Displaying items by tag: Fly Ash

The mountainous eastern shore of the Adriatic Sea and its hinterlands in Europe’s Balkan Peninsula have one of the world’s highest densities of countries: six, across a broad equilateral triangle of 212,000km². All six states – Albania, Bosnia & Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia – are historically characterised by political non-alignment, carrying over from the Cold War period, and all the more notable for the presence of the EU to the north (Croatia, Hungary and Romania) and east (Bulgaria and Greece).

A nine-plant, 9Mt/yr local cement sector serves the 16.8m-strong population of the unconsolidated ‘bloc.’ Albania has 2.8Mt/yr (31%), Serbia 2.7Mt/yr (30%), Bosnia & Herzegovina 1.6Mt/yr (18%), North Macedonia 1.4Mt/yr (15%) and Kosovo 500,000t/yr (6%), while Montenegro has no cement capacity – for now. Altogether, this gives this quarter of South East Europe a capacity per capita of 539kg/yr. The industry consists entirely of companies based outside of the region. Albania’s two plants are Lebanese and Greek-owned (by Seament Holding and Titan Cement Group respectively). Titan Cement Group also controls single-plant Kosovo and North Macedonia, and competes in the Serbian cement industry alongside larger and smaller plants belonging to Switzerland-based Holcim and Ireland-based CRH, respectively. Lastly, Bosnia & Herzegovina’s capacity is shared evenly between Germany-based Heidelberg Materials and Hungary-based Talentis International Construction, with one plant each.

Lafarge Srbija, Holcim's subsidiary in Serbia, announced plans for its second plant in the country, at Ratari in Belgrade, last week. No capacity has yet emerged, but the plant will cost €110m, making something in the region of the country’s existing 0.6 – 1.2Mt/yr plants seem likely. This would give Serbia over a third of total capacity in the Central Balkans and twice the number of plants of any other country there, expanding its per-capita capacity by 22 – 44%, from a regionally low 408kg/yr to 500 – 590kg/yr.

In announcing the upcoming Ratari cement plant, Lafarge Srbija laid emphasis on its sustainability. The plant will use 1Mt/yr of ash from the adjacent Nikola Tesla B thermal power plant as a raw material in its cement production. In this way, it will help to clear the Nikola Tesla B plant’s 1600 hectare ash dumps, from which only 180,000t of ash was harvested in 2023. Circularity has been front and centre of Holcim’s discussions of its growth in Serbia for some time. When Lafarge Srbija acquired aggregates producer Teko Mining Serbia in 2022, the group indicated that the business would play a part in its development of construction and demolition materials (CDM)-based cement and concrete.

Holcim’s Strategy 2025 growth plan entails bolt-on acquisitions in ‘mature markets,’ backed by strategic divestments elsewhere. Other companies have been more explicit about a realignment towards metropolitan markets, above all in North America, at a time when they are also diversifying away from cement and into other materials. Just why a leading producer should look to build cement capacity in Serbia warrants investigation.

Serbia is the only Central Balkan member of Cembureau, the European cement association. In a European market report for 2022, the association attributed to it the continent’s fastest declining cement consumption (jointly with Slovakia), down by 11% year-on-year. Like the rest of Europe, Serbia is also gradually shrinking, its population dwindling by 0.7% year-on-year to 6.62m in 2023, which limits hopes for a longer-term recovery. Serbia remains the largest country in the Central Balkans, with 39% of the total regional population.

Several factors have compounded Serbia’s difficulties as a cement-producing country. Firstly, like the Nikola Tesla B thermal power plant, its kilns run on coal. 50% of this coal originated in Russia and Ukraine in 2021, causing the entire operation to become ‘imperilled’ after the former’s brutal invasion of the latter in February 2022, according to the Serbian Cement Industry Association. In planning terms, this was a case of putting half one’s eggs in two baskets – and dropping them both.

Secondly, Serbia’s choice of export markets is mainly confined to either the EU or global markets via the River Danube, Black Sea and Mediterranean. Either way, it is in competition with a cement exporting giant: Türkiye. Serbia sold €19.7m-worth of cement in the EU in 2023, up by 63% over the three-year period since 2020 – 31% behind Türkiye’s €28.8m (more than double its 2020 figure).¹ One other Central Balkan country had a greater reliance on the EU market: Bosnia & Herzegovina. It exported €48.4m-worth of cement there, quadruple its 2020 figure and behind only China (€133m) and the UK (€54.7) in cement exports to the bloc by value.

Bosnia & Herzegovina’s cement industry underwent a different permutation at the start of 2024: an acquisition, replacing one EU-based player with another. Lukavac Cement, which operates the 800,000t/yr Lukavac cement plant in Tuzla, changed hands from Austria-based building materials producer Asamer Baustoffe to Hungary-based property developer Talentis International Construction. Talentis International Construction belongs to one of Hungary’s major family-owned conglomerates, Mészáros Csoport.

Besides Central Europe, Balkan countries have found a ready source of investments in the past decade in China. In construction alone, Chinese investments total €13.2bn in Serbia, €2.4bn in Bosnia & Herzegovina, €915m in Montenegro and €650m in North Macedonia.² This can be a booster shot to all-important domestic cement markets, but has some risks. Montenegro previously faced bankruptcy after Export-Import Bank of China began to call in an €847m loan for construction of the still upcoming A1 motorway in the country’s Northern Region. This did not put off the Montenegrin government from signing a new memorandum of understanding (MoU) with China-based Shandong Foreign Economic and Technical Cooperation and Shandong Luqiao Group for construction of a new €54m coast road in the Coastal Region in mid-2023.

In Montenegro, UK-based private equity firm Chayton Capital is currently funding a feasibility study for a partly state-owned cement plant and building materials complex at the Pljevlja energy hub in the Northern Region. Along with an upgrade to the existing Pljevlja coal-fired power plant, the project will cost €700m.

In 2026, EU member states will begin to partly tax third-country imports of cement and other products against their specific CO₂ emissions, progressing to the implementation of a 100% Carbon Border Adjustment Mechanism (CBAM) by 2034. Montenegro led the Central Balkans’ preparations for the EU’s CBAM roll-out with the introduction of its own emissions trading system in early 2021. Bosnia & Herzegovina will follow its example by 2026, but other countries in the region have struggled to conceive of the arrangement except as part of future EU accession agreements.

Based on the average specific CO₂ emissions of cement produced in the EU, the World Bank has forecast that exporters to the bloc will be disadvantaged if their own specific emissions exceed 5.52kg CO₂eq/€.³ By contrast, any figure below this ought to offer an increased competitive edge. Albanian cement has average emissions of 4.71kg CO₂eq/€, 15% below ‘biting point’ and 13% below Türkiye’s 5.39CO₂eq/€. Albania’s government consolidated its anticipated gains by quintupling the coal tax for 2024 to €0.15/kg. The figure is based on the International Monetary Fund’s recommended minimum CO₂ emissions tax of €55.80/t, 21% shy of the current EU Emissions Trading Scheme (ETS) credit price of €70.49/t.⁴

The Central Balkans is a region of apparently slow markets and industry growth regardless – to 11 cement plants, following the completion of current and upcoming projects. A recurrent theme of capital expenditure investments and the way investors talk about them may help to explain this: sustainability. Looking at the mix of technologies in the current nine plants, these include wet kilns and fuels lines built for conventional fossil fuels. This is not to presume that any given plant might not be happy with its existing equipment as is. Nonetheless, the overall picture is of a set of veteran plants with scope to benefit from the kind of investments which all four global cement producers active in the region are already carrying out elsewhere in Europe. Such plans may already be in motion. In late 2023, Titan Cement Group’s North Macedonian subsidiary Cementarnica Usje secured shareholder approval to take two new loans of up to €27m combined.

As the latest news from Serbia showed, taking care of existing plants does not preclude also building new ones. The cement industry of the Central Balkans is finding its position in the new reduced-CO₂ global cement trade – one in which old and new work together.

References

1. Trend Economy, ‘European Union – Imports and Exports – Articles of cement,’ 28 January 2024, https://trendeconomy.com/data/h2/EuropeanUnion/6810#

2. American Enterprise Institute, 'China Global Investment Tracker,' 3 February 2024 https://www.aei.org/china-global-investment-tracker/

3. World Bank Group, ‘Relative CBAM Exposure Index,’ 15 June 2023, https://www.worldbank.org/en/data/interactive/2023/06/15/relative-cbam-exposure-index

4. Ember, 'Carbon Price Tracker,' 26 August 2024, https://ember-climate.org/data/data-tools/carbon-price-viewer/

Serbia: Lafarge Serbia is set to build a new cement plant in Ratari near Obrenovac, which will utilise 1Mt/yr of ash from the nearby Nikola Tesla B power plant as a raw material in cement production, reports Balkan Green Energy News. This €110m investment marks Serbia's first cement plant built next to a power plant to harness ash directly from the source and address the country’s problem of ash accumulation in dumps.

CEO of Lafarge Serbia Dimitrije Knjeginjić said "Fly ash cannot be used in the cement or concrete industry, or many other industries, without prior processing. This is exactly what the Ratari plant will be dealing with. We will grind, classify and select 1Mt/yr of ash to produce new construction materials."

Germany: Canada-based company Rock Tech has promoted a peer-reviewed study by the German Lithium Institute that confirms the potential of byproducts from lithium production to be used in cement manufacture. The study found that leached spodumene concentrate (LSC), primarily composed of aluminosilicates, can replace fly ash as an additive in the cement industry. The study also revealed that adding 20% LSC to Portland cement increases its compressive strength by 10%. The process for producing and utilising LSC has been submitted for a patent.

"The phase-out of coal and the transformation of the steel industry will sooner or later lead to changed or disappearing material streams that have been significant for the cement industry in terms of CO₂ savings and product portfolio. The LSC from lithium production has the potential to compensate for these depleting material streams in the future."

Malaysia: Heidelberg Materials has announced its acquisition of ACE Group, a supplier of pulverised fly ash, effective 1 May 2024. Reusing fly ash from energy generation contributes to reducing the CO₂ intensity of composite cement. When used as an additive, fly ash can replace part of the energy-intensive clinker and thus reduce the CO₂ intensity of the cement.

The acquisition includes ACE Greencemt Venture, ASAS Asia and AGP Logistics, with the leadership team from ACE Group continuing to manage the operations post-acquisition. Both parties have agreed not to disclose the financial terms of the transaction.

Cemex announced this week that it is preparing to sells its operations in the Philippines to a consortium comprising Dacon, DMCI Holdings and Semirara Mining & Power. Rumours of the divestment first started to appear in the media in February 2024.

The main part of the deal covers Cemex’s cement subsidiaries, APO Cement and Solid Cement, which have been valued at an enterprise value of US$660m. However, this becomes confusing because the actual selling price is the enterprise value minus the net debt and adjusted for the minority shareholding of one of the parent companies, Cement Holdings Philippines (CHP). The deal also includes the sale of a 40% stake in APO Land & Quarry and Island Quarry and Aggregates. Based on a press release issued by CHP to the Philippine Stock Exchange, the actual cost of the divestment appears to be around US$305m. It is hoped that the divestment will complete by the end of 2024 subject to regulatory approval from the Philippines Competition Commission and other bodies.

Cemex entered the market in 1997 when it acquired a minority stake in Rizal Cement. It then built the business up to a cement production capacity of 5.7Mt/yr from its two main integrated plants, the Solid Cement plant in Antipolo City, Rizal and the APO Cement plant in Naga, Cebu. However, CHP has endured a hard time of late, with falling annual operating earnings before interest, taxation, depreciation and amortisation (EBITDA) since 2019 and falling net sales in 2022 and 2020. The bad news continued into 2023, with net sales falling by 17% year-on-year to US$300m in 2023 from US$356m in 2022. It reported a loss of US$35m in 2023, double that of 2022. The company blamed the fall in sales on lower volumes. It noted that prices were also down and energy costs had grown.

The three companies buying CHP are all controlled by the Consunji family so effectively DMCI Holdings is acquiring Cemex’s operations in the Philippines. The group focuses on construction, real state, energy, mining and water distribution. It previously announced in the late 2010s plans to build one integrated cement plant on Semirara and three cement grinding plants at Batangas, Iloilo and Zamboanga but these plans didn’t seem to go anywhere. Later it was linked to the proposed Holcim Philippines sale in 2019, although the subsidiary of Holcim eventually gave up on the idea.

This latest attempt to enter the cement business underlines DMCI Holdings’ intent and the group has immediately started saying what it plans to do next. In a statement chair and president Isidro A Consunji admitted that cement demand in the country was ‘soft’ but that it is expected to rebound due to the Build Better More national infrastructure program and an anticipated fall in internet rates. Consunji added, “We recognise CHP's operational and financial issues, but we are positive that we can turn it around by 2025 because of its ongoing capacity expansion and the clear synergies it brings to our group.” He was also keen to play up that CHP is currently building a new 1.5Mt/yr production line at its Solid Cement plant with commissioning scheduled by September 2024. DMCI plans to reduce CHP’s costs through various synergies including supplying it coal, electricity and fly ash from Semirara Mining & Power.

The acquisition of CHP by DMCI Holdings is the biggest shake-up in the local cement sector in a while. DMCI has long harboured ambitions in heavy building materials and now it’s close to becoming a reality. As evidenced by its statements following the official announcement of the deal it is already thinking ahead publicly to soothe shareholder concerns. What will be interesting to watch here is whether it can actually pull it off and whether it will face trouble from imports. Readers may recall that the Philippines cement sector has long battled overseas imports, particularly from Vietnam. Despite anti-dumping tariffs though the Cement Manufacturers Association of the Philippines (CEMAP) warned in January 2024 that workers could be laid off due to continued competition from imports. Good luck to DMCI.

Indonesia: Siam Cement Group (SCG) subsidiary PT Semen Jawa used 24,000t of alternative raw materials in its cement production during the first quarter of 2024. These circular materials included bottom ash, fly ash and slag. This corresponds to 3% of its total raw material usage. Meanwhile, the producer co-processed 15,000t of alternative fuel (AF) during the quarter, representing a 20% AF substitution rate.

SCG Indonesia director Warit Jintanawan said that the developments "Not only enhance production efficiency, but also significantly reduces our carbon footprint. This is a testament to SCG's commitment to supporting Indonesia's climate goals, aiming to reduce greenhouse gas emissions by 32%, aligned with Enhanced National Determined Contributions."

Zimbabwe: PPC Zimbabwe says that a planned fly ash beneficiation project at a power plant in Zimbabwe will now take place in early 2025 instead of in 2024. This is due to delays in accessing the power plant to complete the design and commercial contract, according to the cement producer. The Chronicle newspaper has reported that, as a result, PPC Zimbabwe’s capital expenditure investments so far in 2024 are behind its previous full-year guidance of US$31.8m.

Kyrgyzstan: The Terek-Tash cement plant in the Kemin district is expected to commence operations in August 2024. Akylbek Japarov, the chair of the country’s Cabinet of Ministers, made the announcement as part of a tour of the Chuy region, according to the Trend News Agency. The plant will have a production capacity of over 1Mt/yr and has had an investment of US$160m. The Russian-Kyrgyz Development Fund has contributed US$45m to the project. Once completed the plant is expected to be one of the country’s largest industrial units. It will also use ash from the Bishkek thermal power plant.

Canada: Holcim North America has introduced ECOAsh, a Type F fly ash reclaimed from landfills, within its Lafarge Western Canada operations. This innovation is part of Holcim's commitment to sustainable building materials and represents a significant stride in decarbonising the construction industry. As the shift away from coal-fired power plants continues, addressing challenges related to sourcing reliable fly ash supplies prompts the exploration of harvesting and beneficiating legacy landfilled ash as a viable replacement.

Toufic Tabbara, Regional Head of Holcim North America, said "As we continue to build to support growing population demands, the integration of circular building materials such as ECOAsh plays a crucial role in driving our portfolio towards a more sustainable future.”

Brad Kohl, President and CEO of Lafarge Western Canada, added "The transformation of landfill materials into high-value fly ash for sustainable building presents an exciting opportunity for our customers and us to build more with less and work towards a net-zero future.”

Holcim and Geocycle's new processing facility in Alberta will produce high-quality, specification-grade fly ash. The ECOAsh processing facility, commissioned in February 2024, will commence the production and distribution of products throughout Western Canada in the first quarter of 2024.

India: Adani Group has announced plans to build a new cement plant, possibly at Godda, in Jharkhand’s Santhal Pargana Division. The Times of India newspaper has reported that producer recently established a 1.6GW power plant in Godda.

The group said “In keeping with our group’s expansion plans, we are conducting a feasibility study to set up a cement factory, most probably in Godda. A proposal will be sent to government soon. The proposed plant will further boost the economy of Godda and Santhal Pargana. The proposed plant will utilise fly ash from our existing power plant here as raw material. At present, the fly ash is being sent to the ACC cement plants in Jhikpani and Sindri.”