Displaying items by tag: Schwenk Zement

Lithuania: Arturas Zaremba, the head of Akmenes Cementas, has warned that government proposals to increase the import tax on coal in 2024 and the abolition of subsidies for the fuel will affect the company. The country’s parliament is also proposing scaling the import tax based on a CO₂ scale, according to the Baltic Business Daily newspaper. Zaremba said that the cement producer uses 130,000t/yr of coal. However, it is currently investing Euro22m on an upgrade to its Akmenes integrated plant to allow it to switch to using a higher proportion of solid-recovered fuel. It currently has a 10% alternative fuels substitution rate using dried sewage sludge and tyres.

Zaremba said "There will be some impact because we will still have some of that coal left, but not as much as we would have had without the investment. I have not followed how much they plan to increase the excise duty, but we need to look into how much that would be in the financial terms. Any increase has an impact."

Heidelberg Materials’ reaction to changes in the law in Hungary received attention this week in the German press. The government introduced its Act on Hungarian Architecture in March 2023 that will enable it to set production levels and prices upon foreign-owned cement producers when the new legislation takes force in July 2023. An unnamed executive at the Germany-based Heidelberg Materials told Der Spiegel that, "These regulations represent a complete violation of all rules of the European single market.” They added that the Hungarian government appeared to be trying to force the producer to sell up. The report further alleges that the owners of Duna-Dráva Cement, Heidelberg Materials and Schwenk Zement, also received an offer to buy them out in mid-2022 from an individual with links to Prime Minister Victor Orbán.

This latest move to corral the cement sector in Hungary follows a number of recent changes in legislation. Notably, Decree 404 was introduced in July 2021. This set a 90% tax on the ‘excess’ profits of cement, plaster, chalk, gravel, sand, clay, lime and gypsum producers with the stated intention of wanting to prevent rising prices. The government set a threshold price for cement of Euro56/t at the time. At the same time it also blocked exports of cement and other raw materials of declared strategic importance unless affected companies had registered with the Ministry of the Interior. The European Commission (EC) responded to a parliamentary question on the matter in November 2021 saying that it had sent a formal letter to Hungary informing it that it was breaching some parts of the Treaty on the Functioning of the European Union (EU) on the free movement of goods. Although it noted that the new law also affected exports outside the EU, which was beyond the EC's remit. It added that the so-called ‘mining royalties’ did not seem to breach EU tax law.

Concerns over these issues between Hungary and Germany also surfaced in October 2022 when Orbán met with the German Chancellor Olaf Scholz. At this time Thomas Spannagl, the head of Schwenk Zement, said that the windfall profit tax in Hungary had a "serious negative" impact on business and that importers were not affected in the same way.

Heidelberg Materials’ subsidiary Duna-Dráva Cement is the largest cement producer by production capacity in Hungary with two integrated plants at Beremend and Vác. Together they have a production capacity of 2.8Mt/yr, according to the Global Cement Directory 2023, or about 70% of the country’s active national capacity. Heidelberg Materials reported that its result from equity accounted investments fell by 27% year-on-year to Euro262m in 2022 from Euro356m in 2023 due to a decline in earnings particularly in China and Hungary. This compares to a 4% drop to Euro3.74bn in its result from current operations before depreciation and amortisation across the whole business. Despite this it also noted that Hungary’s overall economic output had grown by 5% in 2022.

Just before the new laws affecting cement companies starting arriving in mid-July 2021, the Hungarian Competition Authority started an investigation into a “drastic” increase in raw material prices. This followed a warning a year earlier in 2020 that it had started competition supervision proceedings against the three main market participants: Duna-Dráva Cement, Lafarge Cement and CRH. All three are foreign-owned companies.

Lafarge Cement Hungary operates the Kiralyegyháza plant and it is due to change its name to Holcim in May 2023. Its predecessor companies, Holcim and Lafarge, also used to run plants at Hejocsaba and Lábatlan before the merger in 2015. However, the Hejocsaba plant ran into legal problems between Holcim and another investor, shut in 2011 and was later forcibly taken over by the other party in 2014. Today the plant operates as Hejőcsabai Cement- és Mészipari (HCM) but cement production is reportedly yet to restart nearly a decade later and Holcim says that legal proceedings are still ongoing. The Lábatlan plant, meanwhile, closed for good in the early 2010s. CRH took over some of Holcim’s other operations in Hungary in 2015 at the same time as the formation of LafargeHolcim but does not run any cement plants in the country at present. It does own cement plants in nearby countries that are able to supply the Hungarian market as well as running 19 concrete units. It describes itself as the “number two player” in the local market. It wasn’t specific on Hungary in its financial results for 2022 but it did describe sales in its Europe East region as being ahead of 2021, “due to a strong focus on commercial actions to offset significant cost inflation.”

Construction costs in Hungary do appear to have grown faster than other European countries in the second half of 2021 as the country came out of the coronavirus pandemic. However, the country's anti-immigrant labour stance may have also contributed to the situation, in addition to the high-energy prices and supply chain bottlenecks experienced elsewhere. In addition, cement companies are also capable of monopolistic behaviour. For example, Duna-Dráva Cement’s proposed acquisition of Cemex Croatia was blocked by the EC back in 2017 on competition grounds. However, given how international the cement industry has become, it is surprising to see this kind of treatment from a government within the European Union.

Hungary: The government has enacted an 'architecture law' which will increase its role in decision making within the Hungarian cement industry. When it enters force in July 2023, the law will let the government set producers' cement volumes and prices. It will also require the companies to sell their products to the market-leading retail network, and will give the government a right of first refusal over future divestments.

Der Spiegel News has reported that the government previously enacted decrees that further regulated limestone production, imposed 90% 'additional mining levies' and required producers to obtain special permits to export their cement abroad. Duna-Dráva Cement, a subsidiary of Heidelberg Materials and Schwenk Zement, reportedly began making losses on its bagged cement sales due to the new rules. Both Germany-based owners separately received letters inviting them to sell a stake in Duna-Dráva Cement, and thanking them for their cooperation, in 2022. The sender identified themself as the owner of an 'intensively expanding group of companies' with a 'dominant position in the Hungarian building materials industry.' Anti-corruption organisation Transparency International identified the correspondent as a friend of Hungarian President Viktor Orbán.

Regarding the incoming change to the law, a representative of Heidelberg Materials said "These regulations are a total violation of all the rules of the European internal market. It is obvious that the government wants to pressure foreign cement manufacturers to sell.”

Estonia: The Estonian Competition Authority has granted permission to Schwenk Eesti to gain a majority stake in ready-mix concrete producer Betoonimeister. Baltic Business Daily News has reported that Betoonimeister's six ready-mix concrete batching plants are located in Tallinn, Tartu, Johvi, Tapa and Parnu.

Germany: The Catch4Climate project says it is ready to build an oxyfuel pilot unit at Schwenk Zement’s Mergelstetten plant following approval by the Stuttgart Regional Council. The project comprises Dyckerhoff, Heidelberg Materials, Schwenk Zement and Vicat, and It has set up a research company called CI4C to run it. Over Euro120m will be invested towards building a dedicated 450t/day production line to test the oxyfuel process. Jürgen Thormann, the Technical Managing Director of CI4C, said that this is the first time a so-called ‘pure’ oxyfuel process will be used for CO₂ capture. At a later stage in the project the consortium plans to use the captured CO₂ to produce so-called ‘reFuels’, climate-neutral synthetic fuels such as kerosene for aircraft, with the help of renewable electrical energy. Commissioning of the unit is scheduled for mid-2024.

Estonia: Competition authorities have opened additional proceedings into Schwenk Zement subsidiary Schwenk Eesti's deal to acquire a majority stake in Betoonimeister. The parties concluded their agreement in late September 2022.

Betoonimeister supplies ready-mix concrete across Estonia from six batching plants in Jõhvi, Pärnu, Tapa, Tallinn and Tartu. It employs a total of 90 people.

Latvia: Germany-based Christian Pfeiffer says that it has successfully commissioned the new Broceni grinding plant for Schwenk Latvija. The supplier said that the plant is able to produce cement up to a fineness of 5600 Blaine and is one of the most sustainable grinding plants in Europe.

Schwenk Latvija previously announced a planned investment of Euro34m in a new 170t/day mill and a 12,500t silo at the site of its former Broceni integrated cement plant.

Germany: ThyssenKrupp Industrial Solutions’ Polysius division says that it has been commissioned by Buzzi Unicem, HeidelbergCement, Schwenk Zement and Vicat to build a pure oxyfuel kiln system at the Mergelstetten cement plant as part of the Cement Innovation for Climate (CI4C) project. No dates of the start of construction or final project commissioning of the industrial trial have been disclosed. CI4C was originally formed in 2019.

The Polysius pure oxyfuel process is a new type of clinker production process in which the otherwise normal ambient air is replaced by pure oxygen in the kiln combustion process. One advantage of the technology is that atmospheric nitrogen is eliminated from the clinker burning process leading to much higher concentrations of CO₂ in the exhaust gas compared to a conventional kiln. As such the process aims to concentrate, capture and reuse almost 100% of the CO₂ produced in a cost-effective manner. The medium-term goal is to further process the captured CO₂ with the help of renewable energy into products such as kerosene for air traffic.

Lithuania: The Lithuanian Competition Council has permitted Germany-based Schwenk Zement to increase its stake in Akmenes Cement to 97% from 47%. The markets authority also granted permission for Schwenk Zement’s 75% acquisition of limestone and clay producer Kalcitas and 100% acquisitions of building materials suppliers Cemeka and Lanku Bokstai.

Lithuania: Germany-based Schwenk Zement has sought to increase its stake in 50% subsidiary Akmenes Cement to 97%. The company is also seeking the acquisition of a 75% stake in limestone supplier Kalcitas. The producer took over Mexico-based Cemex’s stake in Akmenes Cement in 2019.