FLSmidth cement dealings

On Friday the Cement division of FLSmidth A/S (OMX: FLS) could celebrate some incoming activity from the United States as it received an EPC contract from a repeat customer to convert an existing wet process kiln to a preheater, precalciner kiln. This deal is worth approximately 136 million Dollards or 780 million Danish kroner. This contract helps the customer to prepare for tighter emission standards and improve efficiency as new National Emission Standards for Hazardous Air Pollutants (NESHAP) regulations are being expected.

During the weekend the company commented on leaked news that it is in negotiations with Tanzanian-based Tanga Cement Co. Ltd (DSE: SIMBA) on a new contract. Tanga was incorporated in 1980 as a local public company and it received a loan from the government of Denmark. FLSmidth provided design, manufacture, supply, erection and commissioning of its plant. Tanga is very positive about the market development in its region with reduced trade barriers among East African nations and foresees the possibility of consolidation in the local cement industry.

Tanga has said its current expansion plan is in its final stage with a capacity increase to cement plant 1 completed in 2009 and the subsequent inauguration of a second cement mill and a packing plant that, a project which was started couple years ago targeting a capacity greater than 1.25m tonnes per year. FLSmidth confirms that the companies are negotiating and it will notify the stock exchange if a binding contract is reached.