September 2024
JK Cement to raise US$12.1m through bonds issue 17 March 2023
India: JK Cement plans to issue US$12.2m-worth of bonds with a five-year maturity. Reuters has reported that the producer will receive bids from 20 March 2023.
Vietnam Cement Association lobbies government to stop new cement plant project licences 17 March 2023
Vietnam: The Vietnam Cement Association (VCA) has urged the government to stop issuing licences for the construction of new cement plants. Capacity is currently projected to reach 121Mt/yr in 2023, 188% of an estimated consumption of 64.3Mt domestically this year.
VCA chair Nguyen Quang Cung said “We must be careful to maintain a balance between regional supply and demand. As a result of the severe overstock in the north, it is crucial to encourage cement producers in the south to spend more on increasing clinker production capacity." Cung added "This will minimise the environmental effects of shipping clinker between the north and south.”
Algeria: Groupe des Ciments d'Algéries (GICA) says that it exported 350,000t of clinker produced at its Chlef cement plant over the period between 1 January and 14 March 2023. Local press has reported that the producer aims to export a total of 2Mt of clinker throughout 2023. It is currently on track to reach 1.75Mt, 13% short of its target, but 17% greater than its 1.5Mt exported in 2022. The company despatched the clinker from the ports of Oran and Tenès, to customers in Africa, Europe and South and Central America. It would now like to begin delivering its clinker to Syria and Türkiye in order to help facilitate rebuilding efforts there in the wake of the catastrophic February 2023 earthquake.
Brazil: Votorantim Cimentos’ full-year sales were US$4.88bn in 2022, up by 16% year-on-year from 2021. Its earnings before interest, depreciation and amortisation (EBITDA) dropped by 6% to US$927m. Throughout the year, the group invested US$378m in expansions, modernisations and business support. Its cement volumes increased in North America, Spain and Tunisia. Revenues rose by 4% in North America and by 16% in Europe, Asia and Africa, but fell by 17% in Latin America.
Chief operating officer Osvaldo Ayres Filho said “We had another year of solid results, thanks to our discipline in the execution of our strategy and despite a global environment marked by high inflation, rising interest rates and the ongoing consequences of the war between Russia and Ukraine. Locally, household indebtedness and credit tightening affected investments in new construction and renovation projects, which impacted the domestic cement market. Despite that, we increased our investments focused on improving competitiveness, developed and launched new businesses, and expanded our operations in important markets, such as Spain. The company is stronger, more resilient and better prepared for opportunities and challenges.”
Progressive Planet to supply PozGlass to Lafarge Canada 16 March 2023
Canada: Progressive Planet has secured a contract to supply its PozGlass recycled glass-based supplementary cementitious material (SCM) to Lafarge Canada. The cement producer says that it will test the commercial viability of all PozGlass produced at Progressive Planet's Kamloops pilot plant in British Columbia, once the plant commences PozGlass production in 2024.
India: Dalmia Cement has awarded a contract for the supply of fly ash and other industrial waste to Vedanta Aluminium. Under the deal, Vedanta Aluminium will supply fly ash for use at Dalmia Cement’s cement plants across Odisha, Chhattisgarh, Meghalaya and Assam. It will deliver spent pot linings to the producer’s Rajgangpur cement plant in Odisha. The fly ash contract will remain in effect until 2028 and the pot lining contract until 2026.
Vedanta chief executive officer Sunil Gupta said “Strategic collaborations such as this will provide multiple benefits in terms of enhanced quality, sustainability and cost benefits to cement manufacturing, while helping us in gainful waste management. Our waste-to-wealth initiatives are designed to develop thriving value-chains for converting our by-products into resources for complementary industries.”
OJSC to establish cement terminal in Araz 16 March 2023
Azerbaijan: OJSC has bought a site in the Araz Valley Economic Zone Regional Industrial Park in Araz, Nakhchivan Autonomous Republic. Local press has reported that company plans to build a cement terminal at the site. In addition, it will also establish a ready-mix concrete plant there. Its total planned investment in the project is US$2m. When operational, the new complex will employ 20 local people.
Canada: The city administration of Langford in British Columbia plans to enact regulations requiring all public and private projects to use reduced-CO2 concrete. It plans to support the rules with parallel measures affecting the design of buildings.
Victoria News has reported that the city authorities previously mandated reduced-CO2 cement for all projects in June 2022, but subsequently relaxed the regulations after only one company – Butler Concrete and Aggregates – completed the transition. Butler Concrete and Aggregates produces its reduced-CO2 concrete using slag cement supplied by Lafarge Canada.
After the initial shocking coverage of the Russian invasion of Ukraine, which began in February 2022, came announcements of the most extensive sanctions in history by the EU, G7 nations and others against Russia. In the EU, this effectively deconsolidated companies' Russian subsidiaries, leaving decision makers with the choice whether to sell up or hold out for better times.1 Four Russian-facing EU cement producers - Buzzi Unicem, CRH, Heidelberg Materials and Holcim - finalised their strategic responses in March 2022.
One year on, on 15 March 2023, 666 (21%) of 3110 eligible multinationals have withdrawn from Russia, according to the KSE Institute.2 Ireland-based CRH led the cement sector exit. It abandoned its Finland-based subsidiary Rudus' ready-mix concrete joint venture, LujaBetomix, on 2 March 2022. Switzerland-based Holcim took longer, but affected its exit on 14 December 2022, agreeing to sell Holcim Russia to local management. One condition of the sale was a rebrand (to Cementum, in February 2023) to withdraw the Holcim name from Russia. Unlike CRH, Holcim's Russian business included multiple cement plants - though the producer stated that it contributed less than 1% of group sales during 2021.
The KSE Institute uses the equivocal label of 'waiting' for companies which have paused investments, or scaled back operations, in Russia, while retaining their subsidiaries. This applies to 500 companies globally (16% of the pre-war total). Germany-based Heidelberg Materials acted swiftly to freeze further investments in HeidelbergCement Russia on 10 March 2022. At that time, its three cement plants were in winter shutdown. In terms of capacity, the 4.7Mt/yr-capacity Heidelberg Materials Russia constitutes 2.8% of Heidelberg Materials. In 2022, Heidelberg Materials suffered a Euro102m impairment on account of its Russian business. CEO Dominik von Achten, announcing the freeze, had described the subsidiary as a 'pure local business with no imports or exports.' Its website has since come offline, but the corporate structure presumably maintains in its frozen isolation.
1220 global multinationals - 39% of all those previously operating in Russia - are still 'continuing operations.' Among these is Buzzi Unicem. Having decided that 12 months was long enough, the Ukrainian National Agency for the Prevention of Corruption (NAPC) placed Italy-based Buzzi Unicem on its list of Russian war sponsors on 8 March 2023 for the actions of its subsidiary SLK Cement. A scathing denouncement accompanied the listing, in which the NAPC set out its main charges. It accused Buzzi Unicem of:
1. Expanding its business in Russia since the invasion;
2. Supplying its products to Russian state-owned businesses, including energy suppliers Rosatom and Rosneft;
3. Voicing support for the invasion via its social media presence.
The NAPC concluded “Buzzi Unicem's continued business in Russia means direct support and sponsorship of terrorism by Russia.”
Buzzi Unicem responded in no uncertain terms that these allegations are untrue: it has no business in Russia, and the entity bearing its logo on its (SLK Cement's) website is entirely independent in its decision-making and commercial actions.
This goes to the root of what it means to be a subsidiary of a corporation. Buzzi Unicem seeks to define the relationship as beginning and ending in operational involvement. Yet Buzzi Unicem and other corporations have invested large sums in businesses like SLK Cement. According to the NAPC, Buzzi Unicem paid Euro62m in taxes alone in Russia between 2016 and 2021. Whether they have elected to 'continue operations,' 'wait' or write in favourable buy-back options into sales contracts, as has happened in other industries, companies can be expected to seek to return to their investment.
As such, it is not entirely surprising that Buzzi Unicem should have followed up its rebuttal with a defence of SLK Cement. It stated "SLK Cement is a Russian domiciled entity operating exclusively in that country and therefore subject to domestic legislation. Payment of taxes and having employees being mobilised to the army are not discretionary decisions, rather legal obligations within the Russian jurisdiction."
In the decision to sell or hold, multinationals face the usual considerations: can they afford to yield their market share to other - less conscientious - competitors? Or, in this instance, those from Türkiye, India and China, whose potential investments are unrestrained by sanctions? Even as Holcim thrashed out its exit deal in October 2022, China-based West China Cement announced plans for a new US$260m, 1.2Mt/yr cement plant in Tatarstan, Volga Federal District. Meanwhile, Cemros (formerly Eurocement) is carrying out a Euro3m mill upgrade at its Lipetsk integrated cement plant in Central Federal District, which will increase the plant's capacity by 20% upon commissioning in early 2023. Between them, Central Federal District and Volga Federal District host four former Holcim cement plants.
12 months into the Russian invasion of Ukraine, an onslaught of withdrawals has shrunk, but not collapsed, the Russian economy.3 The Russian government insists that cement demand remains high (up by 2.1% year-on-year to 58.3Mt during the first 11 months of 2022, according to the Russian cement association Soyuzcement).4 The country has substituted new sources of imports for those lost since the beginning of the invasion, the government claims. It is even preparing for a cement shortage from 2024 onward by 'further developing domestic production capacities.'
Far from shrinking, Russian cement production rose by approximately 2.5% year-on-year to 60.7Mt in 2022.4, 5 The two aforementioned districts - Central Federal District and Volga Federal District - contributed a healthy 15.3Mt (25%) and 13.4Mt (22%) respectively. If the statistics are to be believed, the EU's recalled producers are missing out on a bonanza.
At the same time, all four EU-based producers face the parallel burden of increased costs in their key markets, as sanctions keep energy prices at an all-time high, and nowhere more so than in Europe. These sanctions purport to target Russian businesses and individuals, but their bite is far less discriminating. Companies may well wonder why they are being penalised by governments whose policies failed to prevent a Russian invasion of Ukraine in the first place.
We have no idea what will happen in Ukraine and Russia in the rest of 2023, but we can be sure it will be uncertain territory for the two countries’ cement producers. Those with (former) assets in the Russian market will have to continue their delicate balancing act.
1. European Commission, 'Frequently Asked Questions,' 16 March 2022, https://trade.ec.europa.eu/doclib/docs/2022/march/tradoc_160079.pdf
2. KSE Institute, 'Stop Doing Business with Russia,' 15 March 2023, https://leave-russia.org/leaving-companies?flt%5B147%5D%5Beq%5D%5B%5D=9062
3. European Council, 'Infographic - Impact of sanctions on the Russian economy ,' 9 March 2023, https://www.consilium.europa.eu/en/infographics/impact-sanctions-russian-economy/
4. Soyuzcement, 'Cement Review,' December 2022, https://soyuzcem.ru/documents/%D0%A6%D0%B5%D0%BC%D0%B5%D0%BD%D1%82%D0%BD%D0%BE%D0%B5_%D0%BE%D0%B1%D0%BE%D0%B7%D1%80%D0%B5%D0%BD%D0%B8%D0%B5_%D0%B4%D0%B5%D0%BA%D0%B0%D0%B1%D1%80%D1%8C%202022.pdf
5. BusinessStat, 'In 2022, 60.7 million tons of cement were produced in Russia,' 21 February 2023, https://marketing.rbc.ru/articles/14025/
CII role for Dalmia Cement head 15 March 2023
India: Hakkimuddin Ali, business head for Maharashtra at Dalmia Cement (Bharat), has been elected as vice chair of the Maharashtra branch of the Confederation of Indian Industry (CII). The CII serves as the connecting link between the industry and the government of India.
Ali said that he will use his new position to increase business and industry opportunities in Nagpur, Aurangabad and other cities in Vidarbha, identify problems faced by the industry and suggest necessary remedies to the state government.