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Cement News

FCCL to become the third-largest player in the country

Fauji Cement Company Ltd (FCCL) informed the Pakistan Stock Exchange (PSX) on 18 November that its Board of Directors has approved the process of amalgamation of Askari Cement Ltd into Fauji Cement Co Ltd and its placement before the shareholders in the Extraordinary General Meeting of the company as Special Business for their approval as per requirements of the Companies Act of 2017.

While commenting on the amalgamation, AHL Research stated that, pertinently, Askari has a cement capacity of 2.8Mta against FCCL’s current capacity of 3.43Mta. This implies an 82 per cent addition to existing capacity, which, together with FCCL’s announced greenfield expansion of 2.05Mta in the north (DG Khan, Punjab) and ACL’s brownfield expansion of 2Mta, will render FCCL to become the third-largest player in the country with a capacity of 10.3Mta.

Post-merger and expansion, ACL will add 47 per cent to the total capacity (4.9Mta out of the total 10.3Mta) in the new entity, whereas its current owners will hold nearly 37 per cent in shareholding (800m shares out of 2180m shares). Albeit, this deal will be beneficial for both ACL and FCCL, as the company’s cumulative market share will aid its augmented presence in North (third largest capacity in the region after Bestway Cement Ltd expands by 2.16Mta to 12Mta and Lucky Cement expands by 3.15Mta to 15Mta).

All Pakistan Cement Manufacturers Association sets out decarbonisation strategy

Pakistan: Members of the All Pakistan Cement Manufacturers Association (APCMA) plan to reduce the CO2 emissions from their cement production. The Business Recorder newspaper has reported that companies will take three routes to emissions reduction while continuing to meet increased demand. These are to increase the efficient use of materials, increase energy efficiency and employ new technologies to capture or eliminate emissions.

President Muhammad Ali Tabba said “In a bid to achieve green growth going forward, the cement industry globally will have to adapt to climate change challenges and rework business models to ensure environmental stewardship and robust growth. The cement industry in Pakistan is committed to playing its role.”

HeidelbergCement merges assets acquired from Aditya Birla

According to “tbsnews”

HeidelbergCement Bangladesh has completed the merger of all assets of the two entities it acquired from UltraTech Cement Middle East Investment Limited, a concern of Indian conglomerate Aditya Birla, for Tk183 crore last year.

Of the two companies, Emirates Cement Bangladesh Limited was engaged in cement production at its factory on 16-17 acres of land in Munshiganj, while Emirates Power owns and runs a 10MW power plant in the same area.

Since HeidelbergCement had bought 100% shares of the two entities, the merger process did not need any share exchange.

The two entities are abolished and their assets, liabilities, and people now belong to the listed company.

With the merger, Heidelberg created synergies in a wide range of factors, according to the company’s last directors’ report.

“The merged businesses are subject to much less corporate taxes as they turned out to be a part of a listed firm,” a senior official at HeidelbergCement Bangladesh told The Business Standard.

“Everything such as material procurement, carrying, sales and marketing, administration, accounting, and auditing would see costs saved.”

Ultratech Cement’s factory is producing Heidelberg’s Scan Cement now.

The merged facility with 6.6 lakh tonnes of annual capacity increased Heidelberg Cement’s total annual cement production capacity to 35 lakh tonnes.

German construction material giant HeidelbergCement Group entered Bangladesh in the late 1990s by setting up a floating terminal with onboard packing facilities at the Chattogram port.

Its then Bangladesh concern ScanCement International Limited built a greenfield plant in Kanchpur near Dhaka.

In 2000, Heidelberg bought a minority position in Chittagong Cement Clinker Grinding Company Limited, a local cement company at Chattogram, and later acquired a controlling stake.

In 2003, the two companies under Heidelberg Group’s control were merged and the name changed to HeidelbergCement Bangladesh Limited.

The listed company also fully acquired Meghna Energy Ltd last year which has a 9.99MW power plant in Narayanganj.

Besides, for a stronger and greener internal power ecosystem, the company announced an investment in a 152KW solar plant which would see capacity extension up to 500KW in two years.

Amid disrupted sales, cost escalation, and increased competition, Heidelberg Cement Bangladesh fell into quarterly losses in the July-September period after posting profits for three consecutive quarters.

Its shares closed at Tk274.1 on Thursday at the Dhaka Stock Exchange.

Cement sector pledges to decarbonise Pakistan

KARACHI: Pakistan Business Council (PBC) hosted a virtual session with British High Commission and Embassy of Italy to discuss the pathways for the decarbonisation of the country’s cement sector.

This webinar comes at a time when the world leaders have huddled in Glasgow to discuss sustainability and growth without compromising everyone’s collective future. Speaking at the moot, Mike Nithavrianakis, British Deputy High Commissioner and Director of Trade, said, “Next to water, concrete is the second-most consumed substance on earth; on average, each person uses nearly three tonnes a year”.

According to Nithavrianakis, the concrete industry uses about 1.6 billion tons of Portland cement to produce 12 billion tons of concrete a year and accounts for 7-8 percent of greenhouse emissions. Ehsan Malik, CEO PBC, said, “The investment in infrastructure and the construction packages of the government will entail substantial increase in the use of cement in Pakistan, so we need to think about climate-resilient ways of production”.

Muhammad Ali Tabba, CEO Lucky Cement Limited and President of All Pakistan Cement Manufacturers Association said, “In a bid to achieve green growth going forward, the industry globally will have to adapt to climate change challenges and rework business models to ensure environmental stewardship and robust growth and the cement industry in Pakistan is committed to playing its role”. Faustine Delasalle, Co-Executive Director, Mission Possible Partnership and Director, Energy Transitions Commission explained, “There are essentially three routes, which need to be taken to meet the increasing demand whilst reducing emissions in the cement sector”. “The first being a need to relook at using materials efficiently, the second being improving energy efficiency and the third being employing new technologies to cut emissions,” Delasalle added.

According to the statement, Pakistan’s leading companies are also committing to reduce carbon emissions by disclosing their pledge openly. More than 28 companies from various sectors have signed the pledge letter to the ‘Business Ambition to 1.5 Degrees’ – and are ready to embark on the journey to reduce Carbon emissions to 50 percent by 2030.

Cement dispatches drop by 9.07pc in October

ISLAMABAD: Due to the continuous increase in cost of doing business plus devaluation of local currency against dollar, cement dispatches are showing a declining trend for the past few months.

As per details, cement dispatches declined by 9.07 percent in October 2021. Total Cement dispatches during October 2021 were 5.214 million tons against 5.735 million tons dispatched during the same month of last fiscal year.

According to data released by All Pakistan Cement Manufacturers Association (APCMA), local cement shipments by the industry during the month of October 2021 were 4.603 million tons compared to 4.859 million tons in October 2020, showing a reduction of 5.29 percent.

Exports dispatches suffered a massive decline by 30.09 percent as the volumes reduced from 875,266 tonnes in October 2020 to 611,884 tonnes in October 2021.

In October 2021, North based cement mills dispatched 3.831 million tonnes cement in domestic markets showing a decline of 8.01 percent against 4.164 million tonnes dispatched in October 2020. The South based mills dispatched 771,755 tonnes cement in local markets during October 2021 that was 11.01 percent higher compared to the dispatches of 695,221 tonnes during October 2020.

Exports from North based mills massively declined by 74.03 percent as the quantities reduced from 283,389 tonnes in October 2020 to 73,608 tonnes in October 2021. Exports from the South also decreased by 9.06 percent to 538,276 tonnes in October 2021 from 591,877 tonnes during the same month last year.

During the first four months of the current fiscal year (4MFY22), total cement despatches including domestic and exports were 18.039 million tonnes, which calculates to 6.68 percent lower than 19.331 million tonnes dispatched during the corresponding period of last fiscal year.

Further analysis indicate that domestic uptake of the commodity slightly increased by 1.1 percent to 15.882 million tonnes from 15.713 million tonnes during July-October 2020 whereas exports during the same period declined by a massive 40.4 percent to 2.157 million tonnes from 3.617 million tonnes during July-October 2020.

North based Mills dispatched 13.314 million tons cement domestically during the first four months of current fiscal year showing a decline of 2.3 percent than cement dispatches of 13.627 million tons during July-October 2020. Exports from the North declined by 49.06 percent to 461,275 tons during July-October2021 compared with 905,575 tonnes exported during the same period last year.

Domestic dispatches by South based Mills during July-October2021 were 2.56 million tons showing a healthy increase of 23 percent over 2.08 million tonnes of cement dispatched during the same period of last fiscal year.

There was, however, a massive decline of around 37.45 percent in exports from the south zone as the volumes reduced to 1.696 million tonnes in the first four months of the current fiscal year from 2.712 million tonnes during corresponding period of last fiscal year.

Official spokesman of All Pakistan Cement Manufacturers Association (APCMA) claimed that continuous increase in input costs coupled with recent hike in rupee to USD parity are major concerns for the industry. These price escalations are seriously affecting the cost of doing business in local as well as international markets.

The end of Coal Price Rush

It’s a catch 22 situation. At one end we want to curb greenhouse gases and on the other we crave for cheap power and source of energy for industrial units.

The coal is widely considered the cheapest source to produce energy but at the cost of damaging our environment as it’s the dirtiest one, harming our very existence. The demand for electricity surged as global economy recovered from the pandemic and winter is forthcoming.

China tried put its act together and on 27th Oct officials met with coal producers to agree on measures to fix pricing [read more]. Other measure by The National Development and Reform Commission (NDRC) was looking into the costs and profitability of the coal sector in an effort to work out a mechanism to guide prices to move within a reasonable range. As China is the world’s biggest producer and consumer of coal, and to meet demand, it has been increasing output but further improvement needs to be seen on supply side. With this intervention good news came on 1st Nov from NDRC that “China has seen significant improvement in its coal supply as production has greatly expanded and prices have stabilized”.

This raises the question that is free economy model really up to the mark to provide best prices for the consumers or can it be mangled by group of producers in the name of logistics issues post pandemic to cover loss during lockdowns and to let them become profiteers without repercussions.
The South African coal API4 was trading at $60 year ago on 2nd Nov 2020, it peaked to $238.25 on 6th Oct 2021, and now it’s at $129.9 on 2nd Nov 2021. Let’s hope that the super cycle is over and we are back to normalization.