Note - There have been some major cement sector news stories since this story was published in November 2024. These include deals by Quikrete to buy Summit Materials in the US and Huaxin Cement to buy Lafarge Africa in Nigeria.
Global Cement looks at some of the big cement sector stories of 2024.
Market share and margin in the US
The importance of the US market to multinational cement producers hit fever pitch at the start of 2024 when Holcim announced that it had decided to separate and list its business in North America. The intention was to work towards a full capital market separation and US listing of its North American business, with the US listing originally hoped to have been completed in the first half of 2025.
In October 2024 a report emerged that suggested Holcim’s spin-off was considering a dual listing in the US and Switzerland. Bloomberg said that the company was contemplating the move as its European shareholders might face restrictions holding shares outside of their home markets. The downside of this would be reduced liquidity of the US-listed shares, in addition to the hassle of managing two listings. The issue demonstrates that shareholders and boards may have different senses of value. It also recalls the influence of Holcim shareholders during the ‘merger of equals’ with Lafarge in 2015.
The reason that Holcim - and others - are so focused on North America follows the diverging prospects of the US economy versus Europe. The region delivered a third of Holcim’s earnings in 2023 and a quarter of net sales. Ireland-based CRH moved its primary listing to the US in 2023 for similar reasons. Another big recent transaction in the sector was the merger of the US operations of Summit Materials and Cementos Argos. In May 2024 Greece-based Titan Cement said that it too was planning an initial public offering in the US.
Perhaps confusingly, US cement shipment actually fell year-on-year in 2023, a trend that continued in the first seven months of 2024. The Portland Cement Association’s (PCA) Chief Economist Ed Sullivan blamed this mainly on high interest rates. He then noted in an autumn forecast that a cut in rates was likely to benefit the construction market from mid-2025 onwards. How a second Trump Presidency affects this remains to be seen.
Chinese cement producers to join ETS
The Chinese cement market may be the biggest in the world, but its output has been in decline since 2021 due to a stagnant real estate market. The government has made changes to rationalise the sector. A big step was taken in September 2024 when the Ministry of Ecology and Environment said that the cement sector would be added to the country’s emissions trading scheme (ETS) by the end of 2024. The entry will be stepwise, and 2024 will be used as a control year for the new industries that have entered the scheme, with an implementation phase in 2025 and 2026. The quota of permits allocated to companies will start to be reduced from 2027 onwards.
This is a major step considering that China made more than half of all cement in 2023, but observers will be keen to see whether Chinese ETS prices are meaningful. In April 2024, the average spot price of emissions traded on the Shanghai Environment and Energy Exchange reached a peak of US$13.59/t of CO2. By comparison the EU ETS prices are well established at US$53-80/t.
Billionaire battle
The rivalry between UltraTech Cement and Adani Group hasn’t let up since Adani bought Holcim’s local subsidiaries, Ambuja Cements and ACC in 2022. Both companies are targeting production capacity expansion through acquisitions and new plants. All the smaller cement companies in the country are potentially targets for the cement billionaires: Kumar Mangalam Birla, chair of Aditya Birla Group - the owner of UltraTech Cement, and Gautam Adani, the chair of Adani Group.
UltraTech Cement said that its capacity was 140Mt/yr in March 2024 and that it will exceed 200Mt/yr by the 2027 Indian financial year. Key recent milestones towards this include the purchase of Kesoram Industries for US$914m and an enlargement of its stake in The India Cements, to above 50%, for US$472m.
Adani Group is targeting a capacity of 140Mt/yr by 2028. Subsidiary Ambuja Cements completed its acquisition of Penna Cement for US$1.25bn in August 2024. In October 2024 it said that it had entered into a binding agreement to buy a 47% stake in Orient Cement for US$451m. It was also linked in the local media to a bid to buy Heidelberg Materials’ India-based business in October 2024. The other major point of interest from Adani Group’s cement businesses were press reports, also in October 2024, that the group is preparing to merge its two main cement subsidiaries. The benefits from synergy savings could be large, but moving all the mining and leasing rights around might prove difficult.
The sheer size of the Indian market presents considerable regional variation in the country with the greatest demand found in the east and the largest capacity in the south. These dynamics play into the negotiations that UltraTech Cement, Adani Group and others are encountering as they consolidate.
Exports from the Middle East
Exports have been a common theme among Egypt, Saudi Arabia and Türkiye in 2024. In Saudi Arabia, the rules were relaxed in 2017 and exports have mostly grown since then. In 2023 the country’s cement and clinker exports reached 8.5Mt. Local producers have taken advantage. For example, Al Jouf Cement signed a deal with Rabou’ Al-Taybeh Company to export cement and clinker to Jordan at the start of 2024. However, a tightening local market has also led towards mergers. Qassim Cement Company completed its acquisition of Hail Cement Company in June 2024 and City Cement moved forwards with plans to buy Umm Al-Qura Cement in October 2024.
Producers in Egypt have started to focus on exports at the expense of the domestic market, partly in response to overcapacity. The government introduced cement production quotas in mid-2021, which stabilised prices (and profits). Yet negative currency exchange effects have also played a part. At the start of September 2024 the Federation of Egyptian Industries said that national cement consumption in 2024 was expected to drop by 4% year-on-year to 45Mt. However, exports were projected to rise to 15Mt. The first and second most popular destinations at this point in 2024 had been the Ivory Coast and Ghana.
Exports from Egypt to Libya were blamed for creating a shortage of trucks and delays to the local construction sector due to the 12 day trip taken to deliver cement to Libya and come back. Vicat acknowledged the growing importance of exports for its business in Egypt in its half-year report for 2024. It said that ‘sluggish’ domestic market conditions “were more than offset by growth in cement and clinker volumes for export to the Mediterranean and Africa regions.”
Finally, in Türkiye, exports fell by 18% year-on-year to 6.5Mt in the first half of 2024, although local sales appear to have more than compensated for this. Italy-based Cementir provided some context here, saying that it had decided to focus on the domestic market due to greater profitability. Heidelberg Materials’ joint-venture Akçansa blamed declining exports on historically low freight rates that increased the competitiveness of southeast Asian suppliers. On top of this, Turkish producers are well aware of the impending requirements of the EU Carbon Border Adjustment Mechanism (CBAM). Although this is unlikely to be hitting exports yet, Türkçimento is paying good attention. It described the ‘main goal’ of the cement sector as providing ‘low-carbon production.’ An estimated investment of US$2bn is required to get the industry to fully meet CBAM standards.
Deals in the Americas
The big story in South America has been whether Brazil-based InterCement will be able to strike a sales deal that sticks in 2024. Companhia Siderúrgica Nacional (CSN), Votorantim and China-based Huaxin Cement all submitted offers in the latest attempt, a bidding round in February 2024. The subsidiary of Camargo Correa Group signed an exclusivity deal with CSN in May 2024 but then extended it for a month in July 2024. By September 2024 the company said it had submitted a restructuring plan to local courts.
Rumours that InterCement was looking to sell assets have swirled around since the early 2010s, when InterCement picked up the Brazil-based assets of Cimpor, and Votorantim bought the international ones. The local market then collapsed, giving InterCement a hard time. More recently, the focus has been on InterCement’s high level of debt and pending maturation dates. It publicly said it was working towards a new capital structure in May 2023, and various debt negotiations followed. It signed a deal to sell its subsidiary in Egypt in January 2023 to an unspecified buyer and then divested its operations in Mozambique and South Africa to Huaxin Cement for ~US$230m in December 2023.
Other acquisitions that have been completed in the region include Buzzi’s acquisition of a full stake in Companhia Nacional de Cimentos (CNC) for US$311m that completed in October 2024. Further north, Cemex’s divestment of piecemeal assets continued in 2024 with an agreement in August 2024 to sell its operations in the Dominican Republic to Cementos Progreso for US$950m. Readers may recall that Cemex also sold its businesses in Costa Rica and El Salvador to Cementos Progreso in 2022. It then announced in September 2024 that it had divested its operations in Guatemala to Holcim for US$200m.
Prices and plants in sub-Saharan Africa
Plenty of new plant projects continued to be announced and completed in Sub-Saharan Africa. Significant ones that became operational include Huaxin Cement’s Mavini plant in Tanzania, Cemtech’s Sebit clinker plant in Kenya, Cimpor’s Kribi plant in Cameroon, Mangal Cement’s Iluagba plant in Nigeria and West China Cement’s Lemi National Cement Factory in Ethiopia. Projects that stand out include Atlantic Group’s plant in Madagascar, Malaysia-linked plans to build a plant in South Sudan and the Ciments de l’Afrique (CIMAF) clay calcination unit in Burkina Faso.
Kenya deserves a mention, as its government introduced a fee on imported clinker in mid-2023. This has benefitted local clinker producers such as National Cement, producer of the Simba Cement brand and a subsidiary of Devki Group. Its subsidiary Cemtech commissioned the Sebit plant in April 2024. Since then the government started to sell its entire 25% stake in East African Portland Cement Company. Savannah Cement and Tanzania-based Amsons Group have bid to buy Bamburi Cement.
Many of the countries in the region are developing their economies and increasing cement capacity. However, it doesn’t always feel like this to the general public, especially in response to global inflation. Nigeria-based Dangote Cement was compelled to publicly defend its prices in mid-2023, following previous rows on the same topic. This continued in July 2024, when the Joint Committee of the House of Representatives started investigating the rise of cement prices in the country between 2020 and mid-2024. Dangote Cement defended itself by attributing 95% of its production costs to imports or foreign exchange impacts, noting significant increases in input costs and logistical challenges exacerbated by the poor state of infrastructure and foreign exchange limitations. A similar showdown between government and producers took place in Ghana in July 2024 with new laws enacted to regulate manufacturers.
Construction and demolition materials
Construction and demolition materials (CDM) have remained popular with multinational cement companies in 2024. Heidelberg Materials inaugurated a 100t/hr plant to separate and sort demolition concrete near Katowice in Poland in July 2024. It bought UK-based B&A Group in May 2024 and US-based Highway Materials and Aaron Materials in July 2024. Holcim has set itself a target of recycling
12Mt/yr of CDM by 2030 by using its ECOCycle technology. It reported 8.4Mt/yr in 2023 and hopes to reach 10Mt/yr in 2024. Holcim acquired Germany-based Mendiger Basalt in January 2024, Switzerland-based Cand-Landi Group and UK-based Land Recovery in June 2024, and Belgium-based Mark Desmedt in July 2024.
Most of the CDM activity has focused on Europe, while in the US these kinds of purchases have been of more general aggregates companies. The main drivers here appear to be the strength of the US market and the stricter environmental legislation in Europe. Higher population density in Europe compared to the US may also be playing a part in the differences in speed of adoption between the two markets.
End of an era for FLSmidth
Finally, FLSmidth said in January 2024 that it was planning to sell its cement business. As one commentator on the Global Cement LinkedIn Group put it, it feels like ‘the end of an era.’ The company has been in business for over 140 years and at the time of its 75th anniversary in 1957, it was estimated that 40% of the world’s cement was manufactured in equipment supplied by FLSmidth. Many other milestones followed. At the time of writing no buyer has been announced.
Final words
This article covers some of the major sector news stories so far in 2024 but it also misses some out. The big one, decarbonisation, pervades much of what has been discussed above. It is becoming implicit in all that cement producers do, such as using alternative fuels or lowering clinker ratios through the increased use of supplementary cementitious materials. In the wider market, this is also influencing behaviour. Saint-Gobain’s planned acquisition of construction chemicals manufacturer Fosroc in June 2024 is an example of this. Carbon capture projects have also been steadily securing funding mostly in Europe, but also in the US and elsewhere, as covered extensively in other issues. The leader, Heidelberg Material’s full-scale project at its Brevik plant in Norway is expected to be mechanically complete by the end of 2024. A number of other projects look set to complete in the second half of the 2020s.
Resources
www.worldcementassociation.org/blog/news/global-cement-industry-outlook-trends-and-forecasts
www.globalcement.com/news/item/16938-how-much-could-holcim-be-worth
www.dcement.com/article/202410/232694.html
www.globalcement.com/news/item/18015-copyright-in-the-cement-sector
www.globalcement.com/news/item/14220-the-battle-of-the-cement-billionaires
www.ultratechcement.com/corporate/media/press-releases/Financial-Results-Q2FY25
www.icra.in/CommonService/OpenMediaS3?Key=65b21410-4182-4869-bcf4-e5b8e0b20048
