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Cement issue 17
MARCH / APRIL 2014
& construction Materials
A $50 BILLION
contribution by: Dr S N Pati
Life Cycle Assessment
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a study of the construction industry
for the world’s largest cement producer
MAURITANIA & SENEGAL two distant neighbors, two close markets
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FEATURES 5
LAFARGE & HOLCIM
9
life cycle assessment
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clash of the titans? no more.
A study of the construction industry (2/3) Written by Dr S N Pati
MAURITANIA & SENEGAL
1
EDITORIAL LETTER
3
NUMBERS IN BRIEF
42
Two distant neighbors,two close markets
Cement & construction Materials
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With powers combined, a mega company is born, reshaping the cement world map
rOBERT MADEIRA
India undergoes major structural changes in regional cement prices
cemweek publisher head of cw group research
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research and analytics 21
cement volumes Sun is shining upon Europe - mild winter revives cement sector
24
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25
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construction & building materials 40
INFRASTRUCTURE & PROJECTS India’s First Monorail becomes operational
cement 29
MARKET AND COMPETITION
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33
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34
VOLUME AND PRICING
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REGIONAL UPDATE
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EQUIPMENT HIGHLIGHTS
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letter from the editor
With powers combined, a mega company is born, reshaping the cement world map ndia Cement & Construction Materials Journal covers in this issue one of the most important stories of the cement business in the past years: Lafarge and Holcim merge. The transaction is being structured as a merger of equals, one Holcim share for one Lafarge share. This unthinkable combination will reshape the map of the cement world, influencing markets in all regions, including Asia, Europe and Americas. The impact of this fusion will not be seen only in the cement world, but also in the ready-mix and aggregates sector, as well as in the wider supply-chain. The merger was approved and fully supported by shareholders, and the headquarters of the new company, named Lafarge-Holcim will be based in Switzerland. Wolfgang Reitzle will be designated as Chairman of the company and the
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Board of directors will be equally composed with 7 members from each company. Bruno Lafont has been appointed as CEO and member of the board. The future looks bright for all stakeholders, starting with customers and local communities that will benefit from advanced products and integrated solutions, but even for the employees through enhanced career opportunities, as both major players are the best in this sector. As this merger still needs to be approved at a regulatory level, they estimate divestments of EUR5 billion. Around 10 to 15 percent of the combined EBITDA will be sold in order to receive the final approval. Lafarge and Holcim are two of the world’s biggest building materials companies, with combined sales and EBITDA of
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EUR31.6 billion and EUR6.4 billion in 2013 respectively. By comparison, Lafarge is more active in Middle East and North Africa (MENA), while Holcim is more present in Latin America. The transaction is expected to close in the first semester of 2015.
Robert Madeira
Publisher and Head of Research
Raluca Neagu
PROJECT MANAGER
NUMBERS IN BRIEF Pan-India Cement Production (LTM, million tons)
India undergoes major structural changes in regional cement prices
Millions
LTM (Jan 2013)
LTM (Jan 2014)
260 250 240 230
Pan-India Monthly Cement Production (million tons)
210 200
FY2013-2014
25 20 15
3
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355 335 315 295
235
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Jan-14
255
Source: CW Research
275
Dec-13
Average Pan India cement prices reached Rs306 per 50kgbag in February 2014, increasing 3.7 percent over January 2014.
375
Nov-13
Moreover, the Northern region faced an all-time high cement price with a considerable MoM increase in February 2014 (17.1 percent). This trend brought the Northern region in line with the Central and Eastern regions, which currently report the highest cement prices.
Cement Prices (Rs per 50 kg bag; min, max and average)
Oct-13
Market forces changed considerably in the second half of 2013 with the regions that were once known as owning the minimum and maximum price points switching places. The severe overcapacity of the Southern region weakened cement prices from Rs349 per 50-kg bag in September 2013 to Rs285 per 50-kg bag by February 2014, and generated a premiere for the region that is now reporting the lowest prices in India.
Sep-13
January
Aug-13
December
Jul-13
November
Jun-13
0
May-13
5
Source: CW Research
10
The beginning of 2014 marked the slowdown of governmental funded projects when the cement production grew marginally only by 1.5 percent YoY in comparison to previous growth rates that settled at double-digit hikes in both January 2013 and January 2012. A further abatement was expected for the remaining of 1Q 2014 driven by two main factors that took place around the regions, such as: the temporary closure of Ambuja Cements’ mining operations in Himachal Pradesh that affected the clinker production at its Darlaghat cement plant, and the suspended operations decided by Binani Cement at two of their cement plants located in Rajasthan due to fiscal considerations.
Apr-13
Millions
FY2012-2013
Source: CW Research
220
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feature
& clash of the titans? No more. What was once an unthinkable combination was on April 4, 2014 sparsely confirmed by Lafarge and Holcim in respective press statements: the two were indeed considering a merger of equals. On April 7, 2014 the companies triumphantly confirmed the move after the boards approved the transaction over the weekend, in one fell swoop radically redesigning the world of cement as we know it.
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Bruno Lafont
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fter less than three months of negotiations, on April 4, 2014 Holcim and Lafarge confirmed that they are discussing a merger of equals, building on “common strengths and identities.” What once seemed an implausible scenario would, if it materialized, fundamentally redraw the global map of the industry. The impact would be seen not only in the cement segment of course, but also in the ready-mix and aggregates segments, as well as in the wider supply-chain. THE MERGER: A CUTTING EDGE COMPANY FOR THE BUILDING MATERIALS SECTOR The new company, Lafarge-Holcim, will be domiciled in Switzerland. A merger of equals (one Holcim share for one Lafarge share) has been unanimously approved and fully supported by shareholders, for whom this transaction represents a unique opportunity to scale up both companies. Holcim and Lafarge share a complementary footprint with operations in 90 countries, 73 of which are emerging markets and the remaining 17 are developed regions. The total cement production capacity would reach 427 million tons, with 348 million tons of aggregates and
70 million cubic meters of ready mix concrete sold worldwide, based on 2013 figures pre-disposals, pre-group elimination and post regional elimination. The ambition is to fundamentally transform the industry, while anticipating changing needs, enhancing value proposition for customers, addressing challenges of urbanization and setting new benchmarks for sustainability and climate change mitigation. The main two objectives: to be balanced and efficient. The companies emphasized that the merger will create value for all stakeholders: for customers and local communities through advanced products and integrated solutions (sustainable construction), sharing best practices and contributing to local development; for employees through enhanced career opportunities – both teams are among the best in the sector – and for shareholders with a rebalanced footprint with significant incremental value creation, optimized capital allocation and strong cash flow generation. The new company will also benefits from the best in class R&D network with over 1,000 experts worldwide.
GOVERNANCE AND LEADERSHIP Wolfgang Reitzle will be designated as Chairman of the company and the Board of directors will be equally composed with 7 members from each company. Bruno Lafont has been appointed as CEO and member of the board. An integration committee, co-chaired by Holcim and Lafarge, will be in charge of handling the transition phase and communicate the advances of the negotiation to the public. The new company will be publicly listed in both Zurich and Paris with central functions shared between the two locations. The shareholding structure will have a large and highly liquid free float. DIVESTMENTS: FOCUS IN EUROPE Combined sales and EBITDA for the two companies in 2013 reached EUR31.6 billion and EUR6.4 billion, respectively. Lafarge has higher exposure to Middle East and North Africa (MENA), while Holcim has a larger presence in Latin America. Anticipating regulatory requirements, the companies estimate divestments to
lafarge and holcim volumes
HOLCIM 450
Total 427mT
400
400
350
350
221
300 250
300 250 200
200 150 50 0
7
100 50 0
Cement capacity (mT)
MARCH / APRIL 2014
Total 348mT
193 155 Aggregates volume sold (mT)
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80 70 60 50
Total 70mm
3
31
40 30
150
206
100
LAFARGE
20 10 0
39 RMC Volume sold (mm3)
LAFARGE AND HOLCIM PORTFOLIO
similarly – country by country and engaged in regulatory talks.
lafarge and holcim portfolio
49%
45% 55%
51% 39% 61%
15% 85%
24%
OPERATIONAL SYNERGIES EUR1.4 billion in synergies are expected to materialize in different areas, in addition to the ongoing plans of the companies.
100% 76%
Combined sales by region HOLCIM
be in the range of EUR5 billion. The footprint will be further optimized and approximately 10 percent to 15 percent of the combined EBITDA of the companies will be sold. The new company will have a very strong capital structure with 60 percent of sales coming from high growth markets and 40 percent from developed markets. No market will represent more than 10 percent of total sales. According to the companies timing is now appropriate for divestments – selling high quality assets managed by high quality teams in countries where recovery is
LAFARGE
already present. Lafarge and Holcim are confident regarding the divestments given the appetite in the current environment and lower interest rates. The majority of divestments will be performed in Europe and outside of Europe where overlap is too strong. Consequently, the total weight of the group in Europe may diminish. Divestments might trigger a new wave of global M&A in the sector, possibly at attractive valuations. The majority of the disposals will be in cement (value wise). For the aggregates segment, the analysis is being performed
COMBINED RESULTS AFTER RALISATION OF DISPOSALS AND SYNERGIES ILLUSTRATIVE COMBINED Countries
DISPOSALS
SYNERGIES
1
90
ILLUSTRATIVE2 PROFORMA 90
2013 Sales (CHF/ Euros bn)
CHF 31.6 / EURO 38.6
CHF (6) / EURO (5)
CHF 0.5 / EURO 0.4
CHF 33 / EURO 27
2013 Sales (CHF / Euros bn)
CHF 7.8 / EURO 6.4
CHF (1) / EURO (0.8)
CHF 1.2 / EURO 1.0
CHF8 / EURO 6.6
1.Full run - rate 2. Excluding implementation costs
15 jurisdictions will be involved in the regulatory process and divestments should be done prior to the transaction. Informal contacts with regulators will start immediately, however for some of the most important, contacts have been already made. Holcim-Cemex swap will not affected by the merger.
Operational optimization, including logistics, distribution, IT and energy consumption will generate EUR200 million. Savings in overlapping countries and due to economies of scale in procurement are estimated at EUR340 million. Selling, General and Administration will account for EUR250 million while innovation and capex savings will total EUR200 million each. The remaining synergies will come from savings in the finance area. The combined company will leverage its cost optimization on their proven capabilities in cost efficiencies: Holcim’s Leadership Journey and Lafarge’s Cost Reduction and Innovation plan. Synergies will be phased in over 3 years. MAJOR STEPS TO CLOSING Both Lafarge and Holcim Works Council consultation processes are been initiated immediately and will be followed by divestments. An integration plan for implementation is being put in place straight after closing of the transaction. Regulatory proceedings have initiated in all relevant jurisdictions. The transaction is expected to close in the first semester of 2015.
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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 2 OF 3
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A
life cycle assessment (LCA), also known as: life cycle analysis is an input-output
analysis of inputs like materials, energy and outputs like emissions, waste etc. The goal of LCA is to assess the environmental impacts associated with the product / process and to compare with the alternates available and choose that alternate which is least burdensome one.
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feature he term ‘life cycle’ refers to the notion that a fair, holistic assessment requires the assessment of raw material production, manufacture, distribution, use and disposal including all intervening transportation steps necessary or caused by the product’s existence. The sum of all these steps - or phases - is the life cycle of the product.
the consumer. The use phase and disposal phase of the product are usually omitted. Gate to grave is an assessment of a partial product life cycle starting from use phase of a product upto its final disposal. Cradle-to-cradle is a specific kind of cradle-to-grave assessment, where the endof-life disposal step for the product is a recycling process.
The concept also can be used to optimize the environmental performance of a single product (ecodesign) or to optimize the environmental performance of a company. Common categories of assessed impact categories are global warming, resource depletion, acidification, ozone layer depletion, eutrophication, eco-toxicological, and human toxicological pollutants.
Life Cycle Assessment Methodology as per ISO 14040-14044 The procedures of Life Cycle Assessment (LCA) are part of the ISO 14000 environmental management standards: ISO 14040:2006 and 14044:2006. The new 14044 standard replaces the 14041, 14042 and 14043, but there have been no major changes in the contents.
Cradle-to-grave is the full Life Cycle Assessment from manufacture (‘cradle’) through the use phase and to the disposal phase (‘grave’). Cradle-to-gate is an assessment of a partial product life cycle from manufacture (‘cradle’) to the factory gate, i.e. before it is transported to
Unlike the ISO 14000 standard, it is not possible to get an official accreditation stating that an LCA methodology has been according to the ISO standard. The most important consequence of aiming to adhere to an ISO standard is the need for careful documentation of goal and scope and interpretation issues.
LCA framework (ISO 14040) can be represented as shown in Figure 1. In practice, LCA involves a series of iterations as its scope is redefined on the basis of insights gained throughout the study. Four different phases of LCA (ISO 14040) can be distinguished: ▶ Goal and Scope Definition: the goal and scope of the LCA study are clearly defined in relation to the intended application. ▶ Inventory Analysis: the inventory analysis involves the actual collection of data and the calculation procedures. The relevant inputs and outputs of the analyzed product system are quantified and produced as a table. ▶ Impact Assessment: the impact assessment translates the results of the inventory analysis into environmental impacts (e.g. climate change, ozone depletion). ▶ Interpretation: in this phase conclusions and recommendations for decisionmakers are drawn from the inventory analysis and the impact assessment.
PHASES OF LCA
LCA FRAMEWORK INITIATION
PRODUCT DEVELOPMENT AND IMPROVEMENT
(GOAL AND SCOPE)
INVENTORY ANALYSIS
INTERPRETATION
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STRATEGIC PLANNING PUBLIC POLICY-MAKING
IMPACT ASSESSMENT 11
DIRECT APPLICATION
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Goal and scope In the first phase of a LCA study, the goal and scope of study is specified in relation to the intended application. The objective of the study is described in terms of a so called functional unit. Apart from describing the functional unit, the goal and scope should address the overall approach used to establish the system boundaries. The system boundary determines which unit processes are included in the LCA; assumptions made and must reflect the goal of the study. Finally, the goal and scope phase includes a description of the method applied for assessing potential environmental impacts and which impact categories are included. Life Cycle Inventory The second phase of LCA study, ‘Inventory’, involves collection and compilation of data, modeling & simulation of the process or product under study, as well as the description, validation and verification of data. All quantities of material & energy inputs and outputs in the form of product and emission to air and water from system boundary are compiled into one inventory and converted in terms of quantity per functional unit.
Life Cycle Impact Assessment The third phase ‘Life Cycle Impact Assessment’ is aimed at evaluating the contribution to impact categories such as global warming, acidification, eutrophication, resource depletion etc. The first step is called characterization. Here, impact potentials are calculated on the basis of the LCI results. The environmental interventions calculated in the analysis are “translated” into environmental impacts during the impact assessment phase of LCA. Interpretation The phase ‘interpretation’ is the most important one. An analysis of major contributions, sensitivity analysis and uncertainty analysis leads to the conclusion whether the ambitions from the goal and scope can be met. All conclusions will be drafted during this phase. Sometimes an independent critical review is necessary, especially when comparisons are made to the public domain. Improvement Analysis This phase will mainly involve identification of environmental hot spots in the life cycle of the cement plants. For the identified hot spots in the each unit process of cement manufacturing, alternate measures were suggested. The environment improvement potential of impacts by possible adoption of these alternates were calculated and highlighted for major environmental hot spots in chapter 8. The outcome of the improvement analysis will be helpful in selection of environment friendly alternates like selecting fuel options and decision making in future. Life Cycle Assessment study of Cement Sector LCA study has been carried out for the first time to assess total impact parameters keeping in view of whole cement sector. All types of processes and technologies along with benchmarking for this sector were analyzed from “Cradle to Gate” boundary to get an insight in to the level of emissions from subunits as per process tree. The LCA study of cement sector ‘from cradle to gate’ included compilation of all
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the input and output in terms of raw materials, thermal energy, electrical energy, and emissions along with product. Inventory was prepared for 1000 kg cement, which is used as a functional unit with in defined boundary. Inventorization of cement plants In this LCA study, four cement plants situated in four different geographical zones like south, east, north and west of our country were selected. A LCA data format was designed by NCB team and was sent to various cement plants for data collection. A comprehensive inventories of four cement plants selected for detailed studies, were prepared for major raw material and both thermal and electrical consumption per ton of clinker then cement to distinguish clarity with different products like, OPC, PPC, PSC depending on specific plants. The process tree of cement plant was designed as shown in figure, which depicts the different major activity starting from mining to dispatch. Activity wise all major input, output and emissions as discussed in previous chapters were fed in to the data format of the software to assess the impact. Impact Assessment Global Warming Potential Global warming due to CO2 emissions is extremely high from this sector, due to its typical process of calcinations that isunavoidable, except per unit productthat can
be reduced by producing blended cement. Global cement industry accounts around 5% of the total world’s anthropogenic CO2 emissions. Impact assessment of GWP for four cement plants reveals different contributing factors. The specific CO2 emission coefficients, which are derived from fossil fuels, have been tremendously reduced in the cement industry over the last couple of years in most of the developed countries. The CO2 emissions from Portland cement manufacturing are generated by two mechanisms. As with most high-temperature, energy-intensive industrial processes, combusting fuels to generate process energy releases substantial quantities of CO2. Substantial quantities of CO2 also are generated through calcining of limestone or other calcareous material. This calcining process thermally decomposes CaCO3 to CaO and CO2. Typically, Portland cement contains the equivalent of about 63.5 percent CaO. Consequently,
about 1.135 units of CaCO3 are required to produce 1 unit of cement, and the amount of CO2 released in the calcining process is about 500 kilograms (kg) per one tonne of cement. MgCO3 in the limestone also contribute small amount of CO2. The level of CO2 emissions from fuels depends on the cement process and the fuels used. Total CO2 emissions from the pyroprocess depend on energy consumption and generally fall in the range of 0.85 to 1.15 tonne of CO2 per one tonne of clinker. Cement kilns burn coal and limestone both of which generate CO2 and then indirect emissions result from the use of electricity if fossil fuels had been used for its generation. The approximate contributions of each of the CO2 sources are: Calcinations : 50-55% ,Fuel combustion ; 40-50%, Electricity : 0 -10%. CO2 emissions at cement plants have been reduced through, continuous improvement of technology and management by switching from wet pro-
Impact Characterization of Four Plants (Per Tonne of Cement) Name of the Plant
GWP (kg CO2 equiv.)
AP (kg S02 equiv.)
CO2 (kg)
A
1530
1650
B
1180
C D
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NOx (kg)
SO2 (kg)
Dust (kg)
852
2.30
0.036
0.174
1050
750
1.46
0.029
0.155
1040
866
679
1.22
0.015
0.145
2630
2470
1600
3.47
0.039
0.167
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cesses to dry processes for the production of clinker and replacing primary energy sources with alternate fuels. Producing cement types that contain a lower percentage of clinker, this can be achieved, for example, by substituting granulated blast furnace slag or ground limestone, for the clinker.
from about 70 percent to more than 95 percent. In all four cement plant SO2 emissions from kiln is below detectable limit (BDL) due to nature of raw material and the process and technology they adopt, which was discussed in earlier chapters.
Acidification Potential Sulfur dioxide and Nitrogen oxides emissions are mainly responsible for Acidification potential of cement sector. As sulfur dioxide is formed during fuel combustion, releases of SO2 in the burning zone of the kiln from CaSO4 and oxidation of pyrite/ marcasite (sulfide) and organic sulfur in the preheater or in the kiln inlet of long wet or dry kiln. Sulfur dioxide may be generated both from the sulfur compounds in the raw materials and from sulfur in the fuel. The sulfur content of both raw materials and fuels varies from plant to plant and with geographic location. However, the alkaline nature of the cement provides for direct absorption of SO2 into the product, thereby mitigating the quantity of SO2 emissions in the exhaust stream.
Total SO2 emission is reflected mainly due to power consumption factor in addition to fuel consumption in heavy earth moving equipment in their captive mines. In kiln exhaust gases, more than 90 percent of NOx is NO, with NO2 generally making up the remainder from rotary kilns producing cement clinkers. NOx emissions are generated during fuel combustion by oxidation of chemically-bound nitrogen in the fuel and by thermal fixation of nitrogen in the combustion air. As combustion temperatures increase, the amount of thermally generated NOx also increases. The amount of NOx generated from fuel increases with the quantity of nitrogen in the fuel. In Indian cement industry, NOx emission varies widely from 200 mg/Nm3 to 1800 mg/Nm3 due to various process and pyrotechnology and type of raw materials they use.
Depending on the process and the source of the sulfur, SO2 absorption ranges
During LCA study, NOx from other sources have been considered; like NOx from
CPP specifically plant which uses maximum power from DG sets and also due to mining activity because earth moving equipment emitters fair quantity of NOx depending on diesel consumption. Resource Depletion: For calculation of resource depletion impacts, elemental analysis was done for each of the materials accounted for the purposes of this analysis, presenting resource depletion impact values within the following subcategories: ▶ minerals - limestone, ▶ land use (resource extraction area) ▶ water Consumption. Limestone is abundantly available world over and India is no exception,.regarding its proved category of 21,979 million tons. Hence it is pertinent for cement sector to focus on consumption of low grade limestone to increase the existing life of the mines. Fig gives the water consumption factor in KL/tonne of cement of the plants under study. It indicates that there is scope of improving the water consumption factor for cement sector India. More than this water harvesting is the crucial factor for cement sector to improve the water table around their plant area.
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mauritania two distant neighbors two close markets
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&
&
SENEGAL
Mauritania and Senegal have a long history of conflict that roots back to the late 1980’s.The reason of the tension between them: the Senegal River, which sits at their border, and Senegal Government’s plans to develop a rehabilitation project in the river banks. The majority of Senegal and Mauritania’s population live next to the river. It is a primary source of fresh water and used to irrigate farms’ land in a region that survives almost on agriculture.
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Mauritania
Mauritania, officially the Islamic Republic of Mauritania, is located in the Maghreb region of western North Africa. The country is bordered by the Atlantic Ocean to the west, by Western Sahara in the north, Algeria in the northeast, Mali in the east and southeast and by Senegal in the southwest. Mauritania is among the poorest countries in the world with around 70 percent of the 3.7 million inhabitants living in poverty. The country emerged from a military coup in 2008 that led to the election of a new president in 2009 and the lifting of international sanctions. The backbone of Mauritania’s economy is the mining sector which accounted
for 35.2 percent of the GDP in 2012. The country is the second largest producer of iron ore in Africa after South Africa. It also has large reserves of gold. Agriculture is also an important growth propeller for the country, especially in the Southern region. The economy has steadily recovered from the shocks resulting from the 2008-2009 global financial crisis when the country’s economy declined after more than a decade of uninterrupted growth. Mauritania’s economic growth reached 6.4 percent in 2013 compared to 6.9 percent in 2012 and only 3.6 percent in 2011 due to a stable macroeconomic framework and fiscal discipline. Mauritania’s construction sector is being
fueled by public and private investments in infrastructure, energy and mining. The residential and commercial construction sectors are still rather limited; however, consistent steps are being made towards improving living standards and access to basic facilities. The sector kept strong momentum with growth rates of over 10 percent in both 2012 and 2013, and contributed 7.2 percent to the national GDP in 2013. The Mauritanian authorities focus on wide-ranging public investment programs mainly supporting infrastructure projects. Large infrastructure projects are backed by the growing presence of Chinese and European companies. The informal sector, represented by small and resourceless
mauritania Population (million)
MAURITANIA: CEMENT PLANT LOCATIONS
4.5 4.3
4.2 4.1
4.0
4.0 3.9
3.5
3.3
3.5
2011
3.6
2012
3.7
2013
3.8
2014
2015
2016
2017
2018
Source: CW Research
3.8
Mauritania: GDP % Growth / GDP per capita (US$/person) GDP % Growth
GDP per capita (US$/person)
18.0%
1,800
16.0%
1,600
14.0%
1,400
12.0%
1,200
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1,000 16.8%
8.0%
600
4.0% 2.0% 0.0%
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6.9%
6.4%
6.4%
2012
2013
2014
3.6%
2011
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800
6.0% 8.5%
7.1%
4.8%
2015
2016
400 200
2017
2018
0
Source: CW Research
Source: CW Research
10.0%
locally organized companies, is also a key player in the construction industry. They compete for projects with contractors from Senegal, Tunisia and Morocco. Cement Industry Mauritania’s cement sector comprises three cement companies: Ciment de Mauritanie, a Mauritanian privately owned company, BSA Ciment, majority owned by the French Vicat Group, and Mauritano-Française des Ciments (MAFCI), a Ciments Francais (Italcementi) subsidiary. All Mauritanian cement plants are grinding only facilities located in the vicinity of the country’s main port city and capital, Nouakchott. The Port of Nouakchott also serves as the country’s hub for clinker imports. Mauritania’s cement sector set its basis in 1979 when the first cement plant was commissioned by Ciment de Mauritanie in the capital Nouakchott. It started operations
in May 1981 as a packing plant and was upgraded to a clinker grinding facility in late 1998 by Cemengal. MAFCI - Mauritano Francaise des Ciments was established in 1997 as a cement terminal in the capital Nouakchott. In 2001, the cement terminal was upgraded to a cement grinding plant that currently has a cement capacity of 0.45 million tons. The BSA Ciment’s project was launched in 2005 by Mr. Hmayen Bouamatou, a Mauritanian business man. The EUR26 million investment includes a 0.45 million tons cement grinding unit, a 216,000 cubic meters concrete batching plant and a prefabrication producing plant. In October 2008, Mr. Hmayen Bouamatou sold the majority stake of BSA Ciment (64.91 percent) to the French Group, Vicat. The informality of the Mauritanian cement market affects growth and competition among the players. The 0.69 million tons
of cement produced domestically last year maintained utilization rates at extremely low levels (below 40 percent estimated for 2013). Cement Market Cement demand in Mauritania has risen in recent years mostly fueled by construction activities in the Nouakchott and Nouadhibou areas. While Nouakchott has registered an increase in residential and commercial buildings construction, Nouadhibou consumption is primarily driven by mining related projects. Construction projects in the southern Mauritania usually include bridges and water retention schemes. Demand surged at an average annual growth rate of 13.3 percent between 2005 and 2013, slightly exceeding the 12.9 percent registered by cement production. The deficit in supply has been sourced with imports from Senegal.
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feature
Senegal
Senegal, officially known as the Republic of Senegal, is francophone Sub-Saharan country located in North West Africa bordered by Mauritania to the north and the Atlantic Ocean to the West with an estimated population of 13 million. The country had a moderate 3.4 percent economic growth during the years 2005 to 2012 but the economy is expected to pick up pace and expand at an annual average of 4.9 percent between 2014 and 2018. Senegalese economy is based in the agricultural sector, highly susceptible to rainfall and worldwide commodity prices, fishing and to some extent in the new growing sectors like tourism, communications and banking. The country has large reserves of phosphate, iron, limestone, zircon, and marble, which offer the potential of increasing exports in the future and the mining sector is looking to private investment in order to expand. The Construction Sector The construction sector contributed 3.7 percent to Senegal’s GDP in 2012, a significant setback from the 4.1 percent registered in 2011. Construction activity has been severely impacted by the sluggish internal environment, weakened by the uncertainty that prevailed during the 2012 presidential elections. Sector is driven by public investment in infrastructure, rising middle class, homecoming of expatriates and intensified urbanization. Cement Industry Senegal’s cement industry is dominated by two companies: Sococim, subsidiary
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MARCH / APRIL 2014
of French group Vicat, and Ciments du Sahel with a combined annual capacity of 6.5 million tons of cement. The sector registered significant expansion over the past years, expanding an annual average of almost 8 percent between 2005 and 2012. The largely potential entrance of a third cement company, Dangote Cement, has been delayed for some years due to land ownership issues. The beginnings of Sococim Industries date back to 1935 when Société des Ciments du Sénégal announced its intention to build the country’s first cement plant. The effort proved to be a failure at that time, and it was not until 1948 that Senegal commissioned its first cement facility, a 44,000 tons per year plant located in Rufisque. The Vicat Group entered the country in 1999, when it fully acquired Sococim Industries. Since the purchase the company made a series of investments to upgrade the plant and to improve its operations. In December 2008, Vicat increased its cement grinding capacity by 0.9 million tons per year with the commissioning of a new vertical cement mill. In 2009, a new kiln was added at the Rufisque plant, adding 1.2 million tons per year of clinker capacity. Currently annual production capacity of the plant is 3.5 million tons of cement. Ciments du Sahel entered the Senegalese cement market in 2002, after commissioning its integrated cement facility in Kirène. Dangote Cement, that owns a ready-to-go cement plant in Pout, has so far been unable to commission the facility due to legal constraints. The emergence of a third cement company generated strong opposition, mainly
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from Sococim Industries, which declared that there is no room for another cement company on the domestic market. In May 2013 Dangote Cement accused the owners of the Vicat Group of lobbying the government to protect their Senegalese subsidiary. The authorities confirmed that unfair competition does not exist and that competitors are at the same level of legality and law enforcement. Due to the expectation of increased competition, the cement market has been facing declining cement prices since January 2012. Senegalese cement producers benefit from significant raw materials deposits. The west-central part of the sedimentary basin holds important resources of limestone and marno-chalky. The Eocene marno-chalky of Bargny, located 30 km from Dakar, is the location of Sococim’s integrated production unit. Cement Market Cement demand, estimated at around 2.3 million tons in 2012, is supplied by the two local factories, leaving both Sococim Industries and Ciments du Sahel with extra capacity to export their products mainly to its landlocked neighbor, Mali. After a solid 7.8 percent cement market expansion in 2011consumption decreased 10.6 percent in 2012. The decline in demand was the result of the internal turmoil caused by the presidential elections, with major ongoing projects put on hold while waiting for the new administration to settle in, the international economic downturn and the poor 2011 agricultural season. Around 95 percent of cement is sold in
Cement exports Starting in 2010, cement exports boomed going from 1.2 million tons in 2009 to 2.4
Ciments du Sahel leads cement exports in Senegal with around 55 percent of the total volume delivered. Both companies export a significant share of their production. In 2008, Sahel exported around 65 percent of its total output while Sococim Industries exported only 40 percent.
Outlook
The future of Mauritania’s cement industry will depend heavily on the successful implementation of announced and in construction projects in the mining and energy sectors and on the infrastructure segment. Residen-
tial and commercial construction will also boost cement consumption, even though to a lesser extent. The higher budgetary revenues and outstanding growth in GDP projected for the next five years offer a favorable climate for growth and investment. In these conditions, cement consumption is expected reach around 1.4 million tons in 2018. In Senegal, the rebound in the construction sector (a 6.8 percent increase estimated for 2013) and the efforts by domestic cement companies to increase their competitiveness and presence on the domestic market led to an estimated increase in cement demand of 33 percent in 2013. Consumption on 2018 is expected to exceed 3.4 million tons, driven by public spending on infrastructure projects and the further development of the residential market, due to high urbanization.
Senegal Population (million)
SENEGAL: CEMENT PLANT LOCATIONS
16 15.4 15
15.0 14.6 14.2
14
13.8 13.5
13
12
13.1 12.8
2011 2012 2013 2014 2015 2016 2017 2018
Source: CW Research
In terms of cement consumption per capita, the country experienced a peak in 2011, the only year when it slightly exceeded 200 kg/capita. After the decline of the market in 2012, with consumption levels dropping by 10.6 percent, per capita consumption plummeted to 176 kg/capita, even below the 2005 level.
million tons in 2012, surpassing domestic demand. Between 2005 and 2012, Senegal exported more than 10.8 million tons of cement in total, 8.3 million tons of which were dispatched to Mali.
SENEGAL: GDP % Growth / GDP per capita (US$/person) GDP % Growth
6.0%
GDP per capita (US$/person) 1,400
5.0% Source: CW Research
1,200 4.0%
1,000 800
3.0% 2.0% 1.0%
3.5%
4.0%
4.6%
4.7%
4.9%
5.1%
5.1%
600 400
2.6%
200 2011 2012 2013 2014 2015 2016 2017 2018
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0
Source: CW Research
bags and the remaining 5 percent in bulk. The regions with the highest consumption in Senegal are the urban areas of Dakar, Touba and Sally-Thiès, which are estimated to account for almost 65 percent of cement utilization in Senegal. The market is highly seasonal due to the intense rainy season in the second half of the year.
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CEMENT MARKETS
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CEMENT VOLUMES Sun is shining upon Europe - mild winter revives cement sector At this time last year, cement companies around the world were ending the first quarter in dismay, affected by difficult weather conditions. The tide has turned in 1Q 2014 with most of the European markets being propelled by a mild winter. Cement sales increased in Germany by over 43 percent in the first two months of 2014 when compared to last year as the country registered its fourth mildest winter since 1881. The German housing sector is expected to keep cement consumption high throughout the year. Investments will also rise by 5 percent in 2014 and reach EUR35.3 billion, building on the basis of lower borrowing costs and higher workforce availability. Similar conditions took the Polish cement sector out of the doldrums. Both cement production and consumption increased by more than 35 percent in the first two months of 2014 versus last year. The Polish construction sector also reported its highest growth rate since January 2012, increasing by 14.4 percent in February 2014 YoY. However, the Polish Agency of Enterprise Development draws attention upon the elevated risk of bankruptcy that still describes all construction segments.
Cement sales increased in Germany by over 43 percent
But not all shines in Europe. Spain declined by almost 10 percent at the end of February 2014 versus 2013, consuming around 1.5 million tons of cement during the period. Holcim Spain announced another employment reduction plan of 141 employees, adding to a disturbing total of 2,000 employees affected since 2011. The number reflects an 80 percent employment adjustment. The paralysis in public spending could be worsened considerably as the Spanish government re-launches discussions with builders over a multibillion euro bail-out concerning nine bankrupt motorways. According to the Spanish legislation, when a private motorway faces bankruptcy, the government must repay the cost of the land and construction. Feb 2014 YTD Cement Demand Growth Rate (%) 50% 40% 30% 20%
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Germany
Poland
Japan
Brazil
Colombia
Pakistan
Ecuador
Thailand
Indonesia
Peru
Argentina
Morocco
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Source: CW Research
-30%
Saudi Arabia
-20%
Spain
0% -10%
Cyprus
10%
CW Research
Peru reported a slight recovery in February 2014 . Cement consumption increased by 3.6 percent YoY as some construction projects were accelerated. However, optimism abounds within the market. The Minister of Housing, Construction and Sanitation declared that the construction sector will increase by 9 percent this year as opposed to the 8.5 percent reached in 2013. A critical element in the equation is the reactivation of self construction. On the positive side, Brazil seems to have left behind itself the slowdown registered in 2013. The cement consumption increased by 8.5 percent in the first two months of 2014 and topped 11.5 million tons in volume.
CEMENT MARKETS
Part of the South American cement markets entered 2014 on a slide. Argentina’s cement production and consumption declined by 1 percent over the first two month of 2013. Cement production is projected to maintain a similar volume as last year when the market hit a record high of 12 million tons. The sustainability of the industry is also supported by the favorable contract prices settled between the government and supplying companies, which are seen as boosting infrastructure projects and social housing.
Peru reported a slight recovery in February 2014
Feb 2014 YTD Cement Production Growth Rate (%) 40% 30% 20%
Poland
Ukraine
Vietnam
Colombia
Thailand
China
Japan
Belarus
Argentina
Peru
-40%
The beginning of year was far from being favorable for Middle East’s largest cement market. Saudi Arabia faced a reduction of 9.5 percent in its cement sales over January and February 2014 with the February YoY set at a negative 5.9 percent. Ten Saudi cement companies reported falling cement sales in February 2014. Besides cement capacity expansion projects, companies are also looking into optimizing their operations and reducing costs. Saudi Cement Company announced that it will permanently close three cement production lines at Hofuf cement plant that are deemed inefficient and generating higher costs. Also confronted with a slower start (4.5 percent increase in cement production) and flooded with concerns regarding overcapacity and pollution, China unveiled a landmark urbanization plan for 2014-2020 . Urbanization is viewed as the road toward modernization, giving access to evolved urban infrastructures, public service facilities and living conditions. With growth concentrated in a select set of cement markets, results at the end of the first quarter are expected to reveal some surprising trends. Slowdowns - in although traditional growing markets - are foreseen to intensify, including in countries such as Indonesia, Thailand, Argentina or Ecuador.
Source: CW Research
-30%
Saudi Arabia
-20%
Cyprus
0% -10%
Kyrgyzstan
10%
China unveiled a landmark urbanization plan for 2014-2020
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Japan and South Korea exported less cement in the first two months of 2014 with YTD declines settling at 19 percent and 14 percent, respectively. On the contrary, Thailand managed to export 1.4 million tons of cement in the first two months of the year and increased by 20 percent YTD.
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 (%)
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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 Coal Market Update Market remains sluggish: China’s coal imports continue to plunge Total coal trading volumes continue drop through the beginning of the year on lower demand from China. Inventory at the ports in China remained high in February after the country replenished stocks in advance to the end-of-January New Year’s holiday and as Chinese customers turn to cheaper supplies from local coal producers. As of mid-March the local price of ordinary coal (4,500 kcal) had declined 15 percent since the beginning of the year.
Drummond resumed coal exports from Colombia on March 31 and announced it is investing US$ 360 million to transform the port facilities by August 2014
India coal imports remain strong due to the inability of the local industry to keep up with domestic demand. While coal imports plunged 25 percent in January volume gained 26 percent in February, after the rupee recovered 1.5 percent and made imports cheaper. Coal India, the world’s largest coal miner which accounts for 80 percent of India’s local output, closed the last fiscal year ended March 2014 with a production of 462.5 million ton. Coal India missed its 2013-2014 coal production target by 19.5 million tons and attributed the loss in production to weather (cyclone Phailin) and regulatory obstacles. Indonesia’s coal exports were down in February following lower shipments to China. As coal demand from China dries up affecting Indonesia’s output, prices remain depressed and transportation costs escalate, local miners are suspending their operations. At least six coal companies in Bengkulu, south west of Sumatra, shut down in March. In Colombia shipments were severely affected after Drummond was forced to halt its operation in the port in early January, driving the country’s February exports down 44 percent from January. Drummond resumed coal exports from Colombia on March 31 and announced it is investing US$ 360 million to transform the port facilities by August 2014. Coal Global Trading (million tons) 120
Indonesia
Australia
Russia
South Africa
Colombia
US
Rest
100 80 40 0
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 Feb-14
20
Source: customs data
60
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In Australia, the volume exported from Port Waratah Coal Services Limited (PWCS), located in the Port of Newcastle, increased 6 percent in February from the previous month. Coal exports were partly affected by cyclone Dylan, which hit Australia at the end of January.
In Australia, weak demand from Chinese companies drove thermal coal export price to its lowest level since October 2009
South Africa delivered 4.5 million tons of coal in February from its Richards Bay Coal Terminal (RBCT), falling 2 percent from January. Coal export facilities were affected by a nine-day power outage that halted all operation at the terminal for a week at the beginning of February. The power outage caused delays to vessels and is reportedly costing the industry around US$170 million in lost earnings.
Energy Prices Update Coal Coal trading prices remained weak in main export hubs in March 2014 in a still oversupplied market and uncertainty of China’s economic growth. Average price hit US$77 per ton, the lowest since the end of 2009. March South African export cargoes were down to US$75 per ton, plummeting 12 percent from December 2013 and 10 percent year-over-year. Throughput at Richards Bay Coal Terminal (RBCT), the single largest export coal terminal in the world, has been severely affected during the first quarter. RBCT suspended all operations including the export coal train service on January 31 due to a power outage. The service at the terminal was restored February 10th. In March heavy rain drenched coal supplies at power stations affecting production at the plants. The operators have been forced to trim its forecast for shipments in 2014 to 73 million metric tons from 75 million tons. Steam Coal FOB Average Prices (US$/ton) Colombia exported
Australia Newcastle
Indonesian HBA
South Africa Richards Bay
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Sources: EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces
Mar-14
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
50
70
90
110
130
150
US exported
In Australia, weak demand from Chinese companies drove thermal coal export price to its lowest level since October 2009. Price fell to US$79 per ton in March, down 13 percent from December 2013 and 19 percent from the same month of last year.
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As coal demand from China dries up affecting Indonesia’s output, prices remain depressed and transportation costs escalate, local miners are suspending their operations
China’s Bohai-rim Steam Coal Price Index (BSPI) dropped again in March 2014 and closed at 530 Yuan (US$86 per ton), down 5 percent from February 2014. Local prices in China have been steadily falling since January amid a weak demand and increased competition with cheap imports. Ordinary mixed coal (4,500 kilocalorie) plummeted 15 percent between January 1st and March 28th. The Indonesia HBA coal export index price for March 2014 closed at US$77.01 per ton FOB, US$3.4 lower than February. Export prices in Indonesia continue to fall following China’s weak consumption growth and lower domestic prices. In 2013 China represented around one third of exports out of East Kalimantan, the biggest producing and export region in the country. US Petcoke Export Price (US$/ton) rolling 12-month average 120 100 80 60
F-14
J-14
D-13
N-13
O-13
S-13
A-13
J-13
J-13
M-13
A-13
M-13
F-13
J-13
D-12
N-12
O-12
S-12
A-12
J-12
J-12
M-12
A-12
M-12
0
F-12
20
Source: customs data
40
Petcoke The export price of U.S. uncalcined petcoke has remained mostly unchanged for the last 6 months, tracking relatively stable coal prices. Petcoke price lingered at US$77 per ton in February 2014 with a lot of uncertainty in the market around coal prices. Customers also remain cautious about potential new taxes imposed in China on coal and petcoke. U.S. petcoke exports in February were estimated at 2.6 million tons, up 7 percent from February of last year. Exports to Mexico have been recovering after a drop of 28 percent in December due to the holidays. However volume is down 38 percent year-over-year and the average monthly volume has consistently declined during last 9 months due to the slowdown in the country’s economy. Mexico recorded in 2013 the smallest annual gain in GDP since the global recession in 2009. To learn more, please contact the CW Research team at sales@cwgrp.com or +1-702-430-1748. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE
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Shipments to Brazil in February are down 21 percent year-on-year following two consecutive quarters of lower economic growth in the country and a weak currency. In India, year-to-date petcoke cargoes from the United States have seen a significant increase as imports are used to offset local deficit in fuel supply (mostly coal) and users take advantage of low trade prices and shipping rates.
A sluggish natural gas demand after a mild weather in Europe has kept prices stable
Natural Gas A harsh winter in the United States with non-stop storms hitting the Northeast pushed natural gas prices up to record high in February, driving the Henry Hub spot to US$6.0 per MMBtu, 27 percent over January’s price and up 80 percent from February 2013. Price pulled back to US$4.9 per MMBtu in March despite the severe weather still present across the north part of the country in the last days of March. Current higher than normal price together with the arrival of spring will bring down demand in the near term and push down natural gas prices. Increases in natural gas prices contributed to a decline of 10% in gas used for power generation in 2013 however shale gas production continues to rise. Output from Marcellus (largest source of natural gas in the US) surged 61% in 2013 versus last year. European natural gas price record US$10.9 per MMBtu in March 2014 slightly declining from the previous month. A sluggish natural gas demand after a mild weather in Europe has kept prices stable. However U.K. and Germany future prices jumped recently due to increased tension between Ukraine and Russia. Russia supplies about one-third of the Europe’s natural gas, more than half of which travels through Ukraine (to Slovakia, Germany, Italy and Austria).
Natural Gas Prices (US$/MMBtu)
20
US
Europe
15
10
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Source: EIA, World Bank
Jul-13
Nov-12
Mar-12
Jul-11
Nov-10
Mar-10
Jul-09
Nov-08
Mar-08
Jul-07
Nov-06
Mar-06
Jul-05
Nov-04
Mar-04
Jul-03
Nov-02
Mar-02
Jul-01
Nov-00
Mar-00
Jul-99
Nov-98
0
Mar-98
5
MARKET DATA SNAPSHOT
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Coal trading prices remained weak in main export hubs in March 2014 in a still oversupplied market and uncertainty of China’s economic growth. 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 (March except where not specified); MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year
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cement market and competition
M
arket and competition
eliance Cement Company has forayed into the Uttar Pradesh market as part of its plan to expand its presence in the northern markets. In India, shares of ACC, Ambuja Cements, and UltraTech Cement have seen good recovery since the second fortnight of February, after dipping 10-25 percent over the previous months. India: Firms expand production amid middling demand JK Lakshmi Cement reports that the average capacity utilization for the company in the markets it operates is around 82-83 percent. In the current quarter, the company has been operating at 100 percent utilization. The company’s expansion plans are on track, and the first production from the Durg plant is expected to hit the market by October 2014. The company expects to increase its total capacity from its current 5 million tons
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to 10 million tons by the end of FY15. This reflects a recent improved demandsupply scenario for the cement industry, with demand rising particularly fast since January 2014. Reliance Cement Company has forayed into the Uttar Pradesh market as part of its plan to expand its presence in the northern markets. Uttar Pradesh is one of the largest cement-consuming states in the country, with consumption totaling around 26 million tons per year. With the
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ever-increasing industrial activities, real estate, construction, and infrastructure, in addition to the onset of various Special Economics Zones (SEZs) being developed in Uttar Pradesh, the market is expected to grow at the rate of 6 percent over the next few years. India-based Ambuja Cements can resume mining works at Himachal Pradesh after the High Court issued a restraining order on the Ministry of Environment and Forest’s move to keep the company in abey-
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ance. Ambuja Cements said cement production in the state remained unaffected by the abeyance order. The company had to temporarily stop clinker production at its Darlaghat plant, which is one of the integrated plants of the company. Controlled by Swiss major Holcim, Ambuja has a capacity of 27.25 million tons per year at present. In India, shares of ACC, Ambuja Cements, and UltraTech Cement have seen good recovery since the second fortnight of February, after dipping 10-25 percent over the previous months. While the earlier underperformance of the stocks of India’s top three cement companies was due to low demand and muted realizations in the second half of CY2013, the rebound has been helped by a series of recent price hikes. Near-term demand, however, is likely to be supported only by the consumer segment. There is little hope of government projects picking up, given the upcoming elections. The sector has largely underperformed the market over the past year, reflecting earnings downgrades as demand failed to pick up, despite a favorable base. Under-owned, major large-caps are trading at nearreplacement costs and can be accumulated on declines. Prices of cement in India’s Ahmedabad fell between 10-13 percent during the last quarter, owing to a slowdown in demand
from end user industries like real estate and infrastructure. Average wholesale cement prices have increased by 8-12 percent in select markets like Delhi, Chandigarh in the north, and Mumbai in the west between September and December 2013. Pakistan looks to boost exports to India Pakistani cement makers must engage with distributors in India to boost cement exports there. The Wahga Customs Station has been completed and will soon start functioning in order to facilitate trade with Pakistan. India has imposed no ban on Pakistan’s truckloads of goods entering into the country, and at Wahga border their movement is continuing. Exporters should ask their buyers to contact private sector certification agencies to acquire certification, since security concerns make cement buyers reluctant to come to Pakistan. India’s Binani shutters Rajahstan plants on tax row Binani Cement has shuttered two of its plants in Rajahstan as it seeks government action on its plea for relaxation in the mode of payment of its due taxes. The taxes owed are to the tune of Rs154.51 crore. The two plants are in Sirohi and Sikar districts. Binani has asked the state government to allow it to pay the tax in 36 monthly installments. Due to financial losses, the company is not able to make a onetime
payment. The firm says the fate of over 3,000 employees and their families now rest with the state government, because with no production and sales at both the units, they are grappling with the challenges of living with mounting expenses. Last month, the state government accessed the cement-maker’s 26 bank accounts under the VAT Act, in order to recover the owed taxes, and told the banks not to not allow the company to withdraw money since the sales tax on it has been due since 2007. French Vicat reports lower 2013 profit France-based Vicat Cement has reported lower earnings in 2013, adding that it expects market conditions to remain difficult in France and Italy this year. Last year, the group’s net profit declined by 7 percent to €120 million, impacted by a challenging environment in Egypt and by unfavorable exchange rates. Meanwhile, the consolidated gross operating profit (EBITDA) has decreased by 2.4 percent to €427 million. At constant scope and exchange rates, however, this indicator increased by 0.3 percent over the period. In early February, Vicat warned that its annual EBITDA should be stable at constant scope and exchange rates compared to 2012. Turnover fell by 0.3 percent in 2013, to €2.3 billion, due to lower volumes in France and Egypt, price pressures in India and Senegal, as well as unfavorable exchange rates.
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cement M&A AND FINANCE
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&a and finance
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ndia-based Jaypee Group is now looking to sell off its Panipat grinding unit, which has an annual capacity of 1.5 million tons. Jaypee Associates is also looking to exit its joint venture with SAIL by selling off majority stakes in Bhilai and Bokaro cement plants to cut its debt. In the finance sector, Binani Cement has shut down two of its plants in Rajahstan as it seeks government action on its plea to relax the mode of payment of its taxes due, which amount to Rs 154.51 crore. Indian cement plants change hands In India, Chennai-based Chettinad Cement Ltd. will buy out the Hyderabadbased Anjani Portland Cements. The Board of Anjani Portland has approved the draft of the share-purchase agreement. The deal would result in an open offer as per the existing norms and will involve transfer of a 61.74 per cent stake in the company. The debt on its books now stands at Rs 222 cr. The deal would give the Chennai-based
company a significant presence in the Andhra Pradesh market. Anjani Cements has over 1.2 million tons production capacity in its two plants in Nalgonda district of Andhra Pradesh. It also has plans for setting up a greenfield unit in Karnataka. India-based Jaypee Group is now looking to sell off its Panipat grinding unit, which has an annual capacity of 1.5 million tons. Swiss construction giant Holcim is in the
race for the asset. A domestic player based in the north has also expressed interest in the same unit. These discussions are in line with Jaypee’s strategy to shed non-core assets and reduce its debt burden. Jaypee Associates is also looking to exit its joint venture with SAIL by selling off majority stakes in Bhilai and Bokaro cement plants to cut its debt. The deal, with cement major ACC, would represent around Rs. 2900 crore. The company is India’s third largest cement producer, with current total capacity of 33.30 million tons per year. In September 2013, Jaypee sold its two Gujarat plants, totaling 4.8 million-ton-per-year capacity, to Ultratech for Rs. 3800 crore. India Cements will absorb two of its units, Trinetra Cement Ltd (TCL) and Trishul Concrete Products Ltd (TCPL), after securing board approval. TCL is a stockexchange listed entity, while Trishul is unlisted. According to an India Cements communication, the swap ratio for the merger will be 2 equity shares of 10 each of India Cements for every 9 equity shares of 10 each of TCL, and 7 equity shares of 10 each of India Cements for every 3 equity
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Profits fall for Bamburi, JK Bamburi Cement says its full-year net profit fell by a quarter, hit by export sales to regional markets and stiffer competition. It posted Sh 3.6 billion after-tax profit for the year that ended in December 2013, compared with Sh 4.8 billion recorded a year earlier. Bamburi is increasing its total dividend pay-out of Sh 4 billion, equivalent to Sh 11 per share, up from the Sh 3.8 billion paid in 2013. The first half of 2013 saw a drop in the company’s performance, mainly attributable to competitive pressure in Uganda, and also a significant reduction of exports out of Uganda to the inland Africa markets due to political tensions, which impacted our overall performance.
shares of 10 each of TCP. Trinetra Cement has a manufacturing plant in Rajasthan with an annual cement capacity of 1.5 million tons. It has a captive power plant of 20MW capacity. India Cements holds a controlling 61.22 percent stake in the company. Trishul Concrete Products, promoted by India Cements through its subsidiaries, is involved in the manufacture of 12.3 lakh cubic meters of ready-mix concrete, marketed under the brand Coromandel. The company has eight manufacturing plants in Chennai, Bangalore, Hyderabad, and Coimbatore. Consequent to the amalgamation scheme, the shares held by India Cements and its two subsidiaries in the two companies will be cancelled, and the total number of equity shares to be issued to the remaining shareholders will be about 9.75 lakh shares, dilution of 0.32 percent. Post merger, the paid-up share capital of India Cements will marginally increase to Rs 308.15 crore from the current Rs 307.18 crore.
The profits of cement maker JK Cement have fallen more than 40 percent from Rs 4.35 crore in 2011-12 to Rs 2.53 crore in 2012-13. In 2002, JK Cement earned a profit of Rs 2.25 crore, which grew to Rs 5.12 crore in 2006. But profits went down from 2006 on and reached their lowest point in the past 11 years (Rs 1.98 crore in 2010). JK Cement has two cement manufacturing plants at Khrew in Srinagar. Each plant consists of two kilns with an individual capacity per kiln at around 300 million tons per day. The company’s downfall has been large-
ly attributed to bureaucratic intervention, wrong decision-making, and government neglect. Positive signs for India Cements and Ambuja Cements Angel Broking has maintained its neutral stance for the fourth quarter of FY2014 for stocks of India Cements. The company’s operating performance was ahead of projections for the third quarter, in which the company posted a net profit of 0.4cr during the quarter (vs. projections of a loss). The difference was due to better-than-expected cement realization. Realization was higher by 1.4 percent, year-over-year, and up 7.8 percent on a sequential basis. ICEM’s return ratios are expected to remain subdued due to substantial investments in subsidiaries. Although the stock appears cheap at an EV per ton of US$47on FY2015E capacity, the valuation is justified considering the unfavorable location of the firm’s plants. India-based Ambuja Cements saw its shares rise 1.29 percent to Rs 153.25 per share after a bulk deal of 10 lakh shares was executed on the counter on BSE. The bulk deal saw 0.06 percent of the equity of Ambuja Cements changing hands.
The external debt of Trinetra Cement and Trishul Concrete Products, as of March 31, 2013, was Rs 283 crore.
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cement projects and expansions 5
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1 rojects and expansions
almia Cement Bharat’s greenfield cement plant in Yadwad Village, Gokak will be ready for operation in five months. Furthermore, Reliance Cement has received approval for the construction of a Rs 3,400-crore cement plant. Firms build new plants in India India-based Hi-Bond Cement is building a new plant in Rajasthan with at estimated investment of Rs 1,300 crore. The company plans to complete the project in three years’ time. The plant will be set up at an initial production capacity of 3 million tons per year. India-based Dalmia Cement Bharat reports that its greenfield cement plant in Yadwad Village, Gokak will be ready for operation in five months. The plant has a capacity of 2.5 million tons per year and will cater to the Karnataka region. The addition of the new plant will expand the company’s annual production capacity from 17 million tons to 21.8 million tons. Dalmia Cement has tapped Holtec Engineering as the main engineering consultant, Larsen & Toubro for electrical installation, GDCL for civil works and infrastructure, and Haji APbaba for mechanical erection of the plant. The state of Himachal Pradesh in India has approved the construction of a Rs 3,400-crore cement plant by Reliance Cement. The project, to be set up in the Chopal area of Shimla district, would provide employment for 350 persons. The Single Window Authority also approved 11 other projects totaling investments of
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about Rs 1,008 crore and employment potential for 2,175 persons.
focus
Petron Engineering bags deal with UltraTech Petron Engineering Construction has secured a Letter of Award for Civil Contract at Nagpur Cement Works UltraTech Cement Limited, for a total contract value of Rs 54.70 crore. Shares of Petron Engineering traded higher on the news, reaching Rs 108.8 from the previous close of Rs 104.9. The total number of shares traded during the day was 1,058 in over 120 trades.
UItraTech expansion in Uttarakhand hits roadblock
Farmers protest cement plant in Himachal, India In India’s Himachal, hundreds of farmers who were affected by the construction of a cement plant in Mangal Gram Panchayat, in Solan District, have staged protests outside the Arki SDM office. Villagers have carried out dharna and hunger strikes over the allegation that the cement plant harmed the villagers when Jaypee Associate dumped illegal muck into their environment, causing massive devastation due to the subsequent runoff of debris into agricultural fields. The Himachal Pradesh high court passed an order for the muck’s remov-
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UltraTech’s plan to expand its operations in Uttarakhand may have hit a snag after the new Chief Minister Harish Rawat declared that he is not focusing on industrialization. The cement maker is facing opposition from local people and environmentalists amid fears that the proposed plants may cause pollution in the state. Sources close to the Chief Minister have stated that Rawat is opposed to all those industries which may harm the fragile ecology of the hill state.
al and asked the district administration to comply with its order. However, villagers report that the district administration was unable to force the firm to remove the muck dumped in the villages and on the land of people who were not protesting against the district administration. The high court slapped a fine of Rs. 100 crore on the firm for violating environment norms and constructing an illegal thermal power plant at Behgari in Solan District.
volume & pricing
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cement
olume and pricing
Cement prices variable in India Cement producers in India are hiking prices. ACC, UltraTech Cement, and Ambuja Cements have all reportedly increased cement prices by 10-15 rupees per bag across the country. A 50-kg bag now costs 300-350 rupees in the northern and southern Indian states. Usually, January to May is a peak demand season for cement. The price hikes are expected to aid the companies’ operating margins. Smaller players have followed the majors in raising prices. Shares of ACC, UltraTech Cement, and Ambuja Cements rose 0.5-0.9 percent on announcement of the news. During the last quarter, prices of cement in India’s Ahmedabad fell between 10-13 percent, owing to slowdown in demand from end user industries like real estate and infrastructure. Average wholesale cement prices increased by 8-12 percent in select markets like Delhi, Chandigarh in the north, and Mumbai in the west, between September and December 2013.
made it an issue before the 2012 assembly election, and now BJP is planning to do the same, alleging that cement prices have increased by about seven times since the Congress came to power in the state. Satpal Singh Satti, BJP’s state president, stated that the leaders of Congress have double standards on the issue: “People in Himachal Pradesh are forced to pay more than the neighboring states as Congress government in the state has failed to take required steps to slash the cement prices. The entire matter should be investigated to bring out the truth before public,” he mentioned. The BJP leader added that cement companies have increased the prices by about seven times ever since Congress came to power. “While in opposition, Congress leader Mukesh Agnihotri was raising the issue prominently, but now, after becoming minister, he has preferred to be silent on the issue,” he added.
Cement demand may see uptick after elections All-India cement prices remained flat month on month. Average prices remained flat at Rs 305/bag in March from Rs 304/bag in February. The highest price increase was registered in the western region by Rs 7/bag MoM led by the price increase in Gujarat. In all other regions, prices varied from Rs -1/bag to Rs 1/bag. In the northern region, prices remained at a higher level compared to the previous month due to continued supply constraints on the back of suspension of operations at two of the Binani plants. Prices in the region remained at Rs 316/ bag compared to an average price of Rs 280/bag during 2013. The southern region restrained declining prices at Rs 276/bag with the Hyderabad region, which is facing pricing pressure, registering a minor decline in price by Rs 3/ bag. In the western region, pockets in Gujarat saw price increases of up to Rs 20/bag while prices in Maharashtra remained flat.
The rise of the cement prices, an issue in Himachal Pradesh The rise of the cement prices has become a poll issue in Himachal Pradesh as opposition BJP has decided to corner ruling Congress on the issue. Before 2012 assembly elections, Congress had made it an issue and now Congress had
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Resignation of the managing directors of Ambuja Cements and ACC The managing directors of India-based Ambuja Cements and ACC have offered to resign as part of broad changes at both Holcim units.
Long service award ceremony organized by Lafarge Jojobera Cement Plant in India, owned by Lafarge, organized on the 22nd of March 2014 the Long Service Award Ceremony at Jubilee Park. During this special event, 48 employees of the company were awarded for their contribution. Many awards were received during the award ceremony: two officers were awarded for 25 years of service and one officer for 15 years of service. Among the non-officers, four employees were awarded for 30 years of service, seven Employees awarded for 25 years of service and 34 employees awarded for 20 years of services. Present at the occasion were Mr. Rakeswar Pandey, Mrs. Sita Pandey, Mrs. Kalpna Warke and all employees of Jojobera Plant accompanied by their families.During the ceremony, Mr. Ramesh Warke, vice president
Onne Van Der Weijde and Kuldip Kaura are the resigning directors, whereas Sumit Banerjee, the former MD of ACC, who had quit to join Reliance Cement, is likely to re-join ACC as the managing director. Holcim has appointed Bernard Terver as its Asia head, replacing Paul Hugentobler, who retires in February 2014. Terver, a member of the Holcim Executive Committee, has been appointed head of a region encompassing Africa, the Middle East and the Indian subcontinent.
Jojobera Cement Plant addressed the public, presenting his appreciation for their outstanding contribution to the success of Jojobera plant and Lafarge India. As a token of appreciation for the employees, Mr. Warke handed over the certificates. HeidelbergCement unit in Bangladesh appoints new chairman The Bangladesh-based unit of HeidelbergCement has appointed Albert Scheuer as chairman. Scheuer is currently a member of the managing board of HeidelbergCement Group and is in charge of Asia-Oceania and worldwide coordination of Heidelberg Technology Centre (HTC). He was previously responsible for HeidelbergCement’s operation in China as chief operating officer and worked as managing director of HeidelbergCement Technology Center in the European cement plants from 1998 to 2005.
focus Ambuja Cement, runner up award at Assocham CSR Excellence award Ambuja Cement won the first runner up award at the Assocham CSR Excellence Award during the 6th Global Corporate Social Responsibility Summit hosted in New Delhi. The award was received from Kapil Sibbal,
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Minister for Communications and Information Technology, Govt of India in the presence of Rana Kapoor, President, Assocham, by Pearl Tiwari, Director, Ambuja Cement Foundation and Joint President (Sustainability). The award brings Ambuja Cement Foundation the recognition it deserved for the outstanding contribution for the social development done through its various projects.
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ACF is the social development arm of Ambuja Cements Ltd and works exclusively with with rural communities on issues related to water conservation and management, sustainable agriculture, health and sanitation, support for school education, awareness on prevention on HIV and AIDS, promotion of self-help groups (SHGs) for socio-economic development of women and capacity building of local youth and farmers.
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
pakisTan’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 with extra quantities. The stricter appli- cement, with their exports nearing 0.22 akistan cement sales rose to acation record high during reaching 2.135 million tons, up 8.70 pertons. impacts not onlyFebruary, the availability of million cent over the corresponding month of last year. Pakistan-based transportation, but also the logistics costsLucky Cement recorded a net profit the first 11 months of the current incurred. for the half year ending December 31, 2013, of Rs 5.161 billion, upDuring 20.3 percent year-over-year. 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 US$9 an overseas Firms face impediments in Sri Lanka Reports Sri Lanka that the paying exportsaround notched 7.7million milliontotons this fiscal externalfrom markets, mostlyindicate to Afghanistan, company while functioning as a BOItons com-in Pakistan-based Thatta Cement reports that local of Swiss Holcimwere may dispatched be lookwhileunit around 2.7 percent year versus more than 7.8 million pany. In addition, wrongful conduct such as its proposed grinding and bagging plant in ing to exitThe thesouthern country units amidprovided a governto India. the the last fiscal year for the first 11 months. extraordinary amounts of money sent overSri Lanka’s Hambantota Port has been susment probe into its transactions. Holcim is pended due to a delayed signing of a land being questioned in connection to a series seas under the guise of royalty payments lease. The cement plant is expected to have of questionable transactions. These include have also come under question. In spite of 38 MaY / JUNe 2013 BMWeek CW Group Coal Week CemWeek INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE operational conflicts with a car transshipirregularities during the takeover of PCCL probe, CemWeek CW Group theCoal Week the company has made substanBMWeek BMWeek ofCemWeek CW Group tialCoal Week investments and finalized future ment facility. An environmental impact (Puttalam Plant), a violation the Foreign recent development plans. study is being conducted on industries Exchange Control Act at the takeover of around the port. the Galle Plant from Ruhunu Cement, and Pakistan: Cement sales up and prices may fall Pakistan cement sales rose to a record high during February, reaching 2.135 million tons, up 8.70 percent over the corresponding month of last year. During the first eight months of the current fiscal year, local cement dispatches stood at 16.274 million tons, the highest ever, representing a yearover-year growth of 2.9 percent from 15.814 million tons. Local dispatches increased to 1.76 million tons on average in the northern areas against an average of 1.67 million tons during the previous seven months of the current fiscal year. In the southern region, local dispatches were 369,000 tons during February compared with average permonth dispatches of 349,000 tons from July to January.
R
egional news
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regional news Pakistan-based Lucky Cement recorded a net profit for the half year ending December 31, 2013, of Rs 5.161 billion, up 20.3 percent year-over-year. The earnings per share (EPS) for the corresponding period increased to Rs 15.96 up year-over-year from an EPS of Rs 13.27. The company’s gross profit increased by 10.7 percent during the half year as its net sales revenue improved by 11.8 percent to Rs 19.575 billion up year-over-year from Rs 17.511 billion. Sales of Lucky Cement during the half-year registered a growth of 4.3 percent, rising to 1. 9 million tons vs. 1.8 million tons in same period last year. Export sales volume registered a growth of 19.10 percent to 1.2 million tons vs. 1.0 million tons in the same period last year. The collapse of the railway transportation sector is one cause contributing to the price hikes affecting Pakistan’s cement market. The revival of railway transportation could save another Rs 10-15 per cement bag. The government imposes a Rs 400-per-ton excise duty on cement, leading to an additional Rs 20 cost per bag. Removal of the tax burden and revival of low-cost transportation could lower the per-bag rate of cement by up to Rs 50. In August of last year, domestic cement producers faced a new power tariff for industrial consumers, at 46 percent above the previous one, to Rs 15.31 from Rs10.51 per unit. The time-of-day rate was also increased by 35 percent, to Rs 18.81. The off-peak rate shot up by another 62 percent. All these cost increases led the cost of transportation from Karachi to upcountry destinations to increase by Rs 1,000 to reach Rs 1,500 per ton. Pakistan cement makers have asked the government for a tax incentive that will exclude cement from the “Third Schedule” of the Sales Tax Act. The schedule requires fixation of the maximum retail price (MRP) on the basis of two different zones in the upcoming 2014-2015 budget. Dynamics of every province and region are different, so collection of sales tax on the basis of a single MRP
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across the country is anomalous and would ultimately force manufacturers to restrict sales only to nearby markets. As an alternative, the cement industry proposes a zonebased maximum retail price as it will save consumers from nearby areas from paying excessive amounts while protecting manufacturers from incurring losses on cement sales in remote areas. Semen Indonesia profile Semen Indonesia, formerly known as Semen Gresik, is the largest producer of cement in Indonesia. The company was established on 25th March, 1953, and officially inaugurated on August 7th, 1957, by the first President of the Republic of Indonesia. The company’s first operational plant had an installed capacity of 250,000 tons of cement per year. Today, Semen Indonesia is capable of producing 27.7 million tons of cement in six facilities located across the region. Siam Cement looks to future in Myanmar Siam Cement reports that its operations in Myanmar will commence by 2016, when its 2 million-ton-per-year unit becomes operational. The company has launched a number of corporate social-responsibility activities to improve the lives of people in Myanmar. Such programs include public health and medical efforts, educational support for students, and communitybuilding activities. The firm’s CSR activities also include building new schools near the factory, mobile clinics that will provide medical services to the people, and renovation of pagodas in Mon State. Dungsam Cement enters Indian market Bhutan-based Dungsam Cement Corporation has recently entered India’s northeastern market. The company’s Dragon Cement is eyeing the states of North-Bengal and East Bihar. DCCL is incorporated under the Companies Act 2000 of the Kingdom of Bhutan as a wholly owned subsidiary of Druk Holdings & Investments, an
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focus Firms looking to buy Pakistan Lafarge unit Pakistan-based Lucky Cement and some local rivals are competing to buy the local unit of Lafarge. Prospective buyers have submitted bids to the Paris-based company for Lafarge Pakistan Cement, which reported a record profit in the nine months ending Sept. 30. Lafarge’s plant in the Punjab province has a capacity to produce 2.5 million tons per year and will help the buyer tap sales as Prime Minister Nawaz Sharif’s government increases spending on infrastructure projects.
undertaking of Royal Government of Bhutan. The firm produces 4130 tons of cement daily and has invested close to Rs 1088 crore in this venture. Bangladesh supply woes hit cement industry Cement makers in Bangladesh are having a hard time delivering goods to customers as strikes and shutdowns paralyze the supply chain. For example, MI Cement planned to deliver at least 700 tons of cement on Friday, but was able to supply only 200 tons. The supply chain has been almost entirely cut off by the current wave of shutdowns and blockades, with businesses failing to get shipments even when they offer to pay five to six times more than the usual fare.
orders & equipment highlights
O
rders & equipment
Repeat Siwertell road-mobile unloader order in less than three months A Turkish construction services company Mussa Insaat Dis Ticaret Ltd of Istanbul has ordered two road-mobile Siwertell 10 000 S cement unloaders from Cargotec in less than three months. The trailer based, diesel powered units will have a rated discharge capacity of 300t/h and are scheduled for delivery in mid-May 2014 and late August 2014. “A second order, within two months of the first, is a significant vote of confidence for the operational advantages delivered by Siwertell mobile unloaders,” says Jörgen Ojeda, Director for Siwertell mobile unloaders. “Our customer plans to use the Siwertell units for cement unloading operations at several sites
along the Libyan coast, demonstrating the flexibility of our road mobile systems. Not only are they easy to move from one port to another but once at the new location, the unloader can be prepared for work very quickly by just one person.” Further factors contributing to the orders were the well documented reliability of Siwertell mobile unloaders, along with their high unloading capacity and low operational and maintenance costs. Each unloader will be equipped with a double bellows system and dust filter, ensuring that they deliver consistently high levels of efficiency and environmental protection. “As with the first order, we take great pride in
being part of the re-construction of Libya, in view of the area’s recent history,” Mr Ojeda adds. Complete solution developed for bypass dust treatment Ferro Duo is a medium-sized international raw material company based in Duisburg, Germany. In recent years, Ferro Duo has specialized on the recovery and processing of cement and steel industry dusts. In addition, A TEC has engaged in technologies for the re-use and recycling of bypass dust in cooperation with Holcim. With the combined experience of A TEC in collaboration with Holcim’s factory Rohožník (Slovakia) as well as Ferro Duo, A TEC is now capable to offer a technically
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orders & equipment supreme investment solution for recovery of bypass dust in the cement industry for various conditions. Ferro Duo as a partner with vast experience in the recycling of waste dust is an ideal partner for the construction and operation of such facilities and for the treatment of dusts and products formed therefrom. Together the companies can offer an individual and optimal solution from plant operation to product recovery – clients will benefit from the most technologically and economically advanced system in the area of bypass dust treatment. KHD Humboldt Wedag reports 2013 results KHD Humboldt Wedag International AG (KHD), a leading global provider of equipment and services for the cement industry, ended fiscal year 2013 with a turnover of EUR 249.6 million, a significant increase over the previous year, reports Finanz Nachrichten. The continued intense competition and the unsatisfactory quality of margins in the backlog had a negative impact. Nevertheless, KHD reported a positive EBIT of EUR 1.2 million. According to the report, orders of KHD dropped due to subdued investment activ-
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ity and delays in contracting by 58.0% to EUR 172.4 million in the fourth quarter of 2013, however, KHD has won major orders from Russia, the USA and Turkey. The increase in revenue by 16.9% to EUR 249.6 million was favored by the high order backlog from the previous year. In addition to the project business a solid business with spare parts and services with nearly EUR 38 million has contributed to revenues. The gross profit margin decreased from 20.5% to 11.8%. This was due in particular to the lower margin quality of some projects which have been obtained in hard competition under high pressure on prices, as well as difficulties in the execution of some orders. LR1300 crawler’s complex cement lift Indian firm Bhoir Group used its 300t Liebherr LR 1300 crawler crane to complete a complex lifwt at a cement plant in Chattisgarh, India The crane was hoisted 8.3t with an 86m main boom, 89m luffing jib and derrick with 50t of suspended counterweight. The lift was carried out at a radius of 53m and the load was placed at a height of 118m. The rental firm said that without the LR 1300 a bigger crane would have been needed to execute the lift, thus requiring more space and causing higher costs. The Bhoir Group
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has four LR 1300 crawler cranes and has used them for several high-rise and heavy lift erections. The crane can be fitted with a maximum of 98m of main boom, a maximum of 113m of luffing jib and various fixed jibs including windmill fixed jibs of 7m and 8m. Lafarge Pakistan acquires new vehicles The local unit of French Lafarge in Pakistan has introduced PRTS-compliant vehicles for the safety of its employees, reports The News. Thirteen vehicles complying with PTRS (Public Road Transport Safety) were handed over to the company’s sales staff at a ceremony held on March 28 at Lafarge Pakistan’s head office in Islamabad. According to the report, the cars have at least two airbags, seatbelts for all passengers and an anti-lock braking system (ABS).
Infrastructure & projects
I
nfrastructure & projects
n terms of new projects, IL&FS Engineering and Construction Company Limited have secured new contracts worth Rs 300 crores from the Rail Vikas Nigam Ltd., a wholly owned subsidiary of the Indian Railways. Meanwhile, The National Buildings Construction Corporation (NBCC) unveiled new rebuilding plans in three states. As for updates on projects, The Mumbai Metro Rail Corporation (MMRCL) will issue tenders for the Mumbai Metro Line 3 by July. NEW PROJECTS Brick Eagle to Invest in Housing Investment manager Brick Eagle Capital Advisory is all set to invest Rs 620 crore in lands for affordable housing development. The Company plans to tie up 1000 acres of land to deliver one million housing units in the next 15 years. The Company plans to build houses in key cities such as Mumbai where it focuses on meeting at least 1% of the cities demand for more than 2.5 million affordable homes. Brick Eagle currently manages more than 30 million sq.ft. of affordable housing projects, which are at different stages of development. Centre to build new Waterway in Tamil Nadu The Centre gave its nod for the construction of National Waterway-4 (NW-4) at a cost of Rs 123 crore in Tamil Nadu. The project involves construction of a 37 km Waterway between Sholinganallur
to Kalpakkam in the South Buckingham Canal. The construction on the Waterway is expected to be complete in the next two years. IL&FS secures new rail contracts IL&FS Engineering and Construction Company Limited have secured new contracts worth Rs 300 crores from the Rail Vikas Nigam Ltd., a wholly owned subsidiary of the Indian Railways. The contract involves construction of seven elevated metro stations in Kolkata Metro Line West Bengal. The project is expected to be complete in the next 36 months from the date of issue of Letter of Acceptance (LOA). IL&FS is already engaged in two railway contracts for RVNL which involve construction of a new Broad Gauge Railway Line in Andhra Pradesh and Maharashtra. NBCC unveils new rebuilding plans The National Buildings Construction Cor-
poration (NBCC) unveiled new rebuilding plans in three states. The Corporation plans to expand its redevelopment plans beyond the national capital and is currently involved in inking MoUs with the state governments of Madhya Pradesh and West Bengal and Orissa. The Corporation plans to invest Rs 6,000 crore as part of its rebuilding plans. The Corporation is planning to redevelop two government properties of 100 acres each in Bhubaneswar whereas plans to redevelop about 20-30 acres each in West Bengal and Madhya Pradesh. L&T bags new housing contracts Construction major L&T has won contracts worth Rs 1,981 crore in the housing sector. The contracts involve construction of 24 towers and 271 villas in Bangalore. The project is scheduled to be completed in 42 months. The contract also includes construction of a residential township involving 134 housing units in Gujarat. By
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infrastructure & projects
Supreme Infrastructure bags new orders Supreme Infrastructure has secured three orders worth Rs 617.7 crore for various construction works in Bihar and Maharashtra. In Bihar, the NHAI has awarded the company a contract that involves twolaning of Chhapra-Rewaghar-Muzzafarpur section of NH-102. In Maharashtra, the Brihanmumbai Municipal Corporation (BMC) awarded a contract that involves improvement of various roads whereas the City and Industrial Development Corporation of Maharashtra (CIDCO) awarded the company a contract that involves construction of roadover-bridge in Navi Mumbai. Tata Group to invest Rs 800 crore in infraSTRUCTURE sector The Tata Group has set aside a staggering investment targets worth Rs 800 crore which it plans to invest in various segments of construction and infrastructure sector including roads, airports and housing. The Company plans to invest in the infra sector through its subsidiaries such as Tata Housing Development, Tata Projects and Tata Realty in the next five years.
UPDATE ON PROJECTS MMRCL to float tenders for Mumbai Metro Line 3 by July The Mumbai Metro Rail Corporation (MMRCL) will issue tenders for the Mumbai Metro Line 3 by July. The project involves construction of 32.5 km long Colaba-Bandra-SEEPZ underground metro corridor. The Corporation is expected to award the project to successful bidder by October and the construction is expected to commence from January 2015. Once complete, the Metro-3 corridor will carry approximately 13.9 lakh commuters daily. COMPLETED PROJECTS India’s First Monorail becomes operational India’s first monorail became operational when Chief Minister of Maharashtra, Mr. Prithviraj Chavan flagged off India’s first Monorail in Mumbai. The Mumbai Monrail has been built by L&T in consortium with Scomi Engineering Bhd. Of Malaysia. The elevated guideways on which the monorail runs was among the several challenges that the company faced while constructing the monorail. The Mumbai Monorail is the latest among the several high-profile infrastructure projects executed by L&T.
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Source: Mumbai Metropolitan Region Development Authority (MMRDA)
winning these two contracts, the Company has made significant roads in the residential sector.
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: Jaypee keen on selling more cement assets
1 FLSmidth turns in 2013 loss
2 Ambuja halts limestone mining in Himachal Pradesh
2 CW Research sees global cement trade prices increase 5.9% in 2013
3 India: State wants freeze on Binani Cement accounts
3 CIMAF to build plant in Congo
4 India cement makers target Myanmar as sales dip
4 Egypt halts Lafarge plan to use coke to fuel plants
5 Trinetra Cement in merger talks with India Cements
5 Dangote installs new cement unit in Nigeria
6 Challenging year ahead seen for India cement sector
6 Spain hears complaints about waste disposal at cement plant
7 India: Dalmia Cement to install greenfield plant
7 Fire hits Holcim plant in Switzerland
8 India: Ambuja Cements, ACC execs offer to quit
8 Kenya’s Bamburi set to install new waste disposal plant
9 India: UItraTech plans in Uttarakhand may hit roadblock
9 Argos increased cement shipments last year
10 India: HeidelbergCement posts narrower quarterly loss
10 CW Research sees world cement demand growth pause in 2014
11 India: Hi-Bond Cement to build plant in Rajasthan
11 New green norms could put haze limits on Arizona plant
12 India’s Jaypee Cement selling off Panipat unit
12 Austria to look into potential sale of Asamer holdings
13 ACC has new blending unit in India
13 Cemex set to resume operations at damaged UK plant
14 India: Binani shutters Rajahstan plants on tax row
14 PPC looking to foray into Algeria
15 India holds big potential for Pakistan cement makers
15 Poland’s Górazdze Cement spends on modernization
16 Credit Suisse gives ratings for UltraTech, Ambuja
16 HeidelbergCement acquires Kerpen & Kerpen
17 India: Analysts see limited upside for India cement majors
17 KHD bags deal with Lafarge units
18 Reliance Cement gets greenlight for new plant
18 France: Vicat posts 2013 results
19 Bulk deal boosts Ambuja Cement stocks
19 Saudi approves establishment of new cement firm
20 UltraTech Cement to set up plant in Katni district
20 New cement plant proposed in Congo
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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
AshTrade Europe 2014 Fly Ash Industry Conference
May 22-23, 2014
webinars hosted by cw research
Petcoke Quarterly Review
Sheraton D端sseldorf Airport Hotel, Dusseldorf, Germany
April 24, 2014 at 2:00 PM GMT Cement Business & Industry (CBI) Africa 2014
COLOMBIA
AshTrade Americas 2014 Fly Ash Industry Conference
Solid Fuels Summit (SFS) India 2014
Cement Business & Industry (CBI) India 2014
June 12-13, 2014
October 15-16, 2014
November 11, 2014
November 12-13, 2014
Hyatt Regency Johannesburg, South Africa
Houston, United States
Holiday Inn New Delhi International Airport, New Delhi, India
Holiday Inn New Delhi International Airport, New Delhi, India
cw summits CW Summit Americas 2014 September 11 - 12, 2014 Miami, US
CW Summit Middle East 2014 November 2014 Dubai, UAE
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. For more information please visit http://research.cwgrp.com/meetings
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A GMI GLOBAL INDUSTRY CONFERENCE CBI India 2014 Conference will focus on the various aspects of India’s cement industry from a business growth & investment perspective. Notably, the program will take a dual-track business and technical approach to the issues around: Market perspective, forecast and competitive outlook Alternative fuels, new business models Environmental performance management Finance and capital markets Coal as mainstay fuel option and outlook Efficiency, innovation, new developments Technology, operations and best practices
A GMI GLOBAL CEMENT AND LIME INDUSTRY CONFERENCE AND EXHIBITION
CEMENT BUSINESS & INDUSTRY
2014
NOVEMBER 12-13, 2014 • Holiday Inn New Delhi Int'l Airport • NEW DELHI, INDIA
For attendance, speaking opportunities or general questions about the conference please contact the CBI Client Service team at sales@gmiforum.com or via phone at +1-203-516-7424. India contact: Dr. SN Pati dr.snpati52@gmail.com 09891415719 Global contact: Beatrice Ene be@gmiforum.com +40-722-764-802
Organized by GMI Global and again with the great support from the India Cement & Construction Materials (ICCM) journal the event is expected to bring together more than 200 cement and lime professionals. GMI is excited to build on the success of the CBI series to expand the scope to include participants from the entire region this time around. PAST PARTICIPANTS: ACC Ltd. | Alley-Cassetty Companies, Inc. | Alliance Polysacks Pvt. Ltd. | Alternative Resource Partners | Ambuja Cements | Argus Media | ASEC Trading | Beroe Consulting Pvt. Ltd | BEUMER Group GmbH & Co. KG |Bharathicement Corporation Pvt. Ltd -| Binani Cement | Browz | Burundi Cement (BUCECO) | Cachapuz Cement Manufacturers Association (CMA) | Cimpor | Claudius Peters India | Coal Insights | Credit Suisse | CRH India | CW Group | Dalmia Cement | Evonik Degussa India | Fives FCB | FLSmidth | FLSmidth Maag Gear AG | Golder Associates Canada | Golder Associates India | Golder Associates UK | HeidelbergCement Group | Hi-Bond Cement India | IFC | India Cements Ltd | J.K.Cement Ltd | JK Sons | KHD-| Lafarge Inda | Larsen & Toubro Limited | Loesche | Loesche India | Madras Cement Limited | Magnesita Refractories | Mapei Construction Products | McKinsey & Co | Middle East Green Energies | Mitsui & Co. India Pvt. Ltd. | Mjunction Services | Mondi Oman LLC | Oman Cement -| Orient Cement | Promac India | RAMCO - Enterprise Process Solution | Ready Mixed Concrete Manufactureres | Association (RMCMA) | Refratechnik | Reliance Cement Company Pvt. Ltd. | Rexnord | Sagar Cements Limited | SAIF | Sanghi Industries Ltd. | Segezha Packing | Shree Cement Ltd. | SKF India Limited | Somi Conveyor Beltings Ltd | Starlinger & Co. GmbH | String Automation Pvt. Ltd. | The Crescent Group | Timken India Limited | UltraTech Cement Ltd. | Union Cement | Vicat | Vyankatesh Chemical Industries | W.R. Grace | Zuari Cement, Italcementi Group
Organized by GMI Global LLC To learn more visit the GMI website: www.gmiforum.com