This final issue of the 2010s provides a unique opportunity to look over the major cement sector events of the past 10 years, a contradictory decade of expansion and consolidation, overcapacity and huge new projects, with heightened environmental awareness alongside rising emissions. Here, Global Cement attempts to extract some sense from this confusing time...
It’s 2010, so let’s set the scene. On 4 January the Burj Khalifa, the world’s tallest building, officially opened in Dubai, UAE. A week later Haiti, one of the poorest countries on earth, was ravaged by a devastating earthquake that left 316,000 dead. On 23 March Barack Obama, still riding high after his first year as US President, signed ‘Obamacare’ into law. Shortly afterwards, in April, the BP Deepwater Horizon oil platform exploded in the Gulf of Mexico, killing 11 workers, bringing ecological devastation to the Gulf and giving Obama his first major presidential test.
2010 also saw: The ash cloud from Iceland’s Mount Eyjafjallajökull disrupt flights across Europe; Wikileaks release thousands of classified US government documents, and; The initial events of the ‘Arab Spring’. In 2010 we were yet to be horrified by ISIS and the Syrian Civil War. President Trump, Extinction Rebellion and Brexit were concepts to be realised several years down the line.
Cold hard numbers tell part of the story
Despite the worst ever financial crisis at the end of the 2000s, the world of 2010 was optimistic that normal business conditions, i.e. growth, would return soon enough. In terms of global GDP, this transpired. GDP rose from US$66.0tn in 2010 to US$85.8tn in 2018, an increase of over 30%.1 The IMF forecasts further 3.5% and 2.6% growth in 2019 and 2020 to a total GDP of US$92tn at the end of that year.2 In contrast, global GDP/capita rose by 18%, from US$9539 to US$11,298 over the same period. The difference in these two growth rates is down to rapid population growth. In 2010 the world’s population was still below 7 billion. At the time of writing, Worldometer’s population clock3 shows 7.74 billion, a near 12% rise at more than 140 extra people per minute.
Most new arrivals have been in developing regions, so one might think that there would have been an increase in wealth inequality over the 2010s. Indeed this is the case by some metrics, with the wealthiest 1% of adults controlling more of global wealth in 2019 (~45%) than in 2010 (~42%). However, both of these are lower than in 2000 (~47%).4 The financial crash is responsible for this dip.
At the same time, the proportion of wealth controlled by the poorest 90% of the global population increased from around 11% in 2010 to 18.3% in 2019. The wealth controlled by the wealthiest 5 - 10% shrank accordingly, along with the wealth of other middle and lower income brackets. Many in the ‘middle’ are now trapped between rising living costs and stagnant incomes. Projections from the UK’s House of Commons Library cross party group suggested in April 2018 that, if the 2008 - 2017 trends continue over the next decade, the globe’s wealthiest 1% would control two thirds of global assets by 2030.5
The movement of wealth away from middle income groups has already led to a backlash against ‘the 1%’ in the form of the Occupy Movement, stoked by events like the release of the Panama Papers. In the second half of the 2010s, (perceived) economic stagnation in developed markets also led to a rise in populist political tendencies and protectionism, including the US-China trade dispute, the UK decision to leave the EU and a turn towards increasingly authoritarian leadership in Turkey, Russia, Brazil and elsewhere.
Global cement production
Cement production in the 2010s was a tale of two halves. The first five years continued the strong production growth seen in previous decades, in large part due to the Chinese and Indian cement sectors. From 3.31Bnt of cement made in 2010, production rose to 4.18Bnt in 2014. Since then, cement production has fluctuated around the 4.0 - 4.2Bnt/yr bracket, as markets struggle to absorb the additional capacity that has been added to many countries. Global Cement Directory data shows an additional 843Mt/yr of integrated cement capacity was added between 2010 (3132Mt/yr) and 2019 (3975Mt/yr). Although Chinese data has to be taken with a pinch of salt, India has added 23 integrated cement plants and upgraded existing plants, taking its capacity from 214Mt/yr to 320Mt/yr. There have also been large gains in Africa and Central and South East Asia. Even established markets have expanded. There were 102 active cement plants in the US in 2010 sharing ~105Mt/yr, but ‘only’ 94 in 2019. However, the country added around 15Mt/yr of capacity over the same period, despite the closures.
Not all regions have seen expansion. Although not strictly covering the right time period, CemBR reports that 52 integrated cement plants closed in the region covered by the EU Emissions Trading Scheme (ETS) between 2005 and 2018.
Figure 3 shows that two major world regions stood out in terms of integrated cement capacity growth between 2010 and 2019: Africa and a ‘belt’ running from Central Asia across the Indian sub-continent to Indonesia. African cement capacity grew by 55.7% from 140.3Mt/yr in 2010 to 316.9Mt/yr in 2019, while the countries in the ‘belt’ group saw a 36.8% increase from 51.4.Mt/yr to 810.9Mt/yr.
Europe’s integrated capacity (including Russia) fell by 6.1% to 389.7Mt/yr from 413.4Mt/yr. North America’s integrated capacity (US, Canada & Mexico) rose from 170.2Mt/yr to 201.7Mt/yr, an increase of 31.5%. Central and South America’s integrated capacity rose by 14.0% to 199.5Mt/yr in 2019 from 171.5Mt/yr in 2010. The Middle East’s integrated capacity rose from 290.7Mt/yr to 384.7Mt/yr, an increase of 24.4%.
Countries with particularly large changes included:
India | +106Mt/yr |
Vietnam | +71.7Mt/yr |
Indonesia | +50.5Mt/yr |
Nigeria | +39.9Mt/yr |
Egypt | +32.8Mt/yr |
Spain | - 4.4Mt/yr |
Italy | -16.1Mt/yr |
Guyana, Mali, Togo, Burkina Faso, Bhutan and Cameroon joined the ranks of integrated producers in the 2010s.
The sole integrated cement plants in Iceland and the Netherlands converted to grinding only.
A decade of big moves
Like many other sectors, the global cement industry started the 2010s battered by the financial crisis. Indeed, some established producers have spent almost the whole decade in something akin to ‘survival mode.’ This has meant mergers and acquisitions, divestment of non-core assets and upgrades, particularly those with low capital expenditure, as well as significant efforts towards digitalisation and improved customer service. At the same time, a number of smaller regional players have come to the fore, snapping up assets as they become available.
The Global Cement Directory 2010 provides a snap-shot of the situation prior to this activity. Most obviously we have Lafarge and Holcim as separate large European multinationals, a full five years from merging. In 2010 Italcementi was an independent player and competitor to HeidelbergCement, its parent since 2016. In China, CNBM and Sinoma were both large, but a world away from becoming the 512Mt/yr industry-leading behemoth we know today.
New kids on the block
As these major players have merged into each other, they have consolidated their positions, both due to competition requirements and by choice. The initial chief beneficiary of this was Ireland’s CRH, which absorbed US$6.5bn of former Lafarge and Holcim assets, including 25Mt/yr of capacity across 24 integrated plants. It also subsequently acquired US-based Ash Grove Cement (9.5Mt/yr), boosting its capacity to 51.7Mt/yr. Previously linked with the sale of Binani Cement in India, CRH stated in August 2018 that it was preparing a US$7.8bn ‘war-chest’ for ‘anything from acquisitions to share buybacks.’ It is clear that CRH’s rise up the global cement ranks will continue in the 2020s.
Other ‘risers’ in the 2010s included Dangote Cement. A local producer with just two integrated plants (8.0Mt/yr) in Nigeria in 2010, the Nigerian producer has built new plants in a number of sub-Saharan markets to transform into a regional giant. As well as additional capacity at home, Dangote has expanded its presence into Ghana, South Africa, Cameroon, Ethiopia, Zambia, Tanzania, Sierra Leone and the Republic of the Congo. It is currently building plants in Niger and Togo and has long-standing plans to build an integrated plant in Nepal. It aims to have 62Mt/yr of capacity in Africa in 2020, up from 45.6Mt/yr in 2018.
Also in Africa, South Africa’s Pretoria Portland Cement has simplified its name to PPC, while taking its capacity to 9.0Mt/yr from 5.5Mt/yr. CIMAT, which didn’t produce a single tonne of cement until 2012, has exploded onto the scene in north and west Africa from its base in Morocco. In addition to the two Moroccan plants (3.2Mt/yr) it launched in 2012, CIMAT also operates 10 other cement plants in a further nine African countries via its CIMAF subsidiary. The CIMAT / CIMAF plants combined share a total capacity of 10.0Mt/yr. Three further plants currently being built will bring an additional 2.0Mt/yr in the early 2020s.
In India, UltraTech Cement is another prominent example of a regional player that has expanded during the 2010s. Today it claims to have 117.4Mt/yr of capacity across 23 integrated, one clinker-only and 27 grinding plants across India, the UAE, Bahrain, Bangladesh and Sri Lanka. It had 23.1Mt/yr to its name in 2010, entirely within India. This transformation has been achieved via a merger with assets from Grasim Industries (to around 50Mt/yr), the acquisition of ETA Star Cement (4.5Mt/yr) and Binani Cement (8.8Mt/yr), plus numerous upgrades at its existing plants.
Elsewhere, Cementos Argos has taken bold steps outside of its native Colombia. The product of an eight-way domestic merger in 2005, Cementos Argos first moved into the Caribbean and Suriname in 2009, before expanding to the United States in 2011 with the purchase of Lafarge’s Harleyville and Roberta plants. It has since bolstered its position with the purchase of Lafarge Honduras (2013), ex-Lafarge plants in Florida (US) and French Guiana (2014), a terminal in Puerto Rico (2015), HeidelbergCement’s Martinsburg plant in West Virginia (US) (2016) and further Puerto Rican assets in 2017. It is also active in Haiti, Panama and on many small Caribbean islands. From 9.3Mt/yr of cement capacity in 2010, Cementos Argos has since more than doubled in size to 20.2Mt/yr at the end of 2019.
Net CO2 emissions | Alternative fuels used | Biomass fuels used | Power used | ||
kg/t (clinker) | kg/t (cementitous) | Mt | Mt | kWh/t (cement) | |
1990 | 906 | 755 | 2.3 | 0.34 | 119 |
2000 | 862 | 711 | 6.09 | 1.25 | 113 |
2005 | 847 | 674 | 8.56 | 3.83 | 111 |
2010 | 831 | 636 | 12.6 | 4.68 | 107 |
2011 | 824 | 627 | 12.9 | 5.14 | 104 |
2012 | 815 | 618 | 14 | 5.45 | 102 |
2013 | 812 | 616 | 14.6 | 6.02 | 102 |
2014 | 814 | 616 | 15.8 | 537 | 101 |
2015 | 813 | 618 | 16.8 | 5.28 | 101 |
2016 | 810 | 618 | 16.6 | 4.33 | 103 |
2017 | 805 | 617 | 16.9 | 4.73 | 102 |
Δ 1990 - 2000 | - 44 (-5.1%) | -44 (-6.2%) | 3.79 (+62.2%) | 0.91 (+78.2%) | -6 (-5.3%) |
Δ 2000 - 2010 | -31 (-3.6%) | -75 (-10.5%) | 6.51 (+107%) | 3.43 (+274%) | -6 (-5.3%) |
Δ 2010 - 2017 | -26 (-3.1%) | -19 (-3.0%) | 4.3 (+34.1%) | 0.05 (+1.1%) | -5 (-4.7%) |
Δ 1990 - 2017 | -101 (-11.1%) | -138 (-18.3%) | 14.6 (+635%) | 4.39 (+1291%) | -17 (-14.3%) |
Above - Table 1: Assorted fuel, electrical power and emissions data for cement plants covered by the Getting the Numbers Right Database, 2010 - 2017. Indicative data for 1990, 2000 and 2005 shown for comparison.
While the steady downward trends seen in CO2 emissions per tonne of clinker and electrical power use continued in the 2010s, other metrics have moved more dramatically.
An increase in use of supplementary cementitious materials in the 2000s is reflected in the more rapid decrease in CO2 emissions per tonne of cementitious material over that decade, while the mass of alternative fuels used increased most dramatically since 2000. Biomass use has ebbed and flowed since 2000, with barely any net increase between 2010 and 2017. As a percentage of fuels used, fossil fuels decreased from 87.9% to 82.5% in 2017.
Source: Getting the Numbers Right (GNR) Database 2017, World Business Council for Sustainable Development / Global Cement & Concrete Association.
Note: GNR Database does not cover all cement plants. In 2010 coverage was 25%, in 2017 it was 19%, with variation by world region. This results in European and North American data being over represented, thus trends may not be entirely indicative of the global situation.
Expansion: It’s not for everyone...
While there have been numerous tales of successful growth over the past 10 years, some of the more established names have fared less well. Perhaps the most obvious example is Mexico’s Cemex, which bought a large number of assets from Rinker in 2007, just prior to the financial crash. More than a decade later it has divested non-core cement, concrete and aggregate assets in a number of markets, seeking to achieve divestments of US$1.5 - 2.0bn by the close of 2020. A non-exhaustive list of the asset reduction in 2018 and 2019 includes: The sale of a Spanish white cement plant and other cement assets (plus closure of two grey plants), German concrete and aggregate facilities, a Latvian cement plant, a raft of Scandinavian terminals, minor assets in Brazil and the downgrade of its Ponce plant from integrated to grinding. In the earlier 2016 - 2017 period, it sold minor stakes in Mexican subsidiary GCC, cement plants in the US, Bangladesh, Thailand and concrete and aggregate assets in Hungary and Austria. It also re-jigged its assets in Germany in a complicated exchange with LafargeHolcim. This has lowered Cemex’s integrated cement capacity from 77.5Mt/yr in 2010 to 64.6Mt/yr in 2019.
In March 2018 it finally appeared as if Cemex was ‘out of the woods’ when CEO Fernando González announced that it would start to spend on acquisitions in Brazil and India in 2019. Events since, however, suggest that González jumped the gun. Right now, Cemex’s priority, as for many years, remains the recovery of an investment grade rating.
Turning to LafargeHolcim, the world’s biggest multinational producer, contraction has also been on the cards, albeit more recently. From combined Lafarge and Holcim capacities of 427.2Mt/yr in 2010 (before each separately began to offload capacity), the newly-formed LafargeHolcim took on around 340Mt/yr of capacity in 2015. In its 2018 Annual Report, the company stated that it controlled 312Mt/yr of capacity. In 2019 LafargeHolcim’s wholesale exit from the ASEAN market has reduced its capacity by an additional 33.8Mt/yr, taking capacity to ~278.2Mt/yr. That’s a combined contraction of 150Mt/yr for Lafarge & Holcim / LafargeHolcim over the space of 10 years.
HeidelbergCement meanwhile, which acquired the former Italian cement group Italcementi in 2016, has fared somewhat better. In November 2019 it reported that it had increased its sales in the first nine months of 2019 by 7.0% to Euro13.4bn. It said it had cut its net debt by Euro1.1bn and reached sales and administration savings targets of Euro100m 15 months ahead of schedule. It has even been on something of a shopping spree, buying the Bath, Pennsylvania plant from Giant Cement in the US and UltraTech Cement’s stake in Emirates Cement in September 2019 and various Moroccan assets in July 2019. It is undertaking a massive expansion with KHD at its Mitchell plant in Indiana, US. In the early 2010s it invested heavily in grinding assets in West Africa: Benin, Burkina Faso, Ghana, Sierra Leone, Mauritania, Liberia and Togo.
A consolidating picture..?
These mergers, acquisitions and other combinations have increased the concentration of the global cement sector outside of China since 2010 (Figure 4). In early 2010 the top 10 global producers (outside of China) controlled around 571Mt/yr of integrated cement capacity, 23.2% of the global total outside of China that year. By the end of 2012 this had increased to 689.2Mt/yr (33.5%). At the end of 2015 - following the LafargeHolcim merger - it rose to 824.7Mt/yr (36.7%). It then rose to 867.8Mt/yr (42.3%) by the end of 2016 on the back of HeidelbergCement’s acquisition of Italcementi.
However, the concentration factor as a proportion of global capacity fell during 2017 to 864.4Mt/yr (36.0%) as regional players such as Dangote Cement, UltraTech and Cementos Argos picked up a raft of divestments from around the sector. The Top 10’s capacity rose again to 910Mt/yr (37.9%) at the end of 2018. This pattern, with a peak of capacity held by the top 10 seen in 2014 - 2016, is due to the large combinations of Lafarge and Holcim in 2015 and of HeidelbergCement and Italcementi in 2016.
The final version of the Global Cement Directory 2020, which details the situation at the end of 2019, is still being compiled. However, with LafargeHolcim offloading 33.8Mt/yr of capacity, Cemex’s sales in Spain and a number of minor sales by HeidelbergCement, it appears that the Top 10 will have lost at least 40Mt/yr of capacity during 2019. This would give the top 10 around 870Mt/yr (34.8%)of integrated capacity. The situation heading into the 2020s is hard to read. On one hand, it is likely that multinationals - particularly LafargeHolcim, which is rumoured to be mulling divestments in Africa and the Middle East - could continue to sell assets, further decreasing concentration. However, the newer Top 10 producers like Cementos Argos, UltraTech and Dangote may well add to the top 10’s tally in 2020.
The 2010s in the Chinese cement sector
After massive capacity expansion in the 2000s, China entered the 2010s with huge cement overcapacity. In 2012 the National Bureau of Statistics of China (NBSC) officially warned that too much cement was being made and, in 2013, China’s State Council issued guidelines to tackle the issue. Plans were drafted to promote mergers and acquisitions.
In 2017 the CCA elaborated on its plans, stating that 393Mt/yr of clinker capacity and 540 small to medium-sized cement grinding plants would be closed by 2020. The aim is to reach clinker and cement utilsation rates of 80% and 70% respectively. This has included forced closure of older capacity, bans on new plants and expansions and forced campaign production around major cities. Each of these has tied in with China’s increased environmental focus. A ban on 32.5 grade cement brought in during December 2015 is estimated to have sidelined more than 340Mt/yr of capacity alone.
A complete ban on new capacity was announced in February 2018. In the same year, a huge merger between CNBM and Sinoma was completed, giving rise to the largest cement maker the world had ever seen (521Mt/yr).
Domestic profits have been adversely affected by these consolidation efforts, especially since 2015. After a poor year, major producers set about repairing their balance sheets in 2016 and 2017. In the past three years, there has been a large up-tick in projects carried out by Chinese firms overseas.
Chinese companies are involved in a variety of projects, many of which are joint ventures. In 2018, Global Cement was made aware of 41 projects, across north Africa (6), sub-Saharan Africa (8) the Middle East (2), South America (3) and central (7), north (3), south (6) and south east (6) Asia. These projects comprise 52.4Mt/yr of cement capacity in the form of new clinker lines, grinding plants and expansion projects that have been ordered, are under construction, were commissioned or entered into production in 2018.
Between 1 January and 11 November 2019, at least 13 further projects have been announced in 11 different countries. They encompass a further 19.5Mt/yr of new non-Chinese capacity in which Chinese firms are either the supplier, investor or both.
What does Global Cement Magazine tell us?
Global Cement Magazine has followed the ups and downs of the global cement sector over the past decade and has attempted to keep up with new technologies and trends as they arise. We have increasingly sought out new technologies, particularly in the areas of energy efficiency, alternative fuels, renewables and carbon capture and storage (CCS).
A brief look at the most frequent words by issue actually indicates that this has been the case since 2010. The six most frequent words in the December 2009 - January 2010 issue were: Slag (105), emissions (96), production (86), CO2 (84), fuels (76) and alternative (74) - after removal of a number high-frequency words (including, but not limited to: cement, plant, global, industry, year, company, new, country-ies, and others). The most popular two word phrases included alternative fuels (63), CO2 emissions (23) and low-carbon (20).
The most common words in the January 2012, 2014, 2016 and 2018 issues were: Production (81 in 2012, 141 in 2014 and 69 in 2018) and energy (95 in 2016). In the January 2012, 2014 and 2016 issues the top two word phrases were alternative fuels (19 to 41 instances), sewage sludge (20 in 2012) and renewable energy (12 in 2018).
An increase in non-technical words associated with global trends is noticable from 2016 onwards, as global cement increased the number of trends and keynote articles. For instance, population appears 89 times in the January issue that year. Demand appeared 46 times in the same issue, while construction, indicative of discussion of cement’s place in the wider building materials sector, hits the top 10 words in the January 2016 and 2018 issues.
Finally, the November 2019 issue resumed the trend for production as the top hit (69 instances), indicating that, at the end of the day (decade) cement producers remain firmly in the business of cement production, rather than energy saving, renewables, waste-heat recovery or anything else - They produce cement!
A review of the 2020s...
So... what might we write on these page in a future review of the 2020s? Over the next few years we might reasonably expect continued divestments from the major players and lower concentration at the top of the sector. One doesn’t need a crystal ball to envisage continuation of existing trends: more alternative fuels, higher impacts from CO2 pricing, a hightened rush for SCMs and increased efficiency through increased digitisation efforts.
Looking further ahead, if the past decade teaches us anything, it is that the global cement industry is fluid. Seemingly invincible players (Cimpor, Ciments Français. Italcementi and, in the 2000s, Blue Circle) disappear. With increasing pressure from the public, CO2 trading schemes, scarce resources and chronic overcapacity, the playing field is only becoming more ruthless. It is not a bold statement to say: One or more major players will vanish by 2030. Keep reading Global Cement to find out which ones!
References
1. World Bank Data Indicators website.
2. IMF World Economic Forecast July 2019.
3. Worldometer website, https://www.worldometers.info/world-population.
4. Global Wealth Report 2019, Credit Suisse.
5. Guardian UK website, ‘Richest 1% on target to own two-thirds of all wealth by 2030,’ https://www.theguardian.com/business/2018/apr/07/global-inequality-tipping-point-2030.