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The Indian corporate rumour mill ramped up this week with speculation that UltraTech Cement and Adani Group might possibly be interested in buying Heidelberg Materials' assets in India. This follows the story broken by the Economist newspaper last week that JSW Cement had made an unsolicited offer to buy them. However, when HeidelbergCement India was asked by the Bombay Stock Exchange what exactly was going on, it replied that it was unaware of any such development and that it did not comment on market speculation.

A week later though and now another related story has popped up. In this case it is unclear exactly what the Hindu newspaper actually knew. The country’s two largest cement producers are locked in a battle for capacity expansion and any opportunity is likely to be of interest to them both. Yet the newspaper did quote a source who said that any divestment by HeidelbergCement India (HCI) would involve a “full-fledged bidding process,” implying that something may be going on.

Germany-based Heidelberg Materials operates four main subsidiaries in India: Gulbarga Cement; HC Trading (India); HCI; and Zuari Cement. HCI and Zuari Cement are the main two in terms of cement production. Heidelberg Materials entered the market in 2006 via a number of purchases and a joint-venture. It then acquired Zuari Cement via its takeover of Italcementi in 2016. Between them the two subsidiaries operate four integrated plants, three grinding plants and one terminal in Central and Southern India. Altogether the company says it has a total cement production capacity of 14Mt/yr. Gulbarga Cement, meanwhile, is a long running project via Zuari Cement to build a new integrated plant at Gulbarga in Karnataka. As of mid-2021 at least the company was still finalising planning and permitting requirements.

HCI’s income fell by 3% year-on-year to US$275m in the financial year to the end of March 2023 from US$282m in the same period that ended in 2022. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 39% to US$35.4m from US$58.2m, its lowest figure since at least its 2017 financial year. The company blamed this on higher fuel prices, although it has been trying to offset this by optimising its fuel and power mix. Unfortunately, it was not able to pass these costs on to its customers through price rises due to competition and new cement plants being commissioned in its market areas. Its revenue and profits improved somewhat in the quarter to July 2023. Recent financial data on Zuari Cement appears to be unavailable, possibly in part due to the company changing the dates of its financial year in 2020. However, it reported revenue of US$249m in its 2021 financial year, a broadly comparable figure to HCI’s. When asked during the company’s earnings call in July 2023, HCI’s managing director Joydeep Mukherjee did confirm that the company was looking at a potential merger with Zuari Cement. However, the company was waiting for the right time before it would consider actually doing it.

The Indian cement market has been consolidating in recent years. Companies have been increasing their production capacity, competition has been intensifying and the spike in fuel prices in 2022 battered profits. Adani Group’s acquisition of Holcim’s businesses in 2022 has probably been the most visible example of this trend towards mergers and acquisitions. It follows UltraTech Cement’s acquisition of Jaiprakash Associates in 2017. Heidelberg Materials has been steadily selling off bits and pieces of its cement business since the mid 2010s but at a slower pace than Holcim. Selected sales have occurred in Italy, Spain, Georgia, Ukraine and various countries in Africa, but the biggest was the sale of its US West region to Martin Marietta Materials for US$2.3bn in 2021. It reinforced this process with its ‘Beyond 2020’ strategy with the stated aim to simplify its country portfolio and prioritise its strongest market positions. A large-scale divestment of its operations in India would certainly fit with this plan. Whether the current reporting is accurate or not, Heidelberg Materials’ intentions for its Indian operations are certainly worth keeping an eye on.

China: Anhui Conch has nominated He Chengfa as the chair of its Supervisory Committee in anticipation of the retirement of Wu Xiaoming. His nomination will be submitted to the company’s shareholders at a future extraordinary general meeting. The Supervisory Committee is the monitoring body of the company, accountable to the shareholders at its general meetings.

He Chengfa, aged 57 years, is a senior engineer. He graduated from Wuhan Industrial University specialising in mechanical design and manufacturing and joined Anhui Conch in 1990. Notable positions he has held include that of deputy engineer-in-chief of the Ningguo cement plant, head of the equipment department and deputy general manager of the company. He is currently a deputy general manager, executive deputy officer of the technology centre of Anhui Conch Holdings Company, a director and executive deputy general manager of Santan (Anhui) Institute of Science and Technology and chair of the board of directors of Anhui Conch Construction Materials Design Institute.

Germany: Schade Lagertechnik appointed Jan Weckes as its managing director from the start of September 2023. Weckes previously worked as the managing director for IAS. Prior to this he had managerial sales and marketing roles with MBE Coal & Minerals Technology and worked for Outotec for a decade. He holds a PhD in metallurgy and materials engineering from RWTH Aachen University.

India: The Odisha State Pollution Control Board has granted Shiva Cement consent to operate its Sundergarh cement plant up to production volumes of 1.5Mt/yr, Reuters has reported. The producer commissioned the plant’s 1.36Mt/yr-capacity clinker line in June 2023. At that time, the plant had consent to operate with clinker production volumes of up to 660,000t/yr.

India: The Satna District Office of Collector (Mining) has fined Birla Corporation US$1m for its excess extraction of limestone between 2001 and 2007.

Birla Corporation said “The company did not take environment clearance due to the ambiguity in the provisions of Environmental Impact Assessment Notification 1994, which was only clarified subsequently by the principles laid down in the common cause judgement of the Supreme Court dated 2 August 2017. However, the company had valid consent to operate the mines from State Pollution Control Board. The company remains committed to ensure compliance with all applicable laws. The company is reviewing the order and evaluating the next steps in this matter.”

El Salvador: Holcim El Salvador says that its first electric cement truck will enter operation at its El Ronco cement plant later in 2023. Local press has reported that this will reduce the plant’s carbon footprint by 560t/yr. The El Ronco plant is the subject of an investment in renewable energy infrastructure to cover 21% of its electricity consumption. The company is also investing in circular economic practices with a view to achieving net zero CO₂ emissions.

Holcim El Salvador chief executive officer Rodrigo Gallardo said "We are building more with less, incorporating recycled materials into our production processes, giving them a second life in order to use only what is necessary and thus contribute to preserving our planet." He added “We are building progress for people and the planet, with the vision of making sustainable construction affordable for everyone. The future of construction in El Salvador is being transformed, and we are proud to be leading the way, as we have done for the past 74 years."

Pakistan: The Ministry of Energy (Petroleum Division) is preparing a proposal for a ‘significant’ rise in gas tariffs in Pakistan. The Energy Update newspaper has reported that the rise will affect gas prices in the cement sector, besides other industries. The government aims to reduce the natural gas sector’s debts from US$10.5bn as part of a deal with the International Monetary Fund.

France: Lafarge France has hired Leclanché to upgrade its pusher tugboat Marsouin to a diesel and electric hybrid propulsion system. The supplier will install a 766kWh 65 Ah Navius MRS-3 battery system in the vessel, which operates mostly on the River Seine.

Lafarge France river operations manager Kevin Audegond said "The retrofit of our Marsouin pusher is the first stage in an ambitious programme to modernise our entire fleet by 2030, which will make it possible to transport our materials more ecologically and reduce our environmental impact in the long term.”

US: Ash Grove Cement plans to build a new cement mill at its cement plant in Durkee, Oregon. The project is scheduled to be completed by the end of 2024. The upgrade is intended to allow the plant to manufacture low-carbon cement products.

Serge Schmidt, the president of Ash Grove Cement, said "The transition to low carbon cement production and reducing our environmental footprint is a top priority for Ash Grove Cement. We are always seeking new ways to improve our sustainability performance while providing high-quality cement solutions to our customers. This state-of-the-art finish mill at our Durkee plant will strengthen Ash Grove's position as a leader in low-carbon cement across the Western US."

Australia: Boral has been halting production at its various production plants when the cost of electricity becomes too high. “At a certain point during the day, when the price goes up to a certain level, our manufacturing stops,” Chief executive officer Vik Bansal told the Australian Financial Review energy and climate summit. He added that the company had assessed that it was cheaper to have “thousands of people waiting idle for the prices to come down than actually do the work.” Additional reporting by the Sydney Morning Herald newspaper revealed that Boral’s staff had been working overtime and in night shifts to manage energy costs and to maintain the supply of building material products to its customers. Bansal told the summit that the company’s electricity costs rose by 54% in the 12 months to the end of June 2023.

However, Bansal was not clear whether all or just some of Boral’s plants have been stopping production temporarily due to peak daily electricity prices. The company produces cement, lime, concrete, asphalt and aggregates at 360 locations.

Boral has signed a fixed-price, 10-year power purchase agreement that will cover 19% of its renewable electricity needs to 2035, but is reportedly struggling to find other cost-effective options. In August 2023 it also reduced its emissions reduction target to 2025 from 2019 figures to up to 14% from 19% previously. It blamed this on “external factors” such as delays in securing the required regulatory approvals for the next phases of an alternative fuel program.