Displaying items by tag: HeidelbergCement
Croatia: The proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk is set to be blocked by the European Commission according to sources quoted by Reuters. The commission started investing the deal in October 2016 following plans by HeidelbergCement and Schwenk to buy Cemex Croatia via their jointly owned subsidiary Duna Drava Cement (DDC). The deal would see the largest producer in the area merged with the largest importer. However, a final decision on the transaction has not been made yet and the European Competition Commissioner Margrethe Vestager could still rule in favour of it. The commission is expected to make a final decision by 18 April 2017.
UK: Hanson is considering spending around Euro23m on building a new clinker mill and other improvements at its Padeswood Cement plant. At present the site use four mills that are only able to grind about 40% of the kiln’s output, according to the Daily Post. A second phase of the upgrade project, dependent on production levels being increased, is planned to rebuild a railway link to the plant.
The publication of LafargeHolcim’s annual financial results for 2016 this week starts to give us a review of the year as a whole for the multinational cement producers. Of the larger producers, CNBM, Anhui Conch and Votorantim are expected to make their releases in April 2016, so we’ll focus here on the available data from LafargeHolcim, HeidelbergCement, Cemex and BuzziUnicem, with UltraTech Cement included for some regional variety.
Graph 1: Sales revenue from multinational cement producers in 2015 and 2016 (Euro millions). Source: Company financial reports.
As can be seen in Graph 1 currency exchange effects have caused problems for producers’ sales revenues, with LafargeHolcim, HeidelbergCement and Cemex all reporting falling sales on a direct comparison. Subsequently like-for-like adjustments have cropped up repeatedly on balance sheets to try and present a more investor-friendly picture, although even this has still seen LafargeHolcim and HeidelbergCement report small declines. In this sense it’s a little unfair to include India’s UtraTech Cement, given that the bulk of its business is in just one country. Operating in just one country though has its own risks, one of which we’ll discuss below.
Unsurprisingly, given the poor sales, the focus for the multinationals has generally been on earnings measures such as operating earnings before interest, taxation, depreciation and amortisation (EBITDA). Here, LafargeHolcim and Cemex have done far better as they have streamlined their businesses. For example, LafargeHolcim’s operating EBITDA rose by 12.9% year-on-year to Euro4.895bn in 2016.
Graph 2: Cement sales volumes from multinational cement producers in 2015 and 2016 (Mt). Source: Company financial reports.
Graph 2 looks at cement sales volumes. Most of the producers have made small gains or losses in 2016 with the stark exception of LafargeHolcim. Its cement sales fell by 12.9% to 233Mt in 2016. More alarmingly, for the fourth quarter of 2016 LafargeHolcim blamed an increased rate of declining cement sales volumes on demonetisation in India, tough trading conditions in Indonesia and a unusually good year (in 2015) to compare itself against in the US.
On that point about India, UltraTech may not have released any sales volumes figures but other larger Indian producers have experienced problems with the government’s decision to remove certain banknotes from circulation in November 2016. A report by HDFC Securities this week suggests that cement volumes fell by 13% year-on-year in January 2017 following a 9% decline in December 2016. The country may be facing its first decline in cement sales volumes since 2001. This is squarely down to government policy.
On a regional basis probably the most worrying theme has been an apparent slowdown in the US towards the end of the year. As mentioned above LafargeHolcim has blamed it on a good previous year and Cemex concurred. Buzzi Unicem also reported the same trend but didn’t attribute it to anything in paticular. President Donald Trump’s push for US$1tr investment on infrastructure in the US should help to reverse this along with anything that happens with his Mexican border wall plans.
The other area to pay attention to is Indonesia. Both LafargeHolcim and HeidelbergCement reported tough trading here prompted by production overcapacity. Locally, Semen Indonesia said this week that its sales revenue fell by 3% to US$1.95bn in 2016 and it still has new cement plants to be commissioned in 2017.
The overall picture for 2016 from these cement producers appears to be one of companies treading water and making savings as their sales were battered. As mentioned previously (The global cement industry in 2016, Global Cement Magazine, December 2016) the geographic spread of assets the multinationals own doesn’t seem to be protecting them from world events as well as they once did. On the plus side northern Europe seemed to pick up or at least hold steady in 2016 but various political shocks such as the UK departure from the European Union and elections in France and Germany may scupper this. In a similar vein India remains one of the key markets but government policy has potentially dented its growth this year. In the US cement volumes may be slowing but Donald Trump is riding to the rescue! With this continued high level of potentially disruptive events cement producers are probably hoping for a quiet year in 2017.
HeidelbergCement appeals against investigation by European Commission into purchase of Cemex Croatia28 February 2017
Croatia: HeidelbergCement has appealed against an investigation by the European Commission into the proposed joint purchase with Germany’s Schwenk Zement of Cemex Croatia. The cement producer asserts that by considering Schwenk and itself rather than Duna-Dráva Cement (DDC), a subsidiary that both companies own equally, the commission has given the transaction a ‘Union dimension,’ according to the Official Journal of the European Union. Although DDC is based in Hungary, within the European Union (EU), it imports cement into Croatia (in the EU) from Bosnia & Herzegovina, a country outside of the union. The appeal was made in late December 2016 but only reported in late February 2017.
The European Commission revealed that it was investigating the proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk in October 2016. The commission was concerned that the transaction would merge the biggest producer in the area with the biggest importer, potentially reducing local competition.
UK: Fairport Engineering has reported work on its replacement of two electrostatic (ESP) filters at Hanson’s Ketton cement plant in Rutland. Following discussion in early 2016 Fairport was contracted to replace ESP filters at the plants Mills 9 and 10. Both mills were shut down for planned three-week periods each to remove the old filters and install the new ones. The new system on Mill 9 also required the installation of new screw conveyors, rotary airlocks and the reconfiguration of existing control panels, plus the installation of new 160KW central exhaust fans and associated clean gas ducting. Fairport reports that, to date, the daily averages on both filters are well below the target emission level.
Germany: HeidelbergCement’s sale revenue, volumes and profits have all been boosted by its acquisition of Italcementi in 2016. Preliminary figures for the group show that its revenue rose by 13% year-on-year to Euro15.2bn in 2016 from Euro13.5bn in 2015. Its cement sales volumes rose by 28% to 104Mt from 81.1Mt and its operating income rose by 7% to Euro2bn from Euro1.85bn. The group said that 2016 had been its best year since the financial crisis in 2008. However, on a pro-forma basis, taking into account the contributions of Italcementi in 2015 and 2016, the group’s sales revenue fell slightly and cement sales volumes and operating income rose far less steeply.
“The year 2016 was an important milestone for HeidelbergCement,” said Bernd Scheifele, chairman of the managing board. “With the acquisition of Italcementi, we made a big leap in growth and achieved the best operating income since the financial crisis. The integration of Italcementi is well under way and offers significant earnings potential resulting from the implementation of identified synergies.”
By region, HeidelbergCement’s Western and Southern Europe division reported rising sales volumes of cement but falling revenue and operating income. Improving markets in Germany and the UK were offset by weak demand in Italy, France and Spain and the falling value of the British Pound versus the Euro. By contrast revenue, cement volumes and operating income were all up in the Northern and Eastern Europe-Central Asia area with a particular emphasis in Norway. Notably, demand growth was also reported in Russia driven by markets in Moscow and St Petersburg. In North America financial figures rose in 2016 but revenue fell in the last quarter of the year. Strong sales were recorded in the north and south of the US but a drop in sale volumes was noted in the Canadian Prairie provinces due to falling oil production. In the group’s Asia area sales volumes rose but revenue and operating income fell in 2016 due to a ‘significant’ fall in prices in Indonesia and Thailand. Finally, in the Africa-Eastern Mediterranean Basin the market picture was mixed with small increases in sales volumes, a drop in sales revenue and a slight increase in operating income due to increased market competition in Sub-Saharan countries.
Last week’s Global CemFuels Conference in Barcelona raised a considerable amount of information about the state of the alternative fuels market for the cement industry and recent technical advances. One particular facet that stuck out were reports from cement and waste producers, from their perspective, about Morocco’s decision to ban imports of waste from Italy in mid-2016. The debacle raises prickly questions about how decisive attempts to reduce carbon emissions can be.
Public outcry broke out in Morocco in July 2016 over imports of refuse derived fuel (RDF) imported from Italy for use at a cement plant in the country. At the time a ship carrying 2500t of RDF was stopped at the Jorf Lasfar port. Local media and activists presented the shipment in terms of a dangerous waste, ‘too toxic’ for a European country, which was being dumped on a developing one. Public outcry followed and despite attempts to calm the situation the government soon banned imports of ‘waste’.
What wasn’t much reported at the time was that RDF usage rates in Europe have been rising in recent years and that the product is viewed as a commodity. As Michele Graffigna from HeidelbergCement explained at the conference in his presentation, its subsidiary Italcementi runs seven cement plants in Italy but only two of them have the permits to use alternative fuels like RDF. Italy also has amongst the lowest rates of alternative fuels usage in Europe, in part due to issues with legislation. This is changing slowly but the company has an export strategy for waste fuels from the country at the moment. Italy’s largest cement producer wants to use waste fuels in Italy but it can’t fully, so it is exporting them so it (and others) is exporting them to countries where it can.
In the Waste Hierarchy, using waste as energy fits in the ‘other recovery’ section near the bottom of the inverted pyramid, but it is still preferable to disposal. Waste fuels may be smelly, unsightly and have other concerns but they are a better environmental option than burning fossil fuels. HeidelbergCement engaged locally with media and local authorities to try and convey this. It also arranged visits to RDF production sites in Italy and German cement plant that use RDF to present its message. Looking to the future, HeidelbergCement now plans to focus on local waste production in Morocco with projects for a tyre shredder at a cement plant and an RDF production site at a Marrakesh landfill site in the pipeline. Graffigna didn’t say so directly, but the decision to focus on local waste supplies clearly dispenses with historical and cultural baggage of moving ‘dirty’ products between countries.
In another talk, at the conference Andy Hill of Suez then mentioned the Morocco situation from his company’s angle. His point was that moving waste fuels around can carry risks and that a waste management company, like Suez, knows how to handle them. It is worth pointing out here that Suez UK has supplied solid recovered fuel (SRF) to the country so it has a commercial interest here. He also suggested that despatching a bulk vessel of waste to a sensitive market did not help the situation and that it heightened negative publicity.
Morocco’s decision to ban the import of waste fuels in mid-2016 is an unfortunate speed bump along the highway to a more sustainable cement industry. It raises all sorts of issues about public perceptions of environmental efforts to clean up the cement industry and where they clash with commercially minded attempts to do so by the cement producers. A similar battle is playing out in Ireland between locals in Limerick and Irish Cement, as it tries to start burning tyres and RDF. These are not new issues. Meanwhile in the background the amendment to the European Union Emissions Trading Scheme draws close with a vote set for mid-February 2017. It could have implications for all of this depending on what happens. More on this later in the month.
UK: Greenbank has supplied a GWF feeder system to Hanson Cement’s Padeswood plant in Flintshire. The system is designed to feed raw materials into the processing plant at a predetermined rate. The upgrade is part of a recent series of expansions.
“The constant and reliable feed rate of the GWF feeder is achieved by having a shear gate to set a constant material bed depth for the given particle size combined with an inverter drive to control the feeder belt speed,” said Rod Molyneux, Product Sales Engineer at Greenbank.
Greenbank Group has previously supplied the plant with wear-resistant pipework and a pipe system for a new shredded refuse fuel line into a processing kiln.
Georgia: HeidelbergCement Caucasus (HCC) and the Georgian Building Group (GBG), a subsidiary of Kavkaz Cement, have formed the Georgian Cement Association. The association intends to focus on the quality of cement sold in the country and to create a publicly-recognisable seal of quality.
Domestically produced cement will be sampled in blind tests from product purchased from the open market. Testing shall be conducted primarily by an independent and neutral laboratory, such as the Georgian Technical University, and reconfirmed by parallel testing. Additionally, the Chamber of Commerce and industry of Georgia will supervise the process. The goal of the association is to create a respected and well-recognised ‘Good Quality Seal’ that only members will be able to use on packaging and in advertising.
Other aims of the association include working with the government and appropriate official bodies to tackle industry relevant issues and to promote the industry generally through the creation of jobs and economic growth.
UK: Hanson is spending Euro29m on upgrades at its Ribblesdale cement plant in a seven-year project to improve production efficiency and emissions. In the first six months nearly Euro13m will be spent on improvements and maintenance to enable the plant to meet new dust emission regulations. This is the biggest investment programme at the site since the 1990s and includes a Euro2m replacement of the filters on two cement mills.
“The permitted dust level is being reduced by 66% in April 2017, from 30mg/m2 to 10 - the new equipment will perform better than this,” said plant manager Terry Reynolds. He added that the filters will run well below the new maximum dust emission levels after the installation
The plant will spend Euro7.5m, its largest investment, towards replacing its wet gas scrubber in March 2017. In addition, 75m of ducts have been replaced at a cost of Euro440,000 during a shutdown in January 2017 as part of a five-year improvement plan for the site’s exhaust gas handling system.
Ribblesdale employs 116 people and is supplied by two on-site quarries worked by an 11-person team and a team of contractors managing the loading and hauling of quarry materials. The cement plant has produced cement for projects including the Manchester International Airport, Heysham nuclear power station, Manchester United football stadium, Liverpool’s Roman Catholic cathedral and also now for Hinkley Point C nuclear power station.