Displaying items by tag: Investment

France: F Scott, a French group based in Switzerland, is set to construct a new grinding plant in Montoir-de-Bretagne, Loire-Atlantique, by 2027. The €55m investment is expected to create 50 jobs, according to API agency. The plant will import 300,000t/yr of blast furnace slag and a similar amount of clinker by ship, with plans to potentially switch to calcined clay for producing low-carbon cement. F Scott's proposal was approved in mid-late 2023 following a call for expressions of interest by the major maritime port of Nantes-Saint-Nazaire for a bulk products storage and industrial processing unit.

Thailand: Siam Cement Group (SCG) will allocate US$6bn between 2025 and 2030 to improve the sustainability of its businesses. The investment focuses on SCG Chemicals and SCG Cleanergy, with the latter increasing its renewable power capacity to 3500MW by 2030 and constructing a new heat battery unit for energy storage at the SCG cement plant in Saraburi. The company is also looking to expand into Vietnam, Indonesia and the Philippines.

President and chief executive Thammasak Sethaudom said “We focus on these businesses as they promise sustainable growth, in line with our inclusive green growth mission.”

India: RHI Magnesita India plans to invest approximately €442m to expand and upgrade its production capacity by the end of the financial year 2025, according to The Hindu newspaper. This follows a €331m investment over the past two years, which increased the company's refractory production capacity in India to over 0.5Mt/yr.

India: Indian cement manufacturers plan to invest approximately US$14.3bn over the next four years to increase capacity by 25%, adding 160-170Mt/yr of cement production, reports the Times of Oman newspaper. This expansion is reportedly driven by rising domestic demand and a significant infrastructure push by the government, with plans to invest US$1.7tn in infrastructure projects by 2030. The industry aims to fund this growth primarily through internal accruals, reducing reliance on debt. The top three producers —Ultratech, Ambuja, and Shree Cement — will reportedly contribute over 70% of the total capacity increase.

Brazil: Companhia Siderúrgica Nacional (CSN) will invest approximately US$530m to build a cement plant and a limestone plant in Itaperuçu, Curitiba. Noticias Financieras News has reported that the project is set to begin construction in 2025 and will create 3000 jobs. The cement plant will receive about US$500m, covering 150 hectares with an additional 70 hectares for mining.

Currently, the company is obtaining environmental licences from the Water and Land Institute and will be supported by the government when construction starts in 2025. The initiative benefits from tax incentives under the Paraná Competitivo programme, which provides a tax reduction for companies and industries that want to invest in the state, aligning with efforts to boost local employment and economic growth.

Cambodia: China-based Jiangxi Provincial Building Material Group plans to establish a cement plant in Cambodia. Company president Wensheng Chen led a delegation on 29 August 2024 to assess investment opportunities, meeting with officials from the Council for the Development of Cambodia (CDC).

Chea Vuthy, secretary-general of the CDC’s Cambodia Investment Board (CIB), said "The CIB’s management and officials look forward to providing all possible arrangements for the company to invest in Cambodia."

The mountainous eastern shore of the Adriatic Sea and its hinterlands in Europe’s Balkan Peninsula have one of the world’s highest densities of countries: six, across a broad equilateral triangle of 212,000km². All six states – Albania, Bosnia & Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia – are historically characterised by political non-alignment, carrying over from the Cold War period, and all the more notable for the presence of the EU to the north (Croatia, Hungary and Romania) and east (Bulgaria and Greece).

A nine-plant, 9Mt/yr local cement sector serves the 16.8m-strong population of the unconsolidated ‘bloc.’ Albania has 2.8Mt/yr (31%), Serbia 2.7Mt/yr (30%), Bosnia & Herzegovina 1.6Mt/yr (18%), North Macedonia 1.4Mt/yr (15%) and Kosovo 500,000t/yr (6%), while Montenegro has no cement capacity – for now. Altogether, this gives this quarter of South East Europe a capacity per capita of 539kg/yr. The industry consists entirely of companies based outside of the region. Albania’s two plants are Lebanese and Greek-owned (by Seament Holding and Titan Cement Group respectively). Titan Cement Group also controls single-plant Kosovo and North Macedonia, and competes in the Serbian cement industry alongside larger and smaller plants belonging to Switzerland-based Holcim and Ireland-based CRH, respectively. Lastly, Bosnia & Herzegovina’s capacity is shared evenly between Germany-based Heidelberg Materials and Hungary-based Talentis International Construction, with one plant each.

Lafarge Srbija, Holcim's subsidiary in Serbia, announced plans for its second plant in the country, at Ratari in Belgrade, last week. No capacity has yet emerged, but the plant will cost €110m, making something in the region of the country’s existing 0.6 – 1.2Mt/yr plants seem likely. This would give Serbia over a third of total capacity in the Central Balkans and twice the number of plants of any other country there, expanding its per-capita capacity by 22 – 44%, from a regionally low 408kg/yr to 500 – 590kg/yr.

In announcing the upcoming Ratari cement plant, Lafarge Srbija laid emphasis on its sustainability. The plant will use 1Mt/yr of ash from the adjacent Nikola Tesla B thermal power plant as a raw material in its cement production. In this way, it will help to clear the Nikola Tesla B plant’s 1600 hectare ash dumps, from which only 180,000t of ash was harvested in 2023. Circularity has been front and centre of Holcim’s discussions of its growth in Serbia for some time. When Lafarge Srbija acquired aggregates producer Teko Mining Serbia in 2022, the group indicated that the business would play a part in its development of construction and demolition materials (CDM)-based cement and concrete.

Holcim’s Strategy 2025 growth plan entails bolt-on acquisitions in ‘mature markets,’ backed by strategic divestments elsewhere. Other companies have been more explicit about a realignment towards metropolitan markets, above all in North America, at a time when they are also diversifying away from cement and into other materials. Just why a leading producer should look to build cement capacity in Serbia warrants investigation.

Serbia is the only Central Balkan member of Cembureau, the European cement association. In a European market report for 2022, the association attributed to it the continent’s fastest declining cement consumption (jointly with Slovakia), down by 11% year-on-year. Like the rest of Europe, Serbia is also gradually shrinking, its population dwindling by 0.7% year-on-year to 6.62m in 2023, which limits hopes for a longer-term recovery. Serbia remains the largest country in the Central Balkans, with 39% of the total regional population.

Several factors have compounded Serbia’s difficulties as a cement-producing country. Firstly, like the Nikola Tesla B thermal power plant, its kilns run on coal. 50% of this coal originated in Russia and Ukraine in 2021, causing the entire operation to become ‘imperilled’ after the former’s brutal invasion of the latter in February 2022, according to the Serbian Cement Industry Association. In planning terms, this was a case of putting half one’s eggs in two baskets – and dropping them both.

Secondly, Serbia’s choice of export markets is mainly confined to either the EU or global markets via the River Danube, Black Sea and Mediterranean. Either way, it is in competition with a cement exporting giant: Türkiye. Serbia sold €19.7m-worth of cement in the EU in 2023, up by 63% over the three-year period since 2020 – 31% behind Türkiye’s €28.8m (more than double its 2020 figure).¹ One other Central Balkan country had a greater reliance on the EU market: Bosnia & Herzegovina. It exported €48.4m-worth of cement there, quadruple its 2020 figure and behind only China (€133m) and the UK (€54.7) in cement exports to the bloc by value.

Bosnia & Herzegovina’s cement industry underwent a different permutation at the start of 2024: an acquisition, replacing one EU-based player with another. Lukavac Cement, which operates the 800,000t/yr Lukavac cement plant in Tuzla, changed hands from Austria-based building materials producer Asamer Baustoffe to Hungary-based property developer Talentis International Construction. Talentis International Construction belongs to one of Hungary’s major family-owned conglomerates, Mészáros Csoport.

Besides Central Europe, Balkan countries have found a ready source of investments in the past decade in China. In construction alone, Chinese investments total €13.2bn in Serbia, €2.4bn in Bosnia & Herzegovina, €915m in Montenegro and €650m in North Macedonia.² This can be a booster shot to all-important domestic cement markets, but has some risks. Montenegro previously faced bankruptcy after Export-Import Bank of China began to call in an €847m loan for construction of the still upcoming A1 motorway in the country’s Northern Region. This did not put off the Montenegrin government from signing a new memorandum of understanding (MoU) with China-based Shandong Foreign Economic and Technical Cooperation and Shandong Luqiao Group for construction of a new €54m coast road in the Coastal Region in mid-2023.

In Montenegro, UK-based private equity firm Chayton Capital is currently funding a feasibility study for a partly state-owned cement plant and building materials complex at the Pljevlja energy hub in the Northern Region. Along with an upgrade to the existing Pljevlja coal-fired power plant, the project will cost €700m.

In 2026, EU member states will begin to partly tax third-country imports of cement and other products against their specific CO₂ emissions, progressing to the implementation of a 100% Carbon Border Adjustment Mechanism (CBAM) by 2034. Montenegro led the Central Balkans’ preparations for the EU’s CBAM roll-out with the introduction of its own emissions trading system in early 2021. Bosnia & Herzegovina will follow its example by 2026, but other countries in the region have struggled to conceive of the arrangement except as part of future EU accession agreements.

Based on the average specific CO₂ emissions of cement produced in the EU, the World Bank has forecast that exporters to the bloc will be disadvantaged if their own specific emissions exceed 5.52kg CO₂eq/€.³ By contrast, any figure below this ought to offer an increased competitive edge. Albanian cement has average emissions of 4.71kg CO₂eq/€, 15% below ‘biting point’ and 13% below Türkiye’s 5.39CO₂eq/€. Albania’s government consolidated its anticipated gains by quintupling the coal tax for 2024 to €0.15/kg. The figure is based on the International Monetary Fund’s recommended minimum CO₂ emissions tax of €55.80/t, 21% shy of the current EU Emissions Trading Scheme (ETS) credit price of €70.49/t.⁴

The Central Balkans is a region of apparently slow markets and industry growth regardless – to 11 cement plants, following the completion of current and upcoming projects. A recurrent theme of capital expenditure investments and the way investors talk about them may help to explain this: sustainability. Looking at the mix of technologies in the current nine plants, these include wet kilns and fuels lines built for conventional fossil fuels. This is not to presume that any given plant might not be happy with its existing equipment as is. Nonetheless, the overall picture is of a set of veteran plants with scope to benefit from the kind of investments which all four global cement producers active in the region are already carrying out elsewhere in Europe. Such plans may already be in motion. In late 2023, Titan Cement Group’s North Macedonian subsidiary Cementarnica Usje secured shareholder approval to take two new loans of up to €27m combined.

As the latest news from Serbia showed, taking care of existing plants does not preclude also building new ones. The cement industry of the Central Balkans is finding its position in the new reduced-CO₂ global cement trade – one in which old and new work together.

References

1. Trend Economy, ‘European Union – Imports and Exports – Articles of cement,’ 28 January 2024, https://trendeconomy.com/data/h2/EuropeanUnion/6810#

2. American Enterprise Institute, 'China Global Investment Tracker,' 3 February 2024 https://www.aei.org/china-global-investment-tracker/

3. World Bank Group, ‘Relative CBAM Exposure Index,’ 15 June 2023, https://www.worldbank.org/en/data/interactive/2023/06/15/relative-cbam-exposure-index

4. Ember, 'Carbon Price Tracker,' 26 August 2024, https://ember-climate.org/data/data-tools/carbon-price-viewer/

India: Adani Ports and Special Economic Zone has opened a 2Mt/yr grinding plant in Guna, Madhya Pradesh, Mint News has reported. Together with a neighbouring firearms plant, the Adani Group subsidiary invested US$417m in the project.

India: JK Cement plans to invest US$584m in its construction of a new cement plant in the Jaisalmer district of Rajasthan. IM News has reported that the producer has already secured environmental clearance for the upcoming plant.

India: India’s top cement producers are planning to invest approximately US$15bn from 2025 - 2027 in capital expenditure, according to a report by ratings agency CRISIL. During this period, the industry is expected to expand cement grinding capacity by 130Mt/yr, which represents a fifth of the current capacity. This move is prompted by robust demand and competitive market share goals, reports the Economic Times.

Senior director and deputy chief ratings officer at CRISIL Ratings, Manish Gupta, said "Cement demand outlook remains healthy with a compound annual growth rate of 7% over the financial years 2025-2029. The surge in capital expenditure over the next three financial years will primarily cater to this growing demand as well as to the aspirations of the cement makers to improve their national presence."