Titan to take on Brazilian challenge
Titan Cement Group made an unexpected move this week, buying into Cimento Apodi in Brazil. The Greek-based multinational will form a joint venture to operate the business with the Dias Branco Group and Titan/Sarkis, Sarkis being a vehicle company 94 per cent owned by Titan.
Cimento Apodi, situated in Ceará, northeast Brazil, operates the 1800tpd Quixeré cement plant as well as a 0.36Mt grinding unit at Pecém port, near Fortaleza. Some 2Mta of cement production will be added to Titan’s multinational portfolio that spans from North America to Europe and the Mediterranean, comprising of 13 cement plants, nine cement grinding plants at the end of 2015, and subsidiaries in ready-mix, aggregates, dry mortar, building blocks, fly ash and waste management.
Cimento Apodi also owns subsidiary Dias Branco Group, which is currently constructing a new cement plant in Sergipe, 41km from Aracaju. This greenfield plant will have a cement capacity of 4000tpd.
Ceará is a growing region of Brazil
Titan has been raising its capex, which more than doubled last year to EUR237m from EUR172m in 2014. Both Egypt and the USA have been strong growth regions for the company and the selection of Brazil for its next expansion is likely to be more challenging, even in a developing region like Ceará.
According to the National Cement Industry Union (SNIC), cement sales in June fell 14.7 per cent compared sales in June 2015 and totalled 4.7Mt. In the northeast, cement sales were down 11.4 per cent in June 2015, standing at 1Mt whereas in the south sales dropped some 20.7 per cent to 4.7Mt during June 2016. Cumulative cement sales for the year reached 28Mt, down 14 per cent on the same period in 2015.
Ceará has seen major construction and investment into the region in the past three years with projects like the Olympic Development Centre and the Pecém Port Terminal. Much of the state’s cement consumption in destined for the city of Fortaleza which has a population of more than three million.
Clean drinking water is also a priority for such cities and cement firms are participating in the construction of the São Francisco River Integration project that will supply 393 municipalities in the northeast with fresh water supply. This is the largest water infrastructure works in the country and will integrate canals, reservoirs, aqueducts, tunnels and pumping stations over 720km, with the first phase of construction scheduled for opening in 2017.
Even with public and bank funding of such large projects, cement producers in Brazil find they are faced with delays, protests and budget problems. Steel and cement manufacturer Companhia Siderúrgica Nacional (CSN), for example, had its 10-year Transnordestina railway project put on hold this May when the Federal Court of Accounts prohibited further transfers of public funding. This imortant rail link was supposed to transport trade in the northeast between Pecém Port in Ceará state to Suape Port in Pernambuco state.
