Displaying items by tag: Aggregates
Update on South Africa, June 2023
21 June 2023Mining and materials company Afrimat said it was buying Lafarge South Africa this week. The assets it is acquiring include aggregate quarries, ready mix concrete (RMX) batching plants, one integrated cement plant, two cement grinding plants, cement terminals and fly-ash sources. The means of purchase is somewhat unusual, as Afrimat is paying around US$6m but it also appears to be taking responsibility for around US$50m of outstanding debt that Lafarge South Africa owes its parent company, Holcim. In a statement Afrimat’s chief executive officer (CEO) Andries van Heerden talked up the benefits for his company in terms of the boost to its aggregates and concrete businesses.
This is quite the change from 2012 when India-based Aditya Birla Group was reportedly looking into buying Lafarge South Africa. At this time the value for the business for a similar mix of assets, including 55 RMX plants and 20 quarries, was said to be to US$900m. Prior to this, Lafarge South Africa spent around US$170m in the late 2000s on increasing the production capacity at its integrated Lichtenburg plant and building its Randfontein grinding plant. Then in 2014, when the merger between Lafarge and Holcim was announced, Lafarge consolidated its Nigeria-based and South Africa-based operations as Lafarge Africa. It later decided to move the South African business to another Holcim subsidiary, Caricement, in 2019 to keep the business in Nigeria more profitable by reducing its debts. This transaction was valued at US$317m. At the time chair Mobolaji Balogun said that Lafarge South Africa’s operations had faced a challenging market in South Africa, with shrinking demand in an aggressively competitive sector. Afrimat is now buying Lafarge South Africa and its subsidiaries from Caricement.
Holcim isn’t alone in making an effort to sell up in South Africa. In April 2023 the Valor Econômico newspaper reported that Brazil-based InterCement was receiving offers for its remaining African-based assets in Mozambique and South Africa with a potential deal valued at around US$300m. InterCement runs Natal Portland Cement in South Africa, which operates one integrated plant and two grinding units. This follows the sale of its Egypt-based assets in January 2023 to an unnamed buyer.
PPC, the country’s largest cement producer, is staying put. However, it issued a mixed trading update this week ahead of the formal release of its annual results to 31 March 2023. Trading conditions in the interior of South Africa and Botswana were described as being ‘difficult,’ with cement sales volumes down by nearly 6% year-on-year and earnings before interest, taxation, depreciation and amortisation (EBITDA) down by 26%. Yet the group says it was able to grow its revenue. PPC’s CEO Roland van Wijnen added, “We therefore remain hopeful that the South African government will roll out its infrastructure development plans and protect the local cement market through the introduction of import tariffs to create a level playing field for domestic producers.” Dangote Cement subsidiary Sephaku Cement was more circumspect in its recent trading update but it too warned that, “deteriorating economic conditions and persistent challenges in the cement industry impacted Sephaku Cement’s financial performance to break-even levels.”
Much of the above makes for gloomy reading. As the local trade association Cement and Concrete South Africa (CCSA) has laid out to local media, the market faces the problem of having 20Mt/yr of production capacity, 12Mt/yr of demand and over 1Mt/yr of imports compounding the problem. Lobbying by local producers against imports has been a feature of the market since the early 2010s and this work continues through the efforts of the CCSA and others. However, the plea by PPC for government infrastructure spending suggests that the market faces more systemic problems. As a consequence some cement producers are trying to leave the market, while others are attempting to tough it out.
Update on cement diversification, June 2023
07 June 2023Taiwan Cement said this week that it is aiming for cement to account for less than half of its sales by 2025. At the annual shareholders’ meeting chair Nelson Chang defended the cement sector as a core business but said that the company was expanding more into the green energy sector through its energy storage and vehicle charging lines. Chang directly linked the strategy to growing carbon taxes around the world, such as the European Union Emissions Trading Scheme, where the carbon price has been occasionally close to pushing past Euro100/t since early 2022. Taiwan Cement formed a joint venture with Türkiye-based Oyak Group in 2018 that runs Cimpor in Portugal.
Company |
Cement share of business |
Other main sectors |
CNBM |
45% |
Aggregates, concrete, gypsum, wind turbines, batteries, engineering |
Anhui Conch |
78% |
Aggregates, concrete, sand, trading |
Holcim |
51% |
Aggregates, concrete, lightweight building materials |
Heidelberg Materials |
44% |
Aggregates, concrete, asphalt |
UltraTech Cement |
95% |
Concrete |
Taiwan Cement |
68% |
Power supply, rechargeable lithium-ion battery, sea and land transportation |
Taiheiyo Cement |
70% |
Aggregates, concrete |
Table 1: Cement business share by revenue of selected cement producers. Source: Corporate annual reports.
Taiwan Cement’s plan to decrease its reliance on cement is becoming a familiar one. Holcim notably revealed in 2021 that it was growing its light building materials division. Its cement division represented 60% of sales in 2020 with concrete and aggregates making up most of the rest to 92% and the remaining 8% on other products including light building materials. This started to change with the acquisition of roofing and building envelope producer Firestone Building Products in 2021. Other similar acquisitions have followed. Holcim’s current target is to grow the Solutions & Products division to around 30% by 2025, with cement reduced to somewhere between a third and half of sales. Earlier this year Japan-based Taiheiyo Cement said it was doing a similar thing as part of its medium-term strategy to 2035. In its case cement represented 70% of its sales in 2022 but it is now aiming to reduce this to 65% by 2025 and 50% by 2035.
A common pattern for the business composition of European cement companies is a mixture of heavy building materials made up of cement, concrete and aggregate. However, not every cement company follows the same route. Some cement companies are simply parts of larger conglomerates. UltraTech Cement, for example, is mostly just a cement company. However, it is also part of Aditya Birla Group, which runs a wide range of industries including chemicals, textiles, financial services, telecoms, mining and more. Depending on how one looks at it, UltraTech Cement’s cement business ratio is large or Aditya Birla Group’s ratio is small. Siam Cement Group (SCG) in Thailand is another example of a cement producer operated by a conglomerate with other major businesses.
A different approach that some cement producers take is to mix cement production with complimentary businesses outside of heavy building materials. A good example of this is Votorantim Cement in Brazil, which manufactures cement and steel. Companhia Siderúrgica Nacional (CSN) is another Brazil-based cement producer that is also well known for steel production. Adani Group in India, meanwhile, was well known for logistics, power generation and airports before it purchased Ambuja Cements and ACC from Holcim in 2022.
The driver for cement companies looking to reduce cement as a proportion of their businesses has varied between the three examples presented above. Holcim’s approach has been in response to growing European carbon costs but it also fits with a general desire to broaden its business as the company has sought to reshape itself following the merger between Lafarge and Holcim. Taiheiyo Cement’s plans also have a sustainability angle but the Japanese market has been in slow decline since the 1990s and this has been made worse by the spike in energy prices since 2022. Investing in new businesses makes sense for either of these reasons. Lastly, Taiwan Cement says it is taking action in response to carbon prices around the world. However, its proximity to many other large-scale producers in the Far East may also be a factor. Whether more companies follow suit and also start to reduce the ratio of their cement businesses remains to be seen. Yet, mounting carbon taxes and global production overcapacity look set to make more of the larger cement producers consider their options in certain places.
UK: Breedon Group has acquired concrete block producer Broome Bros., construction firm Minster Surfacing and concrete block and aggregates producer Robinson Quarry Masters. Breedon Group said that the businesses will strengthen its presence around Doncaster in South Yorkshire, in Antrim, Northern Ireland, and 'from the Midlands to London.'
CEO Rob Wood said “Many of our transactions come to us through our local knowledge and personal engagement with the owners. As a result, our active mergers and acquisitions pipeline has continued to yield high quality, earnings-enhancing opportunities that will enable us to progress our sustainable growth strategy." He added "Each of these independent family-run businesses is aligned with our vertically-integrated operating model, providing further opportunity to pull through upstream building materials while extending our downstream footprint to deliver profitable growth.”
Business Live News has reported that the group has also completed its transition to the London Stock Exchange from the AIM exchange. Breedon Group said that this will enhance its corporate profile by helping to attract greater international investment.
Building new buildings from old ones
19 April 2023Holcim launched its formal take on construction and demolition waste (CDW) this week with the unveiling of its ECOCycle technology platform at the BAU architecture fair in Munich. This amounts to managing the distribution, processing, grinding and recycling of CDW back into new building material products. It claims that its concrete, cement and aggregate products can contain 10 - 100% of CDW with no drop in performance.
It is hard to gauge whether this is marketing for existing operations or the start of something new. Yet, in its 2022 Sustainability Report, Holcim said that it recycled 6.8Mt of CDW back into building products and that it is on track to meet its target of 10Mt by 2025. This target was neatly put into words as wanting “to build more new buildings from old ones.” Ahead of the announcement of the launch of ECOCycle, it added that it was going to roll out its Susteno product around Europe. This product, made from 20% CDW, was originally released in Switzerland in the late 2010s. Notably, recent acquisitions by Holcim that connect to its growing focus on CDW include Poland-based Ol-Trans in July 2022, UK-based Wiltshire Heavy Building Materials in October 2022 and UK-based Sivyer Logistics in April 2023.
As covered by Global Cement Weekly in February 2023, Holcim is not the only heavy building materials company pivoting to CDW. The European Union (EU) set a 70% recovery target for it in 2020 and various cement company sustainability reports have described the region as being receptive to moves into this sector. Cemex set up a global waste management subsidiary called Regenera at the end of January 2023. This division covers both alternative fuels, CDW and industrial by-products, so it is more general than Holcim’s current effort, but it shows intent in the same direction. Cemex previously set a target of recycling 14Mt/yr CDW by 2030.
Heidelberg Materials has been working on developing recycled concrete paste and its ReConcrete-360° concrete recycling process. As of its last sustainability report, this process had been tested at the pilot scale and is now being developed and scaled for industrial application. In addition to acquiring UK-based Mick George Group in December 2022 Heidelberg Materials has also purchased Germany-based RWG Holding in January 2023 and Germany-based SER Group in February 2023. All three companies operate in the CDW sector.
The other notable contribution that Heidelberg Materials has been making is as a partner of the ‘Circular City - Building Material Registry for the City of Heidelberg’ project. When Heidelberg Materials announced its involvement in the initiative in mid-2022 it said it was the first city in Europe to apply the principles of urban mining. The goal of the project is to take an inventory of the city’s buildings and then compile it in a digital material registry. The basis for the registry is the Urban Mining Screener developed by EPEA (Environmental Protection Encouragement Agency). This programme can estimate the composition of buildings based on building data such as location, year of construction, building volume or building type. Circular economy supply chains can then act accordingly when a building is retrofitted, demolished or deconstructed. So, for example, at the start of the project it worked out that a former US Army housing estate conversion site was calculated to contain approximately 466,000t of material, with about half in the form of concrete, a fifth in the form of bricks and 5% as metal.
That last example compares to a European Commission estimate that, as a whole, Europe generates around 450 - 500Mt/yr of CDW. A third of this is concrete. As with alternative fuels and slag previously, this may be money going into the ground. Recycling building materials is not new but any significant increase in reusing CDW that can reduce the clinker factor of cement (and the cement factor of concrete) offers a potentially cheaper route to building materials decarbonisation than carbon capture and utilisation/storage at current costs. Hence the continued interest.
Switzerland: Holcim has launched ECOCycle, its initiative to recycle construction demolition materials into new building products. It says it can recycle construction demolition materials across a broad range of applications, from decarbonised raw materials in low-carbon cement formulation, to aggregates in concrete and fillers in road construction.
Jan Jenisch, the chief executive officer of Holcim, said “Across all metropolitan areas where we operate, we are at the forefront of driving circular construction to build new from the old. With our ECOCycle technology we can build cities from cities, recycling 100% of construction demolition materials into new solutions, so everything gets reused and nothing gets lost. With our world’s growing population and urbanisation, circular construction is essential to build a future that works for people and the planet.”
The building materials producer is deploying its ECOCycle technology across its range of products to scale up circular construction. It says that its process enables concrete, cement and aggregates to contain from 10 - 100% recycled construction and demolition waste with no change in performance. The initiative is supported by distributing, processing, grinding and recycling construction and demolition materials into new building material products.
ECOCycle brings together previous work Holcim has conducted in the field such as launching a cement in Switzerland made with 20% demolition and construction waste. The company is now launching this product elsewhere in Europe. In France it is building an affordable housing complex using 100% ECOCycle recycled concrete. In the UK it is building a residential area with 50% ECOCycle aggregates that have been made from 100% recycled construction demolition materials.
Update on Mexico, March 2023
22 March 2023A dispute between Cemex and Vulcan Materials over the use of a terminal in Quintana Roo state heated up this week as the two companies publicly argued over the situation. US-based Vulcan Materials went to the press to say that the Mexican police had forced entry into the facility south of Cancun, run by its subsidiary Calica, with orders to allow a Cemex ship to discharge cement. Vulcan denied that the authorities had any legal basis for the action and said that it was an illegal occupation. Cemex then responded with a press release explaining that the two companies had held a previous contractual relationship for joint-usage of the terminal until the agreement broke down in late 2022. It says it was granted an injunction by a local court to continue using the terminal while legal proceedings carry on.
The disagreement over the use of the Punta Venado terminal dates back to at least 2018 when Vulcan initiated a North American Free Trade Agreement (NAFTA) arbitration claim over alleged planning and environmental issues in relation to a nearby quarry. Dialogue continued, but Calica’s operations in the area were shut down by the government in May 2022. Subsequently, Vulcan’s total volumes of shipped aggregates fell by 6% year-on-year to 54Mt in the fourth quarter of 2022, partly due to the closure.
Unfortunately, the argument has become increasingly politicised with Mexican president Andres Manuel Lopez Obrador criticising Vulcan for its environmental record and US senators using the Vulcan case as an alleged example of Mexico treating US companies unfairly. Some media commentators have also noted that the Mexican government is promoting a number of large-scale infrastructure schemes in the region, including the Tren Maya project, a new 1500km train line around the Yucatan peninsula, which would link tourist towns such as Cancún with historical sites like Palenque.
Graph 1: Grey cement production in Mexico, 2018 - 2022. Source: National Institute of Statistics and Geography (INEGI).
Data from the National Institute of Statistics and Geography (INEGI) shows that rolling annual cement production in Mexico peaked at around 43Mt in late 2018 before falling to 39Mt in mid-2020. It later recovered to a peak of just under 46Mt in mid-2021. It has since dropped a little to mid-2022 and then started to trend upwards again. The nominal cement production capacity in Mexico is 60Mt/yr according to the Global Cement Directory 2023. Yet, the actual production capacity has been reported in local press as being 42Mt/yr, lower than the annual cement production of 43.9Mt in 2022. In February 2023 it was reported that the Mexican government was taking steps to 'implement import facilities' to support more cement being imported. This was due to shortages in certain states particular in the south-west of the country.
Cemex’s net sales in Mexico grew by 11% to US$3.84bn in 2022 and this was attributed partly to tourism-related construction in ‘the peninsulas.’ Holcim noted ‘market softness’ for cement in the country but reported growth for concrete due to infrastructure projects such as the Tren Maya. Cemento Moctezuma’s net sales rose by 2.6% to US$878m. Despite rising sales, both Cemex and Cemento Moctezuma reported falling earnings in 2022.
The dispute between Cemex and Vulcan Materials overlaps with wider trends on how and where the Mexican cement market is developing following a lull in the late 2010s. Production is growing in certain parts of the country, particularly in the Yucatan peninsula due to various infrastructure projects and tourism-related demand. However, the overall economic environment appears to have decreased earnings for some producers. However Cemex said that this was starting to correct itself in late 2022, as prices caught up with inflation. Portraying the Cemex - Vulcan situation in nationalistic terms is unhelpful, especially since Cemex made more money in the US than Mexico in 2022! However, this may be yet another example of more isolationist economic policies along the same lines as the US Inflation Reduction Act.
EU and European ambassadors urge Bangladesh to lift restrictions on LafargeHolcim Bangladesh limestone sales
10 February 2023Bangladesh: The European Union (EU) and Spanish ambassadors and Swiss chargé d'affaires to Bangladesh have formally requested that Bangladeshi authorities lift all restrictions on LafargeHolcim Bangladesh's sale of crushed limestone in the country. The Financial Express newspaper has reported that Bangladeshi court previously ruled in favour of LafargeHolcim Bangladesh's right to sell its crushed limestone 'on the open market' on 5 January 2022. Limestone Importers and Suppliers Group had challenged the legal status of such sales, given that the raw limestone used in LafargeHolcim Bangladesh's produces its crushed limestone production is imported from India.
The Bangladesh government granted LafargeHolcim Bangladesh, a subsidiary of Switzerland-based Holcim, a temporary licence to resume its crushed limestone operations on 27 March 2022. This resulted in protests by local limestone producers.
Cemex opens Tunjuelo Circularity Centre
13 December 2022Colombia: Cemex has announced the launch of the Tunjuelo Circularity Centre at its former Tunjuelo quarry near Bogotá. Having rebuilt parts of the 50m-deep quarry with demolition waste, Cemex will now work on its ecological restoration, while continuing to receive excavation waste for reconstruction of the ground. It will meanwhile divert demolition waste deliveries for recycling in aggregate production. In Bogotá, Cemex has launched an initiative for urban construction partnerships in collaboration with local authorities. It will also collect municipal solid waste (MSW) there for use in its cement production and collect its used plastic cement bags for recycling in building materials production.
Cemex’s Colombia and Peru president Alejandro Ramírez said "This is a pioneering model for Cemex in the construction materials industry globally, which we aim to position as a benchmark for circularity within the sustainable development of large cities in Colombia and the world. A piece of land that supplied materials for Bogotá's development for decades has received construction and demolition waste for its redevelopment and was transformed into a green area to the south of the city, an epicenter of the circular economy and an opportunity for urban development for the capital city of Colombia."
UNACEM Chile and UNICON Chile acquire Conovia
23 November 2022Chile: UNACEM Chile and its ready-mix concrete partner UNICON Chile are set to acquire aggregates company Constructora de Obras y Viales Limitada (Conovia). Peru-based UNACEM Group concluded an agreement to buy Conovia's parent companies Inversiones Befeld Limitada and Inversiones Majas Limitada for US$3.7m on 21 November 2021. Gestión News has reported that Conovia has 180,000t/yr of aggregates production capacity in Valparaíso Region. At present, UNACEM Chile has 600,000t/yr in cement grinding capacity, while UNICON Chile has 1.2Mm3/yr in ready-mix concrete capacity.
UNACEM Group aims to grow its Chilean cement market share to 10 - 15% in 2025, from 8% during 2021. The market is reportedly valued at US$350m/yr.
Shangsi Cement commissions 5Mt/yr aggregates site in Guangxi
23 November 2022China: China Resources Cement subsidiary Shangsi Cement has successfully commissioned its new 5Mt/yr Shangsi aggregates site in Guangxi Province. The cement company developed the site in collaboration with CNBM Design and Research Institute, beginning in February 2022.
CNBM Design and Research Institute general manager Xie Xiaoning that both parties could take this project as an opportunity to further cooperate in-depth in fields such as new building materials, waste co-processing and automation, so as to help China Resources Cement to achieve diversified development and extension along value chains.
China Resources Cement expects to exceed 30Mt/yr in 2022. Earlier in the year, it won an auction for 1.5BnT of limestone reserves in Guangxi Province.