India Cement & Construction Materials (vol 1 / issue 16) by CemWeek

india CemWeek A CemWeek Publication

Cement issue 16

january/february 2014

& construction Materials

contribution by: Dr S N Pati

Life Cycle Assessment A study of the construction industry

new editors-at-large

welcomed at CemWeekâ&#x20AC;&#x2122;s India journal

CW Research:

Global growth to slow following strong 2013

GCVFR - Global Cement Volume Forecast Report

News

Analysis

Market Coverage

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People

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

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DEPARTMENTS

FEATURES 5

new editors-at-large at CemWeek’s India journal

EDITORIAL LETTER

life cycle assessment

NUMBERS IN BRIEF

Global growth to slow following strong 2013

A study of the construction industry (1/3) Written by Dr S N Pati

GCVFR - Global Cement Volume Forecast Report

ANALYST RECOMMENDATIONS Latest Broker Recommendations

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Development plans for a brighter India

India knocks down another important milestone - 250 million tons in annual cement production approaching fast

Cement

rOBERT MADEIRA cemweek publisher head of cw group research

Dr. S. N. Pati SNM Khan Pradeep Kumar EDITORS-AT-LARGE

RALUCA NEAGU

research and analytics

cement 29

MARKET AND COMPETITION

Cement companies reflect once again on the year’s challenges

M&A and FINANCE

coal market update

PROJECTS AND EXPANSIONS

energy price update

VOLUME AND PRICING

PEOPLE

cement volumes

construction & building materials 40

INFRASTRUCTURE & PROJECTS new luxury residential project in Mumbai, named ‘Gateway Towers’

REGIONAL UPDATE

EQUIPMENT HIGHLIGHTS

project manager

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letter from the editor

Development plans for a brighter india ndian Cement and Construction industries, prime movers of country’s economics and their overall growth are crucial for the infrastructure development. Owing to the deceleration in the growth in GDP of Indian economy touching a low of 5% in the last one decade and drying up of investments in infrastructure sector, the fast moving growth wheel of the cement industry has also been severely impacted and presently the growth of the industry is not even 5% from an average growth of 8-10% earlier. As a result, the capacity utilization of the industry has also dropped to 70% from 90% a couple of years back. Currently, about 100 mt. excess cement capacity is lying idle, which means a dead investment of Rs 60,000 crores. Today, India is the second largest cement producing country in the world, with a capacity of 350 plus mt and production of over 251 mt. However, the per capita consumption at 191 kgs is far less than the world average of 513 kgs and that of 1518 kgs for China the largest producer of cement. With such a low per capita consumption while being the second largest producer, at 6.6% of the global cement production, the need and scope for the growth of Indian cement industry is quite natural. Adoption of massive modernization and assimilation of state-of-art technology, have led the Indian cement plants to be most energy efficient and environmental-friendly, comparable to the best in the world in all respects. However , the industry is facing several constraints : both external and internal . The major con-

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straints being confronted by the industry are: acute shortage of coal leading to additional financial burden on account of import of coal which costs 60-80% higher than the administrated price; inadequate rail transportation of cement, clinker, coal, flyash etc; availability of good quality flyash; high taxation on cement and drop in exports due to various reasons. Similarly, Indian construction industry, the second largest industry after agriculture in the country accounting for about 10 to 11 percent of India’s GDP, has shown significant development over the years and is among the best in the world. In the years ahead, the construction industry in India has to overcome various challengesbe it with respect to housing, socio-economic stress, resource shortages, environment, transportation, power or natural hazards. The industry needs to employ innovative technologies and skilled project handling strategies to overcome challenges to improve productivity, quality and economics as also to ensure the timely completion of the projects. Further, the construction industry is characterized by the predominance of migratory and unskilled labour. Therefore, there is a need to invest in human capital to improve the quality of labour through training and skill certification programmes, both in terms of content as well as geographical reach. In this context, it is essential to make concerted efforts by all concerned to highlight the issues faced by the cement and construction industries, create awareness regarding the technological developments

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and policy interventions needed, possible solutions and other aspects for their sustainable growth and development. CBI has been making its contribution in this direction for quite long now. It has now collaborating with three experts namely Dr. SN Pati, Mr. SNM Khan and Mr. Pradeep Kumar who have individually sufficiently long experience of more than three decades in their respective areas of expertise and have made significant contribution to the cement and building materials industries, as editors at large to the magazine. Their main task shall be as under: Marketing and Editorial guidance for the CemWeek “India Cement and Construction Materials Journal”, suggest and source technical papers and articles on topical subjects, facilitate interviews with industry leaders for their views on various issues and ideas on remedial approach to be adopted, offer ideas on content, make editorial comments. It is hoped that the journal will go a long way in providing necessary information to all concerned particularly the cement and construction industry professionals in achieving higher goals in their areas of activities.

Dr S N Pati Former Joint Director, National Council for Cement and Building Materials

NUMBERS IN BRIEF India knocks down another important milestone 250 million tons in annual cement production approaching fast Pan India Cement Volume (Tons) 2009

2010

2011

2012

24,000,000 22,000,000 20,000,000 18,000,000

Expecting YoY positive growth rates for the beginning of 2014, the last 12 months cement production for February 2014 is projected to exceed 250 million tons, another record level for the Indian cement industry.

14,000,000 12,000,000 10,000,000

Jan

Feb

Mar

Apr

Cement prices increased in January 2014 in all regions, except the South. The steep increase in Southern cement prices from September 2013 was reversed entirely by December 2013. Cement companies operating within the region at low utilization rates are reportedly attempting to increase prices, without much luck so far. Eastern India reported the highest prices since November 2013, being affected by reduced wagon availability, slag shortage or maintenance operations. Average all-India cement prices reached Rs296 per 50 kg/bag in January 2014, increasing 3 percent over December 2013.

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May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Source: CW Research

16,000,000

Cement Prices (Rs per 50 kg bag) 400

North

Central

East

West

South

350

300

250

200

May-13

Jun-13

Jul-13

Aug-13

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Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Source: CW Research

2013

26,000,000

Indian cement companies produced 248.9 million tons of cement in 2013. The level was reached after 31 months of consecutive YoY growth, given that only back in May 2011 the monthly level of cement production was not able to top the one reached the previous year in the same month.

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CemWeek’s

India journal

welcomes new editors-at-large

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he leading CemWeek publication is excited to welcome recognized thought-leaders to the India publication team. Dr. SN Pati’s, Mr. SNM Khan’s and Mr. Pradeep Kumar’s long-track records as leaders of India’s National Council for Cement and Building Materials will help to further the insights and relevance of the journal.

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Dr. Surjya Narayanan Pati is former Joint Director of National Council for Cement and Building Materials, with a remarkable professional career of 37 years. Dr.Pati was a recipient of Junior Research Fellow & Senior Research Fellow of CSIR, New Delhi.He worked for a short period of time in a Cement Plant of ACC , Ltd. and also as Head of the Cement Section of DSIR. In 1982 ,he joined as scientist in one of the premier Institutes, known at that time as the Cement Research Institute, now NCCBM. His stellar contributions as Head of the Unit and also Head of the Environmental Management Programme led to a strong development of the Institute. Dr.Surjya Narayana Pati has been a front runner for incorporating the concept of Life Cycle Assessment (LCA) in the Indian cement and construction industry for sustainable and green development. He has jointly worked with CPCB for developing environmental norms for Indian refractory, plywood and cement industries. Moreover, Dr. Pati has published number of research papers in national and international journals.

emWeek’s India Cement & Construction Materials Journal (ICCM) is excited to announce an expansion of its team with the addition of three new collaborating editors. Starting with ICCM’s first issue of 2014, Dr. Surjya Narayanan Pati, Mr. SNM Khan and Mr. Pradeep Kumar – the well-known retired members of India’s National Council for Cement and Building Materials and new ICCM distinguished editors-at-large – will help shape the India-focused journal’s editorial agenda and reach within the Indian cement sector. ICCM looks forward to building on the outstanding experience of these illustrious collaborators that will surely provide the journal with a fresh approach in terms of both content and distribution. Moreover, their deep technical expertise will be an asset for the publication as it focuses on the cement sector.

We are glad to be part of the India Cement & Construction Materials Journal, a publication that has already established itself as a strong brand in the Indian cement industry, as well as the broader CemWeek platform. This fruitful collaboration will most and foremost serve ICCM’s readers by presenting new and exciting topics, more relevant than ever before for the industry Dr. Surjya Narayanan Pati, former Joint Director of National Council for Cement and Building Materials.

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Mr. SNM Khan is the former Joint director of National Council for Cement and Building Materials, graduated in mechanical engineering with post graduate diploma in business administration, with over 36 years experience, out of which, 17 years in cement industry with ACC Ltd. and 18 years with NCCBM. Mr. Khan’s cement industry experience spans from operation and maintenance, industrial engineering, commissioning of cement plants, condition monitoring, consulting in project engineering, energy management, geology and mining, maintenance management. He was also head of the training centre providing wide knowledge of delivering lectures and organizing training programs.

The tie-up seeks to add further valuable content for the journal, while creating an proposition vision for one of the most dynamic markets worldwide - the global cement industry - with an extensive focus placed on the integration of global and regional patterns within Indian borders and vice versa. Mr. Snm Khan, ex Joint Director of the National Council for Cement and Building Materials continued “it is a pleasure for me personally to be able to use my rich experience and unique perspective for the future development of the India Cement & Construction Materials Journal”. “I am extremely excited to join the editorial team of the journal and to remark that ICCM is already a regional lead-

er in delivering interesting content to the building materials industry. I am honored to be part of such a professional publication and to collaborate with its talented and dedicated team”, declared the Joint Director of the National Council for Cement and Building Materials, Mr. Pradeep Kumar. In its turn, CemWeek’s Managing Director and publications’ publisher, Mr. Robert Madeira, believes that the experience and professionalism of these highly regarded professionals will be reflected in the quality of insights provided within the pages of the India Cement & Construction Materials Journal and outside its covers through a direct relationship developed with the readership.

We welcome Dr.

Surjya Narayanan Pati, Mr. Snm Khan and Mr. Pradeep Kumar to CemWeek’s India Cement & Construction Materials Journal and look forward to be working closely with a great team to build the relevance for the always exciting Indian cement market said Mr. Robert Madeira.

Mr. Pradeep Kumar is the former Joint Director of National Council for Cement and Building Materials, graduated in Electrical Engineering and has obtained Post Graduate Diploma in Business Administration. His experience spans over 34 years out of which 33 years in NCCBM in the areas of energy auditing / conservation, Project engineering including preparation of feasibility reports, environmental improvement and maintenance studies. Mr. Pradeep Kumar has pursued various R&D projects related to comprehensive energy audit, power system management, waste heat recovery for cogeneration of power, effects of poor power quality on productivity of cement plants. He is an Energy Auditor certified by the Bureau of Energy Efficiency. Mr. Kumar was member of CMA Energy Task Force for deliberation on various issues related to energy conservation in cement industry and member of the editorial team of joint NCB-CMA quarterly publication titled ‘Cement, Energy & Environment’.

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Life Cycle

Assessment Written by: Dr S N Pati, Former Joint Director, National Council for Cement and Building Materials

a study of the construction industry PART 1 OF 3

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he concept of Life Cycle Thinking is being practiced by using the environmental management tool, and is popularly known as Life Cycle Assessment (LCA), which integrates starting from resource and energy consumption, production, and use up to its final disposal though various strategies over a whole life cycle in order to avoid a piece â&#x20AC;&#x201C; meal approach to the system. In this first article of three, Dr SN Pati, Dr S N Pati Former Joint Director, National Council for Cement and Building Materials takes us through the latest thinking on the subject.

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feature ife cycle approach avoids shifting of the environmental pollution problems from various stages, geographic locations and environmental media, which ensures better alternate paths available for the mitigation of various pollutants. Hence, Life Cycle Assessment is an effective analytical tool for the systematic evaluation of various environmental impacts either of a product or service system through extraction and processing of raw materials through manufacture, delivery, use and finally up to its waste management which is referred to as “Cradle – to - Grave”.

New technologies in the construction industry The Construction industry in India is one of the fastest growing sectors due to the economic development of our country. Indian Construction industry is adopting newer technologies and environmental friendly methods and materials for sustainable construction in our country. Construction Industry role in economic development and prosperity of our country cannot be neglected. Ministry of Environment and Forest had earlier supported LCA study for Cement sector (cradle to grave).

Indian cement industry is in search for environmental improvement Greater thrusts on infrastructure development and proactive governmental policies for construction industry have translated into increasing cement demand in last one decade. Indian cement industry ranking second in the world cement production is currently in search of competitive advantages for continuous improvement on the environmental front. There exist two very different markets; bulk consumers for large infrastructure projects (airports, roads, buildings, dams etc.) to governments and large construction companies; and small consumers bagged products sold to for personal construction and repair of building, and local structures. Bagged cement accounts for an estimated 65% of the world’s production.

As cement is mainly consumed in production of concrete and is the backbone of the construction industry. Construction industry has been adopted various environmental friendly measures like proper site selection, reducing wastage of materials, adopting local alternate building materials, less usage of water, energy efficiency in buildings, proper waste management. Also, Green Building movement in India has been gaining popularity in Indian construction industry. The cement plants has mainly three areas of environmental concern - the ecological degradation of raw materials mined out areas, air pollution due to both fugitive and stack dust, and Green House Gases (GHG) emissions.

Concrete, the second most consumed material on the planet after water The industry has in recent years adopted most advanced technologies not only from production point of view but also from environmental aspects. This sector has phenomenal growth especially after its decontrol in 1989. Cement is the key constituent of concrete, mainly consumed in producing concrete or for masonry work in construction sector. Concrete is the backbone of any construction activity, the second most consumed material on the planet after water. Construction industry is the second largest economic activity after agriculture in our country and plays a signif-

Components of Construction Industry (FIG.1)

CONSTRUCTION BUILDINGS

INFRASTRUCTURE

commercial residential housing complex road port

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airport

INDUSTRIAL industrial

icant role in economic development. In particular, the increasing economic and business activity in our country has created a huge demand for malls, offices and other commercial centers. In order to cater to the infrastructure requirements of the services sector especially office spaces, building construction industry especially commercial buildings sector are growing at a faster rate. Construction Industry in India has mainly three segments namely Infrastructure, buildings, and industrial structures. The various components of construction industry are given in figure 1.1. Social, cultural and economic aspects of sustainability As we know, sustainability has three main constituents’ namely social, cultural and economic aspects. A key factor in achieving more sustainable construction is the environmental parameters, more than the social, cultural and economic aspects. Environmental issues associated the sustainability of buildings, include energy consumption during its use and for producing building materials used in the same building; the emissions related to energy use; resource consumption; and waste generation.

Building activities contribute to 50% of world’s air pollution Building construction industry globally consumes large quantities of natural resources about 50 percent of the raw materials, at least 40% of energy use, 42% of global water consumption and other resources. Building activities also contribute to 50% of world’s air pollution and of all water pollution. Construction industry annually generates nearly 12.0 - 14.7 million tons of construction and demolition (commonly referred to as C&D materials) wastes. About 42% of the total emission of carbon dioxide all over the world is due to the construction industry especially buildings. Energy consumption during the operation of commercial buildings involves energy requirements for external and internal lighting, heating, cooling, ventilation, to run different machineries and equipments. The main reasons for higher energy consumption in commercial buildings like malls and office buildings are long working hours, maintenance of proper ambience and requirements for business activities. Hence, considering the huge quantum

of virgin natural resources consumed in the building construction industry during construction phase and higher energy consumption in the operation phase, it is essential to construct environment friendly sustainable buildings keeping in view the entire life cycle. Application of LCA in cement and construction sector Life Cycle Assessment (LCA) is based on the concept of Life Cycle Thinking which integrates consumption and production strategies over a whole life cycle. LCA is an environmental management tool for identification of priorities in process operation, product design, substitution of material usage etc. by compiling an inventory of relevant inputs and outputs of a product system, to achieve the objectives of resource conservation and reduction in energy requirements, hence minimizing the impact on the environment on sustainable basis. (ISO 14040, and ISO 14044 2006). LCA is rapidly emerging as a decisionmaking tool for governments, stakeholders and decision makers. Many compa-

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nies around the globe are re-examining their business operations and relationships in a fundamental way. They are exploring the concept of Sustainable Development, seeking to integrate their pursuit of profitable growth with the assurance of environmental protection and quality of life for present and future generations. LCA attempts to provide a systematic approach to quantifying resource consumption and environmental releases to air, water and

soil associated with products, processes and services.Â

been completed and some of them are in progress.

LCA studies to be developed in multiple sectors In India, Ministry of Environment and Forests (MoEF), Govt. of India has taken initiatives to carry out LCA studies in different major sectors like Steel, Coal, Paper, Power, Bamboo industry, Cement and construction industry. Some studies have

LCA is a very helpful tool in this regard as it not only provides an account of materials and energy involved in a product or system but also measures the potentiality of various environmental impacts associated and suggest environmentally suitable alternates. National Council for Cement and Building materials (NCB) made a beginning in

lca OF CEMENT AND CONCRETE: CRADLE-TO-GRAVE (FIG.2)

CLUSTER 1

CLUSTER 2

CLUSTER 3

RAW MATERIALS

PRODUCTION OF CLINKER

PRODUCTION OF AGGREGATES

ENERGY RESOURCES

PRODUCTION OF BLENDED CEMENT

other materials for concrete

CLUSTER 5

concrete production

construction of structures

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operation and maintanance

recycled aggregates

operation and maintanance

demolition, recycling, or recycle waste management

demolition, recycling, or waste management

waste

other materials for construction

CLUSTER 4

construction

waste

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AGGREGATES FOR OTHER PURPOSES

direction of sustainable development in India. NCB for the first time in the country completed the LCA study for cement sector (Cradle-to-Gate) under aegis of the MoEF, Govt. of India. NCB had made a sincere effort to evaluate not only input & output in terms of thermal & electrical energy, raw material & emission, but also its impact, independent of its geographical boundary for cement plants and also identifying hotspots for each cement plant studied under this project so that the concern management can take up environmental issues of their plant on the basis of prioritizations for mitigation of the problems. New LCA study for the cement industry For cement industry, there are number of areas where LCA can be helpful: in the identification of significant environmental effects, in the quantification of those effects, in the assessment of changes in environmental performance and the environmental benefits arising from changes in operating conditions, equipment, procedures, raw materials or alternate products specifically for blended cements. This LCA study for cement sector could cover only form cradle-to-gate only. As cement is the major input material for the Concrete, an essential component of any construction and also construction industry is the main consumer of the cement in India, in order to complete life cycle from cradle to grave, MoEF has entrusted NCB with project on study of “Life Cycle Assessment of Construction Industry-Concrete (gate to grave)”. Due to the importance of commercial building sector in our economy, the present study has focused on the environmental impacts associated with the commercial buildings in particular. Under this study, NCB has taken up four commercial buildings, two RMC plants and concrete road for detailed study by inventorizing inputs and output along with its impact potentials and identifying alternate paths available for the mitigation of impacts.

Impacts associated with the entire life cycle Buildings should be designed considering the impacts associated with the entire life cycle i.e. from construction, operation, maintenance, refurbishments, renovation up to final demolition and disposal. There is a huge variety of environmental issues which occur at different stages of the life cycle of a building. Improving the sustainability of buildings, or more specifically the environmental performance of buildings, therefore requires input by all stakeholders involved throughout the life cycle. LCA thinking itself, a new concept (Cradle – to - Cradle or Cradle – to - Grave) to accept is a challenge for our manufacturing units as well as for construction industry to adopt sustainable practices at the designing stage of the buildings. For construction industry, life-cycle assessment typically will be useful even during EIA and planning of alternate site, for more detailed choices on how to build and where to build. The principles of sustainable building may extend to the earlier planning phases and an LCA becomes part of an EIA. However, there is a possibility of integration of LCA and EIA in future for ensuring environmental sustainability in the era of rapid growth of construction industry. The work of standardization of LCA has been recently started in India by accepting and adopting various ISO Standards related to LCA. It will take some time to get acquainted with intricacies of LCA studies. As LCA is still in formative stage in India, it has to go a long way for creating various technologies, geographical, temporal for sector wise data base for every single process, product and service of activities. This is the first of a three-part analysis by Dr. SN Pati. The next two articles in this series will further explore this topic and appear in the next two issues of the India Cement & Construction Materials journal.

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feATURE CW Research

India tactical outlook dimmed, but long-term prospects strong; global growth to slow following surprisingly strong 2013

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In the 1H2014 revision of the twice-yearly published CW Research Global Cement Volume Forecast Report (GCVFR), global cement demand growth seen pausing in 2014 at 3.9 percent YoY following a stronger-than-expected 2013. In 2013, global cement demand expanded 6.6 percent to 3.99 billion tons on surging Chinese demand, which helped more than offset weakness in key expected growth markets.

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feature Many pieces are still looking to gel in the global cement demand puzzle,â&#x20AC;? says Robert Madeira, CW Group Managing Director & Head of Research. He adds: â&#x20AC;&#x153;Once again we reverted to economic and political fundamentals of countries in dissecting growth and revising our outlook; we are reminded that the Chinese political will to drive growth with shovel-ready initiatives is not to be underestimated, even though we believe the current trajectory remains unsustainable. Emerging markets, in defiance of economic coupling theories, largely disappointed which we see part of a general moderation in the near term.

Even though CW Research believes ex-China growth remaining positive beyond 2014, the shape of the growth curve somewhat flattened for the longer term as some of the largest cement markets, including India, Brazil, Saudi Arabia, and Indonesia, dial back. Our major negative revision for 2014 was for Africa (2.5 percentage points lower), mostly driven by North Africa where countries such as Egypt and Morocco are still struggling to

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find footing, or continue seeing turbulence. At a regional level, some of the areas fared better in 2013 than what had been expected, such as North America, Western Europe, Eastern Europe & CIS and Africa. In the case of Africa, the positive revision comes from a less dramatic than expect decline for Egypt (-6 vs -10 percent for the year) than expected and a better than expected increase for some key markets, e.g., South Africa (+6.2 percent vs +3 percent for the year).

India consumed 248.3 million tons of cement in 2013

GLOBAL CONSUMPTION BY REGION (2009-2018 VOLUME) Mm Tons 5,000 4,500

China

4,000

India

3,500

Asia ex-China and India

3,000

Africa

2,500

Middle East

2,000

E Europe & CIS

1,500

Western Europe

1,000

Latin America

500

North America

2009

2010

2011

2012

2013

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2016

2017

2018

Source: CW Research

World tactical view is cautious n 2013 world cement consumption neared 4 billion tons, up 6.6 percent versus 2012 (compared to our yearago view of 4.9 percent). Most of the 2013 increase was led by China, which saw demand surge by 9.4 percent in 2013. ExChina cement consumption met our most recent 2H2013 expectation and ended the year a nudge above 1.6 billion tons, notching the lowest increase since the 2008-9 crisis at 2.7 percent. However, the global slowdown for 2013 is materially below our 4.8 percent forecast a year ago on softness in large emerging markets that changed rapidly (and unexpectedly), such as Brazil, which stalled out and India that saw a preelection malaise, abetted by fiscal issues, harden.

INDIA CONS. FORECAST (‘12-‘17) & COMPARISON TO LAST FORECAST 1H2014 fcst

2H2013 fcst

India’s

Fcst revision

350 300

0.0%

fundamentals

-1.0%

remain intact and

-2.0%

supportive of long

250 200 150

term growth

100 -4.0%

50 -

-5.0% 2012

2013E

2014

2015

2016

2017

LH-axis: Mm tons; RH-axis: change in CW Group forecast vs last update; bars show CW Group forecast as of 2H2013 & 1H2014

Source: CW Research

-3.0%

INDIA CEMENT CONSUMPTION SHARE % from Asia-ex China 45% 40%

% of Global 41%

41%

42%

38%

39%

40%

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

35% 30% 20% 15% 10% 5%

Source: CW Research

25%

India remains strong… despite long odds India consumed 248.3 million tons of cement in 2013 , 5.8 percent above 2012. The growth rate slowed down considerably from the 8.6 percent increase registered a year back. However, India fared better when compared to its regional peers, exceeding Asia ex-China’s CAGR for 20092013 (6.0 percent versus 4.9 percent). A record current account deficit and a sharp fiscal shortfall kept India’s economical and construction progress at softer values, which in turn translated into a time for cost-cutting and optimization for Indian cement companies. Even though CW Research have lowered the medium-term forecast to a more cautiously optimistic growth trajectory (5.1 percent in 1H 2014 for 2013-2017 CAGR versus 7.6 percent forecasted in the 2H 2013 revision), India’s fundamentals remain intact and supportive of long term growth . For 2013, India matched in principle the expectation CW Research have launched in 2H 2013, receiving a downward revision of only 0.2 percent versus the previous estimate.

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The 2013 slowdown of the Indian cement consumption also led the country to temporarily lose its momentum when it comes to gathering a larger share from the global cement consumption. India represented 6.2 percent from the global consumption in 2013, a reduction versus the previous 6.3 percent. However, the country’s share is estimated to expand continuously in the next years, reaching 7.1 percent by the end of 2018. In regards to India’s share in the Asia exChina cement consumption, the share expanded year after year and settled at 39.2 percent in 2013. The momentum is projected to strengthen by 2018 when the Indian market will represent an estimated 42 percent from the region’s indicator. India’s economic output is also projected to grow above the world’s average in the following years, albeit the consecutive reductions in forecast published by IMF. According to the most recent forecast published by

FORECAST SEGMENTATION (2018) Y-axis = 2018 capacity utilization 100% Australia

Japan

90%

Indonesia

Pakistan

80% Thailand

Phillipines

India

South Korea

70%

Malaysia 60% Vietnam 50%

Size of bubble = 2018 market size (relative tons)

the IMF, India is expected to grow by 5.1 percent in 2014 (3.6 percent at global level). In light of this positive long-term view, when viewed in comparison with its regional peers under a forecast segmentation to 2018, India is expected to notch among the highest 2013-2018 CAGR (6.6 percent) growths. By the out-year, the country will operate at 74 percent utilization rate, which is viewed as the norm for most of the Asian countries (excluding China).

X-axis=2013-18 CAGR

Source: CW Research

India’s cement consumption per capita of 200 kg per inhabitant in 2013 was considerably below the global average of 568 kg per inhabitant and even below Asia exChina’s value of 250 kg per inhabitant.

In some respects we are seeing a reversal of fortunes

Source: CW Research

HEATMAP: 2013-18 CAGR OUTLOOK GROWTH

CAGR change in consumption growth (tons)

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Slowdown with divergence ahead? Overall, CW Research sees global cement consumption slowing to 3.7 percent per year on average through 2018 (CW Research admittedly hold conservative view on Chinese demand growth, which naturally drives the global view) and at 5 percent per year on average excluding China (as key markets are expected to rebound). “In some respects we are seeing a reversal of fortunes ,” says Claudia Stefanoiu, Senior Analyst with the team. “North America growth taking steady steps towards peak volumes, while important parts of Africa and Latin America face weakness, India demand wavers. But CW Research also sees relative islands in the swirls of growth: Indonesia, Malaysia, Russia, Nigeria, Saudi Arabia, and Iraq firmly anchor the “high growth club”, with Brazil taking a step out”, she adds. Global growth will remain sluggish from 2013 to 2018 in most of Europe and selective markets from each region. More consistent expansions are noted mostly in Africa, South America or South East Asia, particularly after 2014, with global growth peaking in 2016. Overall, CW Research sees demand expanding between 3.5 and 4 percent per year.

About the GCVFR SLOVAKIA

The CW Group’s Global Cement Volume Forecast Report (GCVFR) is a twiceyearly update on projections for cement volumes at the national, regional and global basis. The report brings together the CW Group’s principal research team to provide the latest insights on the evolution of cement volume trends for 58 important cement markets worldwide, as well as regional and global totals. The mid-year update (also included in the subscription price) is an extended report, additionally including executive briefs of country macro- as well as supply-demand dynamics for the GCVFR coverage universe. COLOMBIA

The report contains the CW Group’s 5-year outlook for: National cement consumption (tonnages) National cement production (tonnages) National net-trade estimates (tonnages) Industry-wide utilization rate (%) Cement production capacity (integrated & grinding tonnages) Methodology: The GCVFR forecast is a data-oriented forecast report, providing extensive details on the outlook for key cement markets around the world. Our methodology goes beyond the obvious and average forecast, to incorporate as many inputs and as much information as needed. The GCVFR not only builds on the CW Group’s industry-leading and proprietary databases and the industry’s most extensive market intelligence platform, but also combines our analysts’ views with inputs from multiple other external analysts, industry associations, market observations, monthly tracking information, discussions with executives and management at cement manufacturing groups, plus a CW Group quantitative overlay model (econometric and statistical quant models). More information: For questions, inquiries and orders please contact your CW Group Client Service Coordinator, or sales@cwgrp.com For further information, or to arrange an interview with the analyst, please contact Raluca Neagu, Market Services & Marketing Consultant at the CW Group at either rn@cwgrp.com, or +40-741-520-372. For a complete table of contents of the report, please visit the CW Research website: http://cwgrp.com/research-a-analysis/global-monitorreports/306089-2014-first-half-global-cement-volume-forecast-reportgcvfr.html

CW Research

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CEMENT MARKETS

CW Research

CEMENT VOLUMES India confirms consumption slowdown in 2013 In the last five years, India has been a medium-ranged expansion market , resembling with part of the South American countries, such as Argentina, Chile or Ecuador, which grew by around 25 percent versus 2009. India registered a cement consumption of over 248 million tons in 2013, 26 percent above the around 197 million tons level reached in 2009. 2009 has been often regarded as a recession year for most of the cement markets around the world. Even though in global terms (excluding China), cement consumption contracted by 4.6 percent in 2009, recession was far from over for some of the European markets. Preliminary 2013 year end results reported by a number of cement markets reveal that regional disparities continue to hamper the industry.

In the last five years, India has been a medium-ranged expansion market

While setting 2009 as base year, the cement consumption evolution of a preliminary global set of 22 major cement markets can be regarded as increasing steadily in the last three years. The averaged index of the analyzed markets (excluding China) closed 2013 at 117. The largest cement demand expansions were registered in China, Indonesia, Saudi Arabia, Peru and Thailand with 2013 indices above 140. In the opposite corner, Spain and Cyprus noted their 2013 indices at 38 and 37, respectively. Cement Demand Historical Evolution 170 150 130

90 70 50 30

2009 2010 2011 2012 2009 = Base Year; Preliminary calculation using results reported by 20 large cement markets; Weighted average excludes China

2013

Source: CW Research

110

China produced almost 2.4 billion tons of cement in 2013. The countryâ&#x20AC;&#x2122;s cement demand increase topped all optimistic forecasts launched during the year. The 9.5 percent growth rate of 2013 adds to the more than 40 percent hike registered between 2009 and 2012. The Chinese cement market is expected to continue to expand in 2014 as real estate investments will grow rapidly.

Indonesia reached 58 million tons in cement consumption at the end of 2013

Indonesia reached 58 million tons in cement consumption at the end of 2013 , a 5.5 percent increase versus 2012. In 2009, cement consumption for the country was rated 20 To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748. 21

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CW Research CEMENT MARKETS

million tons lower. The Indonesian cement market is projected to grow this year at comparable pace, despite the industry’s drive to increase cement prices. Indonesian cement companies are looking to compensate for the higher electricity costs, as the government plans to increase electricity rates for large-scale consumers in order to reduce the energy subsidy. In the beginning of 2014, the Energy and Mineral Resources Ministry received approval from the House of Representatives Commission VII to raise electricity rates by 38.9 percent for companies using more than 200 kVA and by 64.7 percent for those using 30,000 kVA. The new rates will be implemented gradually with increases at every two months starting May and ending December. 2013/2012 Cement Demand Growth Rate (%) 15% 10% 5%

-20% -25% -30% -35%

Source: CW Research

Argentina

Thailand

Ecuador

China

Peru

Japan

India

Indonesia

Switzerland

Saudi Arabia

Brazil

South Korea

Chile

Pakistan

Germany

France

Canada

Morocco

Czech Republic

-15%

Poland

-10%

Spain

-5%

Cyprus

Saudi Arabia expanded its cement consumption by 48 percent since 2009 (37.4 million tons in 2009 to 55.3 million tons in 2013). However, the 3.8 percent growth rate reported in 2013 was extremely disappointing for the industry, given that cement consumption increased by double digits during previous years. The negative impact of labor shortages severely affected Saudi Arabia’s momentum in the last months of 2013. In its turn, the Peruvian cement industry crossed for the first time in its history beyond 10 million tons in cement consumption and notched a 7.1 percent increase in 2013. Thailand noted an even more impressive evolution in 2013 with a 9.7 percent hike in last year’s cement consumption, increasing by 42 percent compared to 2009. Spain registered one of the largest declines since 2009, being now at only 38 percent from the level reached in 2009. In 2013, the Spanish cement consumption contracted by 19.2 percent, reaching only 10.9 million tons in volume. Thus, cement consumption per capita was rated at 235 kg per inhabitant in 2013, a level that is superseded by the 241 kg per inhabitant seen back in 1962. The expectation is that the industry will face another fall in 2014 (8 percent decline). Cyprus reported a comparable evolution in the last five years with the 2013 cement consumption being at 37 percent versus the level noted in 2009. The country consumed only 0.53 million tons of cement in 2013.

The negative impact of labor shortages severely affected Saudi Arabia’s momentum in the last months of 2013

As more and more countries report on their full year 2013 indicators, cement companies turn optimistically toward 2014 expecting Europe to finally turn the corner this year, which will partly deviate the attention away from some traditionally strong markets that will continue to face softer growth rates. To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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MARKET DATA SNAPSHOT

CW Research

China closes 2013 with a production of almost 2.4 billion tons of cement topping all forecasts released during the year. The 9.5 percent growth rate in 2013 adds up to the more than 40 percent hike registered between 2009 and 2012.

Cement Production (million tons)

Cement Consumption (million tons)

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Cement Production MoM (%)

Cement Consumption MoM (%)

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Cement Imports (million tons)

Cement Exports (million tons)

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Cement Exports MoM (%)

Cement Imports MoM (%)

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

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

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CEMENT ENERGY MARKETS

CW Research

CEMENT ENERGY MARKETS Coal Market Update Another setback for Colombia: Drummond’s coal exports halted Total January coal trading volumes pulled back from December following a typical seasonal decline combined with the effect of Colombia’s block on US-based Drummond’s coal exports. Colombia’s coal exports suffered another setback when Drummond was ordered to stop loading coal barges in Colombian ports in early January. The measure follows new environmental regulations in the country that forbid coal exporters to use barges and cranes to load ships. Drummond was also recently fined for spilling coal during a sinking barge rescue operation back in January 2013 and six of its employees will face charges over the environmental disaster. The company had been reportedly exporting 80,000 to 90,000 tons of coal per day out of Colombian ports. In Australia, volume exported from Port Waratah Coal Services Limited (PWCS), located in the Port of Newcastle, decreased 4 percent in January versus the previous month. Coal exports in the country were partly affected by cyclone Dylan, which hit Australia the last week of January. Three terminals, including Glencore’s operations in Abbot Point, had to stop loading ships. Glencore’s operations were suspended for about a week but inland mines were not impacted. Plans to increase the capacity of the Abbot Point terminal have been under scrutiny by environmental groups but the marine park authority just approved a permit for the state-owned coal terminal operator to dredge sediment customs data andSource: enable the expansion.

Colombia suffers another setback: Drummond ordered to halt coal exports

Coal Global Trading (million tons)

Indonesia

Australia

Russia

South Africa

Colombia

Rest

JAN-11 FEB-11 MAR-11 APR-11 MAY-11 JUN-11 JUL-11 AUG-11 SEP-11 OCT-11 NOV-11 DEC-11 JAN-12 FEB-12 MAR-12 APR-12 MAY-12 JUN-12 JUL-12 AUG-12 SEP-12 OCT-12 NOV-12 DEC-12 JAN-13 FEB-13 MAR-13 APR-13 MAY-13 JUN-13 JUL-13 AUG-13 SEP-13 OCT-13 NOV-13 DEC-13 JAN-14 Source: customs data

120 100 80 60 40 20 0

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In the U.S., 2013 coal exports closed at 107 million tons, down about 6 percent from 2012, as a consequence of Europe’s weak economy and lower shipments to Asia. In China, the biggest importer of coal worldwide, the investments in the coal sector may be threatened by recent announcements. The banking regulator ordered to increase scrutiny of credit risks in the coal-mining industry, as investors seek repayment after a big miner that borrowed the funds collapsed. Being a pillar industry in the economy with large amounts of production and consumption, the banks became more cautious taking into consideration the exposure to the coal sector.

Energy Prices Update Cautious optimism for a recovery of coal prices

Coal Coal trading average price for main export hubs remained solid in January 2014 at US$83 per ton. However, the industry sees with cautious optimism a full recovery of the prices in the short term. Indonesia’s average Harga Batubara Acuan (HBA) price gained US$1.6 per ton from December and closed at US$82 per ton, the highest price observed since June 2013. Price has remained stable thanks to a higher coal demand from local power stations and abroad clients that are replenishing stocks in advance to the winter season. The China’s Bohai-rim Steam Coal Price Index (BSPI), which covers six major coal ship-

Steam Coal FOB Average Prices (US$/ton)

US exported

150 140 130 120 110 100 90 80 70 60 50

Colombia exported

Australia Newcastle

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

Nov-12

Sep-12

Jul-12

May-12

Mar-12

Jan-12

Nov-11

Sep-11

Jul-11

May-11

Mar-11

Jan-11

Nov-10

Sep-10

Jul-10

May-10

Mar-10

Jan-10

South Africa Richards Bay

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

Indonesian HBA

ping ports in China, suffered a setback in January and declined to US$96 per ton at the end of the month after reaching US$103 per ton in December 2013. Local prices in China recovered slightly at the end of the year following a strong demand from power plants and a more robust market than the third quarter but prices still remain weak. China saw few transactions toward the end of the month as inventories in ports remained high in advance to the end of January Spring Festival holiday.

CEMENT ENERGY MARKETS

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US petcoke exports to China rise 50 percent

Australia’s Newcastle coal export price plunged US$3 in January to reach US$87 per ton, while in South Africa Richards Bay’s lost 2 percent versus December and is now at US$83 per ton. Colombia’s coal, which has been recovering from a year-low US$75 per ton in September 2013, closed at US$81 per ton. Prices have been moving sideways on concerns about a stronger demand, a weaker currency in large coal consumer countries like India and Turkey, the continued slow growth in Europe’s economy and new environmental regulations in China. US Petcoke Export Price (US$/ton) rolling 12-month average

120 100 80 60

D-13

N-13

O-13

S-13

A-13

J-13

M-13

A-13

M-13

F-13

J-13

D-12

N-12

O-12

S-12

A-12

J-12

M-12

A-12

M-12

F-12

J-12

D-11

Source: customs data

Note: prices are calculated alongside ship and includes inland freight and insurance Petcoke The average export price of U.S. uncalcined petcoke dropped to US$75 per ton in December following lower priced deliveries to India and Japan. The average price for 2013 closed at US$77 per ton, US$3 below 2012 and down US$35 from 2011. Petcoke prices, normally set at 15 percent to 85 percent of coal, continue to be depressed do to the ongoing downward trend in coal prices. To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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U.S. petcoke exports totaled 3 million tons in December 2013, up 35 percent from November and 5 over December of last year. Total volume dispatched from U.S. ports in 2013 was 31.4 million tons, up 7.5 percent from 2012. Chinaâ&#x20AC;&#x2122;s hunger for petcoke, especially for use in power plants, pushed exports to the country up 50 percent from 2012. Deliveries to India, another country that has shown increased interest in petcoke, rose 12 percent while Brazil, a long time consumer of petcoke in the cement industry saw imports from the U.S. rise 13 percent.

US Natural Gas prices hit record levels

Natural Gas U.S. Henry Hub natural gas spot price spiked to US$ 4.7 per MMBtu in January, the highest since June 2010, following a harsh winter not seen in a very long time in the country and low storage level. Temperatures in some regions of the U.S. have been significantly colder than the previous 10-year average, affecting in particular natural gas which is the most used fuel by many households for space heating. With coal prices still sluggish and natural gas prices spiking, U.S. utilities are shifting back to less expensive coal. EIA is expecting the average 2014 price to close at US$4.2 per MMBtu, an increase of 12 percent versus 2013. European natural gas price increased for the fourth consecutive month in January and is now at US$11.6 per MMBtu. However a mild weather has reduced demand and stocks in some countries are above the average for this time of the year. With a weak demand expected ahead oversupply due to accumulated inventories, it is expected that prices remain stable for the rest of 2014.

Natural Gas Prices (US$/MMBtu)

Europe

16 14 12 10 8 6 2

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Jan-14

May-13

Sep-12

Jan-12

May-11

Sep-10

Jan-10

May-09

Sep-08

Jan-08

May-07

Sep-06

Jan-06

May-05

Sep-04

Jan-04

May-03

Sep-02

Jan-02

May-01

Sep-00

Jan-00

May-99

Sep-98

Jan-98

Source: EIA, World Bank

MARKET DATA SNAPSHOT

CW Research

Prices have been moving sideways on concerns about a stronger demand, a weaker currency in large coal consumer countries like India and Turkey, the continued slow growth in Europe’s economy and new environmental regulations in China. Coal - Exports (million tons)

Petcoke - US Exports (million tons - Sep)

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

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Coal - Imports (million tons)

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

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Coal - Global export prices (USD/ton)

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Natural Gas Prices (US$/mmBtu)

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Natural Gas prices MoM (%)

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Source: CW Group analysis estimates

LM: latest month (January except where other specified); MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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cement market and competition

arket and competition

eading cement manufacturers from southern India, including India Cements, Ramco Cements, and Dalmia Cements, are initiating or increasing exports to Sri Lanka as post-war reconstruction picks up. Meanwhile, they are also looking at other markets to help cushion a slide in domestic consumption. Indian cement sector faces challenging year, looks to new markets Indian cement makers are expected to face a challenging year, as demand remains sluggish and roadblocks emerge. Reduced profitability and net sales have been compounded by lower sales volume. The sector has struggled for more than 12 quarters now, with companies continuously losing pricing power while costs rise. Meanwhile, consumption growth remains on a mid-single digit trajectory. At the JKCL Khrew cement plants of India based-JK Cements, production has declined almost 70 percent from the targeted 1,200 MT/day. The older JKCL plant, which dates from the early 1970s, is operating at just 50 percent of production capacity. The newer plant, which started production in 2009 at a cost of Rs 100 crore, now lies defunct. Leading cement manufacturers from southern India, including India Cements, Ramco Cements, and Dalmia Cements, are initiating or increasing exports to Sri Lanka as post-war reconstruction picks up. Southern cement manufacturers currently face large capacity overhang, and 29 JANUARY / FEBRUARY 2014

this new export opportunity represents only a small relief. Manufacturers have been aided by a depreciating Indian rupee during the July-September period. India-based cement makers are also looking at other markets to help cushion a slide in domestic consumption, with southern firms including Chettinad Cements, India Cements, Dalmia Cements, and Ramco Cements increasing their exports to Myanmar.

Lafarge in India examines business needs The French cement giant Lafarge has tapped Platinum Media to handle its media duties in India. Lafarge’s media expenditures are sizeable and expected to grow substantially over the next year as the firm’s market expands in northern India. The account will be handled out of the agency’s Kolkata office.

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Lafarge’s India-based unit has warned the government that it could be forced to close its flagship plant in Chhattisgarh due to a lack of limestone. Lafarge wants the government to accelerate approvals so that it can expand the area of its limestone mine in the state. Legal troubles compound cement sector difficulties India’s Competition Commission has fined cement makers for anti-competition practices. In one case, the commission slapped a penalty of Rs 6,307.32 crore on 11 cement firms, while in another case it imposed a penalty of Rs 397.51 crore on Shree Cement Ltd. Raids on cement stores were conducted at the Nacharam and Orient Cement industries at Manchiryal, India, identifying six cement cases with labels in violation of regulations. The controller of legal metrology has also suspended a district inspector of Adilabad for dereliction of duty. Raid operatives found 50-kg cement bags with shortages ranging from 120 grams to one kilogram. The officials seized 8,210 cement bags from three shops.

m&a and finance

&a and finance

cement

he Abu Dhabi National Energy Company, IDFC, and a Canadian pension fund are considering the purchase of Jaypee Group’s hydropower assets. Furthermore, Jaypee Cement has finalized an agreement with UltraTech for sale of its Gujarat based unit, comprising an integrated 2.4-MTPA cement plant at Kutch and a 2.4-MTPA cement grinding unit at Wanakbori.

Indian firms seek to raise funds and sell assets HeidelbergCement India is looking to issue as much as Rs 370 crore worth of notes by issuing non-convertible debentures, on a private placement basis, to its nonresident parent/group companies qualifying as Qualified Foreign Investors (QFIs). The firm has appointed India Ratings and Research, a Fitch group company, as the credit rating agency for the purpose of obtaining a credit rating in view of the proposed debenture issue. India Ratings and Research has assigned the long-term issuer rating of “Ind AA-” to the company, indicating a high degree of safety regarding timely servicing of financial obligations and very low credit risk. Meanwhile, India’s JSW Steel has sealed a business transfer with HeidelbergCement India to acquire a cement grinding facility at Raigad, Maharashtra. The sale is characterized as a slump sale basis.

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m&a and finance The Abu Dhabi National Energy Company, IDFC, and a Canadian pension fund are considering the purchase of Jaypee Group’s hydropower assets, which may be sold in Jaypee’s attempt to reduce its debt. The Abu Dhabi firm would likely have the largest role in the deal. Included in the sale would be both the 400-MW Vishnuprayag and the 1,000-MW Karcham-Wangtoo, the country’s largest private sector hydropower producer. Jaypee Cement has finalized an agreement with UltraTech for sale of its Gujarat based unit, comprising an integrated 2.4-MTPA cement plant at Kutch and a 2.4-MTPA cement grinding unit at Wanakbori, through a Scheme of Arrangement pursuant to Section 391-394 of the Companies Act, 1956. India-based Ambuja Cements reported share price increases of 1.29 percent, to Rs 153.25, after a bulk deal of 10 lakh shares,

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or 0.06 percent equity of Ambuja Cements, was executed on the counter. Meanwhile, the Rajasthan, India, government has asked banks with Binani Cements accounts to keep the company from withdrawing money, over what it says are tax arrears of over Rs 185 crore. Sluggish Indian market continues The shares of listed India cement maker ACC rose 1.18 percent after the firm reported increased profits in 2013 in spite of a sluggish market. ACC’s consolidated net profit rose 3.34 percent to Rs 1094.67 crore on a 1.99 percent year-over-year fall in sales turnover to Rs 10908.41 crore. Operating EBITDA fell 25.79 percent yearover-year, to Rs 1629.97 crore. The increase in net profit was due to a tax write back of Rs 216.74 crore for FY 2013, but sluggish demand for cement and concrete kept the company’s cement volumes almost flat in FY 2013.

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India-based JK Cement has reported a 79 percent decline in its third quarter net profits, to Rs.11.21 crore. The company logged a net profit of Rs 54.38 crore in the corresponding quarter of the last fiscal year. The total income of JK Cement declined to Rs 677.15 crore, from Rs 688.08 crore the previous year. Shree Cement is also being affected by the sluggish demand in the market, as its stocks saw high volatility after the company posted results for the quarter ending December 2013. The company’s stock touched an intra-day low of Rs 4,100 before closing at Rs 4,326, down 1.6 percent on the back of lower-than-expected reported profits of Rs 115.5 crore. The EBIDTA of Rs 271 crore was just marginally lower than the Bloomberg consensus expectation of Rs 275 crore, as were sales of Rs 1,317 crore versus estimates of Rs 1,346 crore. The power segment, which

contributed 26 percent to overall revenues in FY13, saw strong gains in profitability even as sales fell during the quarter.

sales volume nullified the rise in net plant profits. Interest charges were up, at Rs.80 crore from Rs.71 crore.

The India-based unit of HeidelbergCement India reported losses of Rs 6.63 crore in the quarter ending December 2013, down year-over-year from a net loss of Rs 7.36 crore. Sales during the period rose 36.89 percent to Rs 350.34 crore, down year-over-year from Rs 255.93 crore. The net loss for 2013 amounted to Rs 40.73 crore, compared with a net profit of Rs 30.84 crore in 2012. Sales rose 24.07 percent in 2013 to Rs 1364.77, compared with Rs 1099.96 crore in 2012.

Depreciation charges were down, at Rs 69 crore from Rs 71 crore. In all, there was a marginal loss of Rs 2 crore, against a profit of Rs 54 crore in the same quarter of the previous year. However, the foreign exchange translation difference showed a gain of Rs 3 crore against a charge of Rs 11 crore, enabling the company to report a nominal profit of Rs 42 lakh for the most recent quarter.

Amid a sluggish demand market, India Cements has turned in lower earnings in the third quarter, even as profits for its plants increased. The company reported third quarter net profits after taxes of Rs 42 lakh, down year-over-year from Rs 26.12 crore. Over the same period, sales volumes dropped to 22.94 lakh tons from 24.15 lakh tons. Net plant profits increased to Rs.3,466 from Rs.3,090 per ton. The lower

UltraTech Cement, India’s largest cement manufacturer, reported a 38 percent decline in its third quarter net profits, year-over-year, to Rs 370 crore from Rs 601 crore. During the December quarter, however, UltraTech’s total sales declined marginally year-over-year, by 1.46 percent, to Rs 4,786 crore from Rs 4,857 crore. Results for the quarter were impacted mainly by lower sale prices due to subdued demand. However, ongoing cost optimiza-

tion measures have helped to contain costs despite the continuing increase in input and logistics costs. The outlook continues to remain challenging, with demand growth in the long term likely to be around 8 percent. Key demand drivers will continue to be housing and infrastructure expenditures. Independent auditors report that the company has made no provision for the penalty of Rs 1,175.49 crore imposed by the Competition Commission of India for alleged cartelization by cement manufacturing companies including UltraTech. However, the auditors have not quantified their report. During the December quarter, UltraTech commissioned a 25-MW thermal power plant at Andhra Pradesh Cement Works. The Competition Commission of India approved the proposed acquisition of the cement units of Jaypee Cement Corporation Ltd, of Sewagram, along with the grinding unit at Wanakbori, for a cost of Rs 3,800 crore.

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cement projects and expansions 5

1 rojects and expansions

ndia’s cement industry is expected to raise its cement capacity in 2014, for a total of 370 million tons. India’s cement industry is expected to add another 20 million tons to its cement capacity in 2014, for a total of 370 million tons. Among major additions, UltraTech Cement will add 8-10 million tons, while Shree Cement and JK Lakshmi Cement will add 6 million tons and 4 million tons, respectively. Although cement demand is expected to recover, companies may lose pricing power as competition intensifies. Moreover, profitability may continue to suffer as input costs remain high. India Cements will double its capacity and set up a 40-MW power plant at its facility in Dalavoi in the Ariyalur district of Tamil Nadu. The capacity expansion, from 1.24 million tons of clinker and 2.16 million tons of cement per year to 2.77 million tons of clinker and 4.71 million tons of cement, will serve the Tamil and Kerala markets. The expansion project will occupy an area of 25.09 ha and is estimated to cost Rs 810 crore, including Rs 39.6 crore in capital costs and Rs 5.71 crore in recurring annual environmental pollution control costs. India Cements expects to add a 2 x 20-MW captive power plant to the facility. The expanded plant will require 41.4 MW of power.

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India’s Zuari Cement is investing Rs 2,500 crore to set up a cement grinding unit at Auj and Shingadgaon in Solapur, a terminal in Kochi, and a 3 millionton integrated cement plant at Gulbarga. South India accounts for around 43 percent of the country’s total cement capacity (150 million tons), but suffers from reduced demand (70 million tons). The region is further affected by delays in infrastructure permits and low government spending. In addition, production costs are up. Rail freight costs have recently risen 30 percent, fuel and coal imports costs have increased, and the rupee has depreciated. Ambuja Cements has commissioned its 1 million-ton-capacity, Rs 350-crore cement terminal unit at Mangalore in the Dakshina Kannada district of Karnataka. All west coast states are now covered by Ambuja Bulk Cement Terminals. The new terminal will enable Ambuja to receive imports, reduce the effect of seasonality of the Gujarat plant, and create a common vessel for Mangalore and the Cochin Bulk Cement Terminal.

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focus India’s UltraTech will build a new cement plant in the Karur and Dindigul districts of Tamil Nadu. The plant will have a capacity of 5.5 million tons of cement and 4.5 million tons of clinker and will be served by a 75-MW captive power plant. The project will cost Rs 2,500 crore, including Rs 210 crore in capital expenses and Rs 10.5 crore for recurring annual environmental pollution control costs. Raw materials for the plant will include limestone (6.70 MTPA), laterite/bauxite (0.46 MTPA), cement plant coal (0.60 MTPA), CPP coal (1.20 MTPA), gypsum (0.10 MTPA), fly ash (0.33 MTPA), and petcoke (0.525 MTPA). Coal will be imported from Indonesia and South Africa, and petcoke from Reliance Industries, Jamnagar. Limestone will be procured from the Grasim Industries mine, located at the village of Thennilai, Kadavur Taluk, Karur District.

volume & pricing

cement

olume and pricing

erformance of the sector is expected to be weak in Q2FY14, due to a fall in cement prices coupled with decline in dispatches during the monsoon. Cement sales and prices fall Cement sales in India fell in December due to poor demand in what is normally the peak season. Prices fell Rs 20 to 25 per bag on average. The subdued demand was blamed on slowdowns in real estate and infrastructure. The downturn arrived after a bump in prices by Rs 15-25 per bag in the western and central regions of the country in October and November, when demand was expected to increase after state elections. Prices remained flat in the northern and eastern regions during the period. In the southern region, Karnataka saw a price uptick of Rs 20 per bag, while cement prices declined in AP (down Rs 7-10 per bag) and Tamil Nadu (down Rs 10 per bag) and remained flat in Kerala. Performance of the sector is expected to be weak in Q2FY14, due to a fall in cement prices coupled with decline in dispatches during the monsoon. Petcoke and imported coal prices are down, resulting in lower power cost per ton. Infrastructure is key to outlook India Ratings & Research (Ind-Ra) has maintained a stable to negative outlook for the Indian cement sector for FY15. The agency expects limited downside risks for integrated players who are also among the

top two to three players in their respective regions. The median EBITDA margin of this group is unlikely to fall more than 50bp-100bp, year-over-year, in FY15. The top five integrated players in the industry demonstrate resilience to adverse macroeconomic factors, indicated by stable credit profiles for the past two to three years.

Poor demand impacts firms Muted demand in the last quarter of 2013 has dented the earnings of cement makers such as UltraTech, which recently reported lower than expected margins. Weak volumes, soft earnings, and cost pressures were largely responsible for the performance.

Non-integrated players, by contrast, may continue to face pressure on their credit profile and thus a negative outlook. India Ratings & Research expects cement demand growth to remain sluggish at around 5-6 percent for FY15, given the slowdown in the construction and infrastructure sectors. The cement sector had clocked 5.6 percent growth in 2012-13. Projected percent growth rates for the next fiscal year would be supported by an expected increase in demand from the rural sector and Tier-II and Tier-III cities.

Grey cement and clinker volumes, at 9.7 million tons, were down year-over-year from 9.94 million tons. Meanwhile, the average price per bag of cement was up two percent year-on-year. Net sales, at Rs 4,786 crore, were down 1.5 percent, yearover-year, after expectations of Rs 4,835 crore.

There could also be some demand uptick in the second half of the fiscal year. Election results, in particular, could impact overall growth in construction activities. However, the current slowdown in construction and allied activities is likely to result in reduced capacity utilization by cement companies of between 70 and 75 percent in FY14 and FY15, compared with 76 percent in the previous fiscal year.

Industry survey predicts increased demand An industry survey in India suggests a likely increase in cement demand in the coming period as government spending picks up. Demand has improved in states like Punjab, Haryana, Uttar Pradesh, Bihar, and Maharashtra, while cement prices have increased by Rs 30-40 per bag in the past two months. States such as Rajasthan, Gujarat, West Bengal, and Karnataka are showing initial signs of demand improvement, while demand in Andhra Pradesh and Tamil Nadu is likely to remain weak.

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cement people

eople

India In India, UltraTech Cements director O P Puranmalka has been elected the new President of apex industry body Cement Manufacturers’ Association (CMA) for 2013-14. Puranmalka will replace M A M R Muthiah of Chettinad Cement. J K Lakshmi Cement whole-time director Shailendra Chouksey has been elected Vice-President of the 51-year old association. The CMA represents the majority of the 350 million-ton-per-year Indian cement industry, the second largest in the world. Dalmia Bharat Limited recently announced the appointment of Mahendra Singhi as Group CEO – Cement. With 36 years’ experience in the cement sector, Mr. Singhi joins Dalmia Cement from Shree

Cement, where he served 19 years and was Executive Director. Dalmia Bharat Limited, part of the Dalmia Group, has been a pioneer in cement manufacturing for over seven decades, since 1939. With an expanding India footprint, the company is a category leader in the super-specialty cements used for oil wells, railway sleepers, and airstrips. Sri Lanka Sri Lanka-based Holcim Lanka has appointed Nirmala Gihan Wickremeratne as Chairman and Premila Perera as a member of its Board of Directors. Mr. Wickremeratne had a long and distinguished career at the Hayleys Group, where he served as Managing Director/ CEO of the Dipped Products Group, and later as Chairman and Chief Executive.

He is credited with the establishment of Dipped Products PLC and its development into a world leader in its field. Ms. Perera, formerly a partner and Head of Tax at KPMG in Sri Lanka, is a Fellow of the Institute of Chartered Accountants of Sri Lanka. She has served as Regional Tax Director of KPMG Asia Pacific in Singapore, a member of KPMG International’s “Firm of the Future” Task Force, and on the faculty of the Tax Business School of KPMG International. She is a member of the Main Committee of the Ceylon Chamber of Commerce and a former member of its Taxation Steering Committee and of the Taxation Cluster of the National Council for Economic Development.

focus Maple Leaf Cement Factory Limited, a volume leader in the capital market, has appointed Tariq Saeed Saigol as Chairman for the next three years. Mr. Saigol was schooled at Aitchison College, Lahore, and graduated from Government College, Lahore. He then studied law at University Law College, Lahore. He started his career

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in 1968 at Kohinoor’s Chemical Complex at Kala Shah Kaku. Upon trifurcation of the group in 1976, he became Chief Executive of Kohinoor Textile Mills Limited, Rawalpindi. Since 1984, he has been Chairman of Kohinoor Maple Leaf Group, which has interests in textiles, energy and cement manufacturing. He was also Chairman of

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the All Pakistan Textile Mills Association in 1992-94, President of the Lahore Chamber of Commerce and Industry in 1995-97, and Chairman of the All Pakistan Cement Manufacturers Association in 2003-2006. Mr. Saigol has also been a member of the Federal Export Promotion Board and Central Board of State Bank of Pakistan.

regional

news

Axle load limits for truck transportation imposed by Pakistani authorities are severely cu Multiple regional expansionary actions are announced by cement companies operating in

pakisTanâ&#x20AC;&#x2122;s CemenT sales affeCTed by loGisTiCs limiTaTions Pakistani cement companies dispatched 2.888 million tons of cement in May 2013, more than 7.5 percent below April 2013. Apart from the slower pace of construction activities, the decline was also perceived as the direct consequence of strict application of the axle load limits imposed by the national highway and motorway authorities. The axle load rule had been lax for years, allowing trucks to be loaded domestic market with 0.39 million tons of cement, with their exports nearing 0.22 with extra quantities. The stricter appli- the mong India surrounding regions, Pakistan is the one seeing most activity. The countryâ&#x20AC;&#x2122;s million tons. cation impacts not only the availability of cement producer association is going through troubled times because of cement pricing policy transportation, but also the logistics costs and energy costs, while Bangladesh imports bymonths river route from During the first 11 of the current incurred. sees the first arrival of clinker Star Cement and five of the seven stock exchange listed companies go for bigger profits. fiscal year, Pakistani cement companies Northern cement units dispatched around sold more than 30.5 million tons, around 2.29 million tons of cement in May 2013, one million tons above the correspond24.3 percent of which were sent by sea to ing period of the last fiscal year. Cement fromnotched 13.127 million tons. tons Capacity utiCement prices, sales, and producwhile exports increased 7.6 percent, result- year exports 7.7 million this fiscal external markets, mostly to Afghanistan, lization was estimated at 70.79 percent, thein tion costs edge up in Pakistan ing in an overall2.7 growth of 3.1 percent yearwhile around percent were dispatched year versus more than 7.8 million tons lowest in the last five years, a rate attributed Cement industry dispatches rose 1.4 perover-year. to India. The southern units provided the the last fiscal year for the first 11 months. to slower economic growth in the country. cent, year-over-year, in the first seven months of the current fiscal year in Pakistan. In the first five months of the fiscal year, Cement exports from Pakistan to AfghaniThe increase was driven by rises in both sales rose just 0.3 percent, restricted by a stan are declining gradually due to the slug38 MaY / JUNe 2013 BMWeek CW Group Coal Week CemWeek INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE domestic sales and exports. Cement sales decline in exports to BMWeek major overseas CemWeek marCW Group gish Coalpace Week of new development projects in CemWeek in the BMWeek CW Group theCoal Week during this period stood at 18.848 million kets along with economic slowdown country, along with uncertainty related to the expected withdrawal of NATO forces tons, up from 18.596 million tons year-oncountry. Total cement sales over that period year. In January, local sales grew 1.9 percent stood at 13.167 million tons, up year-over- from Afghanistan.

egional news

In January, Pakistani cement sales to foreign markets rose 7.6 percent, compared to a 1.9-percent rise in domestic sales. The placement of cement in the third schedule of the sales tax had a strong effect on sales. Cement exports to Afghanistan reached their lowest level in the past six months. Pakistan cement makers say increased exports to neighboring India will boost sales, but cited roadblocks that have stifled shipments. Supplies allow exports of 3-5 million tons of cement to India, but the very slow process of BIS Certification, the existence of only one interchange of railway wagons, which causes congestion at the Wagah border, and limited operating hours at the border are hampering shipments. Exports

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regional news would be facilitated if banking needs were established on both sides and containerized cargoes and trucks were allowed as far as Amritsar. Cement prices in Pakistan rose 4 percent or Rs20 per 50-kg bag during the first five months of FY2013-14, with further increases expected. Companies are currently operating at improved margins, with particularly favorable profits for gas-powered companies including Lucky Cement, DG Khan, and Maple Leaf Cement. Increased GST, changes in the GST regime, and a rising power tariff act to limit profit margins. International coal prices crossed $90 per ton for a brief period in October 2013 and have since stabilized around $83 per ton. The average price between July and November 2013 was $76 per ton. With the restoration of the Gas Infrastructure Development Cess (GIDC), Pakistan cement makers are expecting higher production costs. The government has revised the GIDC from Rs50 per mmbtu to Rs100. Companies with gas-fed captive power plants are likely to see resulting cost increases of about Rs10-12 per cement bag.

Chambers of Commerce and Industry and the All Pakistan Cement Manufacturers Association requested the petcoke import, which will pass through Wagah-Attari. Petcoke is already imported from India via rail and sea. Lafarge Surma profits from clinker sales in Bangladesh In Bangladesh, Lafarge Surma Cement has reported that it earns around US$50 – US$60 million per year by selling clinker to other cement companies and saving on the foreign currency side. Bangladesh has no proven limestone reserves, so the company brings limestone to its Chhatak cement plant in Bangladesh via a 17 km-long belt conveyor from a quarry in the state of Meghalaya, India. Strikes and shutdowns hamper Bangladeshi cement supply chain Meanwhile, cement makers in Bangladesh are struggling to deliver goods to customers as strikes and shutdowns paralyze the supply chain. In the current wave of shutdowns and blockades, businesses have failed to receive shipments despite offering to pay five to six times more than the usual fare.

Construction costs are expected to rise following a Rs10-20 increase in cement prices in the southern region of Pakistan. Since July 2013, cement producers have been pushing up rates due to changes in taxes and duties, putting pressure on construction costs. Manufacturers in the north have not yet increased prices, but they may follow. Cement producers have sought permission to fix the cement retail price separately in the two regions due to disproportionate transportation charges. The Association of Builders and Developers Chairman, Mohsin Sheikhani, has urged the government to investigate whether prices have been raised artificially.

Holcim may pull out of Sri Lanka amid government probe In Sri Lanka, the local unit of Swiss Holcim may exit the country amid a government probe into its transactions. Holcim is being questioned in connection to a series of questionable transactions. These include irregularities during the takeover of PCCL (Puttalam Plant), violation of the Foreign Exchange Control Act with the takeover of the Galle Plant from Ruhunu Cement, and paying around US$9 million to an overseas company while functioning as a BOI company. Wrongful conduct such as extraordinary amounts of money sent overseas under the guise of royalty payments have also come under question.

Pakistan’s Economic Coordination Committee (ECC) will allow the road import from India of petroleum coke for the cement industry, taking notice of an increase in fertilizer prices. The Federation of Pakistan

Bhutan’s Dungsam Cement Corporation Limited makes foray into the Northeastern India market Bhutan’s Dungsam Cement Corporation (DCCL), selling cement under the brand

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focus Nepal’s Chaudhary Group building two cement plants Nepal-based Chaudhary Group (CG) is looking to spend Rs10 billion on cement plants in Dumkibas of Nawalparasi and Palpa, targeting markets in the central and western parts of the country. The group ventured into cement production because of growing cement demand and prospects of infrastructure development and other civil construction works in the country. Clinker and cement plants, each with 1,900 ton-per-day capacity, will be built in Palpa for a Rs7.5-billion investment. Chaudhary Group already markets the cement it produces at Dumkibas, where the company has a current capacity of 1,300 tons per day using Nepali clinker. The low-pollution Dumkibas plant was established for an investment of Rs1.5 billion.

name Dragon Cement, is eyeing the northeast states of North-Bengal and East Bihar. The company is incorporated under the Companies Act 2000 of the Kingdom of Bhutan as a wholly owned subsidiary of Druk Holdings & Investments, an undertaking of Royal Government of Bhutan. Because of its huge production capacity (4130 tons per day) and the relatively small size of the Bhutan market, DCCL intends to sell about 70-80 percent of its cement to the Indian market.

orders & equipment highlights

rders & equipment

New order for Siwertell system from Oman Raysut Cement Company has ordered a road-mobile Siwertell system. The order is for its cement-handling operations at the ports of Duqm and Sohar. The order has been booked into Cargotec’s 2013 fourth quarter order intake. The contract, which supports the company’s expansion plans in Oman, comprises the delivery of a road-mobile Siwertell 10 000 S unloader unit and a road-mobile Siwertell PumpMaster blow pump conveying unit, commissioning, supervision, and spare parts. The system will have a rated cement discharge and conveying capacity of 300t/h, will be built at Cargotec’s Siwertell manufacturing facilities in Bjuv, Sweden,

and delivered by July 2014. It will serve the Sultanate of Oman’s eastern port of Duqm, located on the Arabian Sea, and one of its largest ports, Sohar, which is situated on the country’s north coast in the Gulf of Oman. Loesche wins new order in Tanzania The order comes from Tanga Cement Company. The order covers engineering and supply of two Loesche vertical roller mills. One LM 41.4 which will grind cement raw material at a product rate of 200 t/h with a fineness of 15% R 90 µm and one LM 19.2 D coal mill with a grinding capacity of 20 t/h with a fineness of 12% R 90 µm.

Included in the scope of supply are rotary star feeder for the raw meal mill and coal screw feeder for the coal mill. The delivery of the mill key parts is planned for July 2014. This is the first order of Tanga Cement for Loesche. The construction of the cement plant was started in 1978 and commissioning took place in July 1980. The cement plant currently owns a daily cement capacity of 3,000 tons. FLSmidth wins large cement order in Indonesia FLSmidth has received an order from PT Semen Gresik for a greenfield cement plant.

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orders & equipment The order is worth approximately EUR 42m (approximately DKK 310m). The greenfield cement plant has a capacity of 8,000 tonnes per day. The new plant will be located just outside the city of Rembang in the north-eastern part of Central Java, Indonesia. The order comprises equipment for the main part of the production line, including a raw mill, coal mill, preheater, kiln, burner, clinker cooler and silo equipment as well as a complete control system for the entire plant.

unit will have a rated discharge capacity of 300t/h and is scheduled for delivery in mid-May. The new unloader will be equipped with a double bellows system and dust filter, which deliver consistently high levels of efficiency and environmental protection.

New order for Cargotec from Turkey Cargotec will supply a standard roadmobile Siwertell 10 000 S cement unloader

Loesche to suppy 2 vertical roller mills in Saudi Arabia SPCC decided to install and operate the first two vertical roller mills for cement grinding in the Kingdom. Those two (2) cement mills are both LOESCHE Type LM 56.3+3 with a rated capacity of a minimum of 200 tph.

A Turkish construction services company, Mussa Insaat Dis Ticaret Ltd of Istanbul, placed an order with Cargotec for a standard road-mobile Siwertell 10 000 S cement unloader. The diesel powered

Amongst SPCC’S very good experience with their LOESCHE mills in operation (2 cement raw material mills at their Tahamah site and a 3rd one under erection), a very low specific energy demand

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of the milling system and the vast experience of Loesche with more than 300 vertical roller mills for cement grinding sold worldwide, were major decision factors to trust LOESCHE for the supply of the first vertical roller mills for cement grinding in the Kingdom of Saudi Arabia. For the grinding of cement raw material SPCC has also decided in favor of a LOESCHE vertical roller mill, type LM 56.4.

Infrastructure & projects

nfrastructure & projects

eveloper Lodha Group is all set to launch the second phase of its mega city project in Mumbai, named ‘Palava’, in Dombivali, a suburb of Mumbai located in Thane district of Maharashtra. On the same note, Tata Housing, the real estate arm of Tata Group, has launched a new luxury residential project in Mumbai, named ‘Gateway Towers’, that spreads across 8.5 acres. NEW PROJECTS Cabinet Committee Clears road projects in Bihar & Gujarat The Cabinet Committee on Economic Affairs (CCEA) cleared projects worth Rs 2,000 crore for Bihar and Gujarat. The projects include four-laning of the 93 km Gaya-Hisua-Rajgir-Nalanda-Bihar Sharif section on the National Highway-82 in the state. The road projects in Bihar are expected to cost Rs. 1,408 crore whereas those in Gujarat are expected to cost Rs 503 crore. According to the Cabinet Committee, the Japan International Agency (JICA) is going to provide loan assistance for the project in Bihar. L&T Construction bags new orders L&T Construction, the construction wing of L&T has bagged new orders worth Rs. 2,962 crore across various business segments. The Building and Factories Business has bagged new

orders worth Rs. 1,555 crores. The order includes construction of two technology centres in Bangalore and turnkey order for infrastructure development of three government medical colleges in Cuttack, Sambalpur and Behrampur in Odisha. The Water & Renewable Energy Business of the company has bagged new orders worth Rs 726 crore, which includes contracts for a combined water supply scheme in Tamil Nadu. Apart from these, the Power Transmission & Distribution Business has bagged order that includes supply, erection, testing and commission of a 400 kV double circuit transmission line in Andhra Pradesh. The company also received additional orders worth Rs 423 crore in Metallurgical & Material Handling. Lodha to launch 2nd phase of mega city project in Mumbai Leading Real Estate Developer Lodha Group is all set to launch the second

phase of its mega city project in Mumbai. The Mumbai-based developer is developing ‘Palava’, a mega city in Dombivali, a suburb of Mumbai located in Thane district of Maharashtra. The second phase of the project involves construction of 800 buildings spread across 800 acres and is slated to be completed in the next five years. The entire project is spread over 5,000 acres and is going to be completed in four phases by 2025. Tata Housing launches new project in Mumbai Tata Housing, the real estate arm of Tata Group has launched a new luxury residential project in Mumbai. The project named ‘Gateway Towers’ is spread across 8.5 acres and involves construction of six residential towers. The project is a part of a 19-acre development project, which involves an investment of Rs 2,000 crore.

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infrastructure & projects IIT-Kharagpur unveils new innovation park IIT-Kharagpur has started the construction of a new research and innovation park at Rajarhat. The first-of-its-kind tech park is expected to be constructed at a cost of Rs 350 crore and is expected to be complete in the next 2-3 years. Once complete, the innovation park will provide students and researchers from all over the country to work together with the industry on research, development and application under a single roof. New Highway Project in Odisha The government has given its nod to construct a new highway project in Odisha under its flagship National Highways Development Project (NHDP). The project involves four-laning with paved shoulders of Jharpokharia-Baripada-Baleshwar section of NH-5 in Odisha. The cost of the 80.6 km long project is estimated to be around Rs. 760 crore, which includes land acquisition, resettlement, rehabilitation and pre-construction activities. Once complete, the project will reduce the time and cost of travel on the JharpokhariaBaripada-Baleshwar route. UPDATE ON PROJECTS UP Govt to develop Agra-Lucknow Project itself After failing to find any private bidders for

the eight-lane Greenfield Agra-Lucknow Expressway, the Uttar Pradesh Government has decided to develop the project itself on the basis of Engineering Procurement and Construction (EPC). The construction of the 301 km long, involving an investment of Rs. 14,000 crore Expressway is handed over to the Uttar Pradesh Expressways Industrial Development Authority (UPEIDA). Once completed, the Agra-Lucknow Expressway will reduce travel time between Agra and Lucknow from six to three and a half hours. The state government had conceptualized the project immediately after coming to power in 2012, and it wanted to fashion it on the lines of the Yamuna Expressway. Indo-Nepal Road Cost Escalates The estimated cost for the proposed 572 km India-Nepal corridor project bordering UP and Nepal has risen by Rs 1,000. The increase in the cost of the project has come as the Uttar Pradesh state public works department (PWD) proposed fresh detail project reports (DPRs). The department has sent two DPRs in two phases totaling 862 crores thereby raising the cost of project from Rs 2,095 crore to Rs 2,957 crore. The Indo-Nepal Corridor project was first conceptualized in 2010 by the union ministry of home affairs but got stuck following clearance of detailed project reports submitted by the UP government.

COMPLETED PROJECTS Mumbai gets new Airport Terminal Construction on the new terminal of the Mumbai International Terminal has been completed. The Terminal, spread across 4.4 million sq ft and built at a cost of Rs. 5,500 crore will be opened for operations on February 12, 2014. The new terminal is crucial for the airport as it is expected to improve travelersâ&#x20AC;&#x2122; experience at one of Indiaâ&#x20AC;&#x2122;s busiest and most congested airport. The new terminal was constructed as a part of the Rs 12, 500 crore modernization project.

INFRASTRUCTURE AND CONSTRUCTION PROJECTS/EXPANSION

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analyst recommendations ULTRATECH CEMENT ICICI Securities Ltd. has recommended a ‘BUY’ rating for UltraTech Cement with a target price of Rs 2040, upgrading it from current price of Rs 1720. The recommendation comes as the company has been consistently delivering on its capacity expansion. Despite the acquisition of Jaypee’s Gujarat cement plant, the company is in good position to generate healthy free cash flows in the future. On a similar note, Emkay Global Financial Services Ltd has recommended “ACCUMULATE” rating for the company with a target price of Rs 2,000 upgrading it from CMP of Rs 1,876. However, Motilal Oswal has maintained ‘NEUTRAL’ rating for the company with a target price of Rs 1,844, upgrading it from CMP of Rs 1,720. SHREE CEMENT Emkay Global Financial Services Ltd has recommended “ACCUMULATE” rating for Shree Cements with a target price of Rs. 4,700 upgrading it from CMP of Rs. 4,336. The recommendation comes as the company’s expansion plans are running on schedule. The expansion will help Shree Cements address capacity constraints and enhance its competitive advantage. On a similar note, ICICI Securities Ltd. has upgraded its rating to “BUY” from “HOLD” for the company with a target price of Rs 5,080 upgrading it from CMP of Rs. 4,401. The positive recommendation comes as the company is in good position to withstand the challenges in terms of a slowdown in demand for cement because of its strong balance sheet and better efficiency in terms of cost than its peers. Meanwhile, Firstcall Research has recommended “HOLD” for Shree Cements with a target price of Rs. 4,840, upgrading it slightly from CMP of Rs. 4,440. acc Spark Capital has recommended ‘BUY’ rating for ACC with a target price of Rs. 1,310. The recommendation comes as the company plans to improve its efficiencies by increasing its petcoke usage to 20% from current 10%. To the contrary, Emkay Global Financial Services Ltd has recommended ‘REDUCE’ rating for ACC with a target price of Rs. 1,100 reducing it from a CMP of Rs. 1,102. The rating comes because of the company’s high cost 42

structure, which is expected to deteriorate the company’s profitability and return profile. The company is also expected to incur highest obsolescence cost as it plans to upgrade its vintage plants. The analyst expects that the company’s energy cost saving measures is going to be partially negated by declining linkage coal. Meanwhile, ICICI Securities Ltd has recommended ‘NEUTRAL’ rating for ACC with a target price of Rs 1,270, upgrading it from CMP of Rs. 1,122. ambuja CEMENTS Emkay Global Financial Services Ltd has recommended ‘REDUCE’ rating for Ambuja Cements with a target price of Rs. 165, reducing it from CMP of Rs. 184. The negative rating comes as the company posted stagnant volumes because of delays in its organic/inorganic expansions. Spark Capital has recommended ‘SELL’ rating with a target price of Rs 175. The rating comes as the company struggles to maintain its growth in volumes because of lack of near term capacity additions. Meanwhile, ICICI Securities Ltd has remained ‘NEUTRAL’ on Ambuja Cement with a target price of Rs. 181, reducing it slight from CMP of Rs 185.

dalmia bharat Firstcall Research has recommended a ‘BUY’ rating for Dalmia Bharat Ltd. with a target price of Rs. 184 upgrading it from a CMP of Rs. 167. The recommendation comes as the company continues to improve its efficiency by focusing on enhanced usage of petcoke & alternate fuel in kiln and lignite, which are optimizing the cost of production of the company. On similar lines, Spark Capital has also recommended ‘BUY’ rating for the company with a target price of Rs. 165. JK CEMENT Emkay Global Financial Services Ltd has recommended ‘ACCUMULATE’ rating for Ramco Cements with a target price of Rs 210, increasing it from CMP of Rs 171. The company, the largest cement producer in South India is also an efficient cost producer and has a master-stroke strategy in place of creating surplus grinding capacity. Spark Capital has also upgraded its rating to ‘BUY’ from ‘ADD’ for the company with a target price of Rs. 195. The upgrade in the rating comes as the cement company posted 10.5% volume growth in FY13, which is above average considering the depressed market situation in the South and is expected to do well in the coming two years.

RATINGS CHAnGES

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MOST POPULAR ON CEMWEEK.COM The most-read stories on CemWeek over the past two months reflect the industry’s mixed outlook. The India column shows the 20 most popular stories from CemWeek featuring India-related coverage, and the Global column shows the global events that gathered the most attention worldwide during the period. Visit CemWeek.com to access the full stories.

INDIA

GLOBAL

1 India’s UltraTech receives EAC clearance for cement plant

1 FLSmidth ends 2013 with a large cement order

2 India: JSW acquires HeidelbergCement plant in Maharastra

2 FLSmidth to supply cement production line in Qatar

3 India: Cement capacity to be increased by companies

3 AVIC completes voluntary public takeover of KHD

4 Zuari Cement pushes through with ambitious expansion plan

4 Dangote to reduce Dancem stake

5 Dalmia Cement marks anniversary in North East India

5 Saudi Arabia: Hail Cement commissioning running smooth

6 India: UltraTech receives green light to acquire Jaypee plants

6 Tunisia: Ciments of Bizerte plans to increase capacity

7 India: Cement demand expected to improve in 2014

7 Russia: Sibcem increases stake in Iskitimcement

8 India’s CMA elects new President

8 ARM Cement targets to own largest cement plant in Kenya

9 India: Jaypee finalizes deal with UltraTech

9 Report: Holcim looking to pull out of Sri Lanka

10 India: Lafarge chooses Platinum Media

10 CRH reports on 2H 2013 acquisition program

11 More asset sales in the offing for India’s Jaypee

11 Argos purchase of Isagen goes under the microscope

12 India Cements gets nod to double capacity

12 EU thumbs down German request to probe Holcim, Cemex deal

13 UltraTech unit rapped for pollution

13 Korea cement makers announce price hike

14 Promoters of HeidelbergCement are hiking their stake in India

14 Dangote says Cameroon unit nearing completion

15 Report: India’s JK Cements in trouble

15 Dangote to finalize 5 new plants in Africa this year

16 Survey says India cement demand set for pickup

16 Votorantim installing new cement plant in Brazil

17 India cement makers seen posting lower margins

17 Syria does not meet 2013 targets

18 India clears restructuring of Holcim’s Ambuja stake

18 Yemen: Amran Cement looking to fastrack second production line

19 Dalmia looking to expand presence in India

19 Dangote Cement to expand its business in South America

20 India: UltraTech reports declining profit

20 Oficemen inks labor agreeement

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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.

Conferences where the CW Group will be presenting

World Paper & Pulp (WPP) Brazil & LatAm 2014

AshTrade Europe 2014 Fly Ash Industry Conference

COLOMBIA

May 15-16, 2014

webinars hosted by cw research

Golden Tulip Paulista Plaza, S達o Paulo, Brasil

Coal in review March 6, 2014 at 2:00 PM GMT

Sheraton D端sseldorf Airport Hotel, Dusseldorf, Germany

May 22-23, 2014

Cement Business & Industry (CBI) Africa 2014

June 12-13, 2014

Hyatt Regency Johannesburg, South Africa

AshTrade Americas 2014 Fly Ash Industry Conference

October 15-16, 2014

Houston, United States

Africa cement market update March 18, 2014 at 2:00 PM GMT

Cement Business & Industry (CBI) India 2014

November 12-13, 2014

Holiday Inn New Delhi International Airport, New Delhi, India

For questions or inquiries please contact Raluca Neagu, Market Services & Marketing Consultant at the CW Group at either rn@cwgrp.com, or +40-741-520-372.

Solid Fuels Summit (SFS) India 2014

November

New Delhi, India

For more information please visit http://research.cwgrp.com/meetings

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Conference & Exhibition

CEMENT BUSINESS & INDUSTRY June 12-13, 2014 â&#x20AC;˘ Hyatt Regency Johannesburg, South Africa

AFRICA

CBI Africa 2014 brings together over 100 stakeholders from African and international cement producers, equipment vendors, strategy and M&A, financial, sales and marketing and trading as well as delegates from the technical and operations, engineering, environmental, logistics, maintenance, production & operations side. This conference will gather industry experts and market participants to discuss the major topics, including: Market perspective, forecast and competitive outlook Alternative fuels, new business models Environmental performance management Finance and capital markets Efficiency, innovation, new developments Technology, operations and best practices Fuel prices and outlook

GMI

GLOBAL