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Changes are underway in South Asia’s second largest cement sector, with two legal developments that affect the industry set in motion in the past week. At a national level, the Competition Commission of Pakistan recommended that the government require cement producers to include production and expiry dates on the labels of bagged cement. Meanwhile, in Pakistan’s largest province, Punjab, a new law tightened procedures around the establishment and expansion of cement plants. At the same time, the country’s cement producers began to publish their financial results for the first nine months of the 2024 financial year (FY2024).

During the nine-month period up to 31 March 2024, the Pakistani cement industry sold 34.5Mt of cement, up by 3% year-on-year. Producers have responded to the growth with capacity expansions, including the launch of the new 1.3Mt/yr Line 3 of Attock Cement’s Hub cement plant in Balochistan on 17 April 2023. China-based contractor Hefei Cement Research & Design executed the project, including installation of a Loesche LM 56.3+3 CS vertical roller mill, giving the Hub plant a new, expanded capacity of 3Mt/yr.

Pressure has eased on the operating costs of Pakistani cement production, as inflation slowed and the country received a new government in March 2024, following political unrest in 2022 and 2023. Coal prices also settled back to 2019 levels, after prolonged agitation. Pakistan Today News reported the value of future coal supply contracts as US$93/t for June 2024, down by 2% over six months from US$95/t for January 2024.

Nonetheless, cost optimisation remained a ‘strong focus’ in the growth strategy of Fauji Cement, which switched to using local and Afghan coal at its plants during the past nine months. Its reliance on captive power rose to 60% of consumption, thanks to its commissioning of new waste heat recovery and solar power capacity. During the first nine months of FY2024, the company’s year-on-year sales growth of 14% narrowly offset cost growth of 13%, leaving it with net profit growth of 1%.

Looking more closely, the latest sales data from the All Pakistan Cement Manufacturers Association (APCMA) shows a stark divergence within cement producers’ markets. While exports recorded 68% year-on-year growth to 5.1Mt, domestic sales fell, by 4% to 29.4Mt. The association further breaks down Pakistani cement sales data into South Pakistan (Balochistan and Sindh) and North Pakistan (all other regions). Domestic sales dropped most sharply in South Pakistan, by 6% to 5.16Mt. In the North, they dropped by 3% to 24.2Mt. Part of the reason was a high base of comparison, following flooding-related reconstruction work nationally during the 2023 financial year. Meanwhile, the government finished rolling out track-and-trace on all cement despatches during the opening months of the current financial year, and commenced the implementation of axle load requirements for cement trucks. APCMA flagged both policies as potentially disruptive to its members’ domestic deliveries, amid a strong infrastructure project pipeline.

Pakistani producers suffer from overcapacity, but have established themselves as an important force in the global export market. They continue to locate new markets, including the UK in January 2024. Lucky Cement was among leading exporters overall, with a large share of its orders originating from Africa.

On 17 April 2024, the government of Punjab province set up a committee to assess new proposed cement projects, with the ultimate goal of conserving water. Falling water tables are considered a significant economic threat in agricultural Punjab. Besides completing an inspection by the new committee, proposed projects must also secure clearance from six different provincial government departments and the local government. While acknowledging the necessity of the cement industry, the government insisted that it will take legal action against any cement plant that exceeds water allowances.

Pakistan’s cement plants have grown in anticipation of a local market boom. Without this strong core of sales, underutilisation will remain troublesome, especially in North Pakistan where exposure is highest. At the same time, APCMA has given expression to the perceived lack of support affecting production and distribution. For an industry with expansionist aims, new restrictions on its growth and operations can feel like an existential menace.

India: Anandakrishnan Balasubramaniyan has resigned as managing director of Hemadri Cements due to ‘personal reasons and health conditions.’ Balasubramaniyan additionally resigned his seat on the company’s board of directors.

Hemadri Cements appointed Anandakrishnan Balasubramaniyan as additional director and managing director in August 2022.

Pakistan: Fauji Cement raised its sales by 14% year-on-year to US$213m in the first nine months of the 2024 financial year. Throughout the period, which ended on 31 March 2024, Fauji Cement recorded a cost of sales of US$148m, up by 13% from nine-month 2023 financial year levels. Its profit was US$25.3m, up by 1% from US$25m in the corresponding period of the previous financial year.

Australia: Cement Australia has received a US$34.4m federal grant for a kiln upgrade to its Railton cement plant in Tasmania. The upgrade will allow the plant to raise its alternative fuels substitution rate. The project is funded by the government’s Powering the Regions initiative, with total investments valued at US$215m.

Australian Minister for Climate Change and Energy Chris Bowen said “This US$215m investment in Australia’s hard-to-abate manufacturing and mining facilities is about securing the future of high-quality, low-emissions products made right here. Northern Tasmania, Central Queensland and Western Australia have been industrial powerhouses for generations, and the government is ensuring that continues. As global markets change rapidly, we’re supporting Australian industry to not only survive but thrive with our world-class products that support regional jobs across the country.”

Australia: The Australian federal government has granted Adbri US$32.5m for a new front-end engineering and design study at its Birkenhead cement plant. The study will assess the possible installation of a new vertical roller mill and post-production blending system at the plant. InDaily News has reported that the proposed upgrade will increase the plant’s production capacity and help to expand its range of reduced-CO₂ cements. The funding falls under the government’s US$260m Critical Inputs to Clean Energy programme, which aims to help decarbonise the Australian economy by 2050.

CEO Mark Irwin said “With the Commonwealth’s support we have the potential to further accelerate the decarbonisation of our operations and products.”

UK: Breedon Group's sales dropped by 5% year-on-year in the first quarter of 2024, according to a trading update from the company. It attributed this to macroeconomic uncertainty and unfavourable weather conditions in the UK. Sales volumes of its materials ‘softened,’ but prices remained ‘resilient,’ partly offsetting the decline. The quarter brought three new acquisitions, including the company’s first in the US. Two scheduled cement kiln shutdowns took place within budget and on schedule.

CEO Rob Wood said "We have laid good foundations for the remainder of the year: progressing pricing, pursuing efficiencies, completing two bolt-on acquisitions and launching our third platform by entering the US market. Although the economic landscape remains uncertain, I am confident our discipline and focus, coupled with our strong customer relationships, will see us deliver against our unchanged expectations for 2024."

Saudi Arabia: India-based software company Mastek has secured a contract for the comprehensive digitisation of production lines at Yanbu Cement’s plant in Yanbu. Capital Market News has reported that the planned optimisation will help to raise the efficiency of the plant. Yanbu Cement previously embarked on a programme of ‘digital and cloud transformation’ with Mastek in 2022. The partners say that their collaboration aligns with Saudi Arabia's Vision 2030 and Smart Industry 4.0 decarbonisation initiatives.

Germany: Holcim Deutschland has broken ground on the construction of a new kiln line and CO₂ processing unit at its Lägerdorf cement plant in Schleswig-Holstein. The line will feature an OxyFuel kiln, supplied by ThyssenKrupp. ThyssenKrupp’s OxyFuel technology will assist in the capture of 1.2Mt/yr (nearly 100%) of CO₂ from the plant. The partners described the upcoming upgraded Lägerdorf plant as one of the world's first carbon-neutral cement plants.

Holcim Deutschland CEO Thorsten Hahn said "We're laying the groundwork for a sustainable world through cement. Cement is essential for our cities, factories, homes, bridges and beyond. As we transition towards renewable energy, we must also construct the foundations and structures for wind turbines and railway tracks. With our climate-neutral cement plant, we ensure that this vital building material remains accessible without further harm to the atmosphere."

ThyssenKrupp Decarbon Technologies’ chief strategy officer Cetin Nazikkol said “It’s vital to switch to climate-friendly processes. By enriching CO₂ by means of the pure OxyFuel technology we’ve developed, we help our customers capture almost all of the CO₂ arising in the production process and so reuse it in a sustainable manner. Given that global cement production is more than 4Bnt/yr, we see enormous growth potential for our innovative technology.”

UK: Heidelberg Materials UK has opened a new circular materials hub at its Appleford depot in Oxfordshire. The site will recycle construction waste for use in low-CO₂ building materials. The move advances the company’s strategy to conserve natural materials and support the circular economy.

Recycling managing director James Whitelaw said “Recycling, reusing and reducing the use of primary raw materials is crucial to reaching net zero. Our network of recycling hubs will allow us to provide the most sustainable products to our customers through circularity and innovation to enable building more with less.”

Switzerland: The Global Cement and Concrete Association (GCCA) is holding its Innovandi Global Cement and Concrete Research Network (GCCRN) Spring Week at the École polytechnique fédérale de Lausanne (EPFL) campus on 22 – 26 April 2024. 450 delegates from over 40 academic institutions will attend the event, featuring workshops, idea exchanges and progress reviews focused on the decarbonisation of cement and concrete by 2050. Topics include the use of AI, alternative materials and processes, concrete recycling, renewables, kiln electrification and carbon capture.

GCCRN industrial chair and Cemex global research development vice president and Davide Zampini said “If we are to reach our goal of net zero concrete by 2050, then we cannot do so alone. We need to explore as well as harness solutions and collaboration well beyond our industry. That’s why Spring Week is so important.”

GCCRN scientific chair Karen Scrivener said “Everyone here at EPFL is proud to be hosting this year’s Spring Week, anticipated as our largest gathering yet, marking a significant milestone in our journey toward net zero research.”