Displaying items by tag: Cemex

Ed Sullivan was present to tell Global Cement Live viewers about the Portland Cement Association’s (PCA) autumn forecast last week. The PCA expects US cement consumption to drop by 1.5% year-on-year on 2020. This is a weighted average of its three projections, which cover a gradual recovery from coronavirus-related economic disruption, a less controlled scenario and one where wide-spread vaccination has a positive effect in the second half of 2021. The first scenario is the PCA Market Intelligence’s most likely one but only the fast vaccination scenario predicts a return to growth in 2021. This is wide but understandable deviation from the PCA’s autumn forecast in 2019 that expected moderate growth albeit a slowly weakening economy. Almost nobody seriously expected 2020 to turn out like it has. Follow the link at the bottom of this article to view the presentation in full.

Graph 1: Portland & Blended Cement shipments by US region in 2019 and 2020. Source: United States Geological Survey (USGS).

We’ll now take a general look at the US cement industry so far in 2020 to compliment Sullivan’s economic overview. Up until 2020 cement consumption, production and imports had been growing steadily since the financial crash in 2008. Using August 2020 data the PCA says this is changing. Graph 1 above shows a general reverse of the position in the autumn of 2019 [LINK] with declines in the South and North-East and growth in the West and Midwest. Imports alongside this have continued to build. Overall, national cement shipments increased by 2.2% year-on-year to just under 50Mt in January to July 2020 from 48.9Mt in the same period in 2019. This was driven by growth of 10.8% in the Midwest. Missouri is the standout in the region, behind only Texas and California nationally as the third biggest cement shipping state so far in 2020.
From the corporate side, LafargeHolcim, the US’ biggest cement producer, described North America as having, “…the most resilience of all regions despite Covid-19 restrictions in some areas.” It reported an overall fall in cement volumes of 1.4% year-on-year to 8.9Mt in the first half of 2020. However, it didn’t go into specifics for the US. Cemex’s experience seemed to be doing better with an 8% rise in cement volumes supported by the infrastructure and residential sectors. HeidelbergCement went further and described the impact of coronavirus on the US economy as ‘significant.’ It reported a decrease in cement deliveries at its North American plants of 4.9%, to 7.1Mt. Both Buzzi Unicem and CRH reported cement sales growth of 4 – 5%, with CRH noting that, “strong volume trends in West supported by growth in our downstream businesses drove performance.”

Perusing the industry news reveals a slew of environmental stories. So far in 2020, Holcim US said it was going to run a carbon capture and storage (CCS) study at its Portland cement plant in Colorado, Alamo Cement signed a deal to build a solar farm, Grupo Cementos de Chihuahua’s (GCC) Rapid City plant in South Dakota announced plans for a wind farm, CalPortland launched a sustainable product line with a lower clinker factor, LafargeHolcim launched its ECOPact low-carbon concrete range, LafargeHolcim US also said it was adopting new environmental product declarations and Holcim US opened a solar power plant at its Hagerstown cement plant. There have been a few upgrade stories, like the new line being built at National Cement’s Ragland plant in Alabama or Lhoist’s new lime kiln projects, but Lehigh Hanson said it was suspending work on the upgrade to its Mitchell plant in Indiana in April 2020.

At this point all eyes are on the US Presidential election scheduled to run on 3 November 2020. Donald Trump’s long promised but never delivered infrastructure still hasn’t arrived although blame could be apportioned to both sides of the local political divide for this. The PCA believes that both presidential candidates will probably see it through although the Republicans’ interpretation might well involve more cement! In the interest of balance though, it also expects the Democrats to focus on low-income housing construction. At this stage it seems more likely that the early arrival of a coronavirus vaccine will have more impact on the cement industry in the short to medium term than the results of the election.

View Ed Sullivan’s presentation at Global Cement Live

There’s no single theme this week, just a few news stories of note that may have wider significance.

Firstly comes the news that Semen Indonesia subsidiary Semen Padang has been exporting 25,000t of cement to Australia. This follows a consignment of 35,000t of clinker to Bangladesh. The company is hoping to hit a cement and clinker export target of 1.58Mt in 2020 in spite of the on-going coronavirus pandemic. It reached 1.09Mt (about 70%) of this by mid-September 2020 through exports to Bangladesh, Myanmar, Philippines, Australia, Sri Lanka and Maldives.

The wider picture here is that local sales in Indonesia fell by 7.7% year-on-year to 27.2Mt in the first half of 2020 from 29.4Mt in the same period in 2019, according to data from the Indonesian Cement Association (ASI). Cement and clinker exports are up by 32.8% to 3.7Mt from 2.8Mt. Semen Indonesia’s revenue is down but it has managed to hold its earnings up so far. During press rounds in late August 2020 its marketing and supply chain director, Adi Munandir, told local press that he expected domestic demand to fall by up to 15% in 2020 due to effects of coronavirus on private construction and government infrastructure plans. Analysts reckon that the worst of the demand slump hit in the second quarter of 2020 when government-related coronavirus restrictions were implemented, so Semen Indonesia’s third quarter results will closely scrutinised.

One of Semen Padang export targets is the Maldives. This chimes with another story this week because Oman-based Raysut Cement has just bought a majority stake in a cement terminal from Lafarge Maldives for US$8m. The 9000t capacity Thilafusi cement terminal is located on the island of Thilafusi, Kaafu and was expanded in 2015. Raysut Cement has tended to stick to markets in the southern Arabian Peninsula and the east coast of Africa, with projects planned in Madagascar and Somaliland. Yet expansion plans in places further away such as India and Georgia have also been mentioned publicly. A greater presence in the Maldives is a solid step towards Raysut heading eastwards. This would also mirror the plans of the country’s gypsum sector to dominate African and Asian markets and a general longer term shift in global markets from west to east.

One place west that has been doing well in cement though is Brazil. National Cement Industry Union (SNIC) data for September 2020 show a 21% year-on-year boom in cement sales to 5.8Mt and a 9.4% year-on-year increase to 44.6Mt for the first nine months of 2020. Earlier in the year the country’s limited coronavirus suppression methods were attributed for letting the recovering cement sector grow. Now, SNIC has directly thanked government support for civil construction. However, Paulo Camillo Penna, the president of SNIC said. “The results are surprising so far, but that doesn't give us security in the long run,” due to a bubble of real estate and commercial activity that already appears to be declining. Given the slump in cement demand from 2015 to 2018 it’s understandable that SNIC is taking the recovery cautiously.

And to finish we have two connected stories about Cemex. Following the release of its resilience strategy in September 2020, the company has now declared that its integrated Rüdersdorf cement plant in Germany will be the centrepiece of its CO2 reduction plans as part of ‘Vision Rüdersdorf.’ Details are light at present but we expect some kind of carbon capture and storage or usage project. An addendum to this – or perhaps it’s the other way round (!) – is that Cemex has also just announced further credit amendments but with sustainability-linked metrics. Cemex’s chief financial officer (CFO) Maher Al-Haffar said, “We are especially proud that this transaction represents one of the largest sustainability-linked loans in the world.” The teeth of this arrangement remain to be seen but the integration of finance and sustainability has serious implications generally.

Watch out for a research and development themed interview with Cemex and Synhelion in the December 2020 issue of Global Cement Magazine

Germany: Cemex Zement has announced the start of carbon-neutral building materials development at its 1.9Mt/yr Rüdersdorf, Brandenburg cement plant. Called Vision Rüdersdorf, the project consists of, “the comprehensive investigation of various approaches to breakthrough technologies in order to prevent process-related carbon dioxide (CO₂) from entering the atmosphere, but to use it for beneficial purposes. The investigation areas can be divided into capture, storage or use of CO₂. This will help towards Cemex’s target of 55% CO₂ emissions reduction across Europe by 2030 and its commitment to deliver carbon-neutral concrete by 2050.

Chief executive officer (CEO) Rüdiger Kuhn said, “For years, sustainable success has been achieved here in the reduction of fossil fuels and in the selection of alternative recipe ingredients for cement. The experienced team is always looking for possible improvements. When it came to determining the best possible CO₂ emission values, the Rüdersdorf plant was always at the forefront of the European cement industry and has thus also earned an excellent reputation in the global Cemex organisation.”

In order to realise Vision Rüdersdorf, the producer has partnered with companies from other industries. Managing director and plant manager Stefan Schmorleiz said, “In an interesting approach, the CO₂ that we capture is used as a raw material for downstream processes in the chemical industry. Another approach is to innovate in the storage of CO₂. With these efforts, and our commitment to review and invest in these technologies, Cemex Zement is making a contribution to the decarbonisation of the cement industry.”

US: The Wildlife Habitat Council has named Cemex USA the winner of the Corporate Conservation Leadership Award 2020. The award signifies “an exemplary corporate commitment to biodiversity and conservation education, and meaningful alignments with global conservation objectives.”

Director of Sustainability Vicente Saiso said, “We are privileged to receive the Corporate Conservation Leadership Award from the Wildlife Habitat Council. This recognition is testimony to our successful efforts and fosters our commitment to continue embedding sustainability in every aspect of our operations. To date, we have achieved certification for 30 programmes and community environmental initiatives in our operations around the world, with the highest standards of environmental conservation and biodiversity restoration.”

Projects include collaborations in the US and further afield with the California State Wildlife Action Plan, the Friends of Verde River Cooperative Invasive Plant Management Plan, BirdLife International, the El Carmen Nature Reserve Action Programme and a black bear research initiative, as well as the Mexican Strategy for Chihuahuan Grasslands Conservation, the Dominican Republic National Annual Plan and Panama's Alliance for a Million Hectares.

Mexico: The total cement demand generated by infrastructure projects in 2020 will be 1.9Mt, down by 95% from 40Mt in 2019. The El Sol de Mexico newspaper has reported that the government plans to invest US$12.1bn in 32 projects throughout the course of 2020.

Cemex president Rogelio Zambrano welcomed the decision to continue investing in infrastructure, saying that the promised sum would likely stimulate private sector investment in construction exceeding US$13.8bn. He added, “Both self-construction and infrastructure activity are to thank for the recovery in the construction industry since June 2020.”

Croatia: A European Union (EU) court has ruled in favour of the European Commission’s antitrust veto of Germany-based HeidelbergCement and Schwenk Zement’s 2017 acquisition agreement with Mexico-based Cemex for acquisition of its subsidiary Cemex Croatia. The court said that the deal was anti-competitive in that it had the potential to push up cement prices in Croatia, in spite of HeidlebergCement and Schwenk Zement’s offer to grant other cement suppliers access to a terminal.

Mexico: Cuautinchán city council granted permission for Cemex to resume cement production at its 7.2Mt/yr integrated Tepeaca plant in Cuautinchán following its suspension on 1 October 2020 for failure to pay city rates.

The Municipios Puebla newspaper has reported that Cuautinchán mayor José Pérez opposes the reopening, accusing Cemex of quarrying over 4.44km² in a remote area where its licence extends over a site of just 12.0km². He stated that Cemex has caused environmental deterioration and failed to comply with road upkeep requirements, adding, “It is not a company that has established co-responsibility against municipalities.”

Mexico: Cemex has announced the signing of a collaboration agreement with Switzerland-based alternative fuel (AF) specialist Synhelion, through which the pair aim to develop the use of solar power as an alternative heat source to fuel in clinker production. Pilot testing of Synhelion products will begin at a Cemex plant in late 2022, at a total investment cost of up to US$10m.

Head of global research and development Davide Zampini said, "Thanks to the technology that Synhelion is developing, we can bring the solar heat up to 1500°C. In the process, we can also capture the carbon dioxide (CO₂), and that fits perfectly into the process of the synthetic fuel."

Mexico: Cemex says that Carbon Trust has validated its roadmap to decarbonise global operations in line with the Sectoral Decarbonisation Approach (SDA) 2-degree scenario (2DS) developed by the International Energy Agency (IEA). The validated roadmap is intended to help the company to achieve a 35% reduction of net carbon emissions by 2030. The findings validate Cemex's roadmap for reducing Scope 1 and 2 emissions.

The Carbon Trust has assessed the technical feasibility of the plan based on guidelines defined by international institutions including the International Energy Agency, the Cement Sustainability Initiative, and the European Climate Research Alliance. The CO₂ reduction methods include the use of alternative fuels, using decarbonated raw materials, renewable power projects, and novel cements, among others. The validation also included a review of Cemex's commitment to implement the scheme based on governance mechanisms and business planning.

“The magnitude and complexity of change required by a company such as Cemex to decarbonise its global operations is significant. Our assessment provides the organization’s management, investors and stakeholders with an independent validation that its commitments are backed up by sound assumptions and planning,” said Aleyn Smith-Gillespie, Associate Director Advisory at the Carbon Trust.

UK: Breedon Group says that it has “continued to deliver an encouraging trading performance since demand began to return in early May 2020 after the Covid-19 lockdown,” recording eight-month sales of Euro580m over the period that ended on 31 August 2020, down by 15% from Euro681 over the corresponding period of 2019. The group says that the figure includes the contributions of its newly acquired Cemex ready-mix and aggregates assets for August 2020.

As a result of this performance, the board reinstated its 2020 guidance, with underlying earnings before interest and taxation (EBIT) for the second half of 2020 anticipated to be in line with that in the second half of 2019. It added, “We continue to be reassured by the UK government's restated commitment to investment in the UK's infrastructure and to encouraging demand from the UK housing market, complemented by similar trends in the Republic of Ireland.”