Displaying items by tag: Holcim

Belgium: Holcim Belgium has received an environmental permit for the kiln upgrade for its 100% decarbonisation of its Obourg cement plant. Agency Belgium News has reported that the upgraded kiln will employ a 'new incineration concept' to enable it to replace limestone with alternative raw materials. It will reduce the plant's thermal needs by 40% and its CO₂ emissions per tonne of clinker by 30%. Construction will commence in late 2023. The kiln replacement will support a carbon capture installation as part of the GO4ZERO project.

The first phase of the GO4ZERO project is running from 2022 to 2025, and commands total investments of over Euro350m.

France: Estelle Bletry has taken on the role of sales manager for Holcim’s waste management subsidiary Geocycle. Bletry held different positions in Lafarge France between 2007 and 2019. She worked as product development manager and business developer materials and solutions at waste management company Hesus from 2019 to March 2023. Bletry studied marketing at IUT Cergy-Pontoise in Paris.

Mexico: Switzerland-based Holcim has acquired building materials retailer INDAR. INDAR operates nine distribution centres across Mexico, as well as a fulfilment centre in Guadalajara. The retailer will join the group’s Disensa Latin American retail network. Holcim says that the acquisition expands Disensa’s product range with the addition of 10,600 new products. It says that the chain stocks goods from across 80 different brands. The group added that the acquisition advances its Strategy 2025 – Accelerating Green Growth plan, under which its solutions and products business is expected to reach 30% of sales globally by 2025.

Holcim’s Latin America regional head Oliver Osswald said “With its powerful logistics network and a focus on delivering the best in service, quality and customer experience, INDAR will make a perfect fit with our Disensa network by strengthening its product range and value proposition. I look forward to welcoming INDAR’s 420 employees into the Holcim family as we reach our next era of growth together.”

El Salvador: Holcim El Salvador says that the upcoming solar power plant at its El Ronco cement plant will have a capacity of 21.4MW, across three separate installations. Energy provider AES El Salvador holds a 20-year power supply agreement for construction and operation of the plant. The La Prensa Grafica newspaper has reported that Banco Cuscatlán supplied a loan for the project. When operational, the new solar power plant will lower Holcim El Salvador's oil consumption by 43,000 barrels/yr.

Holcim El Salvador CEO Rodrigo Gallardo said "We are not only making solutions and products with a lower CO₂ content, but also cutting CO₂ in our production processes."

Canada: A court has fined Lafarge Canada US$145,000 for a dust spill from its Bath, Ontario, cement plant in October 2019 that 'covered' homes, gardens and cars. The court found that the emission 'caused or was likely to cause adverse effects.' The Belleville Intelligencer newspaper has reported that the Canadian Ministry of Environment previously concluded that no harm to health resulted from the incident.

Plant manager Ignacio Arroyo said "Myself and our plant team unreservedly apologise for the upset and concern that our dust release has caused all of you. We intend to make it right and make sure it never happens again."

National Cement is preparing to open its new integrated West Pokot plant in September 2023. Readers may recall that the long-running project was taken over by Devki Group from Cemtech and Sanghi Industries after the Competition Authority of Kenya (CAK) gave it permission to do so in 2019. The original feasibility report by the Kerio Valley Development Authority dates back to 2010. The new plant will have a production capacity of 2.5Mt/yr.

However, this isn’t the only new clinker production capacity that Devki Group, which sells cement under the Simba Cement brand, is preparing to commission. Local media also reports that the company is also preparing to restart the former Athi River Mining Cement integrated plant at Bondora in Kaloleni, Kilifi County. After five months of trial runs the unit should be ready for full operation from April 2023. Devki Group also picked up this plant in 2019 following the long breakup of ARM Cement, after the latter producer entered financial administration back in mid-2018.

Devki Group started out in the steel sector but it has been steadily carving out a presence in the cement industry. The group opened its first cement grinding plant in 2013 and then built a 1.95Mt/yr integrated plant in Kajiado County, south of Nairobi, in 2018. Once the West Pokot plant is commissioned, the company will reportedly have a clinker production capacity of 7.5Mt/yr from three plants.

This kind of growth is making waves in the local cement sector. Since Global Cement Weekly covered the situation in September 2022 (GCW576), an argument has been brewing in Kenya over whether the country should import clinker or manufacture more of its own. This has moved to lobbying the government on whether the duty on imports of clinker should rise from 10% to 25%. Unsurprisingly, the country’s largest clinker producer, National Cement, even before the new plants are operational, has been a major advocate for putting up the import tariff. This carried over into 2023, when local press revealed the minutes of a meeting between the State Department of Industry and the Kenya Association of Manufacturers (KAM), with input from the cement producers. Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot were all against raising the tariff, saying that it would enable the largest clinker producers, National Cement and Mombasa Cement, to dominate the market. However, unlike the last such meeting, Mombasa Cement was said to be non-committal on the proposal to increase the duty. Despite the disagreement over the tariff, all of the cement companies imported clinker in 2021.

Graph 1: Rolling annual cement production in Kenya, 2019 - October 2022. Source: Kenya National Bureau of Statistics (KNBS).

Rolling annual cement production in Kenya peaked at just over 10Mt in May and June 2022. Data from the Kenya National Bureau of Statistics (KNBS) shows that monthly production started to fall on a year-on-year basis from July 2022. This is likely to be connected to the elections that took place in August 2022, although wider economic trends such as inflation and high input material prices may not have helped either. Despite this, cement production rose by 5% year-on-year to 8.02Mt in the first 10 months of 2022 from 7.65Mt in the same period in 2021.

Other recent news of note in Kenya includes the restart of clinker production at East African Portland Cement’s (EAPC) Athi River Plant in mid-2022. The upgrade was conducted as part of a general five-year upgrade and expansion campaign by the company. The next steps were announced in January 2023 with a stated intention to consider entering markets in the Democratic Republic of Congo and Rwanda. The other story of note was in December 2022, when China-based Sinoma International Engineering announced that it had signed a deal with Savannah Cement to build a new 8000t/day clinker production line with a 2400t/day cement grinding unit, a 35MW captive power unit and a 13MW waste heat recovery unit. As is standard for Sinoma’s new contract releases, it said that the contract would become active once an “advance payment guarantee” had been received. Later in December 2022 the Kenya High Court intervened to stop two creditors from seizing assets from Savannah Cement and putting it into administration, although the court did acknowledge the company’s debts and a loan repayment default. In January 2023 Mauritius-based Barak Asset Recovery, another related creditor, was approved by the competition regulator to buy a majority stake in Savannah Cement. The current state of that new production line is unknown.

As the two stories above show, it is not just National Cement that is trying to move towards increased clinker production in Kenya. The whole situation is reminiscent of the time before Nigeria declared itself self-sufficient in cement in the early 2010s. Local producers became prominent and the market battle between producers and importers became public. Kenya’s range of different cement companies seem to be more diverse than Nigeria’s were, but a similar type of national interest argument may be rolled out by one side. The other parallel to note with Nigeria is that Dangote Cement is said to have attempted to buy National Cement previously and has also been trying to build its own plant in the country since the mid-2010s. Kenya’s demographics and location make it a prime place for this kind of producer-importer tussle. Let’s wait and see how much the situation has changed when the new plants open over the next six months.

Spain: Holcim Spain has appointed Lucas García and Raúl Lannegrand respectively as the managers of the Sagunto and Carboneras cement plants. García succeeds José Luis Coleto, who is moving to a human resources position.

García has worked for Holcim Spain for over 25 years. He has been the manager of the Jerez de la Frontera plant since 2014. Prior to this he held maintenance and production roles. He holds electrical engineering qualifications from the Technical University of Cartagena and the Polytechnic University of Cartagena,

Lannegrand was previously operations manager of Geocycle, Holcim's industrial waste management subsidiary. He has a degree in chemistry from the Autonomous University of Madrid and a Master's degree in Research in Inorganic Chemistry, Lannegrand has knowledge in the field of construction materials research from three years spent at the Institute of Construction Sciences Eduardo Torroja (CSIC).

Switzerland: Holcim has commissioned the world's first cement plant digital twin at one of its cement plants in Switzerland. The software models the plant and is integrated with sensors, analytics and machine learning technology. UK-based HyBird also participated in the development of the technology. Holcim expects it to help to optimise its operations. Under its Plants of Tomorrow automation strategy, it will now aim to roll out the system across all of its cement plants, beginning with those in Europe.

Holcim's global head of Plants of Tomorrow, Rozemarijn Wesby, said "Our digital twin in Switzerland is a breakthrough for the entire industry. By leveraging digital technologies like this, we are generating massive amounts of data, allowing smarter decision-making to take our operational efficiency to the next level."

The key trends to note from the financial results of cement producers in 2022 released so far are that sales revenues are up, sales volumes of cement are mostly down and earnings have mostly dropped too. Readers are not going to be surprised that 2022 was a tough year for business as the raw materials and services inflation coming out of the coronavirus period was heightened by energy cost spikes caused by the Russian invasion of Ukraine. Producers put their prices up in response to deliver often record high annual revenues.

Graph 1: Sales revenue from selected cement producers in 2021 and 2022. Source: Company reports. Note: Figures calculated for UltraTech Cement.

What sticks out by looking at the sales volumes of cement figures in Graph 2 (below) is that Holcim’s cement sales volumes were about the same as Heidelberg Materials’ were in 2022, at around 120Mt. Remember, Holcim’s cement sales volumes were 200Mt in 2021 and 256Mt in 2015 at the time of the merger with Lafarge. Large divestments have followed with the sale to Adani Group of Holcim’s India-based companies in 2022 being one of the biggest. UltraTech Cement, meanwhile, has been steadily increasing its India-based cement production capacity.

Graph 2: Cement sales volumes from selected cement producers in 2021 and 2022. Source: Company reports. Note: Figures calculated for UltraTech Cement.

By company, Holcim’s diversification and regionalisation strategy appears to be paying off well. Reducing its exposure to the cement market is giving it a strong story to tell as it grows its light building materials division, frames this as a success in sustainability and moves out of developing markets. How well this will work if and when it ends the divestment and investment stage remains to be seen. One point to highlight is that its operating profit fell by 18% year-on-year on a like-for-like basis to US$3.43bn in 2022. As well as contending with high costs in 2022, a subsidiary connected to the group was fined US$778m by the US Department of Justice in late 2022.

Heidelberg Materials’ approach to the current economic conditions in 2022 seems to have been to keep its head down and push on for decarbonisation rather than diversifying its business. So it followed the ‘sales up, costs up but earnings down’ pattern of a few of the other cement companies covered here. Although, that said, it did diversify its name to ‘Materials’ from ‘Cement’ in September 2022.

Cemex experienced the same problems as the other companies for most of 2022 but conditions started to improve in the fourth quarter in most of its territories. In particular, it reported that earnings started to grow in Mexico towards the end of 2022 despite falling sales volumes of cement. It attributed this to its pricing strategy. Of note this week, the Mexican government is preparing to support higher levels of imports of cement into the country due to a shortage in the southeast of the country.

Buzzi Unicem, meanwhile, noticed a faster slowdown in cement deliveries in its key markets in Italy, the US and Eastern Europe in the last quarter of 2022 from a general trend that could also be seen earlier in the year. In its largest market, the US, it reported that investment in residential construction slowed. This was further affected by the growing cost of building materials and the rate of inflation, although increasing spending on infrastructure helped to keep domestic consumption stable. A favourable currency exchange rate between the US and the Euro also helped the company to report provisional earnings growth. Vicat’s US businesses in the US and Brazil helped cushion the group somewhat with a large rise in sales revenue. However, earnings in the US were hit by the costs related to the start up of the new kiln at the Ragland plant in Alabama, as well as general energy cost inflation. Its business in France fought against inflation with ‘significant’ price rises delivering a high increase in sales revenue but this was insufficient to prevent earnings from dropping.

The non-European based cement producers present a different picture. Despite the high energy costs, UltraTech Cement managed to increase its revenue and sales volumes of cement in 2022. Its net profit fell though year-on-year in the nine months to 31 December 2022. The company is targeting a cement production capacity of 159Mt/yr by around the 2025 financial year with the aim of becoming the largest cement producing company in the world outside of China. Dangote Cement managed to raise its prices at home in Nigeria to fight off inflation and hold revenue and earnings up. This was harder internationally though with supply chain disruption, high commodity prices, high freight rates and a plant shutdown in Congo blamed for holding earnings back.

Inflation and the energy markets will be clear concerns in 2023. If energy prices for industry stabilise globally then there is more of a chance for business as usual as markets cope better with higher costs. The continued dilemma for multinational cement companies remains whether to decarbonise through diversification or investment in new processes, and how far to go along either path. Meanwhile, the large regional producers are starting to show themselves outside of China, as UltraTech Cement’s growth trajectory testifies. One test for these companies is balancing the risk of expansion versus potential tighter local environmental regulations. The environmental rules of export markets are also a factor to consider here with the head of AdBri calling this week for an Australian equivalent to the European Union’s border adjustment mechanism to block so-called ‘dirty’ imports.

The next set of financial results from the cement sector in 2022 to look out for will be those from the large China-based cement producers. Once these are released we will examine them in more detail.

Switzerland: The board of directors of Holcim intends to propose Jan Jenisch as the group’s chair at its annual general meeting in May 2023. The move follows current chair Beat Hess’ decision not to stand for re-election. Hess was elected to Holcim’s board of directors in 2010 and became its chair in 2016. Jenisch has been the chief executive officer (CEO) of Holcim since 2017 and a member of the board of directors since 2021. He was previously the CEO of Sika from 2012.