Adelaide Brighton Cement focuses on growth and improvement

In Adelaide Brighton Cement’s 1H13 financial report, the company announced that it has completed its AU$112 million capital expenditure projects. This included the following investments:

• Birkenhead cement mill, ship loading and slag dryer – AU$60 million.
• Capacity expansion and environmental performance projects, including a new bag filter for the second kiln, at the Munster lime plant – AU$52 million.

Slag dryers have now been installed at Birkenhead and Darwin, and the Port Kembla slag dryer is expected to be commissioned before the end of the year. These will enable Adelaide Brighton to utilise blastfurnace slag in their product, making up a ‘green’ cement mix.

The upgrades to the Munster kilns will support the expected growth in demand in Western Australia.

Acquisitions and partnerships for the Australian cement company

Meanwhile, the company is also focusing on strategic acquisitions and partnerships. In 2012, Adelaide Brighton acquired a 30% stake in Aalborg Portland Malaysia (APM) and entered into a 10-year supply agreement for white clinker commencing in 2015 to replace Adelaide Brighton’s domestic. APM is progressing with a self-funded US$18.6 million project to expand white clinker capacity from 2015.

Also in 2012, Adelaide Brighton secured supply agreements of 7 and 10 years, respectively, with two Japanese clinker producers. The company is considering further rationalisation of its domestic clinker production capacity to reduce costs. Increasing imports has the potential to improve EBIT by AU$5 – 10 million from 2015.

The impact of carbon tax

One cause of concern for domestic production in Australia is the carbon tax. In the interim financial statement, the company states that the impact of carbon tax in 1H13 was AU$2 million after tax, net of mitigation. The impact for the full year on the same terms is expected to be around AU$5 million. The company points out that political uncertainty makes it difficult to predict the impact of carbon tax on profit, but in 2014 it could potentially decrease net profit by AU$2 – 6 million prior to further mitigation. The range here depends on whether the carbon tax is applied for the full year or just the half-year.

Part 2 of 2. To read part 1, click here.

Adapted from press release by Katherine Guenioui