Displaying items by tag: National Cement

Rwanda: Kenya-based National Cement subsidiary Cimerwa has announced the appointment of Mangesh Verma as its CEO. He succeeds James Oduor, who oversaw the company’s acquisition by National Cement and its acquisition of Prime Cement.

Verma previously served as general manager commercial and operations for Kenya-based food producer United Millers. He previously occupied management positions in various companies in Kenya and India. He has an MBA from Dr RML Avadh University and a bachelor’s in Botany, Zoology and Chemistry from the University of Allahabad, both in India.

Kenya-based East African Portland Cement (EAPCC) made the news this week with the reopening of the company’s Athi River cement plant after a month-long shutdown. The closure was conspicuous because the company is gradually working towards increasing the integrated plant’s production capacity. The first phase of the maintenance and upgrade project saw the replacement of the production line’s kiln shell in September 2022. The current aim is to increase the unit’s cement production capacity to 1Mt/yr by mid-2026. The recent shutdown appears to have been a more normal annual renewal and repair job but EAPCC has used it as a promotional opportunity. Notably, a spokesperson for EAPCC described clinker as the “new gold” in a recent video explaining what was going on.

It’s an improvement on the financial trouble EAPC found itself stuck within in the late 2010s before the government ended up taking a controlling share in the cement producer. On this front local media reported in July 2023 that the government had found a 'strategic investor' to buy a 30% stake in the company. Nothing more has been said on this topic since then though.

The highlighting of the recent shutdown is likely to be a public relations exercise intended to project stability, but that focus on clinker is telling given that the government introduced its Export and Investment Promotion Levy in July 2023. This legislation imposed a 17.5% fee on imported clinker in order to encourage the local industry. Cement producers that rely on imported clinker - including Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot - attempted to lobby against the levy but it remains in place. This business environment helps to explain EAPCC’s renewed focus on clinker production.

One company that stands to benefit from the levy is National Cement, producer of the Simba Cement brand and a subsidiary of Devki Group. It made the news at the start of April 2024 when its subsidiary Cemtech commissioned a 6000t/day clinker plant at Sebit in West Pokot. National Cement already operates an integrated plant near Athi River, south of Nairobi. However, hot on the heels of the West Pokot plant, it is already considering building another integrated plant in the north of Kitui County, to the east of Nairobi. As reported in the local press this week, Cemtech has submitted an environmental impact assessment for the project to the local authorities.

The country has two other clinker producers: Holcim subsidiary Bamburi Cement and Mombasa Cement. The former company announced at the end of 2023 that it had signed a contract to build solar plants at its integrated plant in Mombasa and its grinding plant in Nairobi. The deal was framed as a money saver but additionally it may have been in response to a less than reliable local grid. It also said that it was removing Ordinary Portland Cement (OPC) from its product line from the start of 2024. This move challenged expectations about sustainability initiatives outside of richer countries. Yet, considering how Bamburi Cement argued against the clinker levy, there might have been some commercial thinking here too in order to sell products that use less clinker. Finally, despite completing its divestment of Uganda-based subsidiary Hima Cement for US$84m in March 2024, Bamburi Cement reported a loss of US$2.99m in 2023 compared to a profit of US$1.36m in 2022. Although it reported a rise in turnover and operating profit, it appears that taxes and legal costs related to the sale of Hima dragged the company into a loss.

Graph 1: Rolling annual cement production in Kenya, 2019 - September 2023. Source: Kenya National Bureau of Statistics (KNBS).

It’s been a difficult business environment in Kenya over the last decade given the number of companies that have faced serious financial difficulties. This list includes ARM Cement, EAPCC and Savannah Cement. The last of these companies, Savannah Cement, is currently in administration and is trying to sell its integrated plant. Yet, rolling annual cement production in Kenya has remained above 9.5Mt/yr since early 2022. The government is sticking to promoting local clinker production, and companies like Bamburi Cement, EAPCC and National Cement are making investments of varying scales. The focus, for now at least, is on clinker production in Kenya.

The US Department of Energy (DOE) announced a US$1.6bn investment in the cement sector this week. The funding was part of a total of US$6bn for 33 projects in over 20 states to decarbonise energy-intensive industries also including chemicals and refining, iron and steel, aluminium and metals, food and beverages, glass, process heat applications and pulp and paper. The DOE was keen to link the money to “the President’s Bipartisan Infrastructure Law and Inflation Reduction Act.” Politics is never far away it seems! The projects are part of the Industrial Demonstrations Program, managed by DOE’s Office of Clean Energy Demonstrations (OCED).

Table 1: Summary of US Department of Energy funding announced on March 2024 to decarbonise cement and concrete production

Table 1 above shows the main approaches each of the projects aim to use. The two most expensive ones involve carbon capture and sequestration (CCS) at Heidelberg Materials US’ Mitchell cement plant in Indiana and National Cement’s Lebec plant in California respectively. In a complimentary press release Chris Ward, the CEO of Heidelberg Materials North America, said “This substantial federal funding investment will help create the first full-scale deployment of carbon capture and storage on a cement plant in the US.” The proposed CCS unit at the plant will capture around 2Mt/yr of CO₂ from 2030. If Ward’s forecast is accurate (and no one beats them to it), then Heidelberg Materials will likely have set up the first full-scale CCS units at cement plants in both North America and Europe. This will be a significant achievement. The National Cement project, by contrast, is a mixed bag of approaches to decarbonising cement production that follows the multi-lever approach advocated for in many of the industry net-zero roadmaps. It intends to use agricultural by-products such as pistachio shells, as alternatives fuels to lower the fuel-based emissions, calcined clay to lower the clinker factor and CCS to capture the remaining 950,000t/yr of CO₂ emissions.

The other projects either involve using calcined clay or substituting limestone with calcium silicate. The Summit Materials proposal is noteworthy because it aims to build four clay calcination units in locations in Maryland, Georgia and Texas. None of these appear to be near Summit’s (or Cementos Argos’) cement plants. This suggests that the company may be intending to use calcined clay in ready-mixed concrete production. The Roanoke Cement Company calcined clay project will be baseEuropead at its cement plant in Troutville, Virginia.

The remaining two grant recipients, Brimstone and Sublime Systems, will both test the companies’ different methods of manufacturing cement by using calcium silicate instead of limestone. Brimstone’s method produces ordinary Portland cement (OPC) and supplementary cementitious materials (SCM). The company said in July 2023 that its OPC met the ASTM C150 standards. However, the company has released less information about its actual process. Sublime Systems’ uses an electrolysis approach to create its ASTM C1157-compliant cement. It calls this ‘ambient temperature electrochemical calcination.’

Investment on the same scale of the DOE has also been happening in Europe. In July 2023, for example, the European Commission announced an investment of Euro3.6bn in clean tech projects to be funded from the proceeds of the European Union emissions trading scheme (ETS). This was the third call for large-scale projects following previous announcements of recipients in 2021 and 2022. Euro1.6bn of the third call funding went towards cement and refining projects including five cement and lime projects in Belgium, Croatia, Germany and Greece. The money granted for each of these schemes was in the region of Euro115 - 235m.

Both the US and Europe are throwing serious finance at the cement industry to try and kickstart the various pathways towards net zero. They are also doing it in different ways, with the US aiming to boost its economy by onshoring sustainable industry, and Europe hoping to fund its approach via carbon taxation. Government-driven decarbonisation investment for cement in other large countries and regions around the world appears to be lagging behind the US and Europe but these may spring up as net zero targets are set, roadmaps drawn up and government policy formulated. These places could also benefit from watching what works and does not work elsewhere first. Back in the US and Europe the next tricky part of this process will be bridging the gap between government subsidy and commercial viability.

US: The US Department of Energy has selected four cement producers to receive funding under the Bipartisan Infrastructure Law and the Inflation Reduction Act.

Heidelberg Materials US secured up to US$500m for its planned 2Mt/yr carbon capture project at the Mitchell cement plant in Indiana. National Cement also received up to US$500m, for its Lebec Net Zero limestone calcined clay cement (LC3) project in California. Summit Materials received up to US$216m for a series of clay calcination projects in Georgia, Maryland and Texas. Lastly, Roanoke Cement will receive up to US$61.7m for an LC3 project at its Troutville cement plant in Virginia.  These projects also involve developing a training, education and certification consortium in the cement sector.

Portland Cement Association (PCA) president and CEO Mike Ireland said "This funding is a welcome acknowledgement from the government that America's cement manufacturers are taking ambitious and significant steps toward reaching carbon neutrality. This will move the needle closer to achieving what industry considers the 'heavyweight' of carbon solutions: carbon capture utilisation and storage (CCUS). Once established nationwide, CCUS will greatly accelerate cement manufacturers' charge toward net zero."

Senior vice president of government affairs Sean O'Neill added “From passage of the Bipartisan Energy Act of 2020 to securing funding through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, today's announcement is another major milestone in the cement industry's decarbonisation efforts. The PCA is committed to continuing to work with policymakers to ensure the regulatory environment facilitates rather than impedes these and future investments.

Rwanda: South Africa-based PPC has completed the sale of its 51% stake in the Rwandan cement producer to Kenya-based Devki Group subsidiary National Cement, for US$42.5m. The divestiture advances PPC's strategic exit of Central and East Africa. As a result, the group's financial position is now cash positive. It had previously reduced its debt by 50% to US$20.3m from US$40.7m between March 2020 and September 2023.

PPC CEO Matias Cardarelli said "I am pleased with the timely completion of the sale of our stake in Cimerwa. The disposal allows us to focus on our core Southern African markets, where we see opportunities to drive improved profitability and secure a more sustainable return on capital."

Rwanda: CIMERWA increased its sales by 12% year-on-year to US$82.5m during the 2023 financial year, which ended on 30 September 2023. Its profit also grew, by 19% to US$16.1m. KT Press news has reported that the National Cement subsidiary, at that time a subsidiary of South Africa-based PCC, attributed the growth to its optimisation of production processes, cost savings initiatives and revamped route-to-market model for both the domestic and export markets.

Chief executive officer James Oduor said "We are very proud of this past year's financial performance. We remain very optimistic that the optimisation of selling prices as well as distribution channels for both domestic and export markets will translate to an even better performance in the coming year." He added "We have put in place a strategy and roadmap to guide actions around environmental, social and governance (ESG) and remain steadfast in our commitment to continually deliver superior value to our customers, shareholders and the nation as whole, all while fulfilling on our promise to continue strengthening Rwanda."

Rwanda: Kenya-based Devki Group subsidiary National Cement signed a deal to acquire CIMERWA from International Holdings Proprietary Limited, a subsidiary of South Africa-based PPC, and minority shareholders on 17 November 2023.

KTPress News has reported that CIMERWA’s chair, Regis Rugemanshuro, said “We look forward to welcoming National Cement as our new shareholder. We are confident that they have the financial and technical resources required to support CIMERWA’s growth and expansion in line with our vision and their ambitions in the region.”

Narendra Raval, chair of Devki Group, said “We are committed to a long-term strategic partnership with CIMERWA. We believe in the potential for this business and its people and are excited by the opportunity to support infrastructure development in the region in line with our strategic expansion ambitions.”

US: The Portland Cement Association (PCA) has announced the winners of its 2023 Safety Innovation and Chairman's Safety Performance Awards.

The Safety Innovation Award Program recognises companies that have developed innovative practices, projects and programs that improve safety at cement plants in the US. Entries are judged in five areas: innovation, ease of use and ease of construction, effectiveness and risk prevention. The recipients were:

• Distribution: Continental Cement, Continental Port Allen Terminal, Chesterfield, Missouri
• Quarry: CalPortland Company, CalPortland Oro Grande Plant, Oro Grande, California
• Pyroprocessing: GCC of America, GCC Tijeras Plant, Tijeras, New Mexio
• General Facility: Mitsubishi Cement Corporation, Mitsubishi Cushenbury Plant, Lucerne Valley, California

The Chairman’s Safety Performance Awards are given to member cement plants that did not have a reportable injury or illness during the year. Fifteen plants achieved this in 2023, which represented more than 10% of all active cement facilities in the US and its territories. The recipients were:

• Argos USA, Atlanta, Georgia
• Argos USA, Newberry, Florida
• Argos Puerto Rico Corp, Dorado, Puerto Rico
• Ash Grove Cement Company (CRH), Durkee, Oregon
• Ash Grove Cement Company (CRH), Midlothian, Texas
• Buzzi Unicem USA, Chattanooga, Tennessee
• Buzzi Unicem USA, Maryneal, Texas
• CalPortland Company, Rillito, Arizona
• GCC of America, Odessa, Texas
• Heidelberg Materials, Bellingham, Washington
• Martin Marietta Materials, New Braunfels, Texas
• Martin Marietta Materials, Midlothian, Texas
• Martin Marietta Materials, Tehachapi, California
• National Cement Company of California, Kern, California
• St Marys Cement (Votorantim), Detroit, Michigan

Kenya: Parliament's Finance and National Planning Committee has rejected a petition from the Kenya Association of Manufacturers (KAM) for the removal of the 10% customs duty on imports of clinker. Business Daily News has reported that KAM member Rai Cement said that the duty will force cement plants to shut due to high costs. The committee, however, concluded that the levy aims to encourage local manufacturing, promote exports and create jobs for Kenyans.

National Cement, which operates the 1.95Mt/yr Kajiado cement plant in Merrueshi-Mbirikani, opposed the KAM line by submitting its own petition for an increase in the clinker import duty to 25%.

Eagle Materials announced this week that it had completed the acquisition of Martin Marietta’s cement import business in the north of California. A key part of the deal includes the sale of a cement terminal at Stockton. No value for the transaction has been disclosed.

The agreement prompts discussion for two immediate reasons. Firstly, it continues the enlargement of Eagle Materials’ cement business with its second terminal in California. The company operates its cement business in a band running almost right across the US. It runs seven cement plants in seven different states and jointly operates, with Heidelberg Materials, a plant in Texas too. It also runs a network of 25 cement terminals, including the new acquisition, stretching from California in the west to Pennsylvania in the east.

Eagle Materials’ focus on the cement sector also harks back to its previous plans to separate its various businesses. In 2019 it approved a plan to split its heavy materials and light materials businesses into two publicly-traded entities. The decision was made in response to pressure by shareholder Sachem Head Capital Management to make the company, in its view, more valuable. A strategic portfolio review followed but the planned separation was subsequently delayed due to the Covid-19 pandemic and poor market conditions, amongst other reasons. The board of the company then cancelled the proposed separation in 2021 citing the financial benefits of a diversified business, opportunities for strategic growth and the divestment of its oil and gas proppants business.

The other talking point is that the Eagle Materials transaction follows a positive response by the Federal Trade Commission (FTC) in response to the abandonment of CalPortland’s attempt to buy the Tehachapi cement plant in southern California and two related terminals from Martin Marietta. CalPortland’s parent company Taiheiyo Cement said in late April 2023 that it had terminated the acquisition agreement originally announced in mid-2022 due to its inability to obtain approval from the FTC in a timely manner. Whilst the FTC did not say if it had directly tried to block the proposed deal it did say, “The abandonment is a victory for consumers and preserves competition for a key component of Southern California’s construction and infrastructure industries.”

The FTC argued that the transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market, and was “presumptively illegal.” It noted that the Tehachapi plant was only about 20km away from CalPortland’s Mojave cement plant. It went on to say that, if the deal had gone ahead, CalPortland was poised to own half of the cement plants serving the Southern California market. It added that it would have been well-placed to raise its prices and that, “the transaction would have also increased the likelihood for coordinated action between the remaining competitors in this concentrated market.”

The de-facto block by the FTC of the Tehachapi sale now opens up the question of who Martin Marietta might try to sell it to next. Cemex, Mitsubishi Cement and National Cement (Vicat) are the obvious contenders given that they each also run integrated plants in the state. Of course another company, especially one with some form of existing distribution network, may express interest. Given its enlarged presence in Northern California, Eagle Materials springs to mind. Other potential buyers are, of course, available.