Displaying items by tag: India
Two views on India
12 December 2018Research from the Global Carbon Budget (GCB) this week forecasts that fossil CO2 emissions from the Indian cement industry will rise by 13.4% in 2018. This is in stark contrast to the smooth mood music from the Cement Sustainability Initiative (CSI) last week, which stated that the local industry was on track to meet its commitments towards decarbonisation. So what’s going on?
The situation is akin to the fable about the blind men and the elephant. Both the GCB and the CSI are approaching the emissions of the Indian cement industry from different directions. The GCB is using available data (including data from the CSI) to try and estimate what the CO2 emissions are. It takes cement production data using a method adapted from a paper published by Robbie M Andrew of Norway’s CICERO Center for International Climate Research in 2018 and then it takes into account the types of cement being produced and the clinker factor. This is then converted into an estimated clinker production figure and this is then converted into a CO2 figure.
However, the CSI meanwhile actually has direct data from its local members. At the moment these include ACC, Ambuja Cements, CRH, Dalmia Cement (Bharat), HeidelbergCement, Orient Cement, Shree Cement, UltraTech and Votorantim Cimentos. As part of the Getting the Numbers Right (GNR) database it collects production and sustainability related data from its members. However, for reasons of competition, it maintains a year gap before it reports its data. This means that the GCB can report its estimate ahead of the CSI data.
There is nothing to stop the CSI reporting its progress against its targets though. And this is exactly what it has done in India with the recent document outlining progress towards the 2030 targets from the low carbon technology roadmap (LCTR). The headline CSI metric was direct CO2 emission intensity. According to the CSI, this has fallen by 32kgCO2/t cement to 588kgCO2/t cement in 2017 mainly due to an increased uptake of alternative fuel and blended cement production, as well as a reduction in the clinker factor. This is bang on target with its aim of hitting 320kgCO2/t in 2050 (around 560 kgCO2/t in 2020, assuming a linear decrease).
The problem is that cement production growth in India suddenly sped up in 2018. Global Cement estimates that India’s cement production is set to rise by 7% year-on-year to 296Mt in 2018 from 280Mt in 2017. Data from the Ministry of Commerce & Industry shows that cement production rose by nearly 16% year-on-year to 244Mt in the first nine months of 2018 from 211Mt in the same period in 2017. Along these lines the Cement Manufacturers Association of India has forecast growth of 10% in the 2019 financial year to the end of March 2019. It reckons that this is the fastest growth in the sector since the industry slowed down in 2011.
India’s per capita cement consumption is low (222kg/capita) and its urban population is also low (around 30%). That’s a lot of cement that’s going to be used as it shifts to developed global rates and already it’s the globe’s second biggest cement market. The CSI was right to get in there eight years ago. Yet, the question now is can CO2 emissions decrease whilst the market grows? Research in the US suggests that the real reason for emission drops in the 2010s was the economic recession, not policy shifts or changes in the energy mix. If that holds in India then the cement industry will have a hard time reducing its carbon footprint irrespective of the work the CSI has done.
ACC to build new plant in Madhya Pradesh
12 December 2018India: The board of ACC has approved plans to build a new cement plant at Ametha, District Katnl in Madhya Pradesh. The unit will have a clinker production capacity of 3Mt/yr and a cement production capacity of 1Mt/yr. The subsidiary of Switzerland’s LafargeHolcim plans to expand a 1.6Mt/yr grinding plant at Tikaria, Uttar Pradesh and a 2.2Mt/yr grinding plant also in Uttar Pradesh. The board also agreed to build a 1.1Mt/yr grinding plant at an existing unit at Sindri in Jharkhand. The projects are expected to cost around US$417m.
State government re-invites tenders for Chamba cement plant project
10 December 2018India: The state government of Himachal Pradesh has invited tenders for the Chamba cement plant project for a second time. To attract sufficient bids the government has also decided to build a US$2m road to the project site, according to the Times of India newspaper. Other rules and regulations surrounding the project have also been relaxed. All of the clinker used at the plant must be produced in the state and a quarter must be ground into cement in the region. The project has a proposed budget of US$140m. It has been in development since 2002.
India: The board of directors of Sagar Cements has approved investments in new cement plants in Madhya Pradesh and Odisha. It plans to invest US$21m in Satguru Cement towards building a new 1Mt/yr plant at Indore in Madhya Pradesh. The project will also include a waste heat recovery unit. The total cost of the project is US$60m. Sagar Cements will hold a 65% equity share in Satguru Cement upon completion.
In Odisha the company has approved an investment of US$15m in Jajpur Cements in Jajpur. This project will build a new 1.5Mt/yr cement plant. The project has a total budget of US$43m. It is subject to approval by the Government of Odisha and other regulatory authorities as required.
Madhya Pradesh power stations struggling to dispose of fly ash
06 December 2018India: Power stations owned by the Government of Madhya Pradesh are struggling to dispose of fly ash. The power companies were required to dispose of all fly ash in applications such as cement production or construction projects by the end of 2017, according to the Times of India newspaper. However, less than 20% of fly ash has been disposed of from the Shri Singaji Thermal Power Station (SSTPS) and only 20% fly ash has been disposed of at the Satpura Thermal Power Station (STPS).
An employee of a power plant quoted by the newspaper said that the power companies were able to dispose of fly ash where cement plants were nearby but that they found it a ‘great struggle’ elsewhere. A K Nanda, the managing director of the Madhya Pradesh Power Generation Company, said that the STPS had received no interest for an expression of interest since mid-2018. He added that the company was also approaching cement-based industries through social-media channels.
Global Carbon Budget forecasts CO2 emissions to grow by 2.7% in 2018
06 December 2018Australia: Research by the Global Carbon Budget (GCB) forecasts that CO2 emissions will grow by 2.7% year-on-year to a 37.1 ± 2 Gt CO2 in 2018. This follows a rise of 1.6% to 36.2Gt after a three-year hiatus with stable global emissions. The 2018 forecast is based on preliminary data for the first 6 – 9 months indicate a renewed growth in fossil CO2 emissions based on national emission projections for China, the US, the European Union (EU) and India and projections of gross domestic product corrected for recent changes in the carbon intensity of the economy for the rest of the world.
In 2017 the GCB estimates that cement sector constituted 4% of global fossil CO2 emissions, a rise of 1.2% from 2016. Emissions are expected to grow by 4% in China in 2018, in part due to a 1% rise in cement production. In the EU emissions are projected to fall by 0.7% with stable cement sector emissions. In India emissions are forecast to increase by 6.3% with a 13.4% rise in cement sector emissions.
Fossil CO2 emissions are based on energy statistics and cement production data. The research makes its estimate of emissions from the cement industry using a method adapted from a paper published by Robbie M Andrew of Norway’s CICERO Center for International Climate Research in 2017.
LafargeHolcim shifts to growth?
05 December 2018Fascinating information came out of LafargeHolcim last week as part of its Capital Markets Day 2018. The building materials company said it is expecting sales growth to slow in 2019 but earnings to grow. Jan Jenisch, the chief executive officer (CEO), said that the group was ‘aggressively’ moving forward in aggregates and ready-mix concrete. Alongside this, its recent divestment of its Indonesian operations was declared a ‘major’ milestone in focusing its portfolio and cutting down on debt.
Graph 1: LafargeHolcim’s major product lines by sales (%), 2015 – 2017. Source: Company reports.
Graph 1, above, gives a good idea of how LafargeHolcim has been changing its business. Cement sales as a percentage of total sales have been cut to 60% in 2017 from 67% in 2015. Ready-mix concrete and other sales (including asphalt) have risen to 26% from 19%. Aggregate sales have stayed at around 14%. If the world is making too much cement then LafargeHolcim is switching to concrete and balancing out its supply chain. Naturally, this was backed up in one of its investor presentations showing a more even split in the world building materials market between cement, concrete and aggregates. This fits with Jenisch’s background as the former head of Sika. That company manufactures a wide range of specialty chemicals for the construction and automotive industries.
That shift in focus could also be seen at the inaugural Global Cement and Concrete Association (GCCA) event in late November 2018 where concrete was very much the centre of attention from a sustainability angle. The main companies involved with the GCCA are vertically integrated ones and, by switching its product balance, LafargeHolcim seems to be moving in the same direction. In a sense this is a continuation of the synergy-seeking that was promised when Lafarge and Holcim merged in 2015.
Graph 2: Forecast cement demand growth in LafargeHolcim markets. Source: LafargeHolcim investor presentation 2018.
The other interesting question for LafargeHolcim is where next for growth? The graphic above shows a number of promising areas, including India and east Sub-Saharan Africa. Also, note the slowdown forecast for China. That renewed faith in India is timely this week given the expectation by the Indian Cement Manufacturers Association that cement demand growth in the country will rise by at least 10% in the current financial year to March 2019. If the momentum holds up after a strong first half then it will mark the fastest increase for the region since the market slowed down in 2011. LafargeHolcim doesn’t appear to be on course to grow significantly in India anytime soon but it has major ‘skin in the game’ in a promising market.
Another indication of the vibrancy of the Indian market also came this week from the Cement Sustainability Initiative (CSI) with the results of a status review from its low carbon technology roadmap (LCTR). The results were fairly good for such a large industry, with falling CO2 emissions intensity, growing co-processing rates and a decreasing clinker factor. This report carried a sad note given that the work that the CSI does will be taken over by the GCCA in January 2019. However, if this is the last we’re going to hear from the CSI, then they’ve left on a high note.
Lastly, leafing through old financial reports may not be everybody’s idea of a good time but it does let one see how LafargeHolcim’s product mix has changed. It also gives one time to catch up with old faces. Like Bruno Lafont and Eric Olsen. Once again those two former executives popped up in the latest twist of the on going Lafarge Syria legal case as a group of Yazidi women have applied to become ‘civil parties’ in the case. Whether the war crimes inflicted upon the Yazidis can be pinned on Lafarge Syria remains to be seen. Yet, for all of the LafargeHolcim’s business reorganisation, its predecessor’s conduct in Syria continues to make headlines. However much progress the company makes in turning around its fortunes, if it can be, this will continue to overshadow everything. Once a line is drawn under the affair then LafargeHolcim can move on properly.
India: The Cement Manufacturers Association (CMA) has elected Mahendra Singhi, the chief executive officer (CEO) of Dalmia Cement (Bharat), as its new president. He succeeds Shailendra Chouksey, according to the Press Trust of India. Singhi was previously the president of the Rajasthan Manufacturers Association. He also ran Shree Cement before leading Dalmia Bharat group.
Ambuja Cement introduces accident insurance for truck drivers
05 December 2018India: Ambuja Cement has introduced a comprehensive Group Personal Accident Insurance (GPA) policy for truck drivers. The new policy has a policy cover of around US$7m. It is set to benefit nearly 12,000 drivers, who are third-party employees, in case of accidental death or permanent disability. The subsidiary of Switzerland’s LafargeHolcim says it is the first cement company in the local sector to start such as a plan.
“Road safety has been a big challenge as we have little control beyond our plants’ premises. Introduction of Group Personal Accident Insurance policy for the truck drivers – who operate for round-the-clock dispatches – is yet another step by Ambuja Cement to exhibit how much we value them and their work,” said Ajay Kapur, the managing director and chief executive officer (CEO) of Ambuja Cement.
Raysut Cement preparing to invest US$700m in India
04 December 2018India: Oman’s Raysut Cement plans to invest around US$700m in India by 2022. Joey Ghose, the chief executive officer (CEO) of the company, said that about US$200m has been set aside to buy majority stakes in two local producers in early 2019, according to the Hindu newspaper. Raysut Cement wants to increase its total cement production capacity to 20Mt/yr. The investment will be funded by internal revenue and loans.
The cement producer is holding talks with companies in Chhattisgarh and the coastal region of Gujarat respectively. Each company has a production capacity of around 1.2Mt/yr. Raysut Cement also intends to invest up to US$500m in these companies following their acquisition by 2022, bringing their capacity up to 5Mt/yr.
Outside of India, Raysut Cement also says it is interested in buying a 70% stake in Kenya’s ARM Cement for US$100m. It is also in discussions to acquire buy cement producers in Uganda and Djibouti. It currently has projects in development in Somaliland and Somalia. The company also holds a majority stake in Pioneer Cement Industries Georgia.