Displaying items by tag: Kerala

India: Thiruvananthapuram city Corporation has conducted a trial run of its refuse-derived fuel (RDF) plant at Sanmathi Park, Chala. The plant processes up to 1t/day of legacy waste, which is hard to segregate, to produce fuel for cement plants. The plant processes 40kg of materials per 15-minute cycle. Currently, non-recyclable materials are sent to Tamil Nadu cement plants. The government plans to establish at least one RDF plant per district as a permanent solution.

India: Kerala has converted approximately 48,000t of non-recyclable waste into refuse-derived fuel (RDF) for use in cement plants, from the period of January - December 2023. The Department of Local Self-Government reported that 29,826t originated from the government sector and 18,205t from the private sector. The material was collected from households and shops, separated at collection facilities and sent to cement plants for co-processing. The local authorities managed the collection and separation of dry waste.

The state has ‘significantly’ invested in infrastructure for dry waste storage, with 167 resource recovery facilities, 1981 collection facilities, 20,904 mini collection facilities, and 57 storage warehouses over 45,522m². The Haritha Mithram mobile app has led to an increase in door-to-door waste collection and the volume of dry waste processed. The state has added 41 more warehouses so far in 2024 to manage the increased waste collection.

India: Ambuja Cements has completed its acquisition of a 54% stake in Sanghi Industries for an enterprise value of US$622m. It has funded the purchase through internal accruals. Following the acquisition, Ambuja Cement’s parent company, Adani Group, now has a cement capacity of 75Mt/yr, up by 9% from 69Mt/yr. It has also gained 1Bnt of limestone reserves.

Ambuja Cements said that the transaction would allow it to accelerate its coastal strategy in the west of the country with the aim of reaching a regional cement production capacity of 15Mt/yr. It intends to expand the captive port at the Sanghipuram cement plant to accommodate larger vessels to target markets in Gujarat, Maharashtra, Karnataka and Kerala by 2026. Debottlenecking, fuel mix changes and solar and wind projects are also being considering at the site.

The Indian corporate rumour mill ramped up this week with speculation that UltraTech Cement and Adani Group might possibly be interested in buying Heidelberg Materials' assets in India. This follows the story broken by the Economist newspaper last week that JSW Cement had made an unsolicited offer to buy them. However, when HeidelbergCement India was asked by the Bombay Stock Exchange what exactly was going on, it replied that it was unaware of any such development and that it did not comment on market speculation.

A week later though and now another related story has popped up. In this case it is unclear exactly what the Hindu newspaper actually knew. The country’s two largest cement producers are locked in a battle for capacity expansion and any opportunity is likely to be of interest to them both. Yet the newspaper did quote a source who said that any divestment by HeidelbergCement India (HCI) would involve a “full-fledged bidding process,” implying that something may be going on.

Germany-based Heidelberg Materials operates four main subsidiaries in India: Gulbarga Cement; HC Trading (India); HCI; and Zuari Cement. HCI and Zuari Cement are the main two in terms of cement production. Heidelberg Materials entered the market in 2006 via a number of purchases and a joint-venture. It then acquired Zuari Cement via its takeover of Italcementi in 2016. Between them the two subsidiaries operate four integrated plants, three grinding plants and one terminal in Central and Southern India. Altogether the company says it has a total cement production capacity of 14Mt/yr. Gulbarga Cement, meanwhile, is a long running project via Zuari Cement to build a new integrated plant at Gulbarga in Karnataka. As of mid-2021 at least the company was still finalising planning and permitting requirements.

HCI’s income fell by 3% year-on-year to US$275m in the financial year to the end of March 2023 from US$282m in the same period that ended in 2022. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 39% to US$35.4m from US$58.2m, its lowest figure since at least its 2017 financial year. The company blamed this on higher fuel prices, although it has been trying to offset this by optimising its fuel and power mix. Unfortunately, it was not able to pass these costs on to its customers through price rises due to competition and new cement plants being commissioned in its market areas. Its revenue and profits improved somewhat in the quarter to July 2023. Recent financial data on Zuari Cement appears to be unavailable, possibly in part due to the company changing the dates of its financial year in 2020. However, it reported revenue of US$249m in its 2021 financial year, a broadly comparable figure to HCI’s. When asked during the company’s earnings call in July 2023, HCI’s managing director Joydeep Mukherjee did confirm that the company was looking at a potential merger with Zuari Cement. However, the company was waiting for the right time before it would consider actually doing it.

The Indian cement market has been consolidating in recent years. Companies have been increasing their production capacity, competition has been intensifying and the spike in fuel prices in 2022 battered profits. Adani Group’s acquisition of Holcim’s businesses in 2022 has probably been the most visible example of this trend towards mergers and acquisitions. It follows UltraTech Cement’s acquisition of Jaiprakash Associates in 2017. Heidelberg Materials has been steadily selling off bits and pieces of its cement business since the mid 2010s but at a slower pace than Holcim. Selected sales have occurred in Italy, Spain, Georgia, Ukraine and various countries in Africa, but the biggest was the sale of its US West region to Martin Marietta Materials for US$2.3bn in 2021. It reinforced this process with its ‘Beyond 2020’ strategy with the stated aim to simplify its country portfolio and prioritise its strongest market positions. A large-scale divestment of its operations in India would certainly fit with this plan. Whether the current reporting is accurate or not, Heidelberg Materials’ intentions for its Indian operations are certainly worth keeping an eye on.

India: Adani Group subsidiary Adani Port has sued the government of Kerala for US$9.56m in compensation for on-going delays to the construction of the upcoming Vizhinjam port in the south of the state. A local church-led protest over the rights of fishing communities has stalled construction of the port. The New India Express newspaper has reported that Adani Port had lost over US$12m on 8 October 2022 as a result of the delay. The company rented 12 barges for the work.

The government will hold talks with protestors on 13 October 2022.

Two stories tie into larger trends this week as Global Cement Weekly says goodbye to 2021. Firstly, the state government of Odisha dropped a bombshell this week with its approval for an 18.75Mt/yr cement plant. Keen readers of the Global Cement Directory should note that, if built, this would be around the 10th largest plant worldwide and possibly the biggest outside of China. Credit to Odisha and India though for showing us how to end the year!

Odisha has been encouraging steel production in recent years. In March 2021 local press reported that Arcelor Mittal Nippon Steel (AMNS) had signed a memorandum of understanding with the state government for a US$6.6bn steel plant in the same district. Notably, a more binding agreement was intended to be signed once land and mining leases had been secured. This week the state said that its High Level Clearance Authority had approved an enlarged plan with AMNS worth US$13.5bn. This includes a 24Mt/yr steel plant and a 18.75Mt/yr cement plant. Both are to be built in phases over seven years. No further word on those land and mining leases though. How this fits into India’s overall plans for net zero CO₂ emissions by 2070 is anyone’s guess. Yet this is another cement project linked to steel production. Readers may recall that steel producer Companhia Siderúrgica Nacional (CSN) Cimentos picked up Holcim’s Brazilian cement plants in September 2021.

The other story of note this week was Cembureau’s calculation that if the European Union (EU) emissions trading scheme (ETS) CO₂ price reached Euro90/t then this could represent up to 15% of a cement plant’s production costs. The European cement association made the calculation using data from Ecorys, WIFO, the National Institute of Economic and Social Research for the EU Commission and Agora Energiewende. It wants the EU to bolster carbon leakage measures as soon as possible to fight rising import rates from outside the region. It is pushing for a delay to phasing out the free allocation in the ETS, bringing forward the proposed carbon border adjustment mechanism (CBAM) and for legislators to tackle rising carbon and energy costs generally. It should be noted that the EU ETS price reached Euro88/t on 8 December 2021 but it has stayed below that level since then.

As mentioned at the start, both of the stories above connect to larger trends, principally the cement sector’s adjustments to meet its sustainability goals. A new cement plant with a readily available supply of ground granulated blast furnace slag, such as a potential AMNS unit might have, can reduce its clinker factor more easily than its competitors. One major story in Europe over the last two years has been the steep increase in the ETS price, and Cembureau is highlighting the problems this has caused its members. Global Cement Magazine has run a number of annual round-ups in the last two issues that cover these issues and others. Dr Robert McCaffrey’s news and trends list for 2021 from the Global Cement LIVE broadcast on 21 December 2021 pulls together many of these ideas and more and is well worth watching.

We’ll finish with a list of the top 10 news stories on the Global Cement website in 2021. This reflects what readers all over the world are interested in at a particular time and the list is also biased towards stories that were published in the first half of the year as they have had more time to gather views. Yet, note, new plants in Africa and South Asia, a cement shortage story, Holcim’s decision to change its name and the problems a European producer, Cementa, has had with its quarrying. All of these touch upon larger themes.

Top 10 news stories on Global Cement website in 2021

1. Dzata Cement bagging plant to open in mid-2021
2. UK faces short-term cement shortage
3. LafargeHolcim shareholders agree to change group name to Holcim
4. SRM Concrete acquires 24 concrete plants in Dallas from Cementos Argos
5. Bestway Cement to build new cement plant in Mianwali
6. ThyssenKrupp abandons sale of ThyssenKrupp Industrial Solutions cement section
7. Holcim launches new corporate brand identity
8. Swedish supreme court rejects application by Cementa to renew mining permit for Slite cement plant
9. Larsen & Toubro wins new 3.5Mt/yr cement plant contract in Rajasthan
10. ACC breaks ground on 2.7Mt/yr Ametha cement plant project

Enjoy the Christmas and New Year break if you have one.

Global Cement Weekly will return on 5 January 2022

India: The Kerala state government aims to establish 25% state ownership of the cement industry locally. The New Indian Express newspaper has reported that the policy aims to control rising cement prices. The government said that state-owned Malabar Cements and Travancore Cements will increase their cement production. The former has already lowered its cement prices, according to the administration.

India: Cochin Port Trust has announced plans for expansion projects to the Port of Cochin in Kerala worth around US$420m. The Times of India has reported that the new developments are to include a cement terminal and bagging facility. Other initiatives covered by the memorandum of understandings include a hospital, an oil refinery, a petrochemical terminal and a multi-modal logistics hub. The projects are scheduled for completion by the end of 2023.

The National Council for Cement and Building Materials (NCB) International Seminar is running this week in New Delhi and this gives us a good opportunity to take a snapshot at the world’s second largest cement industry.

Data from the Ministry of Commerce & Industry shows comfortable cement production growth of 4.4% year-on-year to 255Mt in the first nine months of 2019. As graph 1 shows there was higher production growth in 2018 but this followed a decline in 2017, due to partly to the government’s demonetisation policy. October 2019 confirms a trend of falling year-on-year growth from August 2019 onwards following a peak growth rate in mid-2017.

Graph 1: Indian cement production in the first nine months of the year, 2015 – 2019. Source: Indian Ministry of Commerce & Industry.

Graph 2: Year-on-year change in monthly Indian cement production, 2017 – October 2019. Source: Indian Ministry of Commerce & Industry.

Analysts like ICRA have blamed the growth slowdown on the general election in mid-2019 and then the monsoon rains. By region in the six months from April to September 2019 it noted a slowdown in demand due to slowing government projects in northern, eastern and central areas. Labour concerns were reported in the north, centre and Gujarat in the west. Raw material shortages were picked up on such as water in Maharashtra and sand in the east and Andhra Pradesh. Positive growth was reported in Kerala, driven by post-flood reconstruction and low-cost housing schemes, and in Karnataka due to general construction activity. Broadly, UltraTech Cement, the country’s largest cement producer, in its November 2019 investor’s presentation, agreed with this assessment. It noted growth in the northern region and declines elsewhere. Like ICRA it too picked up on low cost housing declaring it to be a ‘key cement consumption driver.’

Away from the figures the main news stories have been continued consolidation such as the auction for Emami Cement and UltraTech Cement’s acquisition of Century Textiles and Industries. The sale of the former for plants in east and central regions has been linked to all the major local producers, including those owned by LafargeHolcim and HeidelbergCement. A report in the Hindu newspaper last week quoted a source placing UltraTech Cement and Nirma Group as the frontrunners with a valuation of around US$700m and an announcement at some point in December 2019. Despite UltraTech Cement’s market dominance nationally, its 17% production share in the east is low compared to its presence elsewhere. Nirma Group’s subsidiary Nuvoco Vistas is one of the smaller producers but, notably, it picked up Lafarge India’s assets in 2016.

Investment in new production capacity has continued with announcements from both JSW Cement and HeidelbergCement in recent weeks about expansion plans well into the mid-2020s. This follows planned projects from Dalmia Bharat Cement and Ramco Cement as well as orders from the JK Cement and Shree Cement. This ties into the capacity growth forecasts of around 120Mt over a similar timescale that the analysts were predicting in the middle of 2019. JM Financial, for example, pinned most of this growth on the south followed by the east and north. However, The India Cements said in November 2019 that it was delaying its expansion projects in Uttar Pradesh due to slowing government spending.

As is usual for a country with a low per capita cement consumption, on the national scale, one of the tensions in the Indian cement industry has been the balance between the capacity utilisation rate and the commissioning of new capacity. Its utilisation rate was below 60% in 2018 and a number of producers started reporting the negative effects of higher input and raw materials costs on their financial results. Knowing when to stop and start capacity growth is critical in this kind of environment. Specifically in India’s case curveballs such as government action on pollution and the country’s growing need for imports of coal as well as a burgeoning waste fuels sector are factors to keep an eye on. Finally, general trends such as UltraTech Cement’s focus on the Indian market, despite buying assets outside the country, are also compelling to watch as it chooses to concentrate on just one country. There are parallels here with other similarly-sized multinational that have also been focusing on core markets elsewhere in the globe.

India: State-owned producer Malabar Cements will increase production following reduced production over the last three months. The state government of Kerala has intervened following price rises, according to the Hindu newspaper. Malabar Cement sells around 6 - 8% of the cement sold in the state. The state government is also considering regulating the price of cement.