Displaying items by tag: Türkiye

Türkiye: OYAK Cement has announced net sales of US$333m and a 17% year-on-year rise in earnings before interest, taxation, depreciation and amortisation (EBITDA) to US$111m for the third quarter of 2024. The company recorded a net profit of US$61.3m for the third quarter and US$155m for the first nine months of 2024.

Türkiye: Çimsa will invest US$31.8m in an expansion to its calcium aluminate cement production facilities at its Mersin Cement subsidiary. The upgrade will reportedly be completed by the end of the first half of 2026.

Italy: Cementir Holding has blamed a fall in earnings in the first nine months of 2024 on “lower results achieved in all geographical areas except Egypt.” It added that sales had fallen due to a decrease in volumes in some places and negative currency effects in Türkiye and Egypt. The group’s revenue fell by 5% year-on-year to €1.24bn in the first nine months of 2024, from €1.30bn in the same period in 2023. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 9% to €296m from €326m. Sales volumes of cement and clinker remained stable at 7.98Mt. It noted that volumes increases were reported in Türkiye and, to a lesser extent, in Malaysia and the US. However, volumes of ready-mixed concrete rose by 5% to 3.33Mm³ from 3.18Mm³.

Francesco Caltagirone Jr, chair and CEO, said “The results for the first nine months of 2024 are in line with our expectations and, after several quarters of contraction, signs of a market turnaround in some geographies are emerging in the third quarter of 2024. We are strengthening our competitive position through initiatives such as: the investment on Kiln 4 in Belgium, the restart of the second line in Egypt, the acquisition in concrete in Nordic & Baltic, a new limestone quarry in Malaysia, and the repurchase of a large part of the minority interest in our Egyptian subsidiary, to prepare ourselves for any upcoming market opportunities”.

Türkiye: The Ministry of Environment, Urbanisation and Climate Change has initiated a new process for the ‘Integrated Cement Factory and Raw Material Quarries Project’ in Muğla, which had previously been halted due to local opposition and judicial rulings. A meeting of the Investigation and Evaluation Commission (IAC) is scheduled for 28 November 2024, according to the Ministry's announcement on 6 November 2024.

According to Railly News, the project ran into difficulties when construction by local company Muğla Cement Industry and Trade began in 2021. Following environmental concerns, the Muğla 2nd Administrative Court cancelled the construction permit and the environmental impact assessment (EIA) 'positive' decision, citing non-compliance with the law. A request to appeal was denied.

In response to these developments, local environmental groups and residents have continued their legal efforts, most recently challenging the designation of the plant area as an 'Industrial Area' in the regional development plan. The case remains pending.

Türkiye: Limak Çimento has carried out a month-long test on hydrogen fuel blends at its cement plant in Ankara. The company partnered with France-based Air Liquide for the supply of hydrogen, which was injected into the preheater tower. The pair previously used a 50% hydrogen blend during a test at Limak’s Polatli plant in June 2024, with ‘excellent results’, according to Hydrogen Insight.

Erkam Kocakerim, CEO of Limak Çimento, said "The purpose of this investment is to enable safe and effective use of hydrogen technologies in our cement kilns and to increase the rate of alternative fuel substitution. We aim to operate the kilns in our seven integrated cement plants with a low-carbon fuel mix between 2030 and 2035."

Türkiye: IFC has provided a US$70m 'green' loan to Çimsa to support its decarbonisation efforts, according to a press release from the IFC. The investment will fund energy efficiency projects, modernisation and the installation of solar photovoltaic panels. Expected outcomes include a 10% reduction in greenhouse gas emissions and increasing renewable energy usage to 20% by 2025. IFC's Cement Decarbonisation Tool Advisory Service will also assist Çimsa in identifying operational enhancements and further investments for achieving its sustainability goals.

Türkiye: Türkiye exported cement worth US$377m in September 2024, 1.4% lower in value than in September 2023, according to Türkiye's Ministry of Trade. The total value of its exports between 1 October 2023 and 30 September 2024 came to US$4.2bn.

The value of cement products exported from Türkiye to Azerbaijan specifically amounted to US$39.6m during the first nine months of 2024, representing a 7.7% increase year-on-year. In September 2024 the value of cement exported was US$5.1m, a year-on-year rise of 8.8%.

Türkiye: Çimsa Çimento has appointed Ozan Keskin as its Vice President of Operations. He will succeed Memet Metin Çalışkan in the role from the start of November 2024.

Keskin has worked in the cement industry for over 20 years. He started as a maintenance engineer at OYAK Adana Çimento in 2003. He later worked for Aslan Çimento, eventually becoming Technical Services Manager in 2015 and Investments & Project Manager in 2017. He then jointed Çimsa Çimento in 2018 as Project Manager. He subsequently became a Plant Manager and Investments and Maintenance Director. He is a graduate in mechanical engineering from the Middle East Technical University in Ankara.

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/

Türkiye: Türkiye’s global cement exports declined by 9% to US$2.1bn during the first half of 2024, according to a statement from the Ministry of Trade. In June 2024, exports dropped by 18% to US$336.5m. However, Türkiye's cement exports to Azerbaijan remained steady at US$24.8m during the first half of 2024. In June 2024, exports to Azerbaijan rose by 16.5% year-on-year to US$3.5m. Since the first half of 2023, Türkiye exported cement products valued at US$4.3bn.