Displaying items by tag: Clinker
China: China Resources Cement’s turnover fell by 21.5% year-on-year to US$3.08bn in the first nine months of 2022 from US$3.93bn in the same period in 2021. Its profit dropped by 65% to US$234m from US$677m. Cement and concrete sales volumes decreased by 17% to 52.5Mt and 26% to 8.04Mm3, although clinker sales volumes grew slightly. Sales by geographical region fell in all provinces, with the exception of Hunan. The company blamed falling profits on production costs and falling sales.
Thomas Gruppe acquires Opterra Zement and Opterra Beton from CRH
26 October 2022Germany: Ireland-based CRH has agreed to sell its subsidiaries Opterra Zement and Opterra Beton to Thomas Gruppe. Thomas Gruppe expects to complete its acquisition of the businesses later in 2022. Opterra Zement owns the 1.4Mt/yr Karsdorf, Saxony-Anhalt, cement plant and 0.5Mt/yr Sötenich, North Rhine-Westphalia, grinding plant, the latter of which is closed. Opterra Beton operates the Neufahrn, Bavaria, ready-mix concrete batching plant.
Thomas Gruppe said "For years, we have been pursuing a steady and long-term growth course in the field of cement and precast and ready-mix concrete. In the cement segment, our competitive position improved significantly with the purchase of the Erwitte (North Rhine-Westphalia) plant in 2017. Together with the grinding plant in Dorndorf (Thuringia), we have achieved a significantly larger area coverage in Germany, and also in the Netherlands, and benefit from synergy effects." It continued "We would like to continue on this growth course. An opportunity like the one to take over the cement plant in Karsdorf does not come often. The Karsdorf plant, with its gigantic limestone deposits, its market position of well over 1Mt/yr of cement and its experienced team, enables us better to supply our customers, and to leverage improvement potential. In addition, Karsdorf is of sufficient size for us to install CO2 separation technology in its production of clinker for the Dorndorf grinding plant." Thomas Gruppe concluded "We are convinced that cement will become a clean building material and believe in its future."
UAE: Asian Paints has partnered with Riddhi Siddhi Crusher & Land Transport and Associated Soap Stone Distributing Company in a 60:40 joint venture for the purpose of white cement and white cement clinker production. The joint venture will invest US$66.5m in the construction of a planned 265,000t/yr integrated cement plant in the Emirate of Fujairah. The project will take until October 2024 to complete. In addition, the new company plans to establish grinding units in India to serve the export market.
Riddhi Siddhi Crusher & Land Transport and Associated Soap Stone Distributing Company operates limestone mines in Fujairah.
Pakistan: Attock Cement recorded standalone sales of US$92.6m in its 2022 financial year, down by 3.6% year-on-year from US$96.1m in its 2021 financial year. The company produced 2.18Mt of clinker, down by 32% from 3.19Mt, corresponding to a capacity utilisation of 76%. The decision to reduce production came about due to high coal costs. Attock Cement sold 1.8Mt of cement, down by 10% from 2.01Mt in the 2021 financial year. The producer's cost of sales rose by 1.1% year-on-year to US$75.9m from US$75.1m. It profit after tax nonetheless grew by 1.2%, to US$5.07m from US$5.01m.
Chair Laith Pharaon said "The 2022 financial year was a challenging year for the company, as export sales remain depressed due to uncompetitive prices demanded by regional markets, which were also facing the uncertainties." He continued "Due to higher input costs owing to the significant increase in energy prices, the gross margin also declined by 4%. However, because of exchange gain on foreign receivables and dividend income received from its Iraq-based 60% subsidiary Saqr Al Keetan, operating margin improved by 3%.
Vietnam's nine-month cement and clinker exports decline
06 October 2022Vietnam: The Vietnam National Cement Association (VNCA) recorded combined national cement and clinker exports of 24.8Mt in the first nine months of 2022, down by 26% year-on-year from the same period in 2021. This corresponded to US$1.1bn in value, down by 14% year-on-year. Việt Nam News has reported that the VNCA expects to achieve total cement and clinker production of 107Mt, against a national capacity of 130Mt/yr. Domestic demand was 65Mt.
Earlier in 2022, Long Son Cement commissioned a new 2.5Mt/yr integrated cement plant, raising national overcapacity to 200% from 196%.
Update on Peru, October 2022
05 October 2022Cemento Yura said it was considering expanding cement and lime production this week. The announcement, made in an interview to business newspaper Gestión, follows a strong second quarter for the subsidiary of Grupo Gloria with clinker production volumes jumping up by 36% year-on-year to 0.51Mt. Overall for the half-year its clinker and cement production rose by 12.8% year-on-year to 0.86Mt and 12.7% to 1.47Mt. The success was attributed to consistent demand from the domestic sector as well as various large-scale mining projects. Julio Cáceres, the commercial director for its Cement, Concrete and Lime Division in Peru, Chile and Bolivia, wouldn’t say where the company was considering heading next, other than that remarking that it was attentive to new markets.
As Cáceres’ job title implies Cemento Yura also operates cement plants outside of Peru. At home it runs one integrated plant in the south of the country near to Arequipa as well as a lime plant at Juliaca. Outside of Peru though it also runs two integrated plants and a grinding unit in Bolivia, via its Sociedad Boliviana de Cemento (SOBOCE) subsidiary, and two integrated plants in Ecuador, via its Union Cementera Nacional (UCEM) subsidiary. The company also has assorted concrete assets. The international aspect to Cemento Yura’s business is interesting given that the larger cement producers in Peru are dominant in different parts of the country with Cementos Pacasmayo in the north, UNACEM (Unión Andina de Cementos) in the centre around Lima and Cemento Yura in the south. Notably, UNACEM also runs a plant in Ecuador and one in Arizona, US. It is also worth mentioning that competition issues have been reported in the local market previously. In mid-2021 Peru’s competition authority, the National Institute of the Defense of Competition and Intellectual Property Protection (INDECOPI), investigated Cemento Yura.
Cemento Yura’s rise in clinker production in the second quarter of 2022 is worth considering because in a previous interview with the local press Humberto Nadal, the chief executive officer of Cementos Pacasmayo, said that importing clinker had become more expensive in 2021. Subsequently, the company started a US$70m upgrade at its Pacasmayo plant to increase its production capacity by 0.6Mt/yr. In its second quarter financial results for 2022 Cementos Pacasmayo directly credited a 27% increase in its earnings on higher operating profits arising from decreasing costs by using less imported clinker. Sure enough data from Association of Cement Producers (ASOCEM) shows that both cement and clinker imports started to fall in October 2021 and have mostly followed a downward trend since then. Clinker imports fell by 41% year-on-year to 0.66Mt from January to August 2022 compared to the same period in 2021.
Graph 1: Cement production in Peru, 2014 – present. Source. Association of Cement Producers (ASOCEM).
Looking at the wider picture in Peru, cement production has stayed fairly consistent since 2014 at around 10Mt/yr. An upward trend probably started in 2019 but then the Covid-19 pandemic cut it off in the first half of 2022 before the market surged back in the second half of that year. 2021 was a good year with production peaking at 12.9Mt. So far the first eight months of 2022 have seen production rise by 5.3% year-on-year to 8.64Mt.
In summary, cement production is rising in Peru, importing clinker appears to have become more expensive for at least one of the producers and some of the larger local companies are investing in new production capacity, considering it or thinking about acquisitions elsewhere. Local clinker producers appear to be in a good place; clinker importers, or those reliant on it, not so much.
US: The US Department of Commerce has concluded a review of anti-dumping duties of imports of grey cement and clinker from Japan. The review established that the duties are necessary to the prevention of cement and clinker dumping. The department launched its review in June 2022, in line with legal requirements. Japanese cement and clinker have been subject to anti-dumping duties in the US since 1991.
Fives to supply Pillard NOVAFLAM burner to cement plant in France
30 September 2022France: Fives has secured a contract to supply a 65MW Pillard NOVAFLAM Evolution burner to a cement producer. The customer’s aims are to continue to maximise alternative fuel (AF) use, to improve clinker quality and to reduce NOx emissions at its cement plant. The order also includes precalciner burners and a natural gas-powered 35MW Pillard hot gas generator, as well as valve trains and pumping systems.
Ramco Cements commissions Kolumigundla cement plant
29 September 2022India: Ramco Cements has commissioned its new US$366m Kolumigundla cement plant in Andhra Pradesh’s Kurnool District. The Hindu Business Line News has reported that the plant has a clinker capacity of 2.25Mt/yr. It will be equipped with a 12.2MW waste heat recovery plant, 6MW-worth of which will be commissioned in October 2022, with the remainder to follow in 2023. A dedicated fossil fuel-fired power plant and 35km-long railway siding will follow some time in the 2024 financial year.
Update on Kenya, September 2022
28 September 2022Nigerian billionaire Aliko Dangote was spotted attending the inauguration ceremony of Kenyan President William Ruto earlier in September 2022. This is relevant because Dangote’s cement company previously announced plans in 2016 to build two 1.5Mt/yr plants in Kenya, near Nairobi and Mombasa respectively. They were intended to become operational by 2021. Unfortunately, Dangote himself allegedly described Kenya as being more corrupt than Nigeria to Kenyan broadcast journalist Jeff Koinange a few years later and nothing more happened. Back in 2014 Ruto visited Dangote Cement’s Obajana plant in Kogi state in Nigeria when the politician was the Deputy President of Kenya. Dangote’s attendance at the presidential inauguration this month suggests at the very least that his relationship with Ruto remains active. Maybe more news on those planned plants will follow.
Graph 1: Cement in Kenya, 2018 – June 2022. Source: Kenya National Bureau of Statistics (KNBS).
The reason why the owner of Africa’s largest cement company might be interested in the Kenyan market can be seen in its latest cement production figures. Data from the Kenya National Bureau of Statistics (KNBS) shows that production for the first half of 2022 grew by 20% year-on-year to 4.95Mt in the first half of 2022, from 4.12Mt in the same period in 2021. Cement production was broadly similar in 2018 and 2019 at around 6Mt. It then increased by 25% to 9.25Mt in 2021 from 7.41Mt in 2020. On a rolling annual basis, production picked up at the start of 2020 and has risen consistently since then each month, peaking at over 10Mt in May 2022.
However, the elections in August 2022 probably slowed this growth trend, despite being much more peaceful than those in 2007, although the KNBS is yet to release the data. Bamburi Cement said in its outlook for the second half of 2022 that it expected markets to recover after the ballot. The subsidiary of Holcim reported increasing turnover in the first half of 2022, due to mounting sales volumes and price rises, but its profit fell sharply. It blamed this on fuel and logistics inflation, growing clinker import costs as well as negative currency exchange effects.
That last point about imported clinker is worth noting given that a government report in late 2021 found that the country had a clinker shortage of up to 3.3Mt/yr. Yet, the KNBS data in recent years shows that cement production and consumption are broadly similar, suggesting that the shortfall in clinker is being imported. The report added that 59% of the imported clinker originated from Egypt, tariff free, due to a free trade agreement. Local producers were reported to have been operating at a 65% capacity utilisation rate. Egypt and the UAE accounted for most of the imported clinker followed by Saudi Arabia. An interview in the Standard newspaper at this time with Bamburi Cement’s managing director Seddiq Hassani revealed that, despite locally produced clinker being cheaper than imported clinker, some producers were reluctant to hand control of a key input material over to their local competitors. Other producers, predictably, were trying to persuade the government to raise the duty on imports of clinker from 10% to 25%. Tariff discussions have continued in 2022.
So far in 2022 the other big stories in the sector have included Bamburi Cement’s plans to build two solar power plants and a major repair to the kiln shell at East Africa Portland Cement’s (EAPCC) Athi River cement plant. The solar plants will be built next to Bamburi Cement’s integrated Mombasa plant and its Nairobi grinding plant. Once operational in 2023 they are anticipated to supply up to 40% of the cement producer’s total power supply. Devki Group, the owner of National Cement, also announced plans in August 2022 to set up a wind farm near Mombasa. However, this seems more like an attempt to diversify the group into electricity production rather than to supply its own plant near Nairobi. EAPCC’s upgrade project has completed this week after about a month and half of work. It is intended to increase the plant’s cement production by 50%.
Cement production started in rise in 2020 but the Covid-19 pandemic may have constrained this. Production (and consumption) then jumped up in 2021 and looks set to do similar in 2022 bar a possible blip from the elections in August 2022. This is despite the global market issues arising from the end of Covid-19 and the war in Ukraine. These may be uncertain times but the fundamentals for the Kenyan cement market look positive despite rising end prices. Unsurprisingly, it looks likely that Dangote Cement remains keen to extend its business to Kenya.