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Companhia Siderúrgica Nacional (CSN) Cimentos was confirmed this week as the agreed buyer for Holcim’s Brazilian cement business for US$1.03bn. The deal includes five integrated cement plants, four grinding plants and 19 ready-mix concrete facilities. CSN is now poised to become Brazil’s third-largest cement producer by production capacity after Votorantim and InterCement. Or second place if you believe CSN’s cheeky claims about a competitor’s idle capacity!

Figure 1: Map of cement plants included in CSN Cimentos’ deal to buy LafargeHolcim Brazil assets. Source: CSN Investor Relations website.

CSN originally started out in steel production and this remains the major part of its operations to the present day. In 2020 it reported revenue of US$5.74bn. Around 55% of this came from its steel business, 42% from mining, 5% in logistics and only 3% came from its cement segment. CSN’s path in the cement sector started in 2009 when it started grinding blast furnace slag and clinker at its Presidente Vargas Plant at Volta Redonda in Rio de Janeiro state. It then started clinker production in 2011 at its integrated Arcos plant in Minas Gerais. Not a lot happened for the next decade, publicly at least, as the country faced an economic downturn and national cement sales sunk to a low in 2017. From around 2019, CSN Cimentos then started talking about a number of new proposed plant projects elsewhere in Brazil, dependent on market growth and an anticipated initial public offering (IPO). These included plants at Ceará, Sergipe, Pará and Paraná and expansion to the existing units in the south-east. Then CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021.

It is worth noting that the Holcim acquisition is subject to approval by the local competition authority. For example, the Cimento Elizabeth plant and Holcim’s Caaporã plant are both in Paraíba state and within about 30km of each other. If approved, this would give CSN Cimentos two of the four integrated plants in the state, with the other two operated by Votorantim and InterCement respectively. CSN also stands to pick up four integrated plants in Minas Gerais from Holcim to add to the one it holds at present. Although this would seem to be of less concern due to the high number of plants in the state.

Holcim has made a point of saying that its divestment in Brazil is part of its strategy to refocus on sustainable building solutions with the proceeds going towards its Solutions & Products business following the Firestone acquisition that completed in early 2021. It has also stated previously that it wants to concentrate on core markets with long term prospects. In this context a major steelmaker like CSN diversifying into cement is a contrast. Both industries are high CO₂ emitters so CSN is hardly moving away from carbon-intensive sectors. Yet the two have operational, economic and sustainability synergies through the use of slag in cement production. This puts CSN Cimentos in company with Votorantim in Brazil and JSW Cement in India, two other steel manufacturers that also produce cement. Whatever else happens at the 26th United Nations Climate Change conference (COP26) in November 2021, it seems unlikely that global demand for steel or cement is likely to be significantly reduced. CSN Cimentos is now going to resume its IPO of shares to raise funds for the Holcim acquisition.

Acquisitions are all about timing. The CSN Cimentos-Holcim deal follows the purchase of CRH Brazil by Buzzi Unicem’s Companhia Nacional de Cimento (CNC) joint-venture earlier in 2021. As mentioned above, the cement market in Brazil has been doing well since it started recovering in 2018. The coronavirus pandemic barely slowed this down due to weak lockdown measures compared to other countries. The current run of sales growth may be tapering off based on the latest National Cement Industry Association (SNIC) figures for August 2021. Rolling annual totals on a monthly basis had been growing since mid-2019 but this started to slow in May 2021. Annual sales will be up in 2021 based on the figures so far this year but after that, who knows? A CSN investors’ day document in December 2020 predicted, as one would expect, steady cement consumption growth in Brazil until at least 2025, based on correlated forecast growth in the general economy. Yet fears of inflation, rising prices and political uncertainty ahead of the next general election in late 2022 may undermine this. InterCement, for example, cancelled a proposed IPO in July 2021 due to low valuations amid investor uncertainty. CSN Cimentos may encounter similar issues with its own planned IPO or face over-leveraging itself when it picks up the tab for LafargeHolcim Brazil. Either way, CSN decided to take the risk on its path to becoming Brazil’s third largest cement producer.

India: Shree Cement is planning to launch three projects with a total value of US$646m. The Press Trust of India newspaper has reported that US$476m-worth of the sum will go towards establishing a new 3.8Mt/yr integrated cement plant at Nawalgarh in Rajasthan’s Jhunjhunu district. The producer will invest a further US$102m in establishing a grinding plant in Purulia district, West Bengal, to take advantage of ‘favourable’ demand. Lastly, it will invest US$68m in installing solar power plants at ‘various’ cement plants across India.

Shree Cement said “The company has committed to maximising the use of clean energy in its operations. Setting up of the above solar power plants will enhance the proportion of clean energy usage in the total energy consumption of the company.”

Egypt: Suez Cement is planning to invest US$20m on an 18MW waste heat recovery unit at its integrated Helwan plant. The subsidiary of Germany-based HeidelbergCement started the project in mid-2021 and expects to complete it by the end of 2022. It is currently negotiating with suppliers and hopes to appoint one soon with construction scheduled for 2022.

US: LafargeHolcim US says that the integrated 2Mt/yr Midlothian plant in Texas will become the first cement plant in the country to fully convert to Portland Limestone Cement (PLC) production. The unit will switch to producing the company’s OneCem product, a blended cement manufactured with up to 15% of finely ground limestone. The move is intended to help LafargeHolcim US and its customers meet sustainable construction goals and lower carbon emissions.

“This is an important, but not unique, step for us. We were the first to produce OneCem, a PLC product, in one of the fastest-growing metro areas in the country, and fuel our industry’s step towards a zero carbon future,” said Patrick Cleary, senior vice president of sales, LafargeHolcim US Cement.

The company is promoting OneCem as an alternative to Ordinary Portland Cement in terms of concrete workability, set time, durability and strength development. It can be incorporated into a broad spectrum of applications that will support foundational structures. The product is available in the Western and Southern regions of the US and the company plans to ‘rapidly’ expand production.

Asia: France-based Fives says it has commissioned a Pillard Novaflam Evolution burner for an unnamed cement plant in East Asia. Due to the travel restrictions linked to the coronavirus pandemic, the commissioning was carried out remotely with the cooperation of the customer. A 143MW coal and petcoke burner with oil as a start-up fuel was supplied as a replacement for an old burner. The aim of this replacement was to increase the kiln capacity to 9000t/day without impacting its NO_x emissions whilst maintaining a good clinker quality despite a high sulphur content in the petcoke. The installation is now in production and an intervention is planned in the coming weeks to further optimise the operation.

Austria: Germany-based Claudius Peters has supplied a conveyor and silos for Schretter & Cie’s integrated Vils Cement plant in Tirol. In the first part of the project Claudius Peters Projects delivered an aeroslide conveying system from the cement mill to the existing silos, including silo bottom aeration systems. For the second part, it built a silo group consisting of three 3500m³ units with expansion chamber technology equipped with truck loading facilities. Each of the silos can be operated at a loading capacity of 250t/hr by a mobile loader with a travelling range of 10m.

Oman: Oman Cement plans to upgrade its 4.2Mt/yr Rusayl cement plant. Reuters News has reported that the producers’ plans consist of a 25% capacity expansion of Line 3 of the plant to 5000t/day from 4000t/day and the construction of a new 10,000t/day Line 4. Lines 1 and 2 will subsequently shut down. Thus, the upgrade will increase the plant’s nominal clinker capacity to 15,000t/day from 8700t/day.

Kenya: Simba Cement plans to begin building a cement plant in West Pokot in 2022. The Star newspaper has reported that the Devki Group subsidiary believes the producer will complete the project 18 months after the start of construction.

Devki Group chair Narendra Raval said “The firm is currently holding public participation and consultative forums with residents and leaders of the area. We want to make sure the community makes the best out of this project.”

Libya: Ahmed Abuhisa, the Minister of Industry and Minerals, has laid the foundation stone for a new cement plant at Al-Shahba. Al-Shahba Cement and National Mining Corporation have signed a deal to build the 1Mt/yr plant in Cyrenaica region, according to the Libya Herald newspaper. The project is part of the ministry’s plan to localise industry in the country, provide job opportunities for young people and drive development. Al-Shahba, which is 100km from the city of Tobruk, is without paved roads and suffers from water scarcity, limited electricity access and the loss of public services.

Brazil: Companhia Siderúrgica Nacional (CSN) has agreed to acquire Switzerland-based Holcim’s Brazilian cement business for US$1.03bn. The business’ assets include five integrated cement plants, four grinding plants and 19 ready-mix concrete facilities. Holcim said that the deal strengthens its balance sheet by ‘significantly’ reducing its debt ratio. It will use the proceeds to invest in its solutions and products business, building its recently acquired subsidiary Firestone. Latin America remains a core strategic growth region, according to the company.

Cheif executive officer Jan Jenisch said “This divestment is another step in our transformation to become the global leader in innovative and sustainable building solutions, giving us the flexibility to continue investing in attractive growth opportunities. We are pleased to have found a responsible buyer with CSN that will develop the Brazilian business over the long term.”