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Many readers will be aware that Gautam Adani was accused of fraud by a US court this week. In a brief statement, Adani Group said that the allegations were “baseless and denied.” The indictment relates to a solar power project, but what does this mean for Adani Group’s cement businesses?

The charges by the US Department of Justice allege, following an investigation, that Gautam Adani, Sagar Adani and Vneet Jaain, executives of India-based renewable-energy company Indian Energy Company, committed “...securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from US investors and global financial institutions on the basis of false and misleading statements.” A number of other individuals have also been accused, along with the two Adanis and Jaain, of participating in a US$250m bribery scheme to Indian government officials connected to a large-scale solar energy project. The indictment related to the period 2020 - 2024 and further alleges on several occasions that “Gautam Adani personally met with an Indian government official to advance the bribery scheme.” The Securities and Exchange Commission (SEC) has also started a connected civil case.

The problem here is that the indictment has rocked the value of Adani Group’s subsidiaries and reduced the credit ratings of some of them. This in turn will make it harder for these companies to raise money in the future for expansion. Various reports in the media said that the group’s companies had lost something in the region of US$30bn as stock prices fell by around 20%. They have since rallied somewhat. And lest we forget, Adani Group has some serious expansion plans. In the cement sector, it is targeting a production capacity of 140Mt/ yr by 2028. Recent transactions include Ambuja Cement’s purchase of Penna Cement for US$1.25bn in August 2024 and a planned acquisition announced in October 2024 of a 47% stake in Orient Cement for US$451m. The group was also linked in the local media to a bid to buy Heidelberg Materials’ India-based business in October 2024.

All of this comes with a price. International credit ratings agency S&P put Adani Ports, Adani Green Energy and Adani Electricity on a downgrade warning. Then, Fitch Ratings and Moody’s followed. Moody’s, for example, downgraded its outlook for seven Adani Group companies to ‘negative’ from ‘stable’ but it affirmed ratings on them. It commented that the allegations “could have a broader credit impact on all rated Adani group issuers” and that they would “likely weaken the Adani group’s access to funding and increase its capital costs.” It added that its actions recognised “...the possibility of broader weaknesses in the governance structure across the rated Adani group entities as well as potential operational disruptions, including on their capital-spending plans, while legal proceedings are going.” The decision by the ratings agencies does not appear to have directly affected Adani Group’s cement companies, Ambuja Cements or ACC, so far. The group may get lucky here given that these companies focus on the domestic market. Thus their credit ratings may remain more buoyant, regardless of what happens next.

As with a number of other global issues at the moment, the outcome of the recent US presidential election may also play into this case. Attorney Ravi Batra told the Press Trust of India that the incoming Trump administration might view the Adani charges as so-called ‘lawfare.’ This is where legal processes are used to target a nation’s economic or other opponents. In addition the current chair of the SEC, Gary Gensler, announced his intention to step down from the role in January 2025. It seems unlikely that the Trump administration might intervene in a legal case involving a foreign company accused defrauding US citizens but the possibility of realpolitik playing a role shouldn’t be totally discounted.

This is the second major international scandal overhanging Adani Group since the disclosures by Hindenburg Research back in early 2023. Those allegations were relatively easy to shrug off given that its accuser was an investment research firm with a reputation for using its findings for short selling shares. Hindenburg Research was not a neutral bystander. This time round, the US judicial system has become involved and the consequences are bigger both reputationally and from any potential legal outcome. In the short term, the credit implications for Adani Group as a whole are becoming apparent. Various companies and countries have stalled or cancelled planned investments. However, the cement business is smaller than the group’s power and transport concerns. It also operates domestically. We’ll have to wait and see what the wider implications for Adani Group are. The first thing to watch for the cement business will be any effect on its expansion plans.

Pakistan: Thatta Cement has appointed Muhammad Owais as its chief financial officer. He succeeds Muhammad Abid Khan in the role. Khan will continue to work at the cement producer as company secretary. Owais has worked for Thatta Cement in a variety of managerial finance roles since 2020, apart from a brief period with ready-mixed concrete company Allied Materials in mid-2023. Prior to this he worked for Deloitte Pakistan.

Germany: Aumund and Holcim have demonstrated an electric linear calcination conveyor (eLCC) at Aumund’s headquarters in Rheinberg, Germany. Initial tests of the eLCC have reportedly demonstrated efficient thermal activation of clay through a combination of radiant heat and material circulation. In 2020, Aumund Fördertechnik teamed up with Holcim for a project focused on the electrical calcination of clay using an Aumund pan conveyor.

The company stated that the eLCC system is fully enclosed and insulated, minimising energy requirements and heat loss, with its compact design allowing for expansion of production capacities. It can operate with electrical heating elements powered by 100% renewable energy sources like wind or solar. The first industrial plant utilising this technology will be constructed in 2025.

Malaysia: Malayan Cement’s net profit rose by 45% year-on-year to US$31.4m for the first quarter of the 2025 financial year ending 30 September 2024, up from US$21.6m in the same period in 2023. Revenue increased by 3% year-on-year to US$264m from around US$257m. The company stated that its ready-mixed concrete segment had contributed a higher share of revenue due to heightened demand for concrete products. It anticipates continued domestic demand and plans to increase export capacities, especially at its Langkawi plant.

Malaysia: Borneo Cement (Sabah) (BCS) plans to convert its upcoming integrated cement plant in Sabah's Tongod district into a tourist destination once the plant begins operations in May 2025. According to BCS chair Masiung Banah, limestone processing and environmental protection practices could serve as a an ‘attractive package’ for foreign and domestic tourists, according to The Star Malaysia. He said that limestone areas rich in flora and fauna and tropical ecosystems would be maintained without being polluted by factory waste. The plant will also reportedly be made into a research hub for Malaysian universities. It is currently in its first phase of development.

Cyprus: Labour Minister Yiannis Panayiotou has appealed to both sides for a resolution to the ongoing cement workers' strike that has now entered its fourth week, according to Cyprus Mail. Negotiations over a new collective agreement have been rejected, with workers demanding the restoration of overtime pay to pre-2018 levels, a reduction agreed upon between 2018 and 2020. Despite appeals from the minister and some employers open to continuing discussions, the unions have maintained a firm stance against altering their demands. The construction industry has reportedly come to a standstill as a result, prompting the minister’s involvement.

Panayiotou said "The restoration of normality in the concrete production sector is necessary for the smooth operation of the wider construction industry and other affected sectors, to avoid negative effects on the Cypriot economy. Unfortunately, we have entered the fourth week of strike measures despite the repeated efforts that have been made to bridge the gap.”

Kenya: A police operation in Athi River led to the arrest of five suspects and the impoundment of three trucks involved in a cement siphoning racket. Officers from the Kenya Police Service recovered over 660 bags of cement that allegedly weighed 4kg less than advertised, at 46kg each, according to The Star Kenya. The operation was initiated after a customer had complained about receiving underweight cement bags. One of the suspects said that he was paid US$3.86/day to siphon 2 - 6kg of cement from each 50kg bag, and that each truck carrying 220 bags of cement was siphoned by three people at a time, usually during the night.

US: Quikrete has entered into a definitive agreement to buy Summit Materials for a total enterprise value of US$11.5bn. The deal will add Summit Materials’ aggregates, cement and ready-mixed concrete business to Quikrete’s concrete and cement-based products business to create a vertically integrated business in North America. Quikcrete’s acquisition offer was first revealed in late October 2024. The transaction is expected to close in the first half of 2025 subject to shareholder approval at Summit Materials, regulatory approvals and other customary conditions.

Will Magill, CEO of Quikcrete, said “We are thrilled to welcome Summit into the Quikrete family.” He added, “This acquisition represents a significant milestone in our journey to expand our capabilities and geographic presence.”

Colombia-based Cementos Argos is Summit Materials’ largest shareholder with a 31% stake. It has agreed to vote all of its shares in Summit’s common stock in favour of the transaction. Cementos Argos says will generate a cash value of around US$2.9bn from the sales of its shares.

Italy: Construction company Cobar has signed an expression of interest with Heidelberg Materials Italia to use its EvoZero net-zero carbon captured cement product. Cobar’s CEO Vito Matteo Barozzi signed the agreement with Heidelberg Materials Italia’s CEO Stefano Gallini. The subsidiary of Germany-based Heidelberg Materials describes Cobar as one of its main customers and said that the deal confirms the progress that low-carbon products are making in the construction market.

Heidelberg Materials launched its EvoZero cement product in late 2023 and its EvoBuild low-carbon and circular products range in early 2024. EvoZero cement will be available in two versions, depending on the customer location. EvoZero Carbon Captured Brevik will be manufactured at the Brevik cement plant in Norway, where the company has built a carbon capture unit. Elsewhere in Europe Heidelberg Materials will sell EvoZero Carbon Captured, where the cement will be manufactured at a local plant and sold with a verifiable carbon proof using mass-balancing and book-and-claim systems.

Philippines: The Cement Manufacturers Association of the Philippines (CeMAP) and Eagle Cement Corporation have backed an order by the Department of Trade and Industry (DTI) to investigate alleged excessive imports of cement. In a statement the parties said that the investigation ordered by DTI Secretary Cristina Roque is a critical step that underscores the government’s commitment to ensuring fair competition, according to the Manila Bulletin newspaper. They added that the move would protect the local cement industry from undue harm caused by imports.

CeMAP previously submitted its position paper to the DTI on 12 November 2024 on the issue of imports of cement. Eagle Cement has backed the Federation of Philippine Industries in its position on the need to protect the domestic cement sector.

Data from the Bureau of Customs show that cement imports rose by 5% year-on-year to 6.2Mt from January to October 2024. 94% of the imports originated from Vietnam with 5% from Japan and 1% from Indonesia.