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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

Hungary: Duna-Dráva Cement (DCC) has appointed Zsolt Szilágyi as its president and chief executive officer with effect from January 2023. He succeeds János Szarkándi, who is set to retire.

Szilágyi currently works at the subsidiary of Heidelberg Materials as the Deputy General Manager of Construction Materials and Trade. He started his career at DDC in 1999 as a technical coordinator. Later, he worked as an investment project manager, then as a production manager and plant director of the Váci Cement Plant.

Spain: LafargeHolcim España has appointed Ricardo de Pablos as Commercial Director Cement. He has worked for the group in a variety of roles since 2005 notably as a regional director of aggregates and the export director for Spain. De Pablos holds a master’s degree in industrial engineering from the Universidad Politécnica de Madrid and a master’s in business administration (MBA) from the IE Business School.

UK: Oscrete UK has appointment three new sales managers and two new trainee concrete technicians as part of on-going growth at the company. David Todd has joined as Area Technical Sales Manager (North), David Taylor as Area Sales Manager (Midlands) and Karl Mobley Area Technical Sales Manager (South East). Keiron and Michael Todd have joining the new product development (NPD) and technical team. Todd worked previously as an account manager for Cemex.

Oscrete is a specialist construction chemical suppliers, manufacturing a range of concrete admixtures for the pre-cast and ready-mix market and developing and supplying additives for the manufacture of dry bagged mortars and adhesives.

US: Mitsubishi Heavy Industries Engineering has launched a new carbon capture alliance with energy company ExxonMobil. Under the partnership, ExxonMobil will deploy Mitsubishi Heavy Industries Engineering's liquid amine carbon capture model for its customers across multiple industries. Kansai Electric Power (KEPCO) will also support the deployment in more CO2-intensive industries, including cement.

Mitsubishi Heavy Industries Engineering president and CEO Kenji Terasawa said “Carbon capture and storage technology and innovation are critical to our path to net zero. As an expert in advanced engineering, Mitsubishi Heavy Industries is committed to leading the way in achieving decarbonisation goals through strategic collaboration and investments in new technologies. We look forward to partnering with ExxonMobil to continue advancing carbon capture technologies, to provide essential carbon neutrality solutions for various industries.”

Scandinavia: Norway-based Aqualung Carbon Capture has secured a contract to supply a membrane-based carbon capture and storage (CCS) system for a Nordkalk lime plant in Scandinavia. The supplier said that each Aqualung Carbon Capture unit has the capture capacity to remove 25% of an average Nordkalk lime kiln's CO₂ emissions. The project will commence in early 2023.

Nordkalk plans to roll out Aqualung Carbon Capture CCS systems across all of its kilns before 2030. Accordingly, parent company SigmaRoc has newly committed to tightened group CO₂ reduction targets under the guidance of the Science-Based Target Initiative (SBTi).

SigmaRoc CEO Max Vermorken said “Our partnership with Aqualung is an exciting next step for the group and the fruit of many months of diligent work by Aqualung and our technical teams in the UK and at Nordkalk. It demonstrates that capturing all process emissions is possible, with existing technology and at industrial scale. Once we roll this out across the group, I believe we will be industry-leading when it comes to our carbon capture strategy, demonstrating again the agility of our business and our business model.”

Aqualung Carbon Capture president and chief technical officer Henrik Utvik said “Aqualung Carbon Capture is extremely pleased to partner with a pioneering company like SigmaRoc to apply our decarbonisation concept in lime production. Due to the size and energy advantages, we believe our technology is ideally suited for this application, and the collaboration with SigmaRoc will fast-track the deployment of full-scale carbon capture installations.”

US: Titan America has successfully converted its cement operations to 100% Portland limestone cement (PLC) production. As part of its transition, the producer established two new 70,000t storage domes to serve its key markets.

President and CEO Bill Zarkalis said "I would like to thank all members of the Titan America team who are able and energised to provide the highest performing products to our customers, and do so with our 2030 goals for a sustainable future at top of mind. Our conversion to 100% Type IL PLC production and our expanded investments to deliver lower carbon products and solutions to customers showcase the progress we have made and our commitment to accelerate our contribution to addressing climate change."

Indonesia: Germany-based Beumer Group says that it has secured a contract with Semen Tonasa to supply its 40 - 50kg bag palletising system for the producer's Celukan Bawang cement plant in Bali. The system's multi-programme interface offers custom adjustment between all common packing patterns. Commissioning is scheduled for mid-late 2023.

Beumer Group said "Global influences such as delivery bottlenecks, shortages of raw materials and logistics problems continue to massively disrupt the supply chains. Nevertheless, the system provider will be able to send the machine to the customer in seven months. The target is to install and commission the machine in the third quarter of 2022."

Peru: Cemento Gloria subsidiary Cemento Yura's Yura cement plant has allegedly been the source of intermittent dust emissions, water contamination and destructive vibrations during its 50 years of operation. In May 2022, local authorities declared four houses uninhabitable due to cracks in walls and roof collapses. Local people have attributed the damage to the vibrations from the Yura cement plant's activities. In November 2022, local water supply is unavailable for over 40 minutes every day, allegedly also due to the plant's operations.

The La República newspaper has reported that Yura residents have launched a protest against the alleged environmental mismanagement outside of the company's plant.

Ireland: Ecocem has announced the launch of ACT, an alternative materials-based cement ingredient capable of reducing the CO₂ emissions of cement production by 70%. The developer says that any existing cement plant can produce ACT at comparatively low cost. The technology is globally scalable, and Ecocem expects to achieve full commercial availability across its Benelux, France, Ireland and UK markets by 2025.

Ecocem managing director Donal O’Riain said “We are eager to work closely with the cement industry and with policymakers to support the scaling and development of a new generation of low-carbon cements. Current policy priorities on decarbonising cement have now been overtaken by technology. Fully effective deployment of ACT requires policymakers to provide effective support well beyond their traditional emphasis on CCUS as the core cement decarbonisation technology.”

Ecocem's investors include France-based building products company Saint-Gobain and US-based Breakthrough Energy Investments.