CemWeek Magazine Issue15 Lo Res

News | Analysis | Market Coverage | Interviews | People Moves

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MAGAZINE

GLOBAL CEMENT INDUSTRY. KNOWLEDGE. JUNE / JULY 2013

MozambiqueThe rough diamond of SouTh africa

Carbon Capture & Storage

The nexT gianT STep for The cemenT induSTry

cement business & industry india & south asiaOctober 9-10, 2013 Hilton Mumbai International Airport Hotel Mumbai, India

CBI India & South Asia 2013 Conference will focus on the various aspects of Indias cement industry from a business growth & investment perspective. Notably, the programme 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

GMI GLOBAL 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 CBI India 2012 to expand the scope to include participants from the entire South Asia region this time around.

supported by

Register on-line at www.gmiforum.com or email [email protected] may also call us in the US at +1-203-516-7424

conference

india & CONSTRUCTION MATERIALSindiaCemWeek CEMENT

cbi

reen shoots of improvement may be starting to emerge on a wider scale around the planet. But even while the main focus in these markets may be on optimizing the core franchise, some are looking beyond. In this issue of the CemWeek Magazine, we take a look at two aspects in particular: the exciting (even if not yet fully certain)

prospects of carbon capture and the ever-present need to improve logistics with a case example from Holcim-controlled ACC in India.

But one market that has not had to suffer the waning demand that many developed economies did, is Mozambique in southeastern Africa. The CW Groups Research & Analytics team shares some highlights about this market from their recently published market research report. Additionally, CW Groups Research & Analytics provides a snapshot of the international Cement and CemEnergy segments as a recurring viewpoint in the eponymous section.

Be sure to also take a look at the CW Group upcoming meetings to see if we can meet in person or virtually in the next few months. Our regularly scheduled webinars are an excellent way to share some ideas and get a conversation started always feel free to contact our consultants and analysts about these topics. Additionally, the CW Group will take part of several industry events over the coming months, including Cement Business & industry India 2013 and Solid Fuels Summit India 2013, both hosted in Mumbai on October 9-10, and 8-9, respectively. We hope to meet you there!

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

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EDITOR'S NOTE

ImprovIng beyond today.

cement business & industry india & south asiaOctober 9-10, 2013 Hilton Mumbai International Airport Hotel Mumbai, India

CBI India & South Asia 2013 Conference will focus on the various aspects of Indias cement industry from a business growth & investment perspective. Notably, the programme 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

GMI GLOBAL 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 CBI India 2012 to expand the scope to include participants from the entire South Asia region this time around.

supported by

Register on-line at www.gmiforum.com or email [email protected] may also call us in the US at +1-203-516-7424

conference

india & CONSTRUCTION MATERIALSindiaCemWeek CEMENT

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ContentsFEATURES

DEPARTMENTS

6 CARboN CAPTURE PRojECTS iN ThE CEMENT iNDUSTRyThe Next Giant Step for the Cement Industry

12 LEADERS Q&A wiTh iNDiAS ACCAchieving logistics excellence

16 MozAMbiQUEThe rough diamond of South Africa

EDiToRS LETTER1 Improving beyond today

NUMbERS iN bRiEF4 Cement Equipment Order Intake Index Slides

RESEARCh20 Official Prices22 Coal market update23 Energy price update26 Tables Page

REgioNAL REPoRTS28 Europe, Middle East & Africa 32 Central and Southeast Asia

34 Americas38 Asia Pacific

FRoM oUR iNDUSTRy PARTNER40 Building materials update

PRojECTS & PEoPLE43 People on the move44 Equipment & notable projects

Cw gRoUP MEETiNg AgENDA46 CW Groups upcoming events

06

16

31

12

Now its time for LOESCHE innovative technology. For further information please call +49 211 53 53 0 or visit www.loesche.com

iT is always a good Thing To moniTorThe Trends of our business buT we Think iT is muchbeTTer To

lead1300948_AZ_Image_A4_04.indd 6 08.04.13 13:11

CEMENT EQUIPMENT ORDER INTAKE INDEX (CEOI)

0

100

200

Q1 2013Q4 2012Q3 2012Q2 2012Q1 2012Q4 2011Q3 2011Q2 2011Q1 2011Q4 2010Q3 2010Q2 2010Q1 2010Q4 2009

nUmbers IN BRIEF

IndIces plummet In fIrst quarter of 2013

Equipment companies experienced a steep decline in order intake during the first quarter of 2013, as orders were still affected by the weak situation in some markets and uncertainty about the future performance of the industry.

CEMENT EQUiPMENT oRDER iNTAKE iNDEXThe CEOI dropped 70 percent and 82 percent in the first quarter of 2013, compared to the last quarter of 2012 and the first quarter of 2012, respectively. The slide is mostly attributed to a lack of large orders during the period, since cement customers remain indecisive about expansions and new greenfield plants under the current environment. The most active countries in terms of new capacity are still located in South America, sub-Saharan Africa and Asia, where infrastructure projects continue to boost cement demand.

CEMENT EQUiPMENT oRDER bACKLog iNDEXThe Cement Equipment Order Backlog Index (CEOB) moved to the 93 level in the first quarter of 2013, down 16 percent from the second quarter of 2012. The index continues to follow a downward trend that started in the second quarter of 2012; however, equipment supplier expectations remain positive. Companies are counting on cement demand growth from developing regions to support a strong order intake and an increase in order backlog in 2013, but tough competition and hard market conditions will remain in the short term.

CEMENT EQUIPMENT ORDER BACKLOG INDEX (CEOB)

80

100

120

Q1 2013Q4 2012Q3 2012Q2 2012Q1 2012Q4 2011Q3 2011Q2 2011Q1 2011Q4 2010Q3 2010Q2 2010Q1 2010Q4 2009

Sour

ce: C

W Gr

oup R

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Sour

ce: C

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oup R

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www.cemweek.com JUNE / JULY 20134BMWeekBMWeek

BMWeekCemWeekCemWeek

CemWeekCW Group Coal WeekCW Group Coal Week

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The Cw group's global Cement Trade Price Report includes current pricing for cement delivered through the retail channel as well as import and export pricing for major markets around the world.

worldwide monthly cement prices Major market retail prices Regional retail price indices Covers grey and white products

Regional monthly cement price indices: Mediterranean basin North America & Caribbean East & Southeast Asia And other regions

global import and export cement prices: Major market trade flows FOB export prices CIF import prices

Annual subscriptions include four quarterly 50+ page reports: Single user: USD2,300 Multi-user (max 3-users): USD3,800 Corporate use: Upon request

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We know the cement industry well. Let us guide you. For more information please contact us at [email protected] or on +1-702-430-17 48848 N. Rainbow Blvd., Box #1658, Las Vegas NV, 89107, USA

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Global market cement prices.Import & export trade prices.All in a single must-have resource.

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Capture &Capture &Carbon Carbon

StorageStorage




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Brevik Cement Plant, NorwayNorcem is working with Norways Aker Solutions and RTI International on a carbon capture pilot project at the Brevik cement plantCourtesy of Norcem, HeidelberCement Group. Norway.

the next giant Step for the Cement Industry

the next giant Step for the Cement Industry

As global development surges on, the rapid deterioration of the environment has

become a major concern in every part of the world. And carbon dioxide (CO2) emissions have been recognized as the

primary culprit in climate change.

www.cemweek.comJUNE / JULY 2013 7BMWeekBMWeek



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during the past decades, the world has seen a rapid increase in carbon dioxide emissions, and the most recent statistical reports show that global CO2 continues to rise. Growth is primarily concentrated in the Asia Pacific region, and attributed mostly to emis-sions in China, Japan and India. Indus-trialized nations with more access to the latest technology and information have been able to curb growth in carbon di-oxide emissions for the past two decades.

Although there is no question that the answer lies in energy conservation and alternative fuel sources, technology plays a critical part in finding a real solution to this global issue. As the largest con-tributors to emissions, energy genera-tors have been one of the first sectors to pursue projects aimed at discovering new technology and methods to reduce CO2 emissions. On the other hand, the U.S. and Europe are currently leading the way in the use of hybrid technology for the transport industry, which is the second largest contributor. Vehicles that run purely on renewable energy sources and electricity may be decades away from commercial distribution, but those that run on a mix of electricity and fuel are gaining popularity. As the technol-

ogy becomes cheaper and more reliable, it will soon become the standard in the automotive industry. And as the third largest contributor, the manufacturing and construction industries are ensuring that they follow the same commitment as the energy producers in finding ways to minimize, if not totally eliminate, carbon dioxide emissions.

gLobAL CEMENT iNDUSTRy ACTivE iN REDUCiNg Co2 EMiSSioNSAt the very core of global progress and development is rising infrastructure, and along with increased infrastructure de-

velopment comes increased production of cement. In 2011, world cement pro-duction was estimated at 3.6 billon tons, which translated to more than 2 billion tons of CO2 released in the atmosphere from fuels utilized in the production pro-cess and the calcination of limestone. So it is no surprise that cement manufactur-ers have become one of the sectors that more actively pursue reduction of CO2 emissions.

Over the past two decades, cement pro-ducers were able to reduce CO2 emissions per ton of cementitious material by as

FEATURE

0

10,000

20,000 Asia Pacic Africa Middle East Europe & Eurasia

South & Central America North America

20112009200720052003200119991997199519931991

GLOBAL CARBON DIOXIDE EMISSIONS-MILLION TONS OF CO2

2013 Aker Solutions

Source: BP Statistical Review of World Energy, June 2012




CW Group Coal Week

much as 16 percent. From 754 kg of CO2 per ton in 1990, the world average has de-clined to 633 kg per ton in 2010.

The reduction was primary attributed to efforts and programs related to (a) en-ergy efficiency, (b) alternative fuel and (c) clinker substitution. However, these efforts will not be sufficient as urbaniza-tion in emerging economies is expected to accelerate in the coming decades. In-creasing demand and production will soon outpace any progress made by such programs.

CARboN CAPTURE AND SToRAgE To SUbSTANTiALLy CUT DowN Co2 EMiS-SioNS oF CEMENT SECToRAccording to the International Energy Agency (IEA), in order to meet interna-

tional standards, the cement industry will need to cut down its CO2 emissions by approximately 18 percent from current levels by 2050. With the cement sector currently accounting for 5 percent of global CO2 emissions, the only way to achieve this goal would be the use of Car-bon Capture and Storage (CCS) technol-ogy in cement production worldwide. By 2050, the IEAs vision is to have 50 per-cent of cement plants in North America, Europe, Australia and East Asia using CCS technology, while a somewhat lower adoption rate of 20 percent is targeted in China and India.

CCS technology involves capturing waste carbon dioxide from large sources such as power plants, transporting it to a storage site and eventually depositing it

CEMENT INDUSTRY - AVERAGE NET KG OF CO2 PER TON OF CEMENTITIOUS MATERIAL

0

500

1,000

South America ex. Brazil North America Middle East Japan Aus NZ India Europe

CIS China Central America Brazil Asia ex. China, India, CIS and Japan Africa

2010200520001990

SOURCES OF CO2 EMISSIONS

Others

Fuel Combustion for Other Uses

Industries

Transport

Energy Generation

43.9%

21.7%

18.2%

12.2%

4%

where it cannot have any impact on the atmosphere. The sequestered CO2 is nor-mally injected in geological formations to serve various purposes such as enhanced oil recovery. There are three types of tech-nology for carbon sequestration that are currently under study: pre-combustion, post-combustion and oxyfuel combus-tion. For cement production, only post-combustion and oxyfuel combustion are possible options for carbon capture.

2013 Aker Solutions

Souce: World Business Council for Sustainable Development - Cement Sustainability Initiative

Source: www.oica.com




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Post-combustion carbon capture involves the use of either chemical absorption or membrane technology, and these will not require major changes to the kiln-burn-ing process. Post-combustion technol-ogy is possible for new kilns as well as for retrofits and has the potential ability to capture about 77 percent of CO2 exhaust gases. Aside from higher capital costs, a cement plant with post-combustion tech-nology is likewise estimated to consume more energy to capture and compress the CO2.

Below is a table indicating the compara-tive costs of cement plants with post-combustion technology using chemical absorption (MEA-based solvents). The European scenario is based on a 1 mil-lion ton per year plant while the Asian developing country scenario is based on a 3 million ton per year plant. Costs of transport and storage are excluded.

On the other hand, oxyfuel combustion technology utilizes oxygen instead of air in cement kilns. It cannot be installed as a retrofit and is only possible as new

build. A new cement plant with oxyfuel technology is expected to incur 25 per-cent more in investment cost than a tradi-tional cement plant. Oxyfuel combustion is still in its early stages of research and would require more study before it can be considered as a viable option for CCS.

The costs of an oxyfuel cement plant us-ing a 1 million ton per year plant for the European scenario and a 3 million ton per year plant for the Asian developing country scenario are provided below. Costs of CO2 transport and storage are excluded.

With CCS technology, it is important to emphasize that the transport and storage of the captured CO2 is an essential part of the process and cannot work with mere sequestration technology alone. The cap-tured CO2 will be compressed into liq-uid form and transported via pipeline or tankers for storage. Thereafter, the CO2 will be injected in depleted oil and gas fields or deep saline aquifer formations. In the process known as Enhanced Oil Recovery (EOR), the CO2 will be inject-

ed into porous rocks and bind chemically to the rock over time, keeping natural gas and oil secure underground for years.

PiLoT PRojECTS FoR CCS TEChNoLogy iN CEMENT PRoDUCTioNAt the moment, there are four pilot activi-ties worldwide that are working on CCS technology for cement plants.

1. Skyonic established a CCS facility at the Capital Aggregates cement mill in the U.S., which focuses on the re-cycling of CO2 to create sodium bi-carbonate or baking soda. They are operating a mobile facility that tests the technology with CO2 captured from a cement plant.

2. Norcem of the Heidelberg Cement Group is working with Norways Aker Solutions and RTI Internation-al on a $15-million carbon capture pilot project at the Brevik cement plant in Norway. RTIs post-com-bustion capture technology was ini-tially intended for coal-fired power plants and will now be tested for the first time on a cement plant. It in-

FEATURE

2013 Aker Solutions




CW Group Coal Week

PARAMETERS UNITWITHOUT CCS WITH POST-COMBUSTION CAPTURE

(EUROPEAN SCENARIO)

(EUROPEAN SCENARIO)

(ASIAN DEVELOPING COUNTRY SCENARIO)

Total investment cost m 263 558 647

net Variable operating costs m/y 17 31 97

fixed operating costs m/y 19 35 50

cost per Tonne of co2 emissions avoided

/t n/a 107.4 58.8

cost per Tonne of cement product /t 65.6 129.4 72.2

PARAMETERS UNITWITHOUT CCS WITH POST-COMBUSTION CAPTURE

(EUROPEAN SCENARIO)

(EUROPEAN SCENARIO)

(ASIAN DEVELOPING COUNTRY SCENARIO)

Total investment cost m 263 327 n/a

net Varialble operating costs m/y 17 23 n/a

fixed operating costs m/y 19 23 n/a

cost per Tonne of co2 emissions avoided

/t n/a 42.4 22.9

cost per Tonne of cement product /t 65.6 82.5 46.4

Source: IEA GHG (2008)

Source: IEA GHG (2008)

cludes Alstoms chilled ammonia process, Alstoms regenerative car-bonate cycle and Aker Clean Car-bons amine scrubbing.

3. The Industrial Technology Re-search Institute is currently work-ing with Taiwan Cement to operate a 1 ton per hour pilot scale facility for calcium looping capture. The testing is being performed at the Hualian cement plant in eastern Taiwan.

4. The European Cement Research Academy (ECRA) is now proceed-ing with Phase IV of its CCS pro-ject. This phase of the project will be focused on oxyfuel technology and is expected for completion by 2015.

PRoSPECTS oF CCS iN ThE CEMENT iNDUSTRyWhile these pilot projects are still in their early stages, other efforts to curb CO2 emissions in the cement industry include the production of alternative ce-ment products that produce lower CO2 emissions. These are manufactured us-ing magnesium instead of calcium.

However, the IEA is determined to adopt CCS into cement production and believes it is now the most viable option for the cement sector. Although it is estimated that CCS technologies will be available no earlier than 2025, the IEA is targeting to have 50 percent of all cement facilities in

OECD countries equipped with CCS tech-nology by 2050. And for countries cur-rently identified as the biggest contributors to CO2 emissions, such as China and In-dia, the IEAs vision is to have no less than 20 percent of their cement facilities CCS-equipped by 2050.

2013 Aker Solutions




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acc lImIted Innovates logIstIcs management

In March 2012, Indias cement manufacturer ACC Limited, one of the top cement producers in the country, launched an RFID-

based vehicle tracking system called SPEED with the objective of developing a new logistics management system that would stimulate

efficiency and productivity along with saving on freight costs and reducing the detention time of vehicles at its cement plants.

Leaders Q & A




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Deepak Gulati ACC

PEED was initially implemented in ACCs Tikaria plant located in the Amethi district in the state of Uttar Pradesh (U.P.) in

northern India. Following the success in Tikaria, the company subsequently adopted the program in two more plants Damoder Cement Works in West Ben-gal and Thondabhavi Cement Works in the State of Karnataka. The company plans to roll out the system to all of its 16 plants in two years.

We spoke to ACCs Logistics Director-North, Mr. Deepak Gulati to learn how the project has helped the company to improve the performance of the distri-bution fleet and what ACC sees as the biggest logistics challenges the Indian ce-ment industry will face in the future.

CW: What technology choices were made and why?Deepak Gulati: We chose RFID (Ra-dio Frequency Identification) technology, which is extensively used in the identifi-cation process with the help of a card and a reader. The choice of this technology was obvious it is a fast emerging next-gen technology that uses radio frequency waves to transfer data between a reader and a moveable item. The technology

assures tracking, access control, identifi-cation and better supply chain manage-ment. It helps in tracking the item on real-time basis.

RFID technology offers several signifi-cant advantages over barcodes (which are also capable of supporting automated data capture). Some of these are:

Barcodes have to be manually scanned, keeping them close to the reader. An RFID tag, bearing a unique identifier, can be scanned from a much longer distance.

RFID tags can hold more data com-pared to barcodes.

Expanded reading range supports quicker reading and faster process-ing.

Facilitates rapid product movement. Continuous data reading, writing, modifying, adding and deleting in-formation possible.

Readability of RFID tags is better

in adverse conditions such as dirt and outdoors it makes an obvious choice for an industry like cement.

RFID allows us to measure deten-tion time at each stage of truck load-ing and thus the utilization of assets within the plant.

CW: What was the value creation in terms of overall plant and logistics man-agement? DG: This project has been aptly named SPEED, keeping in mind:

Safety of the stakeholders Productivity of the packers Efficient utilization of the assets (trucks) and

Ensuring customer Delight

And thus the acronym SPEED.

ACCs Tikaria plant loads around 500 trucks of outbound bagged cement per day. Due to this high volume, tracking and knowing the location of the vehi-

SPEED-LED screen displaying delivery details for loader personnel

This project effectively keeps in mind the safety of the stakeholders, the productivity of the packers

and the efficient utilization of the assets




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LEADERS Q&A

cles at any stage of the loading process was extremely difficult. This project has given the logistics team the functionality to monitor real-time in-plant movement of vehicles and improve the overall safety inside the plant.

Another major advantage in terms of logistics management has been the vis-ibility of the trucks. Now, with the help of RFID based tracking, it has become possible for us to filter the seasonal and occasional trucks coming to our plant for loading during lean seasons and instead focus on the dedicated and regular fleet. This has also significantly reduced the pressure on the parking yard infrastruc-ture which can now be better utilized by the dedicated fleet.

CW: How will this help ACC serve its cus-tomers better?DG: ACC treats each of its stakeholders as a very important business partner. The implementation of the ACC SPEED pro-ject has given us several benefits and cre-ated a win-win situation for both.We have been able to reduce the overall in-plant detention of the vehicles.

This in turn has contributed in the faster execution of orders for our customers and channel partners.

Dealers/customers can now be kept in-formed, with a high degree of accuracy, as to when the truck carrying their order is likely to leave the plant, the estimated

transit time and a forecast of when the consignment is expected to reach desti-nation. Earlier we were not able to pro-ject this kind of valuable information with great accuracy. Now our customers can plan their work much better with this valuable input that we are able to provide.

CW: Does the project create a competi-tive advantage for ACC? DG: Yes. This project with its transparent and visible dispatch process is also cou-pled with other improvements we have implemented, such as enhanced basic amenities for the trucks crew members like a new washroom complex, a large cafeteria with television, water coolers and covered cooking area in a now much cleaner parking yard. Thanks to all these




CW Group Coal Week

improvements, our Tikaria plant has be-come the most attractive plant for load-ing in the area.

More frequent trips now enjoyed by reg-ular and dedicated trucks translates into higher earnings for them. These benefits factored in as a freight advantage with transporters can help make our product more competitive in a highly price-sen-sitive market.

CW: Is the company currently investing in any other logistics-related optimiza-tion processes?DG: This project has already been repli-cated across two more locations of ACC with three more in the pipeline. In order to further strengthen the good logistics practices, the company has already part-nered with a leading GPS service pro-vider. In the first phase, 1000 vehicles are planned to be fitted with GPS devices for real-time, out-plant vehicle tracking.

In addition, we are also in various stages of testing/piloting a truck scheduler for automated truck/order assignment and a driver/vehicle management center for improving the safety of drivers/vehicles.

What are the biggest logistics challenges the Indian cement industry is and will be facing?

The major challenges faced by the cement industry today are:

Overall rising costs particularly of fuel, which leads to rising transpor-tation costs.

Availability of roadworthy and safe-to-ply trucks.

Shortage of competent drivers and lesser number opting for driving as a profession.

Poor road and safety infrastructure in the country.

All the above factors, particularly the availability of competent drivers, will pose the biggest challenge in road trans-portation as fewer people now seem in-terested to enter this profession as com-pared to alternate areas of employment.

BMWeekBMWeek



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SPEED-LED displaying packing bay number, tare weight details for drivers

tIkarIa cement plant




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featUre

The rough diamond of South-eastern africa

mozambIqueThe prospects for Mozambique may finally be looking bright as its resource sector has seen an unprecedented boom. The start of coal mining in 2010 and the discovery of significant offshore gas fields have become major springboards for the Mozambican economy. However, the consolidation of the countrys growth depends on its ability to exploit these huge opportunities without hiccups.




CW Group Coal Week




CW Group Coal Week

COUNTRY SNAPSHOT

Mozambiques economy expanded 7.5 percent in 2012, concluding two decades of uninterrupted growth that followed the end of the countrys civil war in 1992. The real GDP compound annual growth rate of 7.9 percent registered in the last twenty years is expected to stretch over the next five years, as well. In early 2013, severe floods destroyed crops and damaged infrastructure in southern Mozambique, which led financial institutions to lower their 2013 growth expectation for the country.

Notwithstanding positive long-term prospects, Mozambique is still severely constrained by infrastructure bottlenecks that limit the pace of development. Thus, most of the earmarked construction investments focus on the infrastructure segment with large funds pledged for railway modernization. Mozambique is dependent on Foreign Direct Investments (FDI), receiving more than US$5,200 million in 2012. Over the next three years, the amount is projected to exceed US$10 billion, on the basis of annual approval of around 300 projects.

Over the past years, Mozambiques cement industry has been slowly expanding under the aegis of Cimpor. But with a surge in economic activity and predicted impressive growth in cement demand glittering on the horizon, the government awarded a series of cement plant construction licenses. But even so, to date, only one new cement plant has started commercial operations since 2005.

Today, Mozambique is home to five production units, four of which owned by Brazils InterCement (subsequent to its take-over of Cimpors assets in the country). The combined output of these units reached 1.19 million tons in 2012, falling short of the 1.6 million tons of cement consumed domestically.

Even though the cement capacity of the Mozambican cement plants exceeds the countrys cement consumption,

0

3,000

6,000FDI Inward (US$ million)

201220112010200920082007200620052004200320022001-100%

0%

250%

YoY Growth

FOREIGN DIRECT INVESTMENTS IN MOZAMBIQUE (20012012)

APPARENT CEMENT DEMAND & PRODUCTION (20052012) - TONS

0

1,000,000

2,000,000

Apparent consumption

Cement production

20122011201020092008200720062005

Source: CW Group Research





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This article is a summary of the 43-page in-depth market research from CW Analytics.To learn more, contact CW Analytics at [email protected].

Mozambique is still dependent on cement imports. Around 27 percent of the countrys cement consumption since 2005 was covered by imports. Operational challenges, financial difficulties and production interruptions are just a few of the hurdles faced by the Mozambican cement producers.

The CW Group highlights another important aspect of Mozambiques cement sector - only a fraction of the cement capacity can be produced with domestic clinker. This situation is causing increased dependency on imported clinker, with around 3.23 million tons of clinker imported by Mozambique between 2005 and 2012. Although Mozambique is known for its abundant availability of high-quality limestone, the deposits remain untapped as a result of high logistics costs as well as the limited clinker production capacity of the country.

By 2017 the per capita cement consumption is estimated to cross 100 kg per inhabitant for the first time in its history. Large construction projects, combined with infrastructure and housing deficits, are regarded as the major drivers of the cement industry over the next five years. CW Group concludes: under the base case scenario, cement consumption is projected to increase by a compound annual growth rate of 10.7 percent between 2012 and 2017. A more optimistic scenario, which assumes a smoother implementation for main construction projects given the presence of established and experienced international companies on the market, predicts a higher CAGR (13.6 percent) that could potentially push the cement demand beyond 3 million tons by the end of 2017.

NAMEPLATE CEMENT PRODUCTION CAPACITY (20072017E) - TONS

0

5,000,000

10,000,000

New Capacity

Baseline Capacity

2017E2016E2015E2014E2013E2012'20112010200920082007

APPARENT DEMAND FORECAST (20052017E) - TONS

500,000

1,750,000

3,000,000

Apparent consumption

2017E2016E2015E2014E2013E20122011201020092008200720062005






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-0.4%

0%

1%

Jun-

13

May-1

3

Apr-

13

Mar-

13

Feb-

13

Jan-

13

Dec-

12

Nov-

12

Oct-1

2

Sep-

12

Aug-

12

Jul-1

2

Jun-

12

May-1

2

M-O-M CEMENT PRICE COMPARATIVE SET METRICS

CW research & analytics

iNDiA AND PAKiSTAN LEAD ThE PACK iN PRiCE iNCREASE MovEMENTAfter booming in the first two months of 2013, the global official cement prices entered a stabilization phase that lasted for three consecutive months. Preliminary June 2013 estimates reveal an upward trend for cement prices, mostly driven by a sharp increase in South East Asian countries of India and Pakistan.

In Pakistan, a 50 kg cement bag was traded for Rs 488.4 in June 2013, 5.45 percent higher versus the previous month, and 10.2 percent over the corresponding month of 2012. As soon as the Federal Budget for 2013 2014 was released in mid June by the government, cement producers hurried to announce price increases from Rs 30 to Rs 45 per 50 kg bags of cement, blaming budgetary measures, the elevated transportation costs and retention price as driving forces

Before the release of the budget, a goods and services tax (GST) was due only on wholesale prices, but the situation has changed and the GST is currently applied on the retail price. Additionally, the recent implementation of the new axle load limit led transportation costs for both cement and coal on higher grounds.

On the positive side, the Pakistani government reduced the withholding tax on dealers to 0.1 percent in a movement predicted to relieve the burden on cement production companies. Corporate tax rate was also reduced from 35 percent to 34 percent with the prospect to reach 30 percent over the next five years.

Preliminary June 2013 estimates reveal an upward trend for

cement prices

CEMENT MARKETS

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Source: cW group research

To learn more, please contact the CW Research & Analytics team at [email protected] or +1-702-430-1748.

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OffiCiAl CEMENT PRiCESGlObAl PRiCES uPbEAT AT ThE ENd Of h1 2013

-35%

0%

35%

Spain

Colom

bia

Belar

us

Vietn

am

Arge

ntina

Ukra

ine

China

Thail

and

Saud

i Ara

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Russ

ian Fe

dera

tion

Cypr

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Q1 2013/Q1 2012 CEMENT PRODUCTION GROWTH RATE (%)




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-15%

0

20%

JULY 2012 - JUNE 2013 GROWTH RATE (%)

Egyp

tAr

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inaPa

kistan

Thail

and

Pana

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Colom

biaNi

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In neighboring India, cement prices closed the first half of 2013 at Rs 294 per 50 kg bag, 3.2 percent higher compared to May 2013. After increasing in a range between Rs 5 and Rs 25 in the beginning of June, mostly in the northern, eastern and western India, cement prices reversed the trend and declined between Rs 10 and 20 per 50 kg bag during the last days of the month. Local sources mention an even further price decrease during early July, even though cement companies struggled to keep prices at high levels ahead of the monsoon season.

From an annualized growth rate perspective, Egypt bagged the lions part from the price increases reported over the last 12 months - 15.6 percent. An unusual 21.2 per-cent increase in February 2013 up to LE 676.7 per ton prompted Egypts Consumer Protection Agency (CPA) to file a complaint against cement companies accusing them of unfair practices. Market sources argued that the impressive increase was generated by energy shortages and unfavorable exchange rates. In order to counteract energy costs inflation, Egyptian cement companies are currently looking for alternative fuel sources, focusing on switching to coal instead of using gas. More recent data points show that cement prices declined in the beginning of July 2013 to around LE 600 per ton.

At the other head of the scale, Trinidad and Tobago reported the highest decline in the 12-month annualized growth rate, with -12.3 percent, after a successful market recovery from the mid-2012 production hick-up.

After stabilizing in the last 10 months at AED 260 per ton, UAE cement prices also declined on an annualized base to -6.6 percent. The stabilization of the market was obtained on the back of stable evolution of raw materials and freight rates.

Taking a rear-view, cement prices have been on a rise in the last 12 months. Price drops were registered in 13 countries out of the 47 included in CW Analytics and Re-search universe. Three markets were stable, while in the remaining 31 cement prices increased.


31 countries registered cement price increases over the last 12 months

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Chinese coal imports might be stalled but trading

markets still have high expectations for 2013

CEMENT ENERGY MARKETS

CoAL EXPoRTS RECovER iN SoME MARKETS whiLE MARKETS wAiT FoR ChiNAS DECiSioN oN Low CALoRiFiC vALUE CoAL EXPoRTS Despite the deceleration in economic growth in China, the top coal importer world-wide, year-to-date coal trading volumes remain flat compared to 2012.

Coal trading volumes in the second quarter of 2013 showed a marginal increase from the second quarter of 2012 as declining volumes from Colombia and the United States were offset by an increase in coal exports from Australia and Russia.

June 2013 coal output from South Africas Richards Bay Coal Terminal (RBCT) rose 22 percent to 5.3 million tons, following a 30 percent decline during May. In Australia, coal shipments out of Newcastle grew 10 percent, recovering from a 9 percent drop in May.

Colombian coal exports are back on track after the steep decline in February and March volumes that followed the coal union strike. As a result of the strike year-to-date coal exports are 23 percent down from last year.

In the United States, the Energy Information Administration (EIA) is expecting coal production to remain relatively stable this year compared to 2012, while coal exports are anticipated to decline to around 100 million tons in 2013. Exports will be mainly affected by increased competition due to low coal prices, the ongoing economic slow-down in Europe and deceleration in some economies in Asia, mainly China.

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COAL GLOBAL TRADING (million tons)

0

50

100Rest US Colombia South Africa Russia Australia Indonesia

May-1

3Ap

r-13

Mar-

13Fe

b-13

Jan-

13De

c-12

Nov-

12Oc

t-12

Sep-

12Au

g-12

Jul-1

2Ju

n-12

May-1

2Ap

r-12

Mar-

12Fe

b-12

Jan-

12De

c-11

Nov-

11Oc

t-11

Sep-

11Au

g-11

Jul-1

1Ju

n-11

May-1

1Ap

r-11

Mar-

11Fe

b-11

Jan-

11De

c-10

Nov-

10Oc

t-10

Sep-

10Au

g-10

Jul-1

0Ju

n-10

May-1

0





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STEAM COAL FOB AVERAGE PRICES (US$/TON)

30

90

150South Africa Richards Bay Indonesian HBA Australia Newcastle Colombia exported US exported

May-1

3

Mar-

13

Jan-

13

Nov-

12

Sep-

12

Jul-1

2

May-1

2

Mar-

12

Jan-

12

Nov-

11

Sep-

11

Jul-1

1

May-1

1

Mar-

11

Jan-

11

Nov-

10

Sep-

10

Jul-1

0

May-1

0

Mar-

10

Jan-

10

Nov-

09

Sep-

09

Jul-0

9

May-0

9

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Chinas coal imports have been declining this year as a result of weakening demand in the country. Also, the local industry has seen its sale prices plunge, making imports less attractive to coal buyers and favoring domestic products. Meanwhile, the gov-ernment is still considering a ban on imported coal with low calorific value, but the proposal has found strong opposition and it is unknown whether the authorities will move on with the ban or not. The ban would have a negative effect on Indonesia, the main supplier of low calorific coal to China. As a response, the Indonesian govern-ment has announced the country will be looking for new export markets to divert the volume lost to China.

CoALCoal trading prices in the main export hubs declined in May for a second month in a row as a consequence of a still oversupplied market. Australia, Russia and the United States have been the major sources of the additional coal shipped this year and trad-ing volume is not expected to contract anytime soon. Despite cutbacks in production to balance supply and the closure of unprofitable mines in some markets, a number of mining companies have reported an increase in production to maximize output, sacrificing margin over volume.

The average Harga Batubara Acuan (HBA) coal price in Indonesia slid 4 percent from April. In Colombia and South Africa, price fell 1 percent versus the previous month. Year-over-year prices are down 16 percent in Indonesia, 14 percent in South Africa, 13 percent in Colombia and 9 percent in Australia and the U.S.

In China, coal prices continue to fall off. The Bohai-rim Steam Coal Price Index (BSPI), which covers six major coal-shipping ports in China, is now 5 percent below the level it had at the end of 2012.

ENERGY PRiCES uPdATE

Coal prices mainly unchanged, but trends are mixed





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PETCoKEThe 12-month average price of U.S. uncalcined petcoke for export markets in April remained unchanged for the third consecutive month at US$81 per ton. Prices seem to have stabilized after a long slide that started in the fourth quarter of 2011. The decline has eased in some markets and the price in India, for example, is now at the same level it was a year ago. Compared to 2012, seven out of the top ten export market destina-tions show signs of price recovery. Only Japan, Canada and South Korea are lagging behind.

While prices are bogged down, volumes are on the rise. U.S. petcoke exports soared in April and reached the second-highest petcoke volume exported in U.S. history. Out-put was boosted by an increase in shipments to China, Canada, The Netherlands and Mexico. April year-to-date exports to The Netherlands more than doubled versus last year and the volume shipped to Mexico is 40% higher over the same period of 2012.

Petcoke prices stable and no signs of rebound yet

US PETCOKE EXPORT PRICE (US$/TON) ROLLING 12-MONTH AVERAGE

0

60

120

Apr-

13Ma

r-13

Feb-

13Ja

n-13

Dec-

12No

v-12

Oct-1

2Se

p-12

Aug-

12Ju

l-12

Jun-

12Ma

y-12

Apr-

12Ma

r-12

Feb-

12Ja

n-12

Dec-

11No

v-11

Oct-1

1Se

p-11

Aug-

11Ju

l-11

Jun-

11Ma

y-11

Apr-

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NATURAL gASWith oil prices declining from a 12-month high in February 2013 and a soft demand environment, natural gas prices in Europe and liquefied natural gas (LNG) prices in Japan were 5 percent and 2 percent down, respectively, in May compared to April. LNG price in Japan reached its lowest since November 2012, but it is expected to re-cover as the summer season hits and power consumption goes up.

In Europe, even after this months slide, price remains at high level, and the average price for the first 5 months of 2013 is 5 percent higher than the same period of 2012. Natural gas demand in Europe is still sluggish but Russias Gazprom, the largest gas supplier to European markets, is expecting a 9 percent growth in its deliveries to the region during 2013, following a decline of 7 percent in 2012. Gazprom reported an increase of 5 percent in its export contract pricing during 2012.

In the U.S., Henry Hub spot price has been declining since the beginning of June, after reaching levels over US$4/mmBtu in April and May. Prices are down in most regions except for the Northeast where they rose 10 to 20 percent during the second week of June due to warmer-than-normal temperatures. The heat wave continued to affect west and southwest states through the end of June and the beginning of July, with tem-peratures hitting triple digits in most locations. Experts are predicting summer 2013 will be among the top 10 warmest on record, which could send natural gas prices back to US$4/mmBtu. However, the U.S. Energy Information Administration (EIA) still maintains its natural gas price forecast for 2013 at around US$3.92/mmBtu.

Extended winter drives rally in US natural gas prices

NATURAL GAS PRICES (US$/MMBTU)

0

10

20

Japan LNG Europe US

May-1

3

Sep-

12

Jan-

12

May-1

1

Sep-

10

Jan-

10

May-0

9

Sep-

08

Jan-

08

May-0

7

Sep-

06

Jan-

06

May-0

5

Sep-

04

Jan-

04

May-0

3

Sep-

02

Jan-

02

May-0

1

Sep-

00

Jan-

00

May-9

9

Sep-

98

Jan-

98

May-9

7





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CW Group Coal WeekCEMENT - PRODUCTION (MILLION TONS)

Country LM MoM (%) YoY (%) YTD YTD %

china (June) 227.5 1% 10% 1,083.7 8%

india (april) 22.5 -7% 13% 89.9 8%

uS (april) 6.5 14% 0% 21.7 1%

russia (april) 5.4 15% 6% 16.6 11%

mexico (april) 3.0 -1% 2% 11.7 -2%

colombia (may) 0.9 5% 1% 4.4 2%

CEMENT - CONSUMPTION (MILLION TONS)


france (June) 1.9 6% -10% 9.6 -7%

Brazil (June) 5.5 -8% 4% 33.6 2%

S. arabia (June) 5.1 -4% 15% 31.4 11%

Spain (may) 1.0 10% -18% 4.4 -25%

indonesia (april) 4.5 0% 9% 18.1 9%

egypt (march) 3.5 0% -10% 10.6 -15%

PORTLAND CEMENT - IMPORTS (MILLION TONS)


uS (may) 0.5 -3% -20% 1.9 6%

malaysia (may) 0.1 -27% 27% 0.4 25%

canada (march) 0.1 24% 1% 0.2 10%

france (april) 0.2 16% -22% 0.7 -21%

Brazil (may) 0.1 41% -5% 0.4 38%

PETCOkE - ExPORTS (MILLION TONS)


uS 2.9 23% 10% 9.7 1%

PETCOkE - GLOBAL ExPORT PRICES (USD/TON)


uS 78.5 -6% -5% 79.9 1%

NATURAL GAS PRICES (US$/MMBTU)


Japan 15.3 -2% -11% 15.9 -4%

europe 12.3 -5% 6% 12.1 5%

uS 4.0 -3% 66% 3.7 59%

PORTLAND CEMENT - ExPORTS (MILLION TONS)


china (march) 0.8 26% 13% 2.2 38%

Thailand (may) 0.7 13% 4% 3.1 0%

Japan (may) 0.4 9% -28% 2.1 -5%

Korea (may) 0.3 46% -32% 1.4 16%

germany (march) 0.3 17% -21% 0.8 23%

COAL - ExPORTS (MILLION TONS)


indonesia 27.7 3% -7% 134.5 -3%

australia 14.0 -5% 9% 70.4 10%

uS 7.8 -12% -30% 45.5 -6%

colombia 7.1 17% -13% 25.6 -23%

South africa 4.8 -30% -7% 30.9 0%

COAL - GLOBAL ExPORT PRICES (USD/TON)


indonesia 85.3 -4% -16% 88.0 -19%

australia 93.7 0% -9% 97.3 -16%

uS 74.4 0% -9% 76.4 -12%

colombia 83.8 -1% -13% 86.6 -12%

South africa 81.1 -1% -14% 83.6 -18%

-1%

0%

2% South Africa ColombiaUS Australia Indonesia

May-1

3

Apr-

13

Mar-

13

Feb-

13

Jan-

13

Dec-

12

Nov-

12

Oct-1

2

Sep-

12

Aug-

12

Jul-1

2

Jun-

12

May-1

2

COAL EXPORTS MoM (%)

NATURAL GAS PRICES MoM (%)

-30%

0%

60%US Europe Japan

May-1

3

Apr-

13

Mar-

13

Feb-

13

Jan-

13

Dec-

12

Nov-

12

Oct-1

2

Sep-

12

Aug-

12

Jul-1

2

Jun-

12

May-1

2

COAL EXPORT PRICES MoM (%)

-10%

0%

10%South Africa Colombia US Australia Indonesia

May-1

3

Apr-

13

Mar-

13

Feb-

13

Jan-

13

Dec-

12

Nov-

12

Oct-1

2

Sep-

12

Aug-

12

Jul-1

2

Jun-

12

May-1

2

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CW Group Coal Week

Source: CW Group ResearchLM: latest month (June 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

REGIONAL REPORT:

EURoPETough economic times continue for the Spanish cement market, which has fall-en 24 percent in 2013 on reduced public spending and is predicted to finish the year down 21 percent from 2012. Mar-ket predictions suggest that the market will stabilize at 20-25 million tons of consumption next year. Holcim in Spain will cut 75 percent (568 million euros) of its capital expenditures. The struggling Spanish CEMEX branch has sold its Sant Feliu de Llobregat, Catalonia, unit to Ce-mentos Molins.

The Italian cement market has a sim-ilarly poor outlook, with production volumes halved in the past seven years and declines of 20-25 percent predicted for 2013. Production in 2012 decreased 20.8 percent year-over-year to 26.2 mil-lion tons, while consumption fell by 22.1 percent. Excess production capacity is estimated at 40-50 percent. The Italian firms Cementir and Italcementi have announced closures and worker layoffs, spurring protests. Italcementi is moving ahead with a restructuring plan intended to boost efficiency from 60 million to 100 million euros.

In France, Holcim is venturing into the western portion of the country. Western

acquisitions have included Atlantic Ce-ment and the cement import terminal of Montoir-de-Bretagne in Saint-Nazaire. Additionally, Holcim has opened a clin-ker grinding center in Grand-Couronne, with production capacity of 0.58 million tons, and is set to open a second center on the Port of La Rochelle, also with capacity of 0.58 million tons.

Kercim is targeting 10 percent of the west-ern French market with its ultra-modern, US$44 million Saint-Nazaire grinding

center (production capacity 0.6 million tons). The venture will utilize a system based on the external supply of raw ma-terials concept. The French firm Vicat has started trial production of Alpenat cement, a new product with 30 percent lower CO2 emissions in manufacturing.In New Caledonia, Holcim will sell its 0.2-million-tons operations, Holcim Nouvelle Caldonie, to Tokuyama Cor-poration of Japan. Holcim aims to in-crease operating profit by CHF 1.5 billion between 2011 and 2014.

Oversupply of European cement has boosted imports into Belgium. Market watchers expect a loss of 8 percent in ce-ment consumption in Belgium in 2013.

In Switzerland, Holcims Siggenthal unit has begun using lignite to power its kiln, importing 1,500 tons of fuel per week via freight train. Since the fuel comes from Europe, the supply chain is shorter and security higher than for overseas coal.

Price pressures are increasing in the Aus-trian cement industry, after 2012 regis-tered stable sale margins of 4.46 million tons, but revenue that declined 4.7 per-cent to 375 million euros. New technol-ogies are one promising approach: in the Austrian Leitha Mountains, Lafarge has a 12 million-euro, large-scale plant with catalyst technology, expected to reduce nitrogen emissions.

Cimpor will export 0.045 million tons of cement from Alhambra port via barge to Lisbon and thence to Africa. The city of Tema, Ghana, will receive 55 percent of the shipment, with the rest bound for Freetown in Sierra Leone.

In Romania, the cement manufacturer Carpatcement expects to increase cement production by 1.9 percent this year to 2.8 million tons. Total cement production in Romania totaled 7.7 million tons in 2012 and 7.6 million tons in 2011. Carpatce-ment predicts a turnover of RON 834.8 million this year, up 3.3 percent com-pared to 2012, and a gross profit of RON 174.9 million, down 4.9 percent.

CoMPANy (LoCATioN) ovERviEw

hoLCiM/RUSSiA Holcim announced that it will start construction at a new cement plant in Saratov region, Volsk by the end of this year. The company targets to commission the unit late 2015 - early 2016.

RUSSiA A new cement plant will rise in the Buinaksk district of Dagestan. The plant will have a capacity of 0.3 million tons per year.

KERRy QiEFU/bELARUS Kerry Qiefu grinding plant has undergone initial ignition. Kerry Qiefu cement plant was the last plant in a three plants construction project, being also the longest project of all three.

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RUSSiA AND ThE bALTiC REgioNCement production in the first four months of the year has increased by 10.5 percent year-over-year in Russia to 16.6 million tons. Market players have shifted over the same period, with Eurocement reducing its stake by 1.1 percent to 32.8 percent, while Novoroscement increased its stake by 2.6 percent to 10.4 percent, and Heidelberg Cement is up 0.5 percent to 5.4 percent. Holcim has announced construction of a new cement plant in the Saratov region. In Pikalyovo, Russia, the company BaselCement will spend up to 5 billion rubles to modernize BaselCement Pikalyovo, integrating two new produc-tion lines. Sebryakovsky Cement has also announced the opening of a new produc-tion line in Russia.

In contrast to Russia, cement production in the Ukraine reached 1.046 million tons in May 2013, up from April by 24.5 per-cent, but a year-over-year decrease of 8.4 percent. April 2013s production, 23.1 percent higher than March, came in at 5.5 percent below April 2012. In total, 2013 production in the country has totaled 3.201 million tons, a drop of 3.2 percent compared with the same period in 2012. Production in 2012 fell 6.8 percent below those of 2011, which had seen an increase of 11.2 percent over 2010s production. On the fuels side, the Ukrainian cement firm Ukrcement has requested 0.816 mil-lion tons of the countrys imported coal quota to continue production.

After receiving a modernization loan of US$530 million from Eximbank, the Belarusian cement industry launched a US$1,134 million modernization proj-ect, including installation of three new production lines with a 1.8-million-ton capacity each. The lines were expected to increase national cement production

by 117 percent. However, with two of three new lines operational, production decreased by 1.6 percent, year-over-year, between January and April 2013. Domes-tic market consumption shrank and ex-ports are limited by long transportation distances and lack of demand.

MiDDLE EASTIn Saudi Arabia, cement demand is ex-pected to decrease due to a summer building lull. This is in contrast to the first half of 2013, when demand was high enough to require an estimated total of 5-6 million tons of cement imports over the year. Total cement sales in the coun-try from January through May 2013 to-taled 26.23 million tons, up 6.6 percent year-over-year. Looking ahead, a new 250-million-riyal Saudi cement plant will be constructed by Umm al-Qura, while Najran Cement has already begun test-ing a new production line expected to produce 6,500 tons of clinker daily and to boost the firms total output to more


NAjRAN CEMENT/SAUDi ARAbiA

Najran Cement successfully tested its third clinker line that increased the company's daily clinker capacity to 15,500 tons. The latter production line brought an additional capacity of 6,500 tons per day.

EASTERN CEMENT/SAUDi ARAbiA

Eastern Cement also announced the start of the trial run of its new 600 tons per day production line. The trial period will last for three months.

TAbUK CEMENT/SAUDi ARAbiA

Tabuk Cement announced the construction of its second clinker production line (5,000 tons per day) and a captive power plant (30 MW).

bAbyLoN CEMENT PLANT/iRAQ

The Ministry of Industry and Minerals has signed a joint investment with an Iraqi company and two others for the rehabilitation of the Babylon cement plant, while confirming that the value of the contract amounts to US$ 25 million for a period of 15 years. Once rehabilitated, the cement capacity of the plant should reach 0.22 million tons.

RAySUT CEMENT/yEMEN/UAE/oMAN/SoMALiA

Raysut Cement is planning to build a state-of-the-art cement terminal in Berbera Port, Somalia, and a grinding plant in Mukulla, Yemen. The company has also approved a plan to build a new cement terminal in Duqm Port, Oman, but also an expansion project at its UAE affiliate, Pioneer Cement.

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than 17,000 tons of cement per day. The Saudi company Eastern Cement has an-nounced a trial run of a new 600-ton pro-duction line for specialized cement types.

In Iran, cement and clinker exports have doubled, to 5.75 million tons, in the first quarter of the Persian solar calendar fis-cal year. In June alone, 1.4 million tons of cement and 0.33 million tons of clin-ker were exported. Iran exports cement to Iraq at US$50 per ton, a price that will increase by US$5 going forward.

With assistance from the government, the Iraqi company Babylon Cement will rehabilitate its cement plant for US$25 million, aiming for production capacity of 0.22 million tons.

GCC cement sector profits rose in the first quarter of 2013 to US$585.3 million, an increase of 16.9 percent year-over-year. The profit margin reached 40.8 per-cent compared with 39.7 percent a year earlier. Cement prices, however, fell over-all by 0.9 percent in 2013 to US$66.1 per ton, taking into account price drops of 2.5 percent in Saudi Arabia and a price increase of 6.7 percent in Kuwait.

In the UAE, foreign cement trade reached US$269 million and a growth rate of 11 percent during the first nine months of 2012. Reflecting stable commodity pric-es and a lack of cement scarcity, cement prices in the UAE are holding steady at 250-260 dirhams per ton in 2013.

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For a total investment of US$24 million, Raysut Cement plans to build a cement terminal in the Port of Duqm, Oman, and another in Berbera Port, Somaliland, Yemen, in addition to a grinding plant in Mukulla, Yemen. Pioneer Cement Indus-tries, a subsidiary of Raysut, will expand storage capacity with an additional ce-ment silo as well as equipment upgrades.

Domestic cement demand has been moderate in Jordan so far in 2013, with a volume of 1.5 million tons. White ce-ment demand, 100-120 tons per day, has remained flat from 2012 but substantially

lower than 2010 and 2011. Meanwhile, in Kuwait, a new 8,500-ton clinker produc-tion line is open on a trial basis in Kuwait Cements Shuaiba Industrial East plant. With the new line, the total plant capacity will reach 5 million tons per year.

The Israeli cement market is currently controlled almost entirely by the com-pany Nesher, with 10 percent supplied by Lion Baron. To promote competition and lower prices, the Israeli government has approved a bill to de-monopolize the market.

Finally, Syrias Hama Cement company reports reduced cement marketing be-cause the current political crisis has hin-dered construction projects and impeded transportation networks. In addition, ce-ment prices are up due to high fuel costs.

AFRiCAIn Egypt, product transport vehicles have returned to full work capacity, bringing cement prices down 50 pounds per ton after the price rose to 650-700 pounds previously. Nevertheless, cement produc-tion at the Ain Sukhna cement plants has fallen by 50 percent as a result of securi-ty concerns in conjunction with political protests.


gALiLEi-hEiDELbERgCEMENT/ANgoLA

Galilei partnered with HeidelbergCement and Angola National Cement for the construction of a 2 million tons cement plant in the exchange of a total investment of EUR 284 million.

hEiDELbERgCEMENT/LibERiA

HeidelbergCement commissioned a new cement mill at its grinding plant in the capital city of Monrovia. The 0.5 million tons mill represented an investment of US$ 14 million.

TANgA CEMENT/TANzANiA Tanga Cement plans to invest US$ 165 million for the construction of a second kiln at its plant, investment that will lift the clinker capacity by 0.6 million tons.

DANgoTE/TANzANiA The ground breaking ceremony of Dangote's three million tons cement factory took place in the end of May, 2013 in Tanzania.

CiMAF gAboN/gAboN Morocco's CIMAF group laid the foundation stone of its new cement plant worth CFA 9.67 billion. Located in Owendo, 15 km south of Libreville, the cement plant will have an initial capacity of 0.5 million tons.

LAFARgE/ziMbAbwE Lafarge Cement Zimbabwe announced plans to invest US$ 200 million within the next 10 years towards setting up a new one million tons cement manufacturing plant.

SoCiT SAoURA CiMENT/ALgERiA

The Socit Saoura Ciment (SSC), a subsidiary of Algeria's GICA, launched a tender for the realization of a cement plant with a capacity of 3,200 tons of clinker per day in Bechar.

LAFARgE/NigERiA The Enugu State Government has signed a Memorandum of Understanding with Lafarge for the establishment of a cement factory in the region.

LUCKy CEMENT/DEMoCRATiC REPUbLiC oF CoNgo

Lucky Cement starts construction at its US$ 240 million factory in Democratic Republic of Congo. Lucky Cement entered into a 50-50 agreement with the Rawji Group for a company called Nyumba Ya Akiba (NYA).

SELECT PROJECTS IN THE WORkS: AfRICA






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New cement developments are emerging across the African continent. In Tanza-nia, the Tanga Cement Company plans to invest US$165 million to construct a second, 0.6-million-ton kiln and dou-ble clinker production. Meanwhile, the Confederation of Tanzania Industries (CTI) has called on the government to increase taxes on imported cement. Gal-ilei and HeidelbergCement will partner to construct a 2-million-ton capacity plant in Benguela, Angola, at the cost of 284 million euros. Commissioning a new 0.5-million-ton, US$14-million mill at its grinding plant in Monrovia, Heidel-bergCement has expanded its presence in Liberia. A booming construction sector has prompted Zambezi Portland Cement to increase production capacity from 1,000 to 1,400 tons per day. In Zimba-bwe, Lafarge will invest US$200 million in a new cement manufacturing plant, elevating Lafarge Cement Zimbabwes production from 0.45 million tons per year to 1.45 million tons. Construction is

regional report: europe, Middle eaSt, afriCa

underway on a FCFA 35-billion cement factory in Issongo-Bakingili, Limbe, Fako Division of Cameroon. The plant is expected to produce between 0.8 and 1 million metric tons of cement per year. The Gabon-based company Cimaf (Afri-ca Group Moroccan Cement) has begun construction on a second clinker grind-ing plant with anticipated capacity of 0.5 million tons and potential to expand to 1 million tons.

Nigerias cement market is also attract-ing new developments. Lafarge has an-nounced plans to establish a new cement factory to process limestone from large deposits in Enugu State. Meanwhile, the Public Investment Corporation has invested US$289.3 million in Nigerias Dangote Cement and is considering ad-ditional Dangote investments.

The rebuilding of destroyed infrastruc-ture in the Democratic Republic of Con-go (DRC) is attracting cement makers,

including Pretoria Portland Cement Company Limited (PPC Ltd.). PPC will raise 1.3 billion rand this year from bond sales and expects to build a US$200-mil-lion plant near Kinshasa to address a 1 million-ton shortage of cement in the country.

Algerian cement imports rose 102 per-cent between 2012 and 2013, reaching US$159.39 million between January and May 2013. Import quantities increased more than 105 percent to 1.791 mil-lion tons. The Algerian firm GICA is set to construct a new multi-batch, 3,200-ton-capacity clinker plant in Be-char. GICAs development plan, aiming to increase production from 11.5 million tons to 25.7 million tons by 2017, includes the construction of three other plants at Salah, Yellel, and Sigus.

Elsewhere, the cement sector is hampered by a more negative outlook. Under high transportation costs, the price of cement has increased from K65 to K75 in Zam-bia. In Senegal, accusations that President Macky Sall blocked commissioning of a Dangote Cement plant due to pressure from a French business lobby were de-nied.

In Morocco, sales have registered their largest decline in 35 years, finishing the first half of 2013 down 13.5 percent. The drastic decrease is of concern to econo-mists, who view cement consumption as an indicator of a countrys development. Morocco registered a decline in housing starts of 11.5 percent in 2012 and a de-crease in cement demand of 14.5 percent as of May 2013. In all, 2013 consumption is expected to come in at 8 percent below 2012 levels. Moroccos cement overcapac-ity reached 5 million tons in 2012.

Similarly, poor performance in the con-struction market in Madagascar leaves the cement industry on uneasy footing. With 0.5 million tons of cement available in the local market in 2013 and private construction responsible for 80 percent of purchasing, oversupply with associat-ed price declines (already down 6 percent this year) are likely.




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REGIONAL REPORT:

CoMPANy (LoCATioN)

ovERviEw

oRiENT CEMENT/iNDiA Orient Cement received environmental clearance for its cement plant at Chittapur in Gulbarga district of Karnataka. The Rs 1.75 crore project is expected to be commissioned by the end of December 2015.

MADRAS CEMENT/iNDiA

The company is pledging Rs 360 crore for the construction of a new grinding unit in Andhra Pradesh and another Rs 55 crore to boost its power generation capacity. The grinding unit will be supplied with clinker from the Jayanthipuram cement plant and is expected to come online in the second quarter of FY 2014-2015.

DAL TEKNiK MAKiNA TiCARET vE SANAyi/UzbEKiSTAN

The Turkish contractor, Dal Teknik Makina Ticaret Ve Sanayi, signed a contract with German Pfeiffer for the supply of a MPS 3350 cement mill. The delivery of the equipment is scheduled for late 2013 - early 2014.

AKKoRD CoRPoRATioN/AzERbAijAN

The International Bank of Azerbaijan (IBA) announced the success of its program to finance the development of the sector of construction materials through the finalization of the construction process of a second cement plant in the country, funded by the World Bank and built in partnership with Akkord Corporation.

hEiDELbERgCEMENT/KAzAKhSTAN

The new 1.8 million tons cement plant in the village of Shepte is on track to start production by the end of the year.

SELECT PROJECTS IN THE WORkS: CENTRAL AND SOUTHEAST ASIAIn India, the first quarter of 2014 is ex-pected to be the third consecutive weak quarter for cement companies. Industry volumes are likely to be up 4 percent year-over-year and down 8 percent quarter-over-quarter to 61.7 million tons, while average all-India cement realizations are likely to be down 4 percent year-over-year and broadly flat quarter-over-quar-ter. Average EBITDA per ton is expected to decline by 27 percent year-over-year and to remain broadly flat quarter-over-quarter. The earnings downgrade cycle is likely to continue through the quarter. Positive outlooks on the sector hinge on demand recovery in the second half of 2014, a scenario predicated upon a hous-ing upswing after a normal monsoon,

reversal in the interest rate cycle, a pick-up in infrastructure expenditures due to governmental elections, and the low-base effect.

Cement prices rose in June 2013 across India. Over one month, the all-India av-erage increased Rs 14/bag to Rs 308/bag. Prices are up year-over-year by Rs 15/bag. Greatest gains occurred in the south-ern region, with an average price hike of Rs 30/bag. Prices increased by Rs 15-20/bag in the east and west regions, yielding average prices of Rs 333/bag in the east and Rs 306/bag in the west. In the north-ern and central regions, prices increased by Rs 5-10/bag, bringing the northern and central price averages to Rs 296/bag and Rs 293/bag, respectively. Demand fell across the country, as a result of early monsoon arrival and a slowdown in in-frastructure.

Meanwhile, Holcim plans to carry out a substantial restructuring and optimiza-tion of Indian operations, perhaps includ-ing a much-anticipated merger between its local subsidiaries Ambuja Cements and ACC. Madras Cements plans to in-vest Rs 360 crore to set up a new grind-ing unit in Andhra Pradesh and another Rs 55 crore to increase its power genera-tion capacity. The new unit will open in the second quarter of FY2014-2015. The clinker for this plant would be transport-ed from its Jayanthipuram plant. The out-






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put from the new unit would be marketed in coastal Andhra Pradesh and in Odisha and Chattisgarh. The company currently operates three grinding units.

Several notable sales are also on the ho-rizon in India. Jaiprakash Associates (JP) will sell its Gujarat cement unit stake by the end of the year. The 4.8 million ton cement plant has been valued at Rs 4,000 crore. French cement major Lafarge re-ceived approval from Competition regu-lator CCI for its 14 percent stake sale in its Indian subsidiary to Paris Cement In-vestment Holdings, a subsidiary of Bar-ing, while CRH and Vicat are in a race to acquire Shree Jayajothi Cements, the cement unit of Shriram Group. Shree Jayajothi Cements is valued at US$250 million.

In Pakistan, total cement sales declined 6.44 percent over one month to a June 2013 total of 2.702 million tons. Local sales declined 1.4 percent to 2.07 million tons. In northern Pakistan, sales declined 2.8 percent over one month to 1.665 mil-lion tons, but in southern Pakistan sales

were up 4.8 percent to 0.408 million tons. Exports registered a steep monthly de-cline of 20 percent to 0.63 million tons in June.

Beginning July 1, cement prices in Paki-stan will increase Rs 25-30 per 50-kg bag, as a consequence of a new 19 per-cent federal sales tax. The tax includes a 17 percent general sales tax, as well as a 2 percent tax on retailers and distributors.

By contrast, Pakistani manufacturers have slashed the price of cement exports to Afghanistan by around Rs 300 per ton in order to compete in the Afghan mar-ket. Cement exports to Afghanistan via the Torkhum border had been halted due to high availability of cheaper Iranian ce-ment.

In Nepal, the value of cement imports rose by 15.5 percent to Rs 3.34 billion in the first 10 months of the fiscal year, and seven new cement factories were brought online. Domestic manufacturers argue that local production can meet the Nep-alese market demand and call for the gov-

ernment to support local production by rolling back fee waivers on imports from India.

The Ghorahi Cement Industry of Nepal has launched its new Sagarmatha OPC (Ordinary Portland Cement) cement, which complies with Nepal Standards NS 49-2041. Aiming to substitute its product for imports from India and China, the company is now seeking to obtain ISO 9001 certification for the new cement. The new products strength ranges from 55-60 MPa, while 53 MPa is considered high-grade. Sagarmatha cement is manu-factured at a plant equipped with state-of-the-art technology from KHD Hum-boldt of Germany.

Sri Lanka plans to protect local manu-facturers and traders by banning foreign investments in steel, cement and super-markets. Previously-approved projects will not be affected by the new investment ban.

A proposal to abolish the import duty on cement in Kyrgyzstan has been rejected by the Parliamentary Committee on Eco-nomic and Fiscal Policy. The proposal argued that high cement prices increase construction costs and harm Kyrgyzstans markets. However, the committee reject-ed the proposal because the import duties do not apply to the CIS countries.

The Yuzhnokyrgyzsky cement plant in Kyrgyzstan plans to produce 0.6 million tons in 2013, up from 0.5 million tons in 2012 and 0.335 million tons in 2011, but down from 0.922 million tons in 2010.

Natural gas shortages have cut Tajikistans cement production significantly. In the first five months of this year, the country produced only 0.017 million tons of ce-ment, down from 0.09 million tons dur-ing the same period in 2012. The largest cement plant in the country, a facility of Tajikcement, has been dormant since mid-November of last year. Tajikistans cement industry is working to shift equip-ment from gas-powered to coal-powered in an effort to restart production.

regional report: SoutH aSia




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REGIONAL REPORT:

Because of unfavorable market condi-tions, Brazilian cement company Vo-torantim Cimentos has postponed until September 11 its sale of US$3.7 billion in shares. The deal would have been the worlds second-largest this year, after Brazilian insurer BB Seguridade Partici-pacoess US$5.7 billion sale in April. Vo-torantims postponement follows six Bra-zilian IPOs, worth a combined US$7.3 million, since January. Although IPOs are down 4.2 percent globally and 31 per-cent in the U.S. over the same period last year, Brazilian IPOs this year have been the highest for the period since 2002 and have tripled 2012 levels.

The Portuguese company Semapa-Socie-dade de Investimento e Gestao purchased a 50 percent stake in Supremo Cimento in 2012 and is building a cement plant in the Brazilian state of Parana. The new plant will increase Supremos cement capacity from 0.4 million tons to 1.7 million tons. Portuguese cement and building compa-nies are focused on Brazil in anticipation of the 2014 soccer World Cup and 2016 Olympic Games. Additionally, cement consumption in Portugal has slowed con-siderably after the countrys 2011 bailout.In other developments, the port of Para-nagu on the coast of Paran is receiv-ing parts for the R$340 million Margem cement plant, located in Adrianopole in the Metropolitan Region of Curitiba and expected to generate 150 direct jobs in 2014. Parts arriving at the port originate from 15 countries and a large number of companies, including FLSmidth.

The Colombian market is poised for ex-pansion as a result of a government pro-gram slated to build 100,000 new homes.

Construction has prompted Holcim, Ce-mex and Cementos Argos to together in-vest more than US$700 million to build new plants and expand existing facilities. Cemex, which has a 2.7 million-ton ca-pacity plant near Ibague, another in the city of Ccuta, and two mills located in Bucaramanga and La Calera, will invest about US$75 million in Colombia in 2013, building a new mill in Bolivar.

Overall, gray cement production in Co-lombia increased slightly year over year in May, reaching 929,100 tons, but sales declined. A total of 901,600 tons of gray cement were shipped to the domestic market, down 0.3 percent from the same

month last year. The decrease was mainly due to marketing sector losses, which subtracted 3.2 percent from the total. By contrast, there were increases in ship-ments to builders and contractors and cement trucks, which together contrib-uted 2.9 percent. Shipment reductions occurred in Bogot (-15.5 percent), Nari-o (-38.2 percent), and Cesar (-20.5 per-cent), combining to subtract 3.9 percent from the total. Meanwhile, Crdoba (54.7 percent), Atlantic (22.4 percent) and Bo-livar (25.8 percent) summed to a gain of 3.4 percent overall.

Notable among individual companies, Cementos Argos has recently raised US$1.4 billion in capital. In the first fund-ing round, the company earned 1.4 tril-lion paisa and awarded 182 million pre-ferred shares. U.S. investment banks JP Morgan Securities and HSBC Securities purchased 27.2 million preferred shares for 209,423,000 pesos. With an invest-ment of US$93 million, Cementos Argos then began to expand plant capacity in Rioclaro, Nare, and Cairo, increasing by 0.9 million tons the central Colombian cement production capacity.




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regional report: aMeriCaS

Cement Group, anticipate completion in 2016 of a US$160 million cement plant with a production capacity of 0.7 million tons in Peru.

Between January and March of this year, 671,078 metric tons of cement were sold in Bolivia, an increase of 6.6 percent over 2012s first quarter. Overall, 2.4 million metric tons were sold in the country in 2010, 2.6 million tons in 2011, and 2.7 million tons in 2012. Demand is expected to grow by at least 10 percent until De-cember of this year.

Expansion of the Bolivian cement mar-ket is illustrated by the recent opening of the Cooperative Boliviana de Cemento, Industries and Services (COBOCE)s sec-ond modern cement plant, in the town of Irpa Irpa. The furnace currently produces 1,600 tons of clinker and is expected to double capacity.

In late 2012, Bolivia imported about 10,000 metric tons of cement to supply the domestic market. However, recent ex-pansion of domestic production capacity via the cement factories Viachan Soboce (La Paz), Fancesa (Sucre), and Coboce of Irpa Irpa (Cochabamba) ensures that

In Argentina, a factory gas compression plant is slated to open in the northern province of San Juan, enabling a new gas pipeline investment of US$250 million by cement firm Loma Negra. Loma Negra will open its tenth cement unit this year. Additionally, the company has invested US$45 million this year in the new plant and a coal grinding unit.

The Argentinian port of Comodoro Rivadavia will ship 6,000 tons of ce-ment to Ecuador. Shipment will occur on the Brazilian merchant vessel HC Opal and represents an exporting batch from Petroqumica de Comodoro Rivadavia.

Between January and April 2013, sales of concrete and local cement dispatches in Peru grew by 90.7 percent and 0.5 per-cent, respectively. Combined year over year growth was 8.7 percent. Public sector consumption was stimulated by US$38 million in construction at

CemWeek Magazine Issue15 Lo Res

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