Displaying items by tag: Brazil

Germany/Brazil: Researchers at the Martin Luther University Halle-Wittenberg in Saxony-Anhalt and the University of Pará in Pará have produced a cement alternative with 66% reduced CO₂ emissions. A type of calcium sulphoaluminate cement, it replaces up to 60% of limestone in clinker with overburden from bauxite mining. Researchers demonstrated that the resulting product conforms to all standards for commercial Ordinary Portland Cement. The results of the research have been published in ‘Sustainable Materials and Technologies.’

Ireland: CRH’s first-half consolidated sales rose by 15% year-on-year in 2021 to Euro14.0bn from Euro12.2bn in the first half of 2020. Its earnings before interest, depreciation, taxation and amortisation (EBITDA) rose by 25% to Euro2.00bn from Euro1.59bn. Group profit for the period more than doubled to Euro815m from Euro406m. The divestment of its Brazilian cement business during the half contributed towards the profit growth. Cement volumes increased in all of the group’s regions. Cement, lime and cement products sales rose by 21% to Euro2.36bn from Euro1.94bn.

Chief Executive Albert Manifold said ‘‘I am pleased to report a good first half as the strength and resilience of our business model once again delivers superior performance for CRH. Our integrated and solutions-focused approach leaves us uniquely positioned for the changing needs of construction, while our continued strong cash generation provides us with the flexibility to invest in future growth opportunities for our business. Based on current trading conditions and the positive momentum that we see across our markets, we expect second-half group EBITDA to be ahead of a record prior year.’’

Our latest look at South America starts by posing the question: how far can the market in Brazil keep growing? As Graph 1 shows below, cement sales skyrocketed through the coronavirus pandemic, due to a general recovery locally that started in 2018 and relatively weak lockdown measures compared to other countries. Rolling annual totals on a monthly basis from the National Cement Industry Association (SNIC) suggest that this growth period tailed off from May 2021. SNIC was also keen to point out that, despite nearly hitting nearly a 20% growth rate at one point, the sector was still 11% behind where it was before the lull that lasted from 2015 to 2018. As ever the association has an eye on potential risks. At present these include legislative reforms, price inflation and carbon pricing. It noted that Mexico, Colombia, Chile and Argentina all price carbon already but said that the country ‘has a great ally in the Brazilian cement industry’ on the issue.

Elsewhere the big story in Brazil has been the ongoing sale of Holcim’s local assets. The latest news at the start of August 2021 was that the bidders included CSN Cimentos, Cimentos Mizu, Cimento Apodi, InterCement and Votorantim. The first three companies were reportedly working in a consortium in an attempt to buy 10 production plants while InterCement and Votorantim were focusing on smaller bids to avoid the ire of the competition regulators. Aside from this, CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021 and Companhia Nacional de Cimento (CNC), part of Italy-based Buzzi Unicem’s 50% subsidiary BCPAR, acquired CRH Brasil following approval by the regulators. Of note on the production side, Votorantim Cimentos started operation of a new production line at its Pecém grinding plant in Ceará in July 2021.

Graph 1: Cement sales in selected South American countries in first half of year, 2019 – 2021. Source: Local cement associations and national statistics offices.

Over in Peru the now familiar gap-tooth pattern of stunted growth in 2020 can be seen in the sector’s cement sales, but sales rebounded far stronger than comparable sized markets in Argentina and Colombia. Sales nearly doubled to 6.42Mt in the first half of 2021 from 3.33Mt in the same period in 2020 and were significantly higher than the 4.94Mt recorded in the first half of 2020. Imports are also worth watching. Combined cement and clinker importers nearly doubled from 0.76Mt in the first half of 2019 to 1.4Mt in the first half of 2021. Clinker imports made up about two thirds of this figure and the Association of Cement Producers (ASOCEM) noted in June 2021 that 88% of the imported cement came from Vietnam while about two thirds of the clinker came from Japan and Indonesia.

Away from the market data, both Cementos Pacasmayo’s and Unión Andina de Cementos’ (UNACEM) financial results bounced back in the first half of 2021. Cementos Pacasmayo attributed the rebound to sales of bagged cement to the self-construction sector and public sector reconstruction demand. UNACEM also noted the effect of the self-construction sector and said it expected its ‘solid’ cement despatches to continue for the rest of the year despite the risk of a third wave of coronavirus in the country and the messy presidential elections. Other stories of note so far in 2021 include new developments in Cementos Interoceanicos long-held plans to build a 1.0Mt/yr cement plant in Puno and a major upgrade planned to Yura’s integrated plant in Arequipa.

In Colombia local cement despatches grew by 34% year-on-year to 6.20Mt in the first half of 2021 from 4.61Mt in the same period in 2020. Cementos Argos reported major improvements in sales, sales volumes of cement and earnings due to the lockdown in 2020. However, a national wave of protests calling for social reform that started in the spring of 2012 forced the company to shut down its integrated Yumbo plant for over a month. This represented 18% of its national sales. The output of other plants in the country was also negatively affected by roadblocks created by the unrest. Cemex reported the same problems in the country.

Finally, Argentina’s cement despatches rose by 44% to 5.52Mt in the first half of 2021 from 3.83Mt in the same period in 2020. Loma Negra reported that its sales, sales volumes and earnings were all up by a similar rate. The subsidiary of Brazil-based InterCement started up the kiln on its new 2.7Mt/yr production line at the L’Amalí cement plant in Olavarría in June 2021 and commissioning of the new mill and despatch centre on the line were reportedly coming soon in early August 2021. Earlier in the year, in May 2021, Holcim Argentina inaugurated a new 0.5Mt/yr clinker production line at its Malagueño cement plant in Cordoba. These expansion projects were ordered long before coronavirus appeared so it will take a while to see their effects upon the local market. However, the government intervened in June 2021 when it persuaded some building materials producers to agree to reference prices in a bid to curb mounting inflation.

This is what recovery looks like so far in 2021 in the larger cement producing countries in South America. The Brazilian market’s growth phase may be waning after a furious period that even coronavirus wasn’t allowed to slow. Peru’s potential seems set to take off, Colombia’s rebound should have been greater (but it was dented by social unrest) and Argentina seems to be resetting to its usual level. Whatever else happens in the coming months the story to watch going forward will be which company picks up Holcim’s assets in Brazil.

Brazil: Votorantim Cimentos recorded consolidated sales of US$1.89m in the first half of 2021, up by 48% year-on-year from US$1.28m in the first half of 2020. Its cement revenues rose by 57% to US$1.35bn from US$859m. The group recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) growth of 56%, to US$1.04bn from US$667m.

During the half, the group began the consolidation of its Uruguay-based Artigas’ cement operations at its Minas, Lavalleja, cement plant at a total investment cost of US$40.0m. It also agreed to acquired Cementos Balboa on 24 June 2021. In March 2021, the group issued sustainability-linked debentures, the first of their kind in the Brazilian market.

Brazil: Cement producers including CSN Cimentos, Cimentos Mizu, Cimento Apodi, InterCement and Votorantim have all bid for Holcim’s assets in Brazil. A consortium of CSN Cimentos, Cimentos Mizu and Cimento Apodi is reportedly intending to buy up to 10 production plants, according to sources quoted by Reuters. InterCement and Votorantim have also made offers but are bidding for smaller parts of the business due to competition law restrictions.

Votorantim has bid for plants in the north-eastern of the country and InterCement for those in the south-eastern states of Rio de Janeiro, Espirito Santo and Minas Gerais. Any eventual proposed acquisition will be subject to scrutiny by the Administrative Council for Economic Defence (CADE). Holcim expects to generate US$1 – 1.5bn from the eventual sale.

Brazil: Votorantim Cimentos has started operation of a new production line at its Pecém grinding plant in Ceará. The US$38m upgrade brings the production capacity of the site to 1Mt/yr from 0.2Mt/yr previously. The project was suspended temporarily in 2020 due to the coronavirus pandemic. The producer also operates the integrated 2.2Mt/yr Sobral plant in Ceará and a terminal in Fortaleza. The production sites the company runs in the state are connected by railway and a further line has been extended to connect the terminal.

Brazil: Cement sales totalled 31.5Mt in the first half of 2021, up by 16% year-on-year. The National Cement Industry Association (SNIC) attributed the growth to home renovations and new construction projects. The association has forecast total sales for 2021 of 64.2Mt, corresponding to an increase of 6% compared to 2020 levels. It expects the same segments to drive growth in 2022, though at a lower rate.

Brazil: Votorantim Cimentos is preparing to bid for some of LafargeHolcim’s assets in Brazil. However, the company is limited by local competition rules so it is unable to try and buy all of LafargeHolcim’s assets, according the Valor Economico newspaper. In a statement to Reuters, Votorantim said that it had not made a bid yet but that it was always open to new opportunities. LafargeHolcim was reported by local press in April 2021 as wanting to sell its assets in the country.

Brazil: Companhia Siderúrgica Nacional (CSN) has agreed to buy Cimento Elizabeth for US$220m from Farallon Capital. The acquisition will give CSN an additional 1.3Mt/yr cement production capacity bringing its total to 6Mt/yr, according to the Valor Econômico newspaper. The deal will also give it a presence in the Northeast, add modern equipment to its assets and ‘substantial’ reserves of limestone, The purchase will be subject to regulatory approval.

Spain: Votorantim Cimentos has agreed to buy Cementos Balboa from US-based investment company KKR for an undisclosed sum. The producer operates a 1.6Mt/yr integrated plant at Alconera in Badajoz, Extremadura that started production in 2005. The purchase is subject to regulatory approval in Spain.

“This transaction exemplifies our strategy for growth and positioning in Spain and reinforces our presence in the country,” says Marcelo Castelli, global chief executive officer of Votorantim Cimentos. The Brazilian-based company has been present in Spain since 2012 and currently operates four integrated cement plants, two grinding plants, a mortar plant and several concrete and aggregates plants, operating in the regions of Andalusia, the Canary Islands, Castile and León, Extremadura and Galicia .