Focus on the worldwide cementitious materials trade, supply & demand: Gareth Ward, ZAG International (US)
Filmed at Cemtech MEA 2015, 8-11 February, Grand Hyatt Dubai, UAE
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The first one being on this opening slide it says February the 10th, is actually February the ninth. So, that's just a test if you're still awake after lunch. Alright, going forward, here we are, we are a global marketing, sales and materials supply company, focused entirely on the cement industry, which is why I'm here.
With that also overlaps with the steel industry, and also with the power generation industry. The two main materials that we move around the world are granulated blast furnash slug and fly ash, but we so supply intermediate products such as clinker and finished goods such as cement. And being associated with the cement industry we also can supply all the raw material associated with the cement industry such as limestone and gypsum.
What we also have within the company is an internal freight brokering system so whatever material we do supply, can supply are delivered on safer basis, and we're also not a spot sale, or spot trade company. All our business is generally a long term. So, a typical contract with our company would be three to five years. I think the shortest contract we have is a single year contract.
Our business model is to work with partners whether they'd be suppliers, customers, or shipping companies, and our model is that we only win if our business partners win. So, we try and grow our company by growing the business of our business partners, whether you are a supplier, or and end use customer.
So, that's who we are, that's what we stand for and that's our business model. We're founded in 2001 in the US, originally as a consulting company to the Petra Chemical industry, but quickly moved on to cementatious materials, and then in 2006, moved away from just US focused, and the became a global business.
I should join the company in early 2012, as Keith said earlier, and since 2006, we have had steady growth along with the industry globally. We've now got offices in North America, Europe, Asia and Oceanian, the Oceanian being Australia which is where I am coming from. So, this is our approach to business, we call it, coal industrial ecology.
We basically, take the raised or co-products or bi-products from one industry, be it still or power generation, and use it as a raw material in the cement industry, and we ship it around the world. We like to think of it as industry inter-connectivity. Cementing klinker, SCMs, freight right and fuel. Just to give you an example about that works, I will give you an example of a customer in Australia, started in business 67 years ago, we have had now three consecutive three year contracts with them. Initially, starting out just supplying clinker but as the business grew, so we've got a long term freight contract and a long term clinker supply contract out of China, so revenue off that, we started bringing down GGBFS in jumbo bags, so they entered a new sector in the market, and gradually over a period of time as that grew we started supplying GBFS in single bookshop out of Japan.
So, that enabled them to enter a new sector of the market and us to grow our business. The materials we put on the same ship from different sources in China would be limestone, FGD gypsum and hydrated line. So, as our customary is growing, we are also growing our own business. The key with freight rates is to pick a time when the freight rates are low which is now, and then forward locking the freight rates. So, as a cement manufacturer you know that your rates are going to be this year, you know what they are going to be next year, and you know what they are going to be the following year.
So, it's a very good tool for managing your cost base, and managing your business going forward. Fuels using that self same example in Australia, as we are bringing the clinker down from China. The Chinese cement manufacturer is asked about bringing Australian coal back. In China, there are some significant environmental issues, and the Chinese government is trying to reduce the sulfur level impose limits on the sulfur levels in coal.
So, a lot of Australian coal has quite a lot of sulfur level so what we are looking at doing is not just bringing clinker one way, but bringing in taking loss of an Australian coal back up to China. So, we looking it as industry into connectivity. A number of speaker this morning have told about the dramatic changes within the industry in the last decade.