Displaying items by tag: Huaxin Cement

Sectoral adjustment continued for the cement industry in China in 2024. Now that the financial results from many of the larger China-based cement producers are out it gives Global Cement Weekly a chance to review the world’s biggest cement market. The decline in national output of cement accelerated in 2024 and the results showed this. CNBM summed up the situation as follows: “In 2024, affected by the reduction of real estate investment and the slowdown of infrastructure projects, the cement industry in China was caught in a situation of insufficient demand and aggravated overcapacity.” Output dropped by just under 10% year-on-year to 1.83Bnt in 2024 according to data from the National Bureau of Statistics of China (NBS). This is the fourth consecutive annual decline and the lowest figure the sector has experienced since around 2010.

Graph 1: Cement output in China, 2018 to 2024. Source: National Bureau of Statistics of China.

The China Cement Association’s (CCA) assessment concurred with CNBM. Although it detected a slowing in the decline in the second half of 2024, especially in the fourth quarter. It noted that the country has a production capacity of 1.81Bnt/yr and an estimated clinker utilisation rate of 53% in 2024. Note the large apparent difference this may suggest between the NBS and CCA figures. Data from the NBS for the first quarter of 2025 has shown a slowing of the decline. Output was 331Mt, a fall of just 1.7% year-on-year from the same period in 2023. The CCA’s prediction for 2025 is that cement demand will fall by 5% as the real estate market continues to deflate. However, it expects government-led capacity reduction schemes to start making progress.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports.

Graph 3: Sales volumes of cement and clinker from selected Chinese cement producers. Source: Company financial reports.

CNBM’s sales revenue fell by 14% to US$24.8bn in 2024. Sales of its Basic Building Materials segment fell by 23% to US$12.5bn. This was blamed on falling volumes and prices of cement and other heavy building materials. Sales from the group’s two other segments - New Materials and Engineering Technology Services - rose modestly but this wasn’t enough to hold up total group sales. Operating profit from the Basic Building Materials segment decreased by 45% to US$544m. It was a similar picture at Anhui Conch with sales revenue and net profit down by 36% to US$12.4bn and by 25% to US$1.01bn respectively. Notably, CNBM’s sales volumes of cement decreased by 21% to 245Mt in 2024 compared to a decrease of 6.5% to 268Mt by Anhui Conch. This made Anhui Conch the world’s biggest cement company by sales volumes in 2024.

Tangshan Jidong Cement and China Resources Building Materials Technology (CRBMT) both reported a similar situation. Revenue was down and a net loss was reported by the former. Both revenue and net profit were down for the latter. CRBMT said that its cement capacity utilisation rate was 69% in 2024, down from 71% in 2023. This appears to be significantly higher than the national rate mentioned above by the CCA but the company’s regional distribution may be at play here.

Following from recent years, Huaxin Cement bucked the general market trend and its revenue rose modestly to US$4.7bn in 2024. Its net profit still fell by 12.5% to US$330m. Its overseas businesses made the difference. It reported an increase of 37% to 16.2Mt in overseas cement sales with its non-China cement production capacity rising by 8% to 22.5Mt/yr. Milestones include various new or upgraded plant projects in Sub-Saharan Africa capped off by its announcement at the end of 2024 that it was preparing to buy Lafarge Africa. Other cement companies were also keen to promote overseas activity. CNBM said that the first signing of overseas merger and acquisition was achieved in 2024. This is likely to be the purchase of the Djebel El Oust cement plant in Tunisia from Votorantim Cimentos that was completed in late March 2025. Tangshan Jidong Cement acquired the remaining 40% share in South Africa-based Mamba Cement in April 2024.

All of this leaves the cement sector in China still waiting for the market to stabilise. US tariffs seem unlikely to have an effect in any meaningful way unless the general economy is altered. The declining real estate sector and cement production overcapacity are the main drivers at the national level. The CCA expects the real estate market to continue to fall in 2025 although it hopes that government remedy measures will start to show an effect. It is more optimistic about capacity reduction plans. One route towards this is through merger and acquisition activity. In a recent response to investors about industry integration, Huaxin Cement speculated that the sector might consolidate down to 30 companies from around 300 at present. There is clearly still a way to go.

It’s been a strong start to 2025 for the Brazilian cement sector. The National Cement Industry Union (SNIC) reported recently that cement sales in the first quarter of 2025 have been the strongest since 2015. Producers sold 15.6Mt in the three month period, a rise of 5.9% year-on-year from 14.7Mt in the same period in 2024.

The result has been attributed to a growing real estate market boosted by housing schemes such as the ongoing Minha Casa Minha Vida programme. SNIC also noted a growing labour market and wage increases, although sales from infrastructure projects failed to keep up. Unfortunately, SNIC is wary of whether the positive news will continue in the second half of 2025. Risks such as interest rates, growing general debt levels and the effects of any potential international trade wars all lie ahead.

Graph 1: Cement production in Brazil, 2017 - 2024. Production estimated for 2024 based on National Cement Industry Union (SNIC) preliminary data on sales. Source: SNIC.

Based on preliminary SNIC data from December 2024, the country likely had its best year in 2024 since the market peaked in the mid-2010s. Cement sales were reported to have risen by 3.9% to 64.7Mt in 2024. Consumption was 73Mt. An estimate of production based on the same rate of growth suggests that cement production may have grown to 69Mt in 2024 from 66.5Mt in 2023.

The three main cement companies - Votorantim Cimentos, InterCement and CSN - each reported domestic earnings growth in 2024. In Votorantim’s case net revenue in Brazil was flat in 2024 at US$1.39bn but its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 4% year-on-year to US$390m supported by higher prices, volumes and lower costs. InterCement has been in a debt resolution process since December 2024, which will be discussed below. Its sales volumes of cement were flat at 8.6Mt and sales revenue fell by 6.6% to US$557m. Yet, adjusted EBITDA rose by 10.2% to US$135m. CSN’s sales volumes of cement increased by 5.9% to 13.5Mt and its cement business sales revenue by 5.7% to US$810m. However, its adjusted EBITDA zoomed ahead by 39.5% to US$231m. The group attributed its higher sales volumes of cement to its strategy of focusing on logistics and distribution centres to target new markets, build market share and boost synergies.

As covered by Global Cement Weekly previously, InterCement has been trying to sell assets since at least the early 2010s. High debt levels have been a problem more recently and the company entered into judicial recovery, a court-led debt recovery process, in December 2024. How this process plays out should inform the nature of any subsequent divestment of assets. InterCement attempted to sell its subsidiary in Argentina, Loma Nega, to CSN in 2024. Unfortunately, this reportedly failed due to the appreciation of Loma Negra and due to disagreements between bondholders and shareholders of parent company Mover, according to the Valor Econômico newspaper. At home in Brazil, Buzzi, CSN, Huaxin Cement, Polimix, Vicat and Votorantim have all been linked to a potential sale of InterCement assets in a piecemeal fashion. Votorantim, in particular, is expected to face opposition from the local competition regulator CADE if it attempted to buy all of InterCement’s cement plants.

It’s positive to see the cement industry in Brazil starting to reach the sales levels last recorded in 2014. SNIC, understandably, isn't taking anything for granted. It’s warned of more modest growth in 2025, compared to the strong opening quarter, with levels forecast to be somewhere between 1 - 1.5%. It says that this will depend on the “evolution of the economy, monetary policy and investments in infrastructure and housing.” It has also warned of “uncertainties arising from the US.” The other big ‘if’ is whether InterCement can actually start selling cement plants in 2025. Time will tell.

Nigeria: The Senate has directed the Bureau of Public Procurement to halt the planned sale of Lafarge Africa to Chinese producer Huaxin Cement on ‘national security and economic sovereignty grounds’, according to the This Day newspaper. Concerns have reportedly been raised that the deal could lead to capital flight, job losses and reduced regulatory oversight over a sector vital to national development.

Holcim, which owns an 84% stake in Lafarge Africa, initially announced the company’s sale to Huaxin Cement for US$1bn in December 2024. The transaction is set to complete in 2025, pending regulatory approvals.

Senator Shuaib Afolabi Salisu said “We cannot afford to wake up one day and realise that our cement industry, one of the backbones of our economy, is entirely in foreign hands. We must ensure that strategic assets like Lafarge Africa remain in the hands of those who have the country’s best interests at heart.”

Senator Olamilekan Adeola said “The company is about to be divested and the transaction has been shrouded in secrecy. What the motion is simply asking for is that we want this transaction to be as transparent as possible. By the time the eventual sale of this company is done, we will be fully satisfied that Nigeria’s economy will be protected.”

There are two new cement plant stories to note in Nigeria this week. Firstly, the Kebbi State Government has signed an agreement with MSM Cement to build a 3Mt/yr plant. Secondly, drilling work has started on a forthcoming 10Mt/yr plant to be built by Resident Cement in Bauchi State.

The project in Kebbi State appears to be a new one, although the government has been looking for investors for a while. The state government and a subsidiary of MSM Group have signed a memorandum of understanding (MOU) supporting the US$2.4bn initiative, according to local press. Alhaji Muazzam Mairawani, the chair of MSN Group, said that his company intends to develop the plant in four stages, each worth US$600m. The first stage has a schedule of production by early 2027. MSN Group started out in the fertiliser business and has since expanded into the oil and gas, shipping and agricultural sectors.

The project in Bauchi State has progressed further along and is bigger. The state government signed an MOU worth US$1.5bn with Resident Cement in mid-2024. The deal also includes a 100MW power plant, a dam and other amenities for the local community. Before the main announcement of the MOU, local press reported that Sinoma Nigeria Company was investing in the project. Subsequently, Bala Mohammed, governor of Bauchi State, said that the state owns a 10% stake in the plant.

These two new project stories follow the release of the annual reports for 2024 in recent weeks by the main cement producers in Nigeria. Global Cement Weekly touched upon this last week in its coverage of the results of major multinational building materials companies including Dangote Cement. That company’s sales revenue and earnings were boosted by growing sales volumes of cement in Nigeria. This was particularly impressive given that the country continues to face economic problems including high inflation and negative currency exchange effects. Dangote Cement said it managed to overcome these problems through “increased promotional activities and improved route to market solutions” thereby upping the market presence of its products. The company also managed to grow its exports to a record amount. It shipped 0.91Mt of clinker to Cameroon and Ghana out of a total export volume of 1.2Mt.

Graph 1: Sales revenue for large cement producers in Nigeria, 2023 - 2024. Source: Company financial reports.

It was a similar story from the two other large domestic cement companies. Lafarge Africa’s net sales grew at a similar rate to Dangote Cement in 2024 and it increased its profit after tax faster. Lolu Alade-Akinyemi, the CEO of Lafarge Africa, attributed this to the company’s “strong market positioning, operational efficiency, cost management and dedication to value creation.” BUA Cement grew its sales faster than the other two. Starting production on new production lines at its Sokoto and Obu plants is likely to have contributed to this. However, the company’s net profits rose at a lower rate than its competitors in 2024. This has been blamed on the poor market at the start of the year and negative currency exchange effects related to the loans that the company took out for its new lines.

Lafarge Africa ending on a high with its 2024 results is not surprising given that the company is currently being sold by Holcim to Huaxin Cement. The transaction is expected to close at some point in 2025. Huaxin Cement issued an update at the end of February 2025 saying that its accountants had been auditing the financial statements of Lafarge Africa. It also noted the depreciation of the Nigerian Naira in 2023 and 2024. This is all fairly standard stuff but check back later in the year to see how the sale has progressed.

The cement market in Nigeria is looking positive. New plants are on the way, the large cement producers are doing relatively well and the general economy may be improving. New entrants are also entering the market. However, consumers and legislators have increasingly questioned why the price of cement has remained so high in recent years. This continues to present a tricky situation to the market as it develops.

PPC revealed plans this week to build a new cement plant in the Western Cape region of South Africa. It has entered into a “strategic cooperation agreement” with Sinoma Overseas Development Company to put together a 1.5Mt/yr integrated plant for around US$160m. It is hoped that construction will start in the second quarter of 2025 with commissioning scheduled by the end of 2026.

CEO Matías Cardarelli described more details about the project during a tie-in webcast on 16 January 2025. Specifically, the new unit will be built at the company’s integrated Riebeeck Plant site due to the quality of the local limestone and the greater reserves. In addition, all the key environmental approvals and mining rights have already been obtained. Both this plant, and the nearby De Hoek Plant, will continue to run throughout the construction and commissioning period. A decision will then be made about required staffing. PPC did not explicitly say whether the two old plants would be closed but the new plant will “replace and increase the existing capacity” at the other sites.

Points to note from the announcement start with the low cost for the clinker production line. PPC’s 1Mt/yr line at its Slurry plant cost around US$75m when it was commissioned in 2018. Sinoma also built that one. However, negative currency exchange effects make comparisons tricky. In 2015 PPC said that the cost of the Slurry line was around US$115/t. It pointed out that the price was low as it was a brownfield investment. This compares to US$107/t for the Western Cape project, another brownfield project. Other recent integrated plant projects in Sub-Saharan Africa to consider include Cemtech’s clinker plant in Sebit, Kenya (US$170/t) or West International Holding’s forthcoming plant in Buikwe District, Uganda (US$150/t). Plans for a new PPC plant in the Western Cape go back to at least 2017 when the then CEO Johan Claassen said it was preparing for a ‘mega plant.’ At the time it was hoping to replace its Riebeeck plant with a ‘semi-brownfield’ facility that would use around 25% of the current plant’s equipment. The scheme had actually been around longer but Claassen remarked that insufficient domestic demand had held it back.

The next detail to consider is that PPC is planning to build this new plant within 100km of the coast. This was addressed directly with PPC saying that the new plant would be “extremely competitive” against imports. They say it will be able to produce cement, at least, to a similar cost to imports from Vietnam. It was also remarked that only 10 - 15% of the 1Mt/yr of imports, mainly from Vietnam, go to the Western Cape with the rest heading to KwaZulu-Natal via the Port of Durban.

PPC’s plans in Riebeeck are part of its ‘Awaken the Giant’ development strategy. For its six month financial results statement to September 2024 it said that it had “early positive and encouraging signs in all lines of our business.” In South Africa its earnings were up despite lower sales volumes. Dangote Cement’s local subsidiary, Sephaku Holdings, reported a similar picture with a small bump in revenue and earnings back up after coal and fly ash supply constraints a year earlier. PPC isn’t the only cement company developing capacity. Huaxin Cement-owned Natal Portland Cement was reportedly investing US$65m in the autumn of 2024 towards expanding its Simuma Plant in KwaZulu-Natal.

The cement sector in South Africa had a couple of ownership changes in 2024. As mentioned above, China-based Huaxin Cement bought Natal Portland Cement from InterCement at the start of the year. Then, Afrimat received approval to buy Lafarge South Africa in April 2024. Both of these incomers have clear ambitions to expand in the industry. In this context PPC’s decision to finally revive its Western Cape plans, before whatever its new competitors devise, makes sense. Expect more talk of capacity upgrades in the future.

Brazil: China-based Huaxin Cement has signed a deal worth US$187m to buy aggregates producer Embu. Embu owns four quarries in the metropolitan region of São Paulo with a production capacity of nearly 9Mt/yr, according to the Rio Times newspaper. In 2023 it produced 6.3Mt and reported a net profit of around US$3.2m.

Huaxin Cement revealed this week that it is buying Holcim’s majority stake in Lafarge Africa for US$1bn. The moment marks a big step in the China-based cement producer’s international ambitions. It has been linked in the financial media to many divestments around the world in recent years. Yet this appears to be its largest acquisition so far and it adds to what is becoming a serious sized multinational business in Sub-Saharan Africa.

The details of the deal are that Holcim has agreed to sell its 83% share of Lafarge Africa to Huaxin Cement. Lafarge Africa operates four integrated cement plants in Nigeria at Sagamu and Ewekoro in Ogun State, at Mfamosing in Cross River State and the Ashaka Cement plant in Gombe State. It has a combined production capacity of 10.5Mt/yr. The transaction is expected to close in 2025 subject to regulatory approvals.

Holcim holds a relationship with Huaxin Cement that dates back to the late 1990s when it first bought a stake in the company. Following the formation of LafargeHolcim in the mid-2010s, Lafarge’s subsidiary Lafarge China Cement was sold to Huaxin Cement. At the end of 2023 Holcim reported that it owned just under a 42% share in the company. Huaxin Cement has also bought assets from Holcim as the latter company has divested subsidiaries over the last decade. In 2021 it bought Lafarge Zambia and Pan African Cement in Malawi from Holcim. This adds to other acquisitions in the region. In 2020 it purchased African Tanzanian Maweni Limestone from ARM Cement. Later in 2023 it picked up InterCement’s subsidiaries in Mozambique and South Africa. In addition, in October 2024 local media in Zimbabwe reported that the company was planning to build a grinding plant. Now, throw in the plants in Nigeria and Huaxin Cement is the second biggest cement producer in Sub-Saharan Africa after Dangote Cement.

Huaxin Cement said it had an overseas cement grinding capacity of just under 21Mt/yr at the end of 2023. However, this figure included plants in Cambodia, Kyrgyzstan, Nepal, Oman, Tajikistan and Uzbekistan. Data from the Global Cement Directory 2024 suggests that the company now has 10 integrated cement plants in Sub-Saharan Africa with a cement capacity of around 18Mt/yr. It also operates a number of grinding plants in these countries.

The Lafarge Africa deal is significant because a mainland China-based cement producer has finally hit the US$1bn window in merger and acquisition (M&A) activity overseas. Many potential acquisitions in the sector are linked by the press to Chinese companies these days. However, most of the activity to date has been of a plant-by-plant or piecemeal nature. Alternatively, these companies have been building their own plants around the world as part of the Belt and Road Initiative. Taiwan Cement Corporation (TCC) has spent more buying itself into Türkiye-based OYAK Cement since 2018 but it is headquartered in Taipei.

The question from here is how much further does Huaxin Cement plan to expand both in Africa and beyond? The obvious answer is that it will keep going given the state of the cement sector back home in China, the retreat of the western multinationals and the demographic trends in the region. World population growth is predicted to be fastest in Africa in the coming decades and demand for cement should follow. Outside of Africa, the ‘big’ one recently has been InterCement in Brazil. Unfortunately for Huaxin Cement though, InterCement extended its exclusivity deal with Companhia Siderúrgica Nacional (CSN) in November 2024. If the Lafarge Africa transaction completes then it will be the biggest deal yet and it will welcome a China-based cement company to the big league of international M&A. It may just be the start.

Nigeria: Holcim plans to sell Lafarge Africa to China-based Huaxin Cement for an equity value of US$1bn. The Switzerland-based building materials producer owns an 83% share of the subsidiary. The transaction is expected to close in 2025 subject to regulatory approvals.

Lafarge Africa operates four integrated cement plants in Nigeria at Sagamu and Ewekoro in Ogun State, at Mfamosing in Cross River State and the Ashaka Cement plant in Gombe State. It has a combined production capacity of 10.5Mt/yr. The company also holds a ready-mixed concrete production capacity of 0.4Mm3/yr. Its local recycling subsidiary, Geocycle, reported an alternative fuels thermal substitution rate of 37% in 2022.

Zimbabwe: Huaxin Cement has invested US$15m in a new manufacturing plant in Zimbabwe, according to Bulawayo 24 News. The company has set up a subsidiary Huaxin Zimbabwe, to oversee operations. Huaxin Zimbabwe director Clemence Gomba said that the initial capacity will be 300,000t/yr, potentially increasing to 1Mt/yr if lime reserves are accessed, adding that he wanted “Zimbabweans to get cement at their doorsteps.” The plant will serve both local and export markets. Huaxin plans to employ five Chinese nationals and 200 local people.

Company CEO Mr Chen said “We started construction of the site last month [September 2024] and we hope to finish by the end of November 2024. In December 2024, we will start the production of cement. The plant will start with a production capacity of 25,000t/month of cement, we will mainly be manufacturing 32.5 and 42.5 cement. We hope to satisfy the local market so that we can reduce our imports. We hope to find some limestone reserves so that we will not be importing any clinker.”

Industry and Commerce Minister Mangaliso Ndlovu toured the site, saying that Zimbabwe is experiencing a surge in imports mainly from Zambia and South Africa, a reflection that local production is ‘not satisfying’ the market.

It won’t be a surprise to most readers that the Chinese cement industry continued to struggle in the first half of 2024. The China Cement Association (CCA) summarised the situation as a "continuous decline in demand, low price fluctuations and continuous losses in the industry." Cement output fell year-on-year and four of the six large cement companies featured in this article reported falls in revenue. The CCA estimated that the sector as a whole lost about US$140m in the first half of the year.

Graph 1: Cement output in China, 2019 to first half of 2024. Source: National Bureau of Statistics of China.

Data from the National Bureau of Statistics of China shows that cement output fell by 13% to 855Mt in the first half of 2024 from 980Mt in the same period in 2023. That’s a fall of more than 100Mt and around the annual cement production capacity of the US! Analysis by the CCA reckons that the first half of 2024 saw the lowest cement production since 2011. It blamed the situation on the failure of the real estate market to stabilise and a slowdown in infrastructure investment. Geographically the areas with the biggest declines were the Northeast, Northwest and Central and South regions. Those provinces with the smallest declines were Tibet, Jiangsu, Yunnan and Hebei. However, the CCA was keen to point out that staggered production, through initiatives such as peak shifting, took place in the second quarter of 2024, the producers’ cement inventory fell and cement prices rallied somewhat in June 2024.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports. Note: For CNBM Basic building materials segment revenue shown only.

CNBM says that it is the largest cement producer in the world. However, Anhui Conch appears to have sold more cement and clinker than CNBM did… in the first half of 2024 at least. Anhui Conch sold 126Mt of cement and clinker, a drop of 3% year-on-year, compared to 114Mt by CNBM, a drop of 20%. Anhui Conch’s sales revenue and net profit fell by 30% to US$6.4bn and 48% to US$490m respectively. The sales revenue from CNBM’s Basic Building Materials segment, its division that manufactures cement, deceased by 31% to US$5.73bn. Tangshan Jidong and CRC reported similar situations to their larger peers with declines in revenue and profit.

Huaxin Cement and Taiwan Cement both managed to raise revenue, but this was mostly due to their businesses outside of China. Huaxin Cement increased its operating income by 3% to US$2.3bn, with sales volumes of cement falling at home but growing abroad. Indeed, its domestic operating income fell by 32% to US$716m, a similar rate of decline to the other companies featured here. By comparison, the operating income from its overseas cement business rose by 55% to US$502m. Combined with a boost in aggregate sales volumes, this helped to stabilise the company’s financial performance. Taiwan Cement, meanwhile, completed its acquisition of Cimpor Portugal in March 2024 giving it a majority stake in OYAK’s cement business in Türkiye. Subsequently, its revenue in the second quarter of 2024 shot up year-on-year.

CNBM hit the nail on the head in its half-year report when it said: “The overcapacity has not been fundamentally resolved.” China is a big country with lots of regional variation but when cement plants stopped manufacturing cement in the second quarter of 2024 the price improved. Funny that should happen! The government is slowly making adjustments to the real estate market and other mechanisms, including the China national emissions trading system, are due to be applied to cement plants soon. Yet, until that overcapacity is addressed or unless some market fundamentals change then expect to see more of the same in China in the near future.