Displaying items by tag: Closure
Update on France, April 2024
10 April 2024Heidelberg Materials announced this week that it is preparing to close its integrated cement plants at Beffes and Villiers-au-Bouin in France by October 2025. It framed the restructuring as a response to ‘a significant decline in cement sales in France’ and a plan to focus on low-carbon products. Unfortunately, local media reported that around 170 jobs will be lost at the two sites. The company says it is looking at ‘socially acceptable solutions’ including redeployment to other locations in the country.
Investment has been forthcoming from Heidelberg Materials France in recent years. It reminded everyone that it initiated a Euro400m scheme at its France-based subsidiary Ciments Calcia in late 2020. Most of this was earmarked towards a new production line at the Airvault plant, which is currently being built. Other schemes at the Beaucaire, Bussac-Forêt and Couvrot integrated plants followed. More recently, Heidelberg Materials launched a carbon capture, utilisation and storage (CCUS) project at Airvault, part of the GOCO2 initiative, with the aim of starting initial capture in 2030 with full 1Mt/yr capture planned later. What the company didn’t mention though was at the time of that 2020 investment it was also preparing to convert the integrated Gargenville plant into a grinding unit, stop white cement production at its Cruas plant with the intention of turning the site into a terminal and it wanted to reduce its workforce by around 140. To be fair to Heidelberg Materials though, it did have the same goal of reducing its specific net CO2 emissions. The added detail this week was that the group aims to generate half of its revenue from sustainable products that are either low-carbon or circular by 2030.
Heidelberg Materials France is not alone with its ambitions for low-carbon products. Holcim notably opened in early 2023 what it said was the first calcined clay unit in Europe at its Saint-Pierre-la-Cour cement plant. Heidelberg Materials then followed in May 2023 with the announcement of a calcined clay project at its Bussac-Forêt cement plant. Other clay projects from Vicat, NeoCem and Neo-Eco have been reported since then. The other prominent France-based blended cement producer that has steadily been building its business in recent years is Hoffmann Green Cement. More general plant upgrade projects that are also worth mentioning include Eqiom’s (CRH) upgrade to its Lumbres plant in February 2024 and the ignition of a new kiln at Lafarge France’s Martres-Tolosane plant in October 2023. Both of these projects have been framed as driving sustainability.
Graph 1: Cement production in France, 2014 - 2022. Source: France Ciment.
Heidelberg Materials’ assessment about the poor state of the cement market has been confirmed by local media. Sales reportedly started falling in 2022, were down by 6% year-on-year in 2023 and further downward pressure is expected in 2024. Production data shown in Graph 1 above released by France Ciment, the national cement association, doesn’t really show what has been happening with sales. Over the last 20 years production hit a high of around 22Mt in the mid-2000s before settling around 16 - 17Mt/yr from 2015 onwards. The more telling trend, perhaps, has been the increase in CEM II blended cements from 50% in 2012 to 64% in 2022. Cement production may have stayed roughly the same over the last decade but it is using less clinker than it used to. Hence the pressure on companies like Ciments Calcia to reduce clinker capacity.
A further cost pressure facing cement producers in France is the impending end to the price cap on electricity scheduled by the end of 2025. The government enacted the scheme in late 2021 at the end of the Covid-19 pandemic, but then carried on as energy prices spiked following the Russian invasion of Ukraine. France Ciment lobbied in August 2023 for further protection for the sector using the argument that decarbonisation was not possible without electricity available for a reasonable price. It added that decarbonising the cement sector in France with carbon capture would cost around Euro3.5bn. Electricity prices started rising in February 2024 as part of the government’s phase out of the scheme.
Finally, 17 people were arrested on 5 April 2024 in connection with a demonstration at Lafarge France’s Val-de-Reuil ready-mixed concrete plant in Eure. Environmental activists reportedly trespassed on the site, according to local press, causing an estimated Euro450,000 in damages with acts such as spraying foam into machinery, ripping up bags of cement, breaking windows and more. The activists presented their actions as a response to both the environmental impact of cement and concrete production and the ongoing legal allegations about Lafarge’s actions in Syria in the early 2010s. Lafarge France’s La Malle integrated plant was also similarly targeted in December 2022 when around 200 activists stormed the site and caused damage to machinery and property. Lafarge’s response at the time was to remark that there was a feeling of misunderstanding given that the La Malle plant was piloting various decarbonisation methods.
All of this presents a febrile picture of the cement sector in France. Sales are down, electricity costs are set to go up and producers are switching to low-carbon cement products. Alongside this they are also closing clinker production plants but are also investing in new decarbonisation projects. At the same time environmental protestors have also been targeting cement and concrete plants and Lafarge’s association with its former actions in Syria appear to have made it more of a target than the other manufacturers. It is unsurprising then that Holcim, the parent company of Lafarge France, has raised the risk of damage to the group’s reputation, with both the general public and investors, should it fail to meet its targets. Reaching net zero was never going to be easy but setting unrealistic targets is increasingly not an option.
Heidelberg Materials to close two plants in France
05 April 2024France: Heidelberg Materials has announced plans to close two of its plants in France - Beffes and Villiers-au-Bouin - by October 2025. This move is part of the company's restructuring efforts aimed at accelerating its decarbonisation efforts and focusing more on low-carbon products.
The decision comes amid a decline in cement sales in France, attributed to weak demand in the construction sector. 170 employees are affected by the impending closures of these plants, according to the company.
These closures align with Heidelberg Materials' commitment to focus on lower carbon alternatives, enhance energy efficiency, increase the use of alternative fuels, and reduce the clinker content in its cement products in France.
‘Cheap’ imports threaten South African cement industry
26 March 2024South Africa: The South African cement industry faces plant closures and job losses due to an influx of ‘cheap’ cement imports, according to a recent study. Chronux Research found that cement imports to South Africa rose by nearly 20% in 2023, despite logistical challenges at ports. The firm's cement import monitor shows imported cement volumes increased by 18% in 2023 to 979,000t, with a notable 43% year-on-year growth in the second half of the year.
"Cement imports continue to be able to navigate the port and supply chain issues in South Africa with minimal impact," reads the report, highlighting the government's lack of protective measures for local cement producers. Vietnam, Mozambique, Namibia, Saudi Arabia and the UAE were the primary sources of these imports.
Chronux Research director Rowan Goeller expressed confusion over how imports are bypassing the country’s congested ports. The local industry has been lobbying for tariff protection against imported cement. The capacity of South Africa's cement production stands at 20Mt/yr, but only 12Mt/yr is currently produced.
A report by PPC Cement and the Gordon Institute of Business Science revealed in September 2023 that South Africa’s cement industry is operating at two-thirds of its capacity, citing displacement by imports and low demand as major factors. This underutilisation could lead to job losses and government revenue collections, according to the report.
Economic adviser for the Optimum group, Roelof Botha, raised concerns about the quality standards of imported products and their impact on local employment. He said "The extent to which the imported product displaces the locally manufactured products will ultimately also replace domestic employment," highlighting the government's slow response and the potential risks associated with poor-quality imports in construction.
Kenya: East African Portland Cement (EAPCC) has closed its Athi River plant for a US$3m upgrade to boost production capacity.
Oliver Kirubai, EAPCC's managing director, said "We are doing the second phase of our machines upgrade, which is basically targeting to increase our output. Our target is that by June 2026 we should be able to produce 1Mt/yr of cement." He added "Seven local contractors are spearheading the upgrade of this plant. They will work with us during the 25-day closure of this facility." The current production capacity of the plant is 310,000t/yr.
EAPCC recorded a loss of US$9.8m for the financial year ending June 2023, despite making a profit of US$4m in the previous year. This shift was due to increased costs elevating the firm's cost of sales to US$29.4m from US$29.9m, despite a 37% increase in revenues to US$21.9m from US$15.9 in the previous year.
Germany: Heidelberg Materials will stop producing clinker at its 700,000t/yr Hanover cement plant in Lower Saxony later in 2024, and transition the plant to grinding-only. The producer took the decision following a ‘significant drop’ in its cement sales, amid local low construction activity and a market shift towards lower-cement materials. Nonetheless, it intend to raise its capacity utilisation at its 1Mt/yr Ennigerloh, 900,000t/yr Geseke and 400,000t/yr Paderborn cement plants in neighbouring North Rhine-Westphalia. These will supply clinker to the Hanover grinding plant in future. Heidelberg Materials says that the plant's strategic location will ensure its continued importance in regional cement supply. Part of the 120-strong workforce at the Hanover plant will remain at the new grinding plant. The company will collaborate with the works council to find ‘acceptable solutions’ for the remainder of the team, possibly including intra-group transfers to other divisions and locations.
The Calix consortium’s on-going LEILAC 2 carbon capture project will now move from the Hanover plant to another Heidelberg Materials plant. Australia-based Calix is collaborating with Heidelberg Materials to identify a suitable new site as quickly as possible.
Hetauda Cement Industry to resume production in February 2024
19 January 2024Nepal: Hetauda Cement Industry (HCI) will resume cement production at its Hetauda cement plant in early February 2024, following a suspension due to coal shortages. HCI uses 36,000t/yr of coal, and currently has 600t in stockpiles. The República newspaper has reported that on-going issues with equipment have reduced the Hetauda cement plant’s effective capacity to 10,000 bags per day. Additionally, HCI has failed to find a buyer for a shipment of 225,000 bags of cement. The Nepali government is reportedly considering paying new subsidies to the company.
General manager Basanta Raj Pandey said "The management of the factory has requested the Office of Prime Minister and Council of Ministers and the Ministry of Industry, Commerce and Supplies to provide subsidies to help resume its production."
Nepal’s Minister for Industry, Commerce and Supplies Ramesh Prasad Rijal said "The Prime Minister and his government are discussing arranging all possible subsidies to bring the industry back into operation as soon as possible."
Cementi Tojik disbands and shuts Dushanbe cement plant
02 January 2024Tajikistan: Cementi Tojik announced the closure of the 1.1Mt/yr Dushanbe cement plant and its disbandment as a company on 26 December 2023. Asia-PLUS News has reported the reason for the company’s departure from the industry as a government regulation issued in mid-2023, which ordered the closure of the plant due to ‘serious’ emissions violations.
India: Andhra Cements has commenced work to dispose of grinding mills from its Visakha grinding plant in Andhra Pradesh’s Visakhapatnam District, Reuters has reported. The plant previously had a capacity of 600,000t/yr.
Sagar Cements concluded a deal to acquire Andhra Cements in January 2023.
Dragon to close Thomaston cement plant
07 September 2023US: Dragon Products Company, a subsidiary of Giant Cement, has announced that it will close its plant located in Thomaston, Maine. The facility, which has been operational for almost 100 years, and has been under Dragon's ownership since 2006, will undergo a gradual shutdown, beginning in December 2023.
Dragon said that the closure had been prompted by the persistent escalation of operating and logistical costs, exerting a negative impact on the Thomaston plant's viability. "Despite our best efforts to adapt and navigate through these challenging circumstances, we have determined that these actions are necessary for the long-term sustainability of our business,” explained Roberto Polit, Vice President of Operations. Phased lay-offs are scheduled to commence in December 2023, with the process anticipated to conclude by the beginning of 2025.
"We extend our sincere gratitude to all employees who have contributed significantly to our plant in Thomaston," added Polit. "Their hard work, dedication, and commitment have been invaluable to our operations. We are also grateful for the support and understanding shown by the local community throughout the years."
US: Heidelberg Materials North America has reached an agreement with the administration of Santa Clara County to decommission its quarry in the county, near Cupertino. Silicon Valley News has reported that the quarry historically supplied limestone for cement production at Permanente cement plant, which came offline in April 2020. The county administration says that the deal signals that it has achieved its aim to ensure final closure of the Permanente plant.
Heidelberg Materials North America spokesperson Jeff Sieg said that the company is ‘pleased to formalise our agreement not to restart the kiln at our Permanente cement plant.’ He continued "We remain focused on working collaboratively with the community and other stakeholders on the development of a long-term strategy for the property, so that it can continue to provide value in the future.”