Displaying items by tag: Holcim

Nigerian billionaire Aliko Dangote was spotted attending the inauguration ceremony of Kenyan President William Ruto earlier in September 2022. This is relevant because Dangote’s cement company previously announced plans in 2016 to build two 1.5Mt/yr plants in Kenya, near Nairobi and Mombasa respectively. They were intended to become operational by 2021. Unfortunately, Dangote himself allegedly described Kenya as being more corrupt than Nigeria to Kenyan broadcast journalist Jeff Koinange a few years later and nothing more happened. Back in 2014 Ruto visited Dangote Cement’s Obajana plant in Kogi state in Nigeria when the politician was the Deputy President of Kenya. Dangote’s attendance at the presidential inauguration this month suggests at the very least that his relationship with Ruto remains active. Maybe more news on those planned plants will follow.

Graph 1: Cement in Kenya, 2018 – June 2022. Source: Kenya National Bureau of Statistics (KNBS).

The reason why the owner of Africa’s largest cement company might be interested in the Kenyan market can be seen in its latest cement production figures. Data from the Kenya National Bureau of Statistics (KNBS) shows that production for the first half of 2022 grew by 20% year-on-year to 4.95Mt in the first half of 2022, from 4.12Mt in the same period in 2021. Cement production was broadly similar in 2018 and 2019 at around 6Mt. It then increased by 25% to 9.25Mt in 2021 from 7.41Mt in 2020. On a rolling annual basis, production picked up at the start of 2020 and has risen consistently since then each month, peaking at over 10Mt in May 2022.

However, the elections in August 2022 probably slowed this growth trend, despite being much more peaceful than those in 2007, although the KNBS is yet to release the data. Bamburi Cement said in its outlook for the second half of 2022 that it expected markets to recover after the ballot. The subsidiary of Holcim reported increasing turnover in the first half of 2022, due to mounting sales volumes and price rises, but its profit fell sharply. It blamed this on fuel and logistics inflation, growing clinker import costs as well as negative currency exchange effects.

That last point about imported clinker is worth noting given that a government report in late 2021 found that the country had a clinker shortage of up to 3.3Mt/yr. Yet, the KNBS data in recent years shows that cement production and consumption are broadly similar, suggesting that the shortfall in clinker is being imported. The report added that 59% of the imported clinker originated from Egypt, tariff free, due to a free trade agreement. Local producers were reported to have been operating at a 65% capacity utilisation rate. Egypt and the UAE accounted for most of the imported clinker followed by Saudi Arabia. An interview in the Standard newspaper at this time with Bamburi Cement’s managing director Seddiq Hassani revealed that, despite locally produced clinker being cheaper than imported clinker, some producers were reluctant to hand control of a key input material over to their local competitors. Other producers, predictably, were trying to persuade the government to raise the duty on imports of clinker from 10% to 25%. Tariff discussions have continued in 2022.

So far in 2022 the other big stories in the sector have included Bamburi Cement’s plans to build two solar power plants and a major repair to the kiln shell at East Africa Portland Cement’s (EAPCC) Athi River cement plant. The solar plants will be built next to Bamburi Cement’s integrated Mombasa plant and its Nairobi grinding plant. Once operational in 2023 they are anticipated to supply up to 40% of the cement producer’s total power supply. Devki Group, the owner of National Cement, also announced plans in August 2022 to set up a wind farm near Mombasa. However, this seems more like an attempt to diversify the group into electricity production rather than to supply its own plant near Nairobi. EAPCC’s upgrade project has completed this week after about a month and half of work. It is intended to increase the plant’s cement production by 50%.

Cement production started in rise in 2020 but the Covid-19 pandemic may have constrained this. Production (and consumption) then jumped up in 2021 and looks set to do similar in 2022 bar a possible blip from the elections in August 2022. This is despite the global market issues arising from the end of Covid-19 and the war in Ukraine. These may be uncertain times but the fundamentals for the Kenyan cement market look positive despite rising end prices. Unsurprisingly, it looks likely that Dangote Cement remains keen to extend its business to Kenya.

Spain: LafargeHolcim España has appointed Carmen Díaz appointed as its director general. She succeeds Isidoro Miranda in the position and will report to Miljan Gutovic, Region Head EMEA at Holcim Group.

Díaz trained as a chemical engineer from the University of Oviedo and has taken the General Management Program (PDG) from the IESE Business School. She started working for Lafarge in 2002 as the head of its concrete business in Spain. She held the position of VP Commercial Performance in 2014 with responsibility for 30 countries. Later she became the Head of Ready-Mix Commercial and then the General Manager for the ReadySet Mix Digital Venture. Most recently she was worked as the Commercial Director of Spain for LafargeHolcim.

Spain: Sustainability Observatory's Decarbonisation 2022 report has named FCC, Cemex and Holcim on a list of Spain's top 10 CO₂ emitters. Construction conglomerate FCC, parent company of Cementos Portland Valderrivas, was the seventh largest contributor the country's CO₂ emissions during the year. Mexico-based Cemex placed joint eighth with energy provider Iberdrola at 2.4Mt-worth of CO₂ emissions in 2021, followed by Switzerland-based Holcim with 2Mt.

Spanish CO₂ emissions grew by 5.1% year-on-year in 2021, and by 3% across industries subject to emissions credit trading, which include the cement sector. Together, the top 10 emitters accounted for 57% of these industries' emissions, and 19% of total national emissions.

Costa Rica: The Costa Rica Institute of Technical Standards (INTECO), with confirmation of the National Institute for Women (INAMU), has renewed Holcim Costa Rica’s Management System for Gender Equality in the Workplace certification. This recognises the company’s commitment to promoting the role of women in its operations. Holcim Costa Rica requires the candidate pool for new positions to consist of 50% men and 50% women. This has helped its realise representation of 52% women across its corporate offices, and 35% in all leadership roles. Its CEO Andrea Lara said that the producer assures its employees a work environment characterised by respect, fairness and an absence of harassment or discrimination.

Lara said “Both men and women have the same opportunities. The position is awarded to the most qualified man or woman for the position.”

Belgium: Holcim has completed its acquisition of façade and external insulation systems producer Cantillana. Holcim said that the deal expands its position in building renovation and energy efficiency solutions, aligning with its Strategy 2025 – Accelerating Green Growth plan.

Algeria: Lafarge Algeria has launched Chamil cement, a 40% reduced-CO₂ cement, which contains locally sourced clay and ferrous materials. The producer developed Chamil cement based on technology from the Rouiba Construction Development Laboratory.

Lafarge Algeria aims to achieve export volumes of 3Mt across its product range in 2022.

HeidelbergCement’s latest sustainability target has been to reduce the ‘cement’ footprint from its own name. From this week it has become Heildelberg Materials. Of the top ten global cement producers in Global Cement Magazine’s roundup in the December 2021 issue only three now have the word ‘cement’ in their names.

In Heildelberg Materials’ own words, the “new brand identity underlines the company's pioneering role on the path to carbon neutrality and digitalisation in the building materials industry.” Chair Dominik von Achten then goes on to explain that the company is proud of its cement business but its range of services goes far beyond cement. This is certainly true but in 2021 the cement business generated 44% of the group’s revenue. 19% came from aggregates, 25% from ready-mixed concrete plus asphalt and the remaining 12% from services and other lines.

Yet, Heidelberg Materials is also a leader in driving innovation in carbon capture, utilisation and storage (CCUS) for the cement sector with a full production line capture unit planned for commissioning in 2024 at the Brevik plant in Norway. When it opens it will be the only full scale CCUS unit at a cement plant anywhere in the world. The group further plans to reduce the CO₂ footprint of its cementitious products to below 500kg/t CO₂ by 2030 and aims to generate half of its revenue from low-carbon products. These are not small achievements or ambitions.

Meanwhile, Holcim completed the divestment of its Indian business to Adani Group this week for US$6.4bn. For Holcim the move marks a milestone in the reshaping of its business away from developing markets and the diversification on its product lines into light (and more sustainable) building materials. So why would a company like Adani Group move into the cement sector when multinationals are getting out?

Money is the obvious answer and the one group owner Gautam Adani raised at a speech marking his latest mega-acquisition. He said, “Our entry into this business is happening at a time when India is on the cusp of one of the greatest economic surges seen in the modern world.” He expects his new cement arm to become the most profitable cement producer in the country although his competitors may have other ideas. As well as operational efficiency, Adani also plans to inject US$2.5bn into the business as part of plans to increase its production capacity to 140Mt/yr in the next five years, from around 70Mt/yr at present. However, the financial press in India and elsewhere has wondered how much debt Adani Group can cope with and whether it will consolidate its latest acquisitions or simply use them to buy into even more sectors. Time will tell.

Lastly, it should be noted that Adani Group’s new rival UltraTech Cement has targeted a production capacity of 154Mt/yr by 2025. Any growth in the Indian market will clearly be contested. It is also worth noting that the latter company has retained ‘cement’ in its name. For now at least.

India: Ambuja Cements has appointed Gautam Adani as its chair and his son Karan Adani as a director. ACC has appointed Karan Adani as its chair. The changes in board personnel follow the completion of the acquisition of Holcim’s subsidiaries in India by Adani Group. Karan Adani is expected to manage both cement companies, according to the Press Trust of India.

Other initial personnel changes following the takeover include the appointment of Ajay Kapur as the chief executive officer (CEO) of Ambuja Cements. Vinod Bahety has been appointed as the chief financial officer. The company’s former chair, NS Sekhsari, has been appointment as chairman emeritus in recognition of his “outstanding and invaluable contributions.” At ACC, Sridhar Balakrishnan remains as CEO.

Gautam Adani, the chair and founder of Adani Group, holds over 30 years of business experience. Under his leadership, Adani Group has emerged as an integrated infrastructure conglomerate with interests in resources, logistics and energy sectors.

Karan Adani is the CEO of Adani Ports and SEZ Limited (APSEZ). He is currently leading the transformation at APSEZ to form an integrated logistics company. This has included growth at the company from two ports to 10 ports and terminals. He is an economics graduate from Purdue University in the US.

Ajay Kapur holds over 25 years of experience in the cement and construction, power and heavy metals sector. He joined Ambuja Cement in 1993 as an executive assistant to the then managing director (MD). He held various strategic positions over the last two decades, and from 2014 to 2019, he served as the CEO and managing director of the company. Prior to joining Adani Group in June 2022, Kapur was CEO - Aluminium and Power and MD - Commercial at Vedanta. Most recently he served as CEO of Special Projects at Adani Ports and Special Economic Zone. Kapur is an economics graduate from St Xavier's University in Mumbai and holds a Master’s of Business Administration (MBA) from the KJ Somaiya Institute of Management. He has also attended the Advanced Management Programme at the Wharton School of the University of Pennsylvania.

Vinod Bahety previously worked as the Group Head - Merger & Acquisition & Corporate Finance for Adani Group. He has worked on some of the major merger and acquisition activities for the group. Previously he worked in the banking sector. He is a chartered accountant by qualification.

Switzerland: Holcim has launched of the world’s first 1.5°C science-based framework to decarbonise the cement industry in coordination with its partnership with the Science Based Targets initiative (SBTi). This framework was independently developed by the SBTi, in collaboration with an advisory group representing academia, civil society and industry. Holcim has submitted its 1.5°C-aligned 2030 targets for SBTi validation, and is engaging with organisations at Climate Week NYC to scale up the framework’s deployment.

Jan Jenisch, the chief executive officer of Holcim, said “Taking a rigorous, science-driven approach on this journey, we partnered with the SBTi to create the 1.5°C-aligned framework for the sector. Today we submit our 2030 net-zero targets in line with this framework and encourage all our peers to join us to scale up our impact together.”

India: Gautam Adani, the chair of Adani Group, says his company has plans to double its cement production capacity to 140Mt/yr by the late 2020s and become the most profitable producer in the sector. In a speech made to mark the group’s US$6.5bn acquisition of Ambuja Cements and ACC, he anticipated that a rise in cement demand in India, due to economic growth and government infrastructure development, would lead to “significant” margin expansion, according to the Press Trust of India. He added that the transaction was the country’s largest ever in-bound merger and acquisition in the infrastructure and materials sector.

Adani explained the decision to enter the cement market was due to India’s growth potential in the cement market. He said that while India is the second largest producer of cement in the world, its per capita consumption is just 250kg compared to 1600kg of China. He also expected that long-term average growth in cement demand would be 1.2 to 1.5 times the country’s gross domestic product (GDP) due to government investments in infrastructure and housing.