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Displaying items by tag: Buzzi
Italy: Buzzi Unicem’s net sales remained stable at Euro3.22bn in 2020. Cement sales volumes grew slightly to 29.3Mt and ready-mixed concrete sales fell by 3.1% year-on-year to 11.7Mm3 from 12.1Mm3. The group attributed this to growth in the US and stable markets in Russia and Germany, compensating for weaker trends in Eastern Europe and Italy.
US: The Portland Cement Association (PCA) has announced the winners of the 2020 Safety Innovation Awards. The awards recognise ‘creative safety-enhancing projects in the cement industry’ across five categories.
Buzzi Unicem USA’s Joliet, Illinois cement terminal won the distribution award for its barge entry ladder, which reduced fall hazards associated with unloading cement from barges. Ash Grove Cement’s Durkee, Oregon cement plant won the general facility award for its burner pipes cart upgrade, which reduced safety hazards associated with moving cement kiln burner pipes. Further hazard reductions were made by Buzzi Unicem USA’s Chattanooga, Tennessee cement plant’s finish mill access platform and the Monarch Cement Company’s Humboldt, Kansas cement plant’s noise reduction upgrade, which jointly won the milling/grinding award. The pyroprocessing award went to GCC of America’s Pueblo, Colorado plant for its semi-automated clinker feeding system, while the quarry award went to Ash Grove Cement’s Louisville, Nebraska plant for its dump box hardened material extraction tool.
PCA president and chief executive officer (CEO) Michael Ireland said, “Our industry prioritises the safety of its employees above all else. We are proud of our members’ efforts to pursue excellence in safety innovation for their company and their colleagues.”
Dyckerhoff receives approval for use of CEM II / CM (S-LL)
20 November 2020Germany: Buzzi Unicem subsidiary Dyckerhoff has received general building inspection approval from the German Institute for Building Technology for the Portland composite cement CEM II / CM (S-LL) produced in the Amöneburg and Deuna factories. It is the first to receive approval to sell this class of cement, which contains both slag and limestone, in Germany.
The use of CEM II / C cements reduces CO2 emissions from building with cement and concrete due to their lower clinker factor. CEM II / CM (S-LL) emits 39% less CO2 per tonne of cement compared to CEM I cement. Compared to the current status quo of the binder mix, CEM II / C cements have the potential to reduce CO2 intensity by 25%.
The CEM II / CM (S-LL) ‘Amöneburg’ and ‘Deuna’ is authorised for use in strength classes 32.5 N, 32.5 R, 42.5 N, 42.5 R, 52.5 N and 52.5 R. It may be used for the production of concrete, reinforced concrete and prestressed concrete in the following exposure classes: X0, XC1 to XC4, XD1 to XD3, XS1 to XS3, XF1, XA1 to XA3, XM1 to XM3.
Energy Stars for Buzzi plants
20 November 2020US: The US Environmental Protection Agency (EPA) has awarded its 2020 Energy Star® certification to Buzzi Unicem USA plants in Chattanooga, Tennessee and in Festus, Missouri. This certification is awarded to a facility for superior energy performance in comparison to similar plants. This marks the 12th consecutive year that the Chattanooga and Festus plants have received certification.
In order to qualify for Energy Star® recognition, cement plants must score at least 75 on the Energy Performance Indicator (EPI) system used by the EPA to measure energy efficiency. In addition, the plant must have a satisfactory environmental compliance record for the past three years. Receipt of the Energy Star certification means these two plants perform in the top 25% of similar facilities in the US.
Catch4Climate project moves forward with Mergelstetten oxyfuel plans
19 November 2020Germany: The Catch4Climate project has moved into the planning stage of its oxyfuel pilot plant at the Mergelstetten cement plant. The group, comprising Buzzi Unicem’s subsidiary Dyckerhoff, HeidelbergCement, Schwenk Zement and Vicat, signed a letter of intent with the state’s prime minister and transport minister in Stuttgart in mid-November 2020.
The consortium intends to build and operate its own demonstration plant on a semi-industrial scale, to use the oxyfuel process to capture CO2. In the future, the captured CO2 will be used to produce so-called ‘reFuels’, climate-neutral synthetic fuels such as kerosene for air traffic, with the help of renewable electrical energy.
The cement producers formed CI4C – Cement Innovation for Climate in late 2019. The aim of the Catch4Climate project is to create the basis for a large-scale application of CO2 capture technologies in cement plants enabling the later use of CO2 as a raw material in other processes such as a carbon capture and utilisation/storage.
Third quarter 2020 update for the major cement producers
11 November 20202020 has been a year like no other and this clearly shows in the financial results of the major cement producers so far.
The first jolt is that several major Chinese cement producers have seen their sales fall. Following a tough first quarter due to coronavirus, the Chinese industry then overcame floods in the summer, to eventually report a decrease in cement output of 1.1% year-on-year to 1.68Bnt in the first nine months of 2020. The world’s largest cement producer, CNBM, reported a slightly smaller drop in sales year-on-year in the first nine months of 2020. This relatively small fall, just below 1%, may be due to CNBM’s size and diversity of business interests. Other large Chinese producers have noted bigger losses, such as Huaxin Cement’s 9% sales decline to US$3.04bn and Jidong Cement’s 5% sales fall to US$3.8bn. However, Anhui Conch actually saw a 12% rise in sales to US$18.7bn.
Graph 1: Sales revenue from selected cement producers, Q1 - 3 2020. Source: Company reports.
Graph 2: Cement sales volumes from selected cement producers, Q1 - 3 2020. Source: Company reports.
LafargeHolcim’s sales look worse in Graph 1 than they really are because the group was busy divesting assets in 2019. Its net sales fell by 7.9% on a like-for-like basis to US$18.7bn in the first nine months of 2020, a rate of change similar to HeidelbergCement’s. Being a properly multinational building materials producer brings mixed benefits given that these companies have suffered from coronavirus-related lockdowns in different times in different places but they have also been able to hedge themselves from this effect through their many locations. In the third quarter of 2020, for example, LafargeHolcim was reporting recovering cement sales in its Asia-Pacific, Latin America and western/central parts of its Europe regions but problems in North America. Again, HeidelbergCement noted a similar picture with cement deliveries up in its Africa-Eastern Mediterranean Basin Group area, stable in Northern and Eastern Europe-Central Asia and down elsewhere. How the latest round of public health-related lockdowns in Europe round off a bad year remains to be seen.
The other more regional producers are noteworthy particularly due to their different geographical distribution. Cemex has seen a lower fall in sales revenue and cement sales volumes so far in 2020, possibly due to its greater presence in North America. What happens in the fourth quarter is uncertain at best, with US coronavirus cases rising and the Portland Cement Association (PCA) expecting a small decline in cement consumption overall in 2020. Along similar lines, Buzzi Unicem appears to have benefitted from its strong presence in Germany and the US, leading it to report a below 1% drop in sales revenue so far in 2020, the lowest of the decreases reported here for the western multinational cement companies.
Looking more widely, UltraTech Cement, India’s largest producer, had to contend with a near complete government-mandated plant shutdown in late March 2021. The figures presented here are calculated for comparison with other companies around the world due to the difference between the standard calendar financial year (January to December) and the Indian financial year (April to March). However, they suggest that Ultratech Cement suffered a 14% fall in sales to US$3.9bn and an 8% decline in sales volumes to 56Mt, among the worst decline of all the companies featured here. This is unsurprising given that UltraTech mostly operates in one country. Sure enough it bounced back in its second quarter (June – September 2020) with jumps in revenue, earnings and volumes.
Finally, for a view of a region that hasn’t had to face coronavirus-related economic disruption of anything like the same scale, Dangote Cement has reported solid growth so far in 2020, with rises in sales and volumes both above 5%. Economic problems at home in Nigeria have seen relatively higher growth elsewhere in Africa in recent years but now the pendulum has swung back home again. The big news has been that the company has pushed ahead with plans to turn Nigeria into a cement export hub, with a maiden shipment of clinker from Nigeria to Senegal in June 2020. The vision behind this has expanded from making Nigeria self-sufficient in cement from a few years ago into making the entirety of West and Central Africa cement and clinker ‘independent.’
The big news internationally this week was of the reported effectiveness of a Covid-19 vaccine in early trials by Pfizer and BioNTech. It might not yet make it into people’s arms at scale but it shows that the vaccine appears to work and that others in development and testing may do too. Building material manufacturer share prices didn’t rally as much as airlines or cinema chains on the news, construction has carried on after all, but this is a positive sign that normality for both health and wealth is on the way back at some point in 2021. One point to consider, given the wide regional variation with the economic effects of coronavirus, is what effect a disjointed global rollout of a vaccine or vaccines might have. A building material manufacturer dependent on a region that stamps out the virus later than other places might face an economic penalty. Recovery seems likely in 2021 but it isn’t guaranteed and the implications of the coronavirus crisis seem set to persist for a while yet. Here’s hoping for a different outlook at this point in 2021.
Buzzi Unicem’s net sales down slightly so far in 2020
11 November 2020Italy: Buzzi Unicem’s net sales fell slightly to Euro2.41bn in the first nine months of 2020 from Euro2.42bn in the same period in 2019. Its cement sales volumes declined by 1.8% to 21.7Mt from 22.1Mt. The group said that sales volumes recovered during the third quarter of 2020 due to a rebound of demand in Italy, stability in Germany and a ‘trend reversal’ in Russia. Net sales also increased in the US during the third quarter.
Who wants a piece of Eurocement?
04 November 2020Eurocement changed owners this week when Sberbank took control of the company’s parent organisation. Due to a ‘difficult financial situation’ the state-owned bank said it had consolidated 100% of the shares of Eurocement’s parent company GFI Investment Limited. It’s uncertain quite how difficult this situation is but in 2016 the cement producer owed the bank Euro700m. Local media agency RosBiznesConsulting (RBC) reported in September 2020 that the ‘problem borrower’ that had caused a record increase in overdue debt at Sberbank in July 2020 was none other than Eurocement. Whilst Sberbank has said so far that it does not have operational control of the group, it is seeking a strategic investor for the asset.
This is a major story given that Eurocement is Russia’s largest cement producer and it operates 19 cement plants Russia, Ukraine and Uzbekistan. It said it produced 16.5Mt of cement domestically in 2019 but this compares to a production capacity of around 50Mt/yr suggesting a considerably low utilisation rate of just one third! The producer has embarked on a modernisation programme in recent years but many of its plants are old and use wet-process production lines.
2019 finally saw the Russian cement market turn around following decline since 2015. Unfortunately, CM Pro reports that cement production in Russia as a whole fell by 5% year-on-year to 25.1Mt in the first half of 2020. Cement shipments fell by a similar rate. This trend appears to have carried on through July and August 2020. Cement consumption has fallen fairly uniformly in most regions with the exception of the Northwestern Federal District, which has seen a modest increase. In the middle of the year, Soyuzcement - the Union of Russian Cement Producers, was expecting wildly different scenarios ranging from falls of up to 10% in a negative situation to rebound of up to 3% in a positive one. It was pinning its hopes on government support for the construction industry in various ways. With the trend to August 2020, record breaking numbers of new coronavirus cases in early November 2020 and the onset of winter, it seems unlikely that Soyuzcement’s positive thinking will come to pass.
With this in mind who might want to buy into Eurocement? No doubt various private equity firms and local producers are watching the oil price carefully while they plan their next move. Internationally, LafargeHolcim seems the obvious western multinational contender with a presence in the country. Yet it seems unlikely it would want to take the risk, following its departure from certain regions like South-East Asia in recent years and persistent rumours about other divestment targets. HeidelbergCement’s balance sheet, credit lines and appetite for risk might not yet withstand a major investment in Russia. Buzzi Unicem has actually been expanding recently with an acquisition in Brazil but whether it’s prepared to bet on another market disrupted by coronavirus is unknown. China National Building Materials Group Corporation (CNBM) was reportedly planning on becoming a shareholder of Eurocement Group in 2016 but this may have just been bluster surrounding geopolitical links between Russia and China, and general cooperation between the companies on upgrading Eurocement’s old production lines. However, Russia is the next location in China’s Belt and Road initiative so it’s not ridiculous. Whoever steps up can expect the Russian government to take a keen interest, depending on how much control Sberbank wants to offer up of Eurocement. The story continues.
Pilot plant for Cleanker project inaugurated in Italy
30 October 2020Italy: The pilot plant for the Cleanker project was inaugurated at Buzzi Unicem’s Vernasca cement plant in early October 2020. The purpose of the calcium looping technology project is to demonstrate a technology for capturing carbon dioxide (CO2) in cement plants. Tests will be run for around 10 months with a total actual operating time of one month at most.
Buzzi builds in Brazil
28 October 2020Buzzi Unicem beefed up its presence in Brazil this week with the announcement that it is buying CRH’s local cement plants through its Companhia Nacional de Cimento (CNC) joint-venture with Grupo Ricardo Brennand. The deal covers CRH Brazil’s three integrated plants at Cantagalo in Rio de Janeiro, and, Arcos and Matozinhos in Minas Gerais. It also throws in two grinding plants including the Santa Luzia Plant in Minas Gerais for a total of US$218m, although the final figure may change depending on conditions such as the net financial situation at the closing date.
The purchase brings up two trends. Firstly, it’s a continuation of CRH’s refocus on safe havens in Europe and North America. The Ireland-based building materials producer originally picked up these plants in the wake of the formation of LafargeHolcim in 2015 as part of a package deal for Euro6.5bn in its ‘bolt-on’ acquisition expansion phase. Most of the assets in that deal were in Europe and North America, although it did see CRH also build a presence in the Philippines.
Since late 2019 reports have emerged in the press about plans to sell up in Brazil and the Philippines. Whether CRH has made any profit on its sale in Brazil is hard to tell given the scale of its purchases from Lafarge and Holcim in 2015. The focus was likely on those key markets closer to home. Yet cement sales in Brazil peaked in 2014 before the national economy were hit by falling commodity and oil prices that contributed to a recession as well as the Petrobras political crisis. Sales bottomed out in 2018 and have been building steam since. Now is certainly the time to consider departure with a good price given the National Cement Industry Union’s (SNIC) glowing data for September 2020.
For Buzzi Unicem, the proposed acquisition represents the next step on its multinational ambitions, pushing Brazil into its fifth biggest territory in terms of cement production capacity after Italy, the US, Mexico and Germany. Its timing was good in September 2018, when it agreed to buy a 50% stake in the Brazilian company BCPAR from Grupo Ricardo Brennand for Euro150m, because local sales were finally starting to pick up. Once again Buzzi Unicem has also picked up cement production assets for a capacity price just below US$100/t. This time it faces a similar balance of uncertainty with the Brazilian cement industry reporting continuing growth but facing an uncertain future from the economic effects, locally and worldwide, from the coronavirus pandemic.
One point to note here is that as part of its deal with Grupo Ricardo Brennand in 2018, Buzzi Unicem had the right to buy the remaining 50% of BCPAR from Grupo Ricardo Brennand until 1 January 2025. Presumably, though, the option to buy Grupo Ricardo Brennand out of BCPA remains valid. This makes it interesting that Buzzi Unicem chose further expansion over consolidation of its existing business. Four years remain for it to buy the rest of BCPAR if it wants to.
Given the concentration of the Brazilian business in the south-east of the country it seems unlikely that the acquisition would be turned down since the enlarged BCPAR will hold a production base behind larger producers like Votorantim or InterCement. However, Cimento Nacional’s Sete Lagoas plant and CRH Brazil’s Matozinhos plant are both close in Belo Horizonte and this may cause concerns. Now it’s over to the Brazilian regulators to approve or decline the deal and the various parties to finalise.