEX MEXICO HAS A POSITIVE OUTLOOK Cemex Mexico expects the growth in the sector to be driven by the private initiative of new projects, especially industrial, commercial and housing.

"We are optimistic, we have many people talking about cuts, how much it will affect the infrastructure, but private initiative is uncovered in investment and the truth is that we have a country that is pulling very strong investment in different sectors," said Juan Romero, president of Cemex Mexico. The

housing construction work is expected to encourage growth. In the last year, the sector recorded a growth of 7.5 percent due to development of several infrastructure projects.

INCREASED COMPETIVENESS IN THE BARBADOS MARKET

In the last five months, cement prices dropped from USD 220 per ton to USD 160 per ton in Barbados. The new market

DECLINE IN CEMENT CONSUMPTION IN ARGENTINA Cement consumption in Argentina saw a 8.4 percent decline on an annual basis.

"At the country level, with a total of 802,256 tons used, a drop of 9.4 percent is recorded over the same month of 2015. This indicator is supported by the behavior of Build Index, prepared by the Build Group leaders, with which I positively correlated,� said Valeria Toselli, an economist.

According to data presented by the Association of Portland Cement

player, Rock Hard Cement, took credit for this sharp decrease in prices. According to a company official, Rock Hard added competitiveness to the Barbados market.

They also claimed that, in the five months Rock Hard has been operating, the company managed to get a 65-percent share in the market, a claim that is not verifiable. In the future, the company wants to explore new markets, including Guyana, Haiti, Jamaica, Panama, Suriname, the Eastern Caribbean, the French-speaking nations and South America.

MEXICO: HOLCIM TO REDEFINE ITS MARKETING STRATEGY Holcim Mexico plans to redefine its marketing strategy in a bid to improve its market share. The company has begun the process of change internally as the company will initiate a new operational phase that entails the development of a new organization divided into four main business segments, including distributors, infrastructure and industrial segment.

The company officials believe that the Mexican market has changed widely in the last few years and it is important to improve its operations in order to fulfill the needs of the new customers. "We see a positive outlook on the Mexican market for the coming years and a great opportunity to be closer to customers with tailored solutions, the best support and excellence in quality of Holcim products, with the overall support of Lafarge Holcim. We are convinced that it is through specialization as face this challenge and assist you in a better way the needs of our customers," said an official from the company.

Manufacturers (AFCP), February 2016 shows a drop in cement consumption nationwide. The cement consumption and shipments have declined considerably in the last two months.

BRAZIL RECORDS A DROP IN CEMENT SALES Brazil recorded 11.1 percent decline in cement sales in April, as compared to the same period a year earlier.

In the first four months of the year, the cement sales fell by 13.9 percent to 18.5 million tons as compared to the corresponding period of 2015. www.cemweek.com

APRIL / MAY 2016

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REGIONAL REPORT

CONSTRUCTION & BUILDING MATERIALS

BY BMWEEK.COM FLOATING CEMENT DEVELOPED IN TURKEY

from nature, using materials that are normally regarded as waste.

Turkish researchers are developing a new cement type that can float in water. The new cement mixture is made from dust marble and burned coal ash, among other chemicals. This new brand is environment-friendly since it doesn’t require raw material extraction

This cement can also prove itself useful by minimizing the damages done by heavy rains and earthquakes. The next phase of research is to establish a cement production line to develop the product.

TURNING CO2 INTO 3D PRINTABLE CONCRETE Researchers in California are working on a new method for sequestering the carbon dioxide generated by fossil fuel power plants in a 3D printable concrete. A team from the University of California Los Angeles (UCLA) works towards capturing the CO2 emitted by power plants and use it as an ingredient in a concrete-like building material. "We can demonstrate a process where we take lime and combine it with carbon dioxide to produce a cement-like material," said associate professor, Gaurav Sant. "This technology 45

APRIL / MAY 2016

could change the economic incentives associated with these power plants in their operations and turn the smokestack flue gas into a resource countries can use to build up their cities, extend their road systems," said professor J.R. DeShazo.

The technique involves extracting the carbon dioxide that would otherwise be discharged by coal or gas-based power plants into the atmosphere, and then combining it with lime to produce a cement-like material.

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SOUTH CAROLINA REMOVES COAL ASH FROM WET PITS South Carolina leads U.S. southeast in terms of coal ash clean-up. Over the last three years, the state managed to excavate 20 million tons of coal ash from all its waterfront coal ash pits and having it removed to lined, dry storage. The removal came as an imposition by the state to the three power utilities operating in the state, South Carolina Electric and Gas, Duke Energy and Santee Cooper.

Efforts were led by the Southern Environmental Law Center through a series of lawsuits that were heard between 2012 and 2015.

South Carolina’s example is not exactly being repeated by its neighboring states. North Carolina allows Duke to leave almost 100 million tons of coal ash without proper storage, polluting groundwater. Tennessee is trying to investigate and take steps to clean up coal ash, but is not certain that the state will require coal ash to be removed to proper storage.

EQUIPMENT

EQUIPMENT THYSSENKRUPP CONSOLIDATES BRAZILIAN BUSINESS ThyssenKrupp will consolidate its Brazilian assets under ThyssenKrupp Industrial Solutions. The company will congregate four business areas: cement, mining, car production lines and chemical production. The new conglomerate will became the largest inside the Thyssen group, concentrating 13 percent of the group’s worldwide sells. Last year, ThyssenKrupp Brazil had a BRL 9.9-billion net income.

The new group, Industrial Solutions, will be led by Paulo Alvarenga, an electrical engineer and former VicePresident of business development for ThyssenKrupp in South America.

His target is to double income over the next four years. ThyssenKrupp has built cement plants across Brazil for four decades now.

LONG SON SIGNS WITH LOESCHE AND SINOMA For its cement works in Dong Son Bim Son the customer Long Son Company Ltd. has placed an order with LOESCHE GmbH, the market leader in cement grinding. The customer Long Son Company Ltd. is one of the largest exporters of cement, cement clinker, coal etc. in Vietnam.

The new cement works Dong Son Bim Son is a greenfield project. The contract customer for this project is Sinoma-NCDRI, a long-term LOESCHE partner with worldwide activities in international cement plant construction.

The consumers for such export activities are customers from countries in Asia and Africa. According to the company's own information, Long Son Company Ltd. also supplies more than 10,000 million tons of raw materials per month to India. As a new customer, the company was convinced of the quality and reliability of the LOESCHE technology by the large number of the existing references for LOESCHE GmbH in Vietnam and the guarantees given for this project.

MORDOVCEMENT FINISHES REPAIR WORKS Mordovcement, part of the Eurocement Group, just ended a five-month repair campaign. The campaign included extensive works in the production line.

The works replaced 65 meters of furnace lining, the cement grinding interchamber wall, reconstructed the hopper which receives the clay (for a cost of RUB 4 million), and repaired rollers and the grinding table. The conveyor which

brings raw materials to the production line was completely reconstructed, with a cost of RUB 40 million.

This new investment aims to improve the performance and utilization rate of the production line. It is expected to produce 40 percent more high-quality cement than before. The capacity of the crusher feeder was increased from 500 to 900 tons per hour and its lifespan was extended by 4 to 5 years.

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EQUIPMENT IRISH CEMENT REDUCES ALTERNATIVE FUEL BURNING Irish Cement wants to change the way it operates its Mungret plant. The company wants to halve the amount of alternative fuels that are burnt in the plant to 90,000 tons. Irish Cement prepares to invest EUR 10 million to replace fossil fuel by alternative fuel like used tires and other materials. This decision created uproar among local citizens that rallied against tire burning at the factory, managing to collect 470 signatures against it. Irish Cement presented a new application that is almost identical to the original one, apart from the scaling down on the amount of alternative fuel that will be used. The local council will decide on the project by June 21.

CLARINET GERMANY RECEIVES EQUIPMENT FROM LOESCHE Clariant Germany has bought the first mobile Loesche Mahlanlage, fully integrated into seven containers in Balikesir, Turkey. All electrical connections between the containers are pluggable. Loesche’s solution provides an integration of the entire grinding plant in 7 ISO container.

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UK: HOPE CONSTRUCTION MATERIALS UNVEILS HIGHCAPACITY CEMENT WAGONS UK-based Hope Construction Materials unveiled high-capacity cement wagons at its unit in Derbyshire in the last week. The company unveiled a fleet of 48 wagons, built by Feldbinder. Half of the wagons are now in service, and the rest are expected to arrive from Germany this month. The wagons were developed in partnership with leasing company VTG Rail UK and they represent an investment of GBP 1

All components of the grinding system of the controller via the feed hopper, the crusher, the mill with separator, the hot gas generator, the filter, the fan and the pneumatic product transport are housed in containers. If placed on a firm base, no foundation is required. The smallest Loesche roller mill type LM 9.2 D, designed for the grinding of industrial minerals, has a capacity of 1.8 tons per hour.

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million per year, for over 11 years. The wagons have a capacity of 80 tons, more than twice than the 36 tons of previous designs, and the shorter wheelbase will help to reduce noise. “We are delighted to unveil this project which will result in greater efficiency and sustainability of our rail operations throughout the UK”, said Industrial Director Ashley Bryan. He added, “This new deal will see Hope able to transport bigger payloads in fewer journeys, benefiting both our customers throughout Britain, but also the environment.”

ISKITIMCEMENT, RUSSIA RESTARTS KILN Iskitimcement resumed operations on its kiln number 6 after proceeding with scheduled reparations. The reparations made included standard repairs in the chain, the curtains and in the refrigerator, some repairs of the electrostatic precipitator, the replacement of some worn out pieces and a full audit to the equipment. The kiln will undergo scheduled reparation next year. The number 8 kiln will be the next furnace to undergo repairs that are predicted to cost RUB 12 millions. Hopefully, the repairs will improve the reliability and efficiency of both kilns and reduced their environmental impact. During 2016, the company expects to spend RUB 200 million on repairs, close to the values expended during 2015.

BUZZ 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

CONFERENCES WHERE THE CW GROUP WILL BE PRESENTING 2016 2016

CW

ASHTRADE INDIA 2016

Cement Business & Industry Africa 2016

June 13 - 14, 2016

Johannesburg, South Africa

CW Group’s Cement Finance, Strategy & Trade Summit Americas 2016

October 4 - 5, 2016

Miami, USA

Cement Business & Industry India 2016

October 19 - 20, 2016

Mumbai, India

AshTrade India 2016

December 6, 2016

New Delhi, India

BUSINESS, LOGISTICS AND TECHNICAL COAL COMBUSTION BY-PRODUCTS MEETING

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CRH linked to Lafarge India assets Lafarge India begins sale process of assets Buzzi Unicem increases EBITDA, net profit Study on fly-ash disposal Morocco: Lafarge and Holcim to undergo a merger Lafarge Morocco records surge in net income Irish Cement to review plans to use alternative fuels India: JP Associates likely to sign cement deal with UltraTech Poland cement market has a positive outlook India: Shree Cement ramps up for expansion

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CRH, LafargeHolcim contest final price of 2015 deal New technology favors energy saving in cement kilns Vietnam: Cement prices increase in March A greenfield cement plant to be set up in Cambodia LafargeHolcim reports a record increase in North America operations Mexico witnesses surge in cement prices Lafarge Africa posts 2015 results Saudi Arabia to begin cement exports India: ACC cement plant in Mumbai to cease operations India: Cement production increases in January

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