Displaying items by tag: European Commission

Belgium: The European Parliament and Council have reached a provisional agreement to revise the European Union (EU) Emissions Trading System (EU ETS) for the period after 2020. This revision is intended to help the EU on track to achieving its commitment under the Paris Agreement to reduce greenhouse gas emissions by at least 40% by 2030. The deal between the parliament and council follows more than two years of negotiations, following the European Commission's proposal to revise the EU ETS in July 2015.

The main improvements agreed by parliament and council include changes to the system in order to hasten emissions reductions and strengthen the Market Stability Reserve to speed up the reduction of the current oversupply of allowances on the carbon market. Additional safeguards have been proposed to provide European industry with extra protection, if needed, against the risk of carbon leakage. Several support mechanisms have also been added to help industry meet the innovation and investment challenges of the transition to a low-carbon economy.

Cembureau, the European Cement Association, said that it had hoped, “…for a stronger signal towards best performing plants that their investment efforts will be honoured through a full protection against carbon leakage and is still concerned about the impact of a cross-sectoral correction factor.” However, it added that it was pleased that the EU had withstood attempts to differentiate between sectors in applying the rules of the ETS scheme.

Environmental campaign group Sandbag criticised the amendments for not going far enough to cope with a gap between allowance supply and emission. “The logic of the Paris Agreement is that all countries need to step up ambition to cut emissions. With the ETS hobbled, the EU and Member States must now immediately look to how emissions can be cut rapidly before 2020 and in the period up to 2030. Accelerating coal plant closures and supporting the efforts of industry to decarbonise, is essential,” said Sandbag’s managing director Rachel Solomon Williams.

Following the political agreement between the parliament, council and commission, also known as a trilogue, the text will have to be formally approved by the parliament and the council. Once endorsed by both co-legislators, the revised EU ETS Directive will be published in the Official Journal of the Union and enters into force 20 days after publication.

Germany: The European Commission has approved the acquisition of Fels-Werke by Ireland’s CRH. Fels-Werke is active in mining, processing and distribution of lime and limestone products, gypsum and mortar in Germany, the Czech Republic and Russia. The commission concluded that the proposed acquisition would raise no competition concerns because there is limited geographic overlap between the companies' activities. It described them as ‘remote’ competitors. Fels’ owners Xella agreed to sell the business to CRH in August 2017 for an undisclosed sum.

Putting two speakers from the European Commission front and centre at the start of this year’s European Slag Association Conference (EuroSlag) in Metz, France was always going to cause a ruck. Once Coal and Steel Research Unit head Hervé Martin and steel sector policy officer Gabriele Morgante said their pieces and the panel opened up then the verbal punches started flying. Okay, this may be slightly exaggerated, but after a bunch of policy-heavy presentations, suddenly the situation became crystal clear. Was the agricultural use of ferrous slag going to be allowed to continue? What would be the classification of the slag? And so on. One Russian delegate commented afterwards, “I thought we had environmental problems in Russia.”

Jérémie Domas, Centre Technique et de Promotion des Laitiers Sidérurgiques (CTPL) explained in a later presentation that the heart of the current debate goes back to the European Waste Framework Directive (2008/98/EC). This legislation created an ambiguity over the status of slag between classifying it, as a waste or as a by-product, that the European industry has been battling over ever since. A multi-coloured map in Aurelio Braconi of the European Steel Association’s (Eurofer) presentation depicted the disarray this has caused with the varied legal statuses of slag across Europe. To add to this, Braconi’s home country of Italy, for example, is split into designating slag as both a product and a waste. His response was to say that the ‘human factor’ was important back home for utilising slag. The European Union (EU) is now working on its Circular Economy Package, which includes revised legislative proposals on waste, and it has been consulting on various issues throughout the year. It is this process is that been making slag producers twitchy.

Other delegates on the first session’s panel provided a bit more context, with Thomas Reiche of the German Technical Association for Ferrous Slag (FEHS) saying that the waste legislation didn’t need to be changed but that public procurement laws did. Eric Seitz of the French Association of the Users of industrial By-products (AFOCO) added that slag products had been sold for decades without any problems. However, he definitely wanted ‘strong’ support from the EU on the issue.

Moving on, Craig Heidrich of the Australasian (Iron & Steel) Slag Association (ASA) provided some interesting figures in his presentation on worldwide slag production that differ from the data often reported by trading companies. Heidrich reckoned that 567Mt of slag was produced in 2015 with a breakdown of 347Mt blast furnace (BF) slag and 220Mt steel slag.

Andreas Ehrenberg of the FEHS presented research on converting electric arc furnace (EAF) slag into a hydraulic material that could be used in cement or concrete production. Given that, using Heidrich’s figures for example, about a third of ferrous slag production is steel slag often created in an EAF, the potential implications of this line of inquiry are important. Unfortunately, the main disadvantages of the original EAF slag analysed in Ehrenberg’s work compared to BF slag are the lower CaO and SiO₂ contents and the higher MgO and Fe oxide contents. Laboratory-scale tests confirmed in principle the feasibility of forming clinker or ground blast furnace slag-like materials based on EAF slag. But the reduction and treatment steps in the process require a lot of effort and the economical value of the recovered metal is low. Taking the research further will require much more work on the semi-technical scale.

The other paper with particular relevance to the cement industry was Chris Poling of SCB International unveiling his company’s ground blast furnace slag (GBFS) micro-grinding mill, the Nutek Mill 2. The new mill is intended to allow slag grinding to take place in a much wider range of locations, along similar lines to the modular clinker grinding mills made by Cemengal or Gebr. Pfeiffer’s Ready2Grind line. The pilot project is being installed now in New York State, US. The mill has a GBFS capacity of 10 - 12t/hr with a target of 40 – 45kWh/t when fully optimised. Further units at the same location are planned for early 2018 with approval sought from the New York State Department of Transportation.

The 10th European Slag Conference is expected to take place in 2019. With more clarity expected from the EU on its Circular Economy Package there will be much to discuss.

Europe: RHI and Magnesita have announced divestment agreements ahead of their proposed merger. RHI has signed a contract with a European refractories supplier for an undisclosed sum regarding the sale of its dolomite business in the European Economic Area. The sale consists of the production sites at Marone in Italy and Lugones in Spain. Magnesita has entered into a definitive agreement with Intocast to divest its business related to the production and supply of magnesia carbon bricks produced at the company's Oberhausen plant in Germany for Euro20.3m. Both sales were required by the European Commission as part of the merger process.

“With the sale of the two sites, the combination of RHI with Magnesita is also still right on schedule,” said RHI’s chief executive officer Stefan Borgas with regards to his company’s divestments “We expect the confirmation by the European Commission in the near future.”

RHI signed a contract in August 2017 to sell its production sites at San Vito in Italy and Sherbinska in Russia that produce fused cast refractories for the glass industry. Production at the company’s plant at Aken in Germany was stopped in the first half of 2017 for an indefinite period. RHI plans to sell or close the plant to maintain its production utilisation rate across the business.

Belgium: The European Commission has cleared a proposed merger between Brazil’s Magnesita and Austria’s RHI Group subject to the divestment of a number of production sites in Europe. Magnesita is required to sell its plant in Oberhausen, Germany along with its Oberhausen business in the European Economic Area (EEA). RHI is required to sell its dolomite business in the EEA including plants in Maroni, Italy, and Lugones, Spain. Magnesita and RHI said they are speaking to potential buyers at present.

“With today’s milestone, we have come significantly closer to the planned merger with Magnesita – and thus a globally leading company in the refractory industry which optimally combines the strengths of both companies,” explains Stefan Borgas, chief executive officer (CEO) of RHI and designated CEO of the future RHI-Magnesita Group.

Outstanding approvals required to complete the merger include that from the Brazilian Antitrust Authorities and the approval of the cross-border merger, of RHI AG with its subsidiary RHI MAG NV in the Netherlands, by the RHI General Meeting.

Unsurprisingly the European Commission blocked Duna-Dráva Cement’s (DDC) attempted purchase of Cemex Croatia this week. Merging the country’s biggest cement producer with its largest importer was going to be a challenge for the commission. Whereas in previous transactions the various parties offered business disposals to ease the commission’s concerns, here all they were got was access to a cement terminal in Metković in southern Croatia. And this facility on the Neretva river is currently being leased by Cemex! Clearly this didn’t give the impression of being a long term solution.

Compare this with the merger between Lafarge and Holcim in 2015 where multiple sales were proposed to make sure the deal went through. Or look at the acquisition of Italcementi by HeidelbergCement in 2016 where the parties sold Italcementi’s Belgian subsidiary Compagnie des Ciments Belges to Cementir to make the deal happen. In comparison to these deals the attempt by HeidelbergCement and Schwenk, through their subsidiary DDC, comes across as a calculated gamble designed to test the resolve of the commission. If the commission had somehow passed the proposed acquisition then the companies would have cornered the market. If it turned it down, as it has, then nothing would be lost other than putting together the bid. HeidelbergCement had its mind on bigger things as it bought and then integrated Italcementi.

Commissioner Margrethe Vestager summed up the mood of the commission: “For mergers between direct competitors, we generally have a preference for a clean, structural solution, such as selling a production plant. HeidelbergCement and Schwenk decided not to offer that. Instead they proposed to give a competitor access to a cement terminal in southern Croatia. Essentially, this amounted to giving a competitor access to a storage facility – without existing customers or established access to cement, without brands and without sales or managerial staff.”

Elsewhere, the other big story in the industry news this week was Votorantim’s decision to focus on the lime business in Brazil by adding lime units to some of its existing cement plants. Given the dire state of the local cement and construction industry, initiatives to break the deadlock have been expected. The alternative is plant closures and divestures, such as the ongoing talks by Camargo Corrêa to sell the other big local producer, InterCement. Votorantim plans to build lime units attached to the cement plants at Nobres in Mato Grosso, Xambioa in Tocantins, Primavera in Pará and Idealiza in Goiás. Unfortunately the agricultural areas of the country and ones with cement plants don’t overlay neatly. Cement production is mainly focused in the south-eastern states and Votorantim are targeting the Cerrado, in the centre of the country, for the lime business.

The scale of the project, at US$50m, the scale of the lime business generally and the addition of lime units at cement plants suggest that the pivot to lime can only be a sideline to cement and construction. Given the similarity of the cement and lime production processes the announcement would be much more significant were Votorantim set to convert clinker kilns into lime ones. A notable example of this was at Cement Australia’s Gladstone plant in Queensland, Australia. Here a mothballed FCB-Ciment clinker kiln was converted into a lime kiln in the early 2000s. At the time the cost of the conversion project was valued at just under US$20m. If Votorantim was seriously thinking of doing this at a few of their underperforming cement plants then one would expect the bill to be higher than US$50m. However, it’s early days yet.

Europe/Croatia: The European Commission has blocked the proposed takeover of Cemex Croatia by HeidelbergCement and Schwenk under the European Union (EU) Merger Regulation. The commission expressed concerns that the takeover would have significantly reduced competition in grey cement markets and increased prices in Croatia. The decision follows an investigation by the commission into the proposed deal where HeidelbergCement and Schwenk, two German cement companies, would acquire Cemex's assets in Croatia via their joint-venture company Duna Dráva Cement (DDC).

"We had clear evidence that this takeover would have led to price increases in Croatia, which could have adversely affected the construction sector. HeidelbergCement and Schwenk failed to offer appropriate remedies to address these concerns. Therefore, the Commission has decided to prohibit the takeover to protect competitive markets for Croatian customers and businesses," said Commissioner Margrethe Vestager.

The commission found that the takeover would have eliminated competition between companies that were competing directly for the business of Croatian cement customers and could have led to a dominant position in the markets. The combined market shares of the parties would have been around 45 - 50% in the markets and reached more than 70% in parts of the country, notably in Dalmatia. It found that DDC had been pursuing a strategy to increase sales in Croatia, resulting in more competitive prices for Croatian customers in recent years. Allowing the takeover would have reduced this competition. The commission also found that the remaining domestic cement suppliers and importers would not have been able to compete effectively with the new entity due to limited potential for sales expansion and due to being further from potential markets. In addition there are no independent terminals available on the Croatian coast for seaborne imports.

None of the proposed remedies offered by HeidelbergCement and Schwenk satisfied the commission. Options such as a granting access to a cement terminal leased by Cemex Croatia on the Neretva river in Metković in southern Croatia were deemed insufficient and temporary.

Cemex Croatia, the largest cement producer in the country, operates three cement plants, seven concrete plants, two aggregates quarries and a network of maritime and land-based terminals in Croatia, Bosnia-Herzegovina and Montenegro. DDC and HeidelbergCement are the largest cement importers in Croatia.

Cemex Croatia operates three cement plants, seven concrete plants, two aggregates quarries and a network of maritime and land-based terminals in Croatia, Bosnia-Herzegovina and Montenegro. DDC imports grey cement into Croatia from its plants in Hungary and Bosnia-Herzegovina, the closest competing plant to Cemex's plants in Split. HeidelbergCement imports grey cement into Croatia from a plant in Italy.

Croatia: The proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk is set to be blocked by the European Commission according to sources quoted by Reuters. The commission started investing the deal in October 2016 following plans by HeidelbergCement and Schwenk to buy Cemex Croatia via their jointly owned subsidiary Duna Drava Cement (DDC). The deal would see the largest producer in the area merged with the largest importer. However, a final decision on the transaction has not been made yet and the European Competition Commissioner Margrethe Vestager could still rule in favour of it. The commission is expected to make a final decision by 18 April 2017.

Croatia: HeidelbergCement has appealed against an investigation by the European Commission into the proposed joint purchase with Germany’s Schwenk Zement of Cemex Croatia. The cement producer asserts that by considering Schwenk and itself rather than Duna-Dráva Cement (DDC), a subsidiary that both companies own equally, the commission has given the transaction a ‘Union dimension,’ according to the Official Journal of the European Union. Although DDC is based in Hungary, within the European Union (EU), it imports cement into Croatia (in the EU) from Bosnia & Herzegovina, a country outside of the union. The appeal was made in late December 2016 but only reported in late February 2017.

The European Commission revealed that it was investigating the proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk in October 2016. The commission was concerned that the transaction would merge the biggest producer in the area with the biggest importer, potentially reducing local competition.

It looks like Cembureau, the European Cement Association, got its own way on the proposal to amend the European Union's (EU) Emissions Trading Scheme (ETS) that the European Parliament voted on last week. The system has been tightened but not enough to make the cement industry suffer, for now. Naturally, the environmentalists are outraged.

The key reform was that the carbon credits reduction rate (the linear reduction rate) will increase and the market stability reserve (MSR) will double its capacity to absorb excess allowances on the market. However, the big battle was fought over whether to include an importer inclusion scheme (or Border Adjustment Measure) or not. Lots of political 'horse-trading' took place right up to the vote on 15 February 2017 to adopt the draft proposal, with particular battles over the importer inclusion scheme. Negotiations will now continue with the Council of the European Union before the proposal returns to the European Parliament for a final vote.

Cembureau seemed pleased with the outcome. It supported the proposal principally for maintaining competitiveness and for not ‘deliberately discriminate between sectors.' It also liked the inclusion of dynamic allocation, a benchmark based on what it said was real data, a flexible reserve in relation to the allowances available for free and those designated for auctioning and an impetus towards funding carbon capture and storage. It also singled out its pleasure that an amendment for an importer inclusion scheme had not been accepted.

This last point caused a spat between Cembureau and Bruno Vanderborght, a former executive at Holcim, at the end of January 2017 in the lobbying frenzy before the vote. In robust language Vanderborght accused the European cement industry of using the ETS for negative leakage. His argument was that the free allocation of carbon credits given to the cement industry had been used to 'maximise gross margin.' Instead of spending the money on upgrading inefficient units, the industry had used its same inefficient units to increase exports of clinker to outside the EU, to places like Africa. Cembureau countered that it had been taken out of context by Vanderborght and that arguments he levelled, such as data from the Cement Sustainability Initiative (CSI) suggesting that the EU has the highest share of clinker production in old, energy-intensive installations worldwide, were misleading since CSI reporting may not be as thorough outside of Europe.

Predictably, the proposal didn't please the environmental lobby, which denounced the deal as toothless. Environmental campaign group Sandbag has been on the case of the cement industry for several years, pointing out that its own research shows that cement producers have 'abused' the free allocation scheme for profit and that emissions have actually increased under the ETS so far. Its headline figure in the wake of the vote was that the cement sector was set to rake in a surplus of allowances worth Euro2.8bn by 2030.

Following the vote Sandbag took no time to point out that the ETS carbon price had sunk below Euro5/t. In its assessment, a carbon price of least Euro50/t is required to stimulate low carbon investment. However, the carbon price soon rose back up. Little impartial analysis is available on whether the amended proposal will actually deliver its aims, although a Thomson Reuters analyst did describe the outcome as one that 'significantly tightens the market balance.'

In a final twist, the lead rapporteur for the reforms to the EU ETS is a UK member of the European Parliament (MEP). Depending on how the Brexit negotiations go, the guy marshalling the amendments to the EU ETS won't be subject to its eventual implementation.

The EU ETS is slowly starting to improve through reforms such as those voted on last week but it remains very much in doubt whether it will be able to deliver solid meaningful reductions in carbon emissions. Cembureau is rightly protecting the industry it represents but at present the price of coal appears to be a better driver of measures such as increased use of alternative fuels than the ETS. The ETS has had the misfortune in operating for the last few years throughout a market depression in Europe where it has been propping up some cement producers and now it’s helping them get back on their feet as they export their products out of the continent. In a world awash with excess clinker the policy makers are eventually going to have to decide how much they want to damage industry in order to meet their environmental aims. We need cement and we need to cut carbon emissions. Someone is always going to be unhappy in this situation.