Displaying items by tag: China

China: Anhui Conch Cement’s sales revenue rose by 38% year-on-year to US$2.98bn in the first quarter of 2018 from US$2.16bn in the same period in 2017. Its net profit rose more than doubled to US$757m from US$341m, according to Dow Jones. The rise in sales and profits has been attributed to rising cement prices in smaller cities and demand from the Xiongan New Area project. The cement producer also said that it received a government subsidy of US$18m.

Nigeria: Dangote Cement will use two vertical roller mills (VRM) from Germany’s Loesche for a new production line at its Obajana plant in Kogi State. The order comprises a six-roller mill for raw cement meal with a capacity of 580t/hr, the largest roller mill for raw material in the Loesche range, and a three-roller mill with a modular design featuring a drive power range of 1000kW for grinding hard coal and lignite with a throughput of up to 70t/hr.

The scope of delivery also includes a LDC classifier for the raw cement mill and a LSKS ZD classifier for the coal mill, which is characterised by individually adjustable grain size separation. The raw material mill is equipped with metal-matrix-compound (MMX) technology. The two mill gear units are equipped with state monitoring and remote access for remote monitoring. Loesche is also contributing to the design and planning of the entire plant as well as the engineering for the electrical measurement, control and regulation technology and complete automation. The delivery date is scheduled for the third quarter of 2018.

The contract partner for this project is China’s Sinoma International Engineering, which has previously installed a seven clinker and cement raw meal VRMs for the Obajana plant. The site has a cement production capacity of over 12Mt/yr and it is the largest cement plant in Sub-Saharan Africa.

Vietnam: Nguyễn Quang Cung, vice chairman of the Vietnam Building Material Association, says that local industry cement exports grew strongly in the first quarter of 2018 due to Chinese cement plants shutting down because of pollution and power shortages. He made the comments at the Vietbuild conference, according to the Viet Nam News newspaper. Local cement production rose by 18% year-on-year in the first quarter and exports rose by 68%.

Cung said that the Chinese government ordered the closure of a series of cement plants from 15 November 2017 to 15 March 2018 due to environmental concerns and a shortage of electricity during the winter. These circumstances turned China, the global clinker exporter in 2016, into an importer of cement at the end of 2017. It has mainly imported clinker from Vietnam, at a volume of 1.5Mt/month. Vietnam’s clinker exports ‘skyrocketed’ in 2017 due to this.

The association expected the country to export 15Mt of clinker in 2017 but it exported nearly 21Mt instead. It also anticipates that plant closures in China will increase in 2018.

Two reports out this week have looked at the carbon footprint of the cement industry. The first, a technology roadmap by the Cement Sustainability Initiative (CSI) and the International Energy Agency (IEA), laid out a technology pathway for the sector to reduce its direct CO₂ by 24% from current levels by 2050 to meet the IEA’s 2°C scenario (2DS). The second, a report by the CDP (formerly the Carbon Disclosure Project) on the progress of 13 major cement producers to reduce their emissions, was a progress report on the business readiness for a low carbon economy transition.

Graph 1: European Union industry emissions by sector, 2013 - 2017. Source: Sandbag, European Commission.

The scene was set last week when the environmental campaign group Sandbag picked up on the latest emission data from the European Union (EU) Emissions Trading Scheme (ETS). Industrial emissions as a whole rose by 2% year-on-year to 743Mt in 2017. The cement and lime industry reported a rise of 3% to 148Mt in 2017 from 144Mt in 2016. As Sandbag reported, industrial emissions have remained ‘stubbornly high’ for the duration of the ETS. It then went on to say that, “the EU urgently needs a new industrial strategy to bring about radical industrial process changes and/or carbon capture and storage, especially for the high-emitting steel and cement sectors.”

The CDP’s report provided a global scorecard on the readiness of the cement industry to adapt to a low-carbon future. Unfortunately, the report used data from self-reporting questionnaires and it lacked data from the two largest Chinese cement producers, Anhui Conch and China National Building Materials (CNBM), although it did try to compensate for this. The CDP assessed companies across four key areas aligned with the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD).

Graph 2: Opportunity vs. risk for low-carbon transition. Source: Building Pressure report, CDP.

Surprisingly, the study, even with its limitations, found regional variation. As can be seen in Graph 2, the Indian cement producers came out on top from the criteria used: transition risks, physical risks, transition opportunities and climate governance and strategy. CDP pinned this on better access to alternative materials such as fly ash and slag coming from other carbon intensive sectors, such as thermal power generation and steel production. Reported process emissions measured by the clinker ratio for the Indian companies was 69% versus 78% for the other companies. They also benefited from newer cement plants driven by high market growth in the region compared to older plants in Europe.

The technology roadmap from the CSI and the IEA set out key actions for the industry to take by 2030 to have at least a 50% chance of achieving the 2°C 2DS scenario followed by a possible transition pathway that could be achieved through technology, legislation and investment. The key actions are protecting carbon pricing mechanisms from carbon leakage, putting new technology into action and supporting it by legislation, and greater government support for products with a lower clinker factor.

The CSI’s and IEA’s targets for 2030 included reaching a clinker to cement ratio of 0.64 in 2030 from 0.65 in 2014, a thermal energy intensity of clinker of 3.3GJ/t from 3.5GJ/t, an electricity intensity of cement of 87kWh/t from 91kWh/t and a alternative fuel co-processing rate of 17.5% from 5.6%. Perhaps the most optimistic is a CO₂ capture and storage amount of 14MtCO₂/yr in 2030 from nothing at the moment. This last target seems unlikely to be achieved given the lack of projects outside of the pilot stage, but it’s not impossible.

This column barely touches on the detail within either report or even the latest data from the EU ETS. Both reports offer ways forward to meet the 2°C global warming target outlined in the Paris Agreement. It’s easy to be pessimistic given the on-going clash between environmental optimism and business logic but both reports offer a way forward. The CDP report sets out a baseline with a look to the future, whilst the CSI/IEA roadmap offers what it says is a realistic route to reach that 2DS target. Lastly, if the CDP’s assessment is correct about the Indian producers then it’s possible that other developing cement industries may inherently be cleaner due to their use of newer plants and equipment. If worldwide government support can be provided for use of alternative fuels and materials on a much larger scale, as well as all the other recommendations, then meeting the Paris agreement may be easier than expected as new markets build new production capacity.

Two examples of carbon capture utilisation and sequestration projects will be covered in the May 2018 issue of Global Cement Magazine

Algeria: China’s CBMI has signed a contract with ASEC Cement to build a 4500t/day clinker production line at ASEC Cement’s Djelfa plant. The unit was originally partially built by ASEC Egypt in 2008 and had completed 90% of civil work before it was suspended due to the financial crash. Local company ETRHB Haddad and the Algerian subsidiary of China State Construction Engineering Corporation (CSCEC) took control of ASEC Cement in 2017 allowing the Djelfa project to continue.

The engineering, procurement and construction contract covers limestone crushing to cement packaging and delivery. It includes engineering, equipment and steel structure procurement, civil construction, erection, training and commissioning. Construction is scheduled to take 19 months from the contract’s activation date. As such the plant could be operational by the end of 2019.

Zambia: Weye Construction Materials has submitted plans to the Zambia Environmental Management Agency to build a 1Mt/yr cement plant in Chilanga district. The investment for the proposed project, including quarry and full clinker production line, has been set at the low value of US$45m.

According to the application the project will build a raw material mill single–stage cyclone pre-heater, a coal-fired rotary kiln and a packaging unit. Bag filters will be used for dust recovery at the bagging facility and material transfer points. Electrostatic precipitators will be installed for gas cleaning to avert nuisances from the kiln. WEYE added that the project would also create 555 jobs.

WEYE Construction Materials is owned by two Chinese shareholders: Zhang Yiwei and Lu Qiang. It is a subsidiary of China’s Weye Construction Group, based in Jiangsu province and established in 1999.

Democratic Republic of Congo: South Africa’s PPC says it is talks with China National Materials (Sinoma) over selling a majority stake in its operations in the country. In an interview with Bloomberg chief executive officer Johann Claassen said that deal would depend on the price and implications on the on-going merger between Sinoma and China National Building Material (CNBM). He added that the PPC’s cement plant in the Democratic Republic of Congo had proven ‘challenging’ and that the company had arranged a ‘debt holiday’ with lenders after the market ‘didn’t pan out as envisaged.’

Persistence has paid off for UltraTech Cement this week. Although the deal is not complete, all the signs are pointing towards India’s largest cement producer buying Binani Cement despite losing an auction for it last month. Here’s a recap of what has happened so far.

In July 2017 the National Company Law Tribunal (NCLT) in Kolkata, a semi-judicial body that rules on issues relating to companies, started insolvency proceedings for Binani Cement. It followed a plea by one of the cement company’s creditors, the Bank of Baroda, that had an outstanding claim of around US$15m. The Kolkata bench of the NCLT rejected Binani Cement’s argument that the debt was tiny compared to the assets of its parent company Binani Industries of US$2.15bn. It then appointed an administrator, or resolution professional, called Vijaykumar Iyer, a partner at Deloitte Touche Tohmatsu India. More on him later on.

The subsequent auction of Binani Cement raised lots of interest both internationally and locally due to its production base. The company operates a 4.9Mt/yr plant at Binanigram in Rajasthan with two kilns and four mills. It also runs a 1.4Mt/yr cement grinding plant at Sirohi in the same state. Unusually though for an Indian producer it also runs a 2Mt/yr grinding plant at Jebel Ali, Dubai in the UAE and a 0.5Mt/yr integrated plant, Shandong Cement, in China.

Its products domestically in India include 43 and 53 grades Ordinary Portland Cement and Portland Pozzolana Cement, with the Bollywood film star Amitabh Bachchan as its brand ambassador. On that last point the Indian Supreme Court chastised Binani Cement in 2014 for not paying sales tax in Rajasthan whilst being able to hire Bachchan! However, given the ferocity of the struggle to buy Binani Cement maybe all that marketing of the brand paid off, giving the producer a much higher profile than it might otherwise have had.

Anyway, lots of companies showed interest in Binani Cement in the first round of bidding in late 2017. CRH, LafargeHolcim, HeidelbergCement, India Cement, Orient Cement, Ramco Cement, Shree Cement, UltraTech Cement and Piramal Group were all linked to the auction. Eventually UltraTech Cement, JSW Cement, Ramco Cement, HeidelbergCement India, Dalmia Bharat and a pair of Indian investors all submitted bids and JSW Cement emerged as the winner with a bid of US$919m. However the emergence of an additional liability of around US$250m scuppered that auction when it turned out that Binani Cement had offered a corporate guarantee for the acquisition of a fibreglass asset in Europe known as 3B in 2012 by Binani Industries. By February 2018 the next auction was in progress and this time Dalmia Bharat Cement and UltraTech Cement led the race. Dalmia Bharat won the second auction with a bid of around US$1.03bn made in a consortium with Bain Capital’s India Resurgent Fund and Piramal Enterprises.

At this point the situation might have conceivably slowed down. Instead, UltraTech Cement kept on fighting and queried the entire bidding process. It then made a direct offer of US$1.11bn to Binani Cement in the form of a so-called ‘comfort letter’ that Binani Industries used to stop the insolvency process. At the same time it received approval from the Competition Commission of India in its bid for Binani Cement, the previous absence of which was one of the reasons its bid against Dalmia Bharat was rejected.

Indian company law now faced a dilemma over how a bankruptcy works given that the NCLT was meant to be in charge. A way out was found though when the NCLT in Kolkata and the National Company Law Appellate Tribunal both allowed the bidders to settle the dispute ‘amicably.’ To add further confusion the administrator Vijaykumar Iyer also alleged right in the middle of the final tussle between Dalmia Bharat and UltraTech Cement that fraudulent transactions had been made by Binani Cement! Whether this has any further implications remains to be seen.

At this stage nobody is likely to declare UltraTech Cement the winner of Binani Cement until it actually picks up the keys to the cement plants. Perhaps not even then in case of any lingering legal issues! UltraTech Cement clearly views Rajasthan as a growth area given the tenacity with which it has gone after Binani Cement. It operates two integrated plants in the state and is building two more of its own. After its long journey in buying plants from Jaiprakash Associates in 2017, UltraTech Cement is starting to look like the cement producer that simply won’t take no for an answer.

China: The merger between China National Building Material (CNBM) and China National Materials (Sinoma) is looking likely to be completed in early May 2018. The companies have issued a scheduled timeline for key events of the withdrawal of Sinoma shares and the implementation of a share exchange. This process is expected to be completed on or around 3 May 2018 with CNBM updating its business registration at the Beijing Municipal Administration of Industry and Commerce as soon as possible thereafter. The merger marks the conglomeration of the leading Chinese cement producer and equipment manufacturer.

Tunisia: China’s Anhui Conch plans to open an office in Tunis to explore investment opportunities. A delegation from the cement producer met with Slim Feriani, the Minister of Industry and Small and Medium Enterprises, according to African Manager.