Displaying items by tag: FLSmidth

Denmark: FLSmidth has notified investors that Altor Fund Manager has increased its holding of shares in the company to over 5%. The transaction took place on 18 January 2023.

Denmark: Equipment manufacturer FLSmidth has launched new corporate strategies for its cement and mining sectors. The so-called ‘pure play’ plans are intended to further focus on technology, products and services and sustainability. The group says it is also simplifying its operating model to reduce risks, improve efficiencies, ensure stronger execution and improve profitability and quality of earnings. The announcement was made at the same time as the group’s latest investor event.

Mikko Keto, the chief executive officer at FLSmidth, said “We must prioritise our efforts on our core business, reduce risk and execute with excellence. We have already started to fundamentally transform our business to ensure stronger strategy execution and to achieve our long-term ambitions to the benefit of our stakeholders.”

In the cement sector the group’s ‘Green 26’ plan aims to make the company the preferred service supplier for the industry. It added that it has a “clear commitment to drive the green transition in the cement industry.” It has set a target of reaching an 8% earnings before interest, taxation, depreciation and amortisation (EBITDA) margin by 2026. For the mining sector the target is a 13 - 15% margin.

In provisional financial results for 2022, FLSmidth revealed that it had an EBITDA margin of 3.3% for cement and 7.6% for mining. Group revenue rose by 24% year-on-year to Euro2.93bn in 2022 from Euro2.37bn in the 2021. Revenue from the cement and mining sectors grew by 7% to Euro847m and 29% to Euro2.03bn respectively. The group said that the short-term outlook for the cement industry remained impacted by overcapacity and that a potential recession is expected to impact market demand negatively over the coming period. Its mining sector revenue was inflated by the acquisition of ThyssenKrupp Mining in 2022.

Demark: Hasle Refractories has appointed Carsten Riisberg Lund as chair of its board of directors.

Riisberg Lund has worked in the cement industry for 35 years mostly for equipment supplier FLSmidth. His most recent role was as FLSmidth’s Cement Industry President since late 2020. Before this he worked as the President for Region Europe, North Africa and Russia (ENAR). He started his career as a Process and Commissioning Engineer for FLSmidth. Since then he led FLSmidth’s former Material Handling division and spent three years as managing director in India.

Morocco: NovaCim’s new 1.4Mt/yr cement plant at Ouled Ghanem near El Jadida has produced its first cement. Denmark-based FLSmidth supplied equipment for the unit including an OK type vertical roller mill, which it says is the first such installation of the product in the country. FLSmidth said in 2019 that it was going to build the plant for TEKCIM in conjunction with the Société Générale des Travaux du Maroc (SGTM). Full commissioning is scheduled for 2023.

Morocco: NovaCim has ordered the SLV Cement logistics software product from Portugal-based Cachapuz for its forthcoming 1.2Mt/yr integrated cement plant in Ouled Ghanem in El-Jadida Province. The product is intended to improve and optimise dispatch processes. Denmark-based FLSmidth announced in 2019 that it was going to build the plant for TEKCIM in conjunction with the Société Générale des Travaux du Maroc (SGTM). The plant is expected to start production in 2023.

This week’s Virtual Global CemPower Seminar included an assessment on how interventions in European power markets might affect efforts to decarbonise industry. The presentation by Thekla von Bülow of Aurora Energy Research outlined how different countries in the European Union (EU) were implementing the forthcoming electricity price cap on ‘inframarginal’ producers to 180Euro/MWh. Each of these different proposals will entail differing levels of structural change to the wholesale energy market. For example, the Agency for the Cooperation of Energy Regulators (ACER) has recommended establishing a series of frameworks including a stronger focus on Contracts for Difference (CfD) schemes to promote renewable energy sources.

These changes are a consequence of the EU’s response to the Russian invasion of Ukraine. Gas prices surged and then pushed up other energy prices in turn to record levels. As this column covered in September 2022, the price of electricity shot up in the summer of 2022 whilst at the same time Russian gas imports ceased. Cembureau, the European Cement Association, called for urgent action to be taken to support cement production due to large increases in the cost of electricity. For example, in its latest overview of the German cement industry, the German Cement Works Association (VDZ) said that the sector has an electrical consumption of 30TWh/yr. Clearly energy policy is of great interest to the industry.

Since then, in late September 2022, Heidelberg Materials’ chief executive officer Dominik von Achten told Reuters that his company was preparing to shift production at its Germany-based plants to times and days when power prices are lower including at the weekend. However, this was dependent on negotiations with the unions. Von Achten also warned of plant closures being a possibility. Then, in November 2022, it emerged that Zementwerk Lübeck’s grinding plant in northern Germany had reportedly been only operating its grinding plant at night and at the weekend due to high electricity prices. Also in November 2022 European energy news provider Energate Messenger reported that Heidelberg Materials was preparing its cement plants in Germany with emergency backup power to keep critical services running in the case of electricity power cuts. One view from the outside came from equipment supplier FLSmidth’s third quarter results where it noted it had, “...started to see the first cases of budget constraints imposed by customers to counter the increasing energy cost. A high utilisation is still driving service activity in Europe, but some customers have put large capital investments on stand-by and we have experienced a slowdown in decision-making processes.” On the other hand it also pointed out that this trend is driving sales of products that helped reduce energy usage and/or switch to alternative fuels.

On the financial side, Holcim reiterated in its half-year report that, on the country, level the group uses a mixture of fixed price contracts, long-term power purchase agreements, on-site power generation projects and increased consumption of renewable energy at competitive prices to reduce the volatility from its energy bills. Both Cemex and Heidelberg Materials said similar things in their third quarter results conference calls. Cemex said that nearly 70% of its electricity requirements in Europe were fixed in 2022 with nearly 30% fixed for 2023. It went on to reveal that around 20% of its total costs for cement production in Europe derived from its electricity bill. Interestingly, it added that a higher proportion of its electricity costs in Germany were fixed than elsewhere in Europe, due to the use of a waste-to-electricity system owned by a third party that is fed with refuse-derived fuel (RDF), but that it was more exposed to floating fuel rates in Spain. Heidelberg Materials added that it supported energy price caps in both Germany and the EU whether they affected it directly or not.

So far it has been a mild start to winter in Europe. This may be about to change with colder weather forecast for December 2022. This will stress test the EU’s energy saving preparations and in turn it could force the plans of industrial users, such as the cement sector, to change. Some of the cement producers have commented on the financial implications of rising fuel costs but they have been quieter publicly about how they might react if domestic consumers are prioritised. Plant shutdowns throughout cold snaps are the obvious concern but it is unclear how likely this is yet. The variety of energy policies between fellow member states, their own supply situations and the differences between cement plants even in the same country suggest considerable variation in what might happen. If large numbers of cement plants do end shutting throughout any colder periods, then one observation is that it will look similar to winter peak shifting (i.e. closure) of plants in China. The more immediate worry in this scenario though is whether these plants actually reopen again.

The proceedings pack from the Virtual Global CemPower Seminar is available to buy now

Readers may have noticed the 2022 United Nations Climate Change Conference (COP27) is currently taking place at Sharm El Sheikh in Egypt. Many of the cement companies, suppliers and related associations are present at the annual jamboree and getting stuck in. For example, Holcim’s chief sustainability officer Magali Anderson was scheduled on 8 November 2022 to discuss solutions to decarbonise the built environment at the event’s Building Pavilion, Cemex’s chief executive officer Fernando A González took part in the First Movers Coalition (FMC) panel, FLSmidth is down for a number of talks and both the Global Cement and Concrete Association (GCCA) and World Cement Association are busy too.

Stone cold progress, if any, from the conference is yet to emerge although there is still time given that the event runs until 18 November 2022. No doubt some sort of ‘big message’ style international commitment or plan will emerge from the haggling. However, on the cement sector side, the biggest story so far has been the FMC plan for some of its members to procure at least 10% near-zero cement and concrete for its projects by 2030. Both Holcim and Cemex were founding members of the collation of companies that intend to use their purchasing power to support sustainable technologies in hard to abate sectors. Commitments for the aviation, shipping, steel and trucking sectors were set at COP26 in Glasgow, aluminium and CO₂ removal followed in May 2022 and chemicals and concrete were scheduled for November 2022. The latter has started to happen with the formation of the FMC’s cement and concrete group. Companies involved include ETEX, General Motors, Ørsted, RMZ Corporation and Vattenfall. Of these, Sweden-based energy producer Vattenfall has publicly said it is going for the 10% near-zero cement and concrete target by 2030.

Table 1: Net CO₂ emission intensity (kgCO2/t) for cement production at selected large cement producers.

While we wait for more announcements to escape from Sharm El Sheikh it might be worth reflecting upon one of the targets some of the cement companies have set themselves for 2030. Table 1 above compares the net CO₂ emission intensity for cement production at some of the large cement producers. It doesn’t tell us much, other than that the CO₂ emission intensity for these companies was in the region of 550 - 600kgCO₂/t of cementitious material in 2021. This compares to 580kgCO₂/t in 2020 for the GCCA’s Getting the Numbers Right (GNR) data for the companies it covers. The companies featured in Table 1 are all aiming – or appear to be aiming – for 475 - 525kgCO₂/t by 2030. This may not sound like much but it has and will require hard work, innovation, investment and risk on the part of the cement producers. This is also before carbon capture, utilisation and/or storage (CCUS) units will have been built at most cement plants. Yes, until the CO₂ emission intensity goes to down to zero, if cement production volumes keep rising sufficiently then total gross CO₂ emissions from the cement industry will also increase. Yet, gross CO₂ emissions from cement production are likely to peak sometime between now and 2030 if they haven’t already.

One sobering fact to end with is that 1990 is now further in the past than 2050 is in the future. If you can remember George Bush Sr as US president or you saw the film Goodfellas at the cinema then that’s the amount of time we have left to reach net zero. The global economic shocks of the post-coronavirus period and the war in Ukraine are stressing the world’s climate targets more than ever before. Let’s see how COP27 reacts to this. So far though, serious commitments to using low-carbon cement and concrete from big companies are a useful step to entrenching these products in the market.

Denmark: Cement plant equipment manufacturer FLSmidth has reported strong fundamentals in its third quarter results for 2022. Its cement order intake increased by 8% year-on-year compared to the third quarter of 2021. Cement sector revenue increased by 7% organically and by 13% when including positive currency exchange effects. This, alongside solid performance from its mining sector, helped the group’s order intake to increase by 11% overall for the quarter.

Group chief executive officer Mikko Keto said, “The positive momentum that we saw in the second quarter has been sustained in the third quarter where we have seen robust growth in both order intake and revenue. The mining business continued to benefit from a healthy backlog and fundamentally positive market conditions, with a 53% growth in service order intake. In addition, the cement business delivered an earnings before interest, tax and amortisation (EBITA) margin of 3%. The short-term outlook has improved based on stable performance despite an emerging recession.”

Denmark: Nordic Investment Bank (NIB) has granted a 150m loan to FLSmidth to support technological developments for the growth of sustainability in the cement and mining sectors. The supplier said that the loan tracks three core sustainability indicators: FLSmidth's ratio of partners with SBTi-certified science-based targets, FLSmidth’s own Scope 1 and 2 CO₂ emissions and its products' Scope 3 impacts.

Chief financial officer Roland Andersen said “With our MissionZero pledge, we are fully committed to developing technologies and solutions that will enable the mining and cement industries to move towards zero emissions by 2030. As sustainability is an integral part of everything we do, it is only natural for us to also link our financing to our sustainability ambitions. This is a first step in this direction, and we are very pleased with the long-term commitment provided by NIB."

Denmark: FLSmidth says it will lead CO₂Valorize, a new consortium intended to develop and deploy carbonation technologies in the cement industry. The group will receive Euro2m from the Marie Skłodowska-Curie Doctoral Networks and is supported by the European Commission’s Horizon Europe initiative. The expected commercial and technical outcomes of the consortium include a full flow sheet of the carbonation process line, the techno-economic analysis of various technology and materials options, and the optimisation of FLSmidth's proprietary reactors. The project is also intended to be a key part of FLSmidth MissionZero programme.

Burcin Temel McKenna, Head of Green Cement Solutions Development at FLSmidth, said “We have been granted a unique opportunity to revolutionise the cement industry at a time of extreme urgency”. He added, “On-site carbon capture and utilisation projects will be a quicker and more economically viable way forward for in cement plants.”

The consortium includes the following partners: Norwegian University of Science and Technology; Karlsruhe Institute of Technology; HZDR Innovation with Helmholtz-Zentrum Dresden-Rossendorf and Technische Universität Dresden; Technical University of Denmark; University of Padova; Siemens Process Systems Engineering; and the Slovakia-based cement producer Cemmac. The partners will support eight fully funded PhD students conducting research into the characterisation and kinetics of carbonated materials and optimisation of the carbonation process. They will also explore the commercial opportunities for mineral carbonation. The focus will be on the carbonation of calcium-, aluminium-, and magnesium-silicates as well as cement derivatives, slag, fly ash, recycled concrete fines and mine tailings.