Displaying items by tag: Energy

UK: Hanson has signed a memorandum of understanding with Shell to work together to explore opportunities that help the construction industry’s transition to net zero emissions.

Under the agreement the companies plan to explore: using hydrogen for transport and industrial processes; using capture utilisation and storage (CCUS) in cement production; looking at lower carbon fuels and electric vehicles; digital innovations in energy production, consumption and efficiency; improving bitumen and asphalt technology; and renewable energy sources such as solar installations and batteries to replace diesel generators. In addition, the companies say they will consider the possibility of collaborating in future business opportunities or new business models, which will create value and scope for further decarbonisation.

Hanson’s chief executive officer Simon Willis said, “We are already working together on several initiatives to decarbonise asphalt with bitumen materials and innovations which promote long life, increased use of recycled materials, low carbon products and the circular economy.” He added that “Hanson and Shell have a long-established working relationship and are committed to sharing knowledge and resources to jointly work on projects that will facilitate our transition to net zero emissions.”

New Zealand: Golden Bay Cement has obtained two hydrogen-fuelled cement trucks produced by Hyzon. TR Group leased the vehicles to the cement company.

Golden Bay Cement said “These two zero emission green trucks signal the future, and are just another step we take to a smaller carbon footprint across our business.”

Switzerland: Vigier Ciment is operating a self-charging electric dump truck at its limestone and marl quarry in Biel. The 45t truck’s regenerative braking system recharges its 600kwh lithium battery on the downhill trip from the quarry to the primary crusher. Its 65t capacity more than doubles its weight when laden, easily enabling it to recover charge for the return trip. Each trip generates an estimated 10kwh of surplus energy. In ordinary use, this would equate to 77Mwh/yr. It saves 50,000 – 100,000l/yr of diesel and eliminates an estimated 196t/yr of CO₂. Green Car Reports has reported that Kuhn Schweiz built the dump truck, based on Japan-based Komatsu’s HB model truck. It is the world’s largest electric vehicle.

Cement markets have mostly recovered following the shock emergence of coronavirus in 2020. Most of the producers that have released their results so far for 2021 have reported strong boosts to sales revenue and racing earnings as something more like normality resumed. The following roundup covers a selective group of cement companies around the world.

The recovery in 2021 has made the outliers in the companies covered here noteworthy. UltraTech Cement, Semen Indonesia and Dangote Cement are all large regional companies with dominant positions domestically and varying degrees of international spread. As can be seen in Graph 1, UltraTech Cement and Dangote Cement both reported very large increases in sales, over 20% year-on-year. By contrast, Semen Indonesia sales fell very slightly.

Graph 1: Sales revenue from selected cement producers in 2020 and 2021. Source: Company reports. Note: Figures calculated for UltraTech Cement.

One reason for UltraTech Cement and Dangote Cement’s success can be seen in Graph 2 (below). Both companies managed to sell more cement in 2021. Semen Indonesia did not due to Indonesia’s production overcapacity and new competitors. It also blamed a significant rises in coal prices for a 9% drop in its earnings before interest, taxation, depreciation and amortisation (EBITDA).

UltraTech Cement has been wary of successive waves of coronavirus throughout its 2022 financial year, but generally the Indian regional markets have recovered and government-backed rural housing and infrastructure spending have supported growth. It did note rising coal prices earlier in the year, but these were reported to have somewhat softened during the quarter to 31 December 2021. It is worth noting that the ongoing war in Ukraine is affecting energy markets but more on this at the end of this article. Dangote Cement’s performance was slowed somewhat by the start of coronavirus but it has since resumed its turbo-charged trajectory with volumes, revenue and earnings growth all above 10% in 2021. Mostly this performance is supported by the Nigerian market but the company is doing well internationally too.

Graph 2: Cement sales volumes from selected cement producers in 2019 and 2020. Source: Company reports. Note: Figures calculated for UltraTech Cement.

Holcim and HeidelbergCement’s increase in sales revenue in 2021 are actually fairly similar on a like-for-like basis, both with around 10%. The former’s sales volumes were up across cement, ready-mixed concrete and aggregates in each of its regions around the world, as were sales revenue. Holcim’s big move in 2021 has been the expansion of its Solutions & Products segment with the acquisition of Firestone in April 2021. Now this has continued with the completion of the Malarkey Roofing Products purchase on 1 March 2022, a few days after it released its 2021 results. Chief executive officer Jan Jenisch described the move towards lightweight building materials as generating, “further double-digit growth engines for the company.” As an aside, it was fascinating to see CRH leave the building envelope business this week, mostly based in the US, with an agreement to sell up its division for US$3.8bn to private equity. The business CRH is divesting sells architectural glass, storefront systems, architectural glazing systems and related hardware to customers primarily in North America. CRH is clearly pursuing a different business strategy to Holcim.

HeidelbergCement has also reported a strong year in 2021 albeit without the Holcim razzle-dazzle of barging into new market areas. It noted significant increases in energy prices and pandemic‐related lockdowns in some key markets in Asia. It described a very slight cement sales volume decline in Africa and the Middle East and a drop in earnings in Asia. Its trump cards are its carbon capture projects coming down the pipeline. It’s keen to remind investors about this with the unspoken implication that it might save the company money in the future when carbon taxes bite further.

Both Cemex and Buzzi Unicem followed the growth pattern seen in sales and earnings by the other larger multinational producers covered above. Central and South American markets really took off for Cemex in 2021, starting with its home market in Mexico. However, growth was present, although slower, in both its largest markets in the US and its Europe, Middle East, Africa and Asia region. Notably cement volumes in the Philippines grew by 7% and that’s even with the devastation caused by typhoons at the end of the year taken into account. Similarly, Buzzi Unicem performed well in 2021 due to growth in Italy, the US and Eastern Europe compensating for a small sales decline in Germany. As mentioned in Update on Ukraine, February 2022 Buzzi Unicem has particular exposure to the war in Ukraine as it operates two cement plants in Ukraine and two units in Russia but this is a problem for the 2022 financial year.

To finish on Ukraine, first and foremost, a human tragedy is unfolding. Yet the war also presents many economic challenges to financial markets through sanctions and counter-actions. A recession in Russia looks likely as do energy price surges in the US and Europe leading to further inflation and, perhaps, recessions too. All this potentially lies ahead. For now, the dilemma for US and European-based cement companies and suppliers with operations in Russia is reputational. Should they continue to do business in Russia as public opinion hardens and companies like BP, Shell, Equinor, HSBC and AerCap head for the exit? The Russian government has blocked foreign companies and individuals from selling shares locally but pressure looks set to intensify for such companies to do something.

Turkey: Çimsa Çimento revenue grew by 80% year-on-year to Euro240m in 2021 from Euro133m in 2020. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 46% to Euro41.4m from Euro28.5m. The subsidiary of Sabancı Holding says that 54% of its sales in 2021 came from foreign sales. However, it noted that its production energy costs increased by 94%. It also reported that its alternative fuels substitution rate hit 15%.

“In July 2021 we took over the Buñol Factory in Valencia, Spain with Cimsa Sabancı Cement. With the addition of the Buñol Factory to our production and distribution network, we have strengthened our export network and expanded our sphere of influence in Europe, North Africa and South America,” said chief executive officer Umut Zenar. With the acquisition of the white cement plant in Spain, Çimsa Çimento says it has become one of the largest white cement producers in the world.

Mexico: The Mexican Ready-Mix Concrete Industry Association (AMIC) says that European natural gas shortages and disruptions to the supply of oil, chemicals and other goods as a result of the conflict in Ukraine may cause a rise in the cost of global cement production.

AMIC president Ana Laura Burciaga said "Having a conflict that delays the arrival of these products can make them more expensive because they would have to be obtained from more expensive sources due to shortages.” Burciaga continued "The area where the conflict is taking place was a major supplier of gas and we are concerned that this will have repercussions, especially in terms of a price increase when we have just suffered a very significant one of a magnitude we had not seen for many years."

Nigeria: Lafarge Africa, Holcim’s subsidiary in Nigeria and South Africa, says that it acheived record full-year results in 2021. Its net sales were US$705m, up by 27% year-on-year from US$554m in 2020. Meanwhile, its recurring earnings before interest, taxation, depreciation and amortisation (EBIT) rose by 43% to US$157m from US$110m.

CEO Khaled El Dokani said "Our 2021 performance showed significant improvement.” He added “We are equally pleased with the progress we are making on sustainability. Our use of affordable clean energy and agro-ecology footprint are in accordance with our net zero pledge journey."

In 2022, the company forecast ‘good demand momentum’ as it continues to maximise volume opportunities across its markets, while actively managing costs. During the year, it also plans to consolidate its sustainability efforts.

Pakistan: Power Cement has received the International Standards Organisation (ISO)’s ISO 50001:2018 certification for the energy performance of its management systems.

The producer said “We are on a never-ending quest to improve the environment for future generations by promoting the usage of sustainable energy.”

India: Dalmia Cement (Bharat) has commissioned a 14.7MW solar power plant at its 1.3Mt/yr Kapilas grinding plant in Odisha. The producer says that the new power plant multiplies its total solar power capacity in Cuttack District by six to 17.1MW from 2.4MW.

The company said "Furthering Dalmia Cement (Bharat)'s sustainability goal of becoming carbon negative by 2040, this initiative will enhance the plant's energy efficiencies."

Switzerland/France: Holcim is collaborating with Engie and and the French National Institute of Applied Sciences (INSA) Lyon to develop a cement-based energy storage technology to serve as an alternative to batteries. The solution will use cement hydration to store heat as energy and release it when needed in an infinitely repeatable cycle. The partners say that it will make energy storage local, safe, affordable and recyclable.

Holcim’s head of global innovation Edelio Bermejo said "The world needs innovative solutions to accelerate our shift towards renewable energy generation, distribution and storage – all areas in which Holcim can play a big part. With this collaboration, we are moving energy storage forward, opening up a new range of solutions based on materials that are local and recyclable."