Displaying items by tag: grinding plant
CRH looks south
20 December 2023We end 2023 with the news that CRH and Barro Group are preparing to acquire AdBri in Australia. The two companies have teamed up to buy all the ordinary shares in the building materials company that they do not already own for about US$750m. Barro already owns a 43% stake in AdBri and CRH owns just under 5% via a cash settled derivative. The plan is for CRH to buy the remaining shares so it ends up with a 57% holding in total. It requires shareholder approval at AdBri, regulatory consent and other conditions to be met to move forward.
Barro Group has been increasing its stake gradually in AdBri over the last 25 years. It hit 43% in 2019 and subsequently the Australian Competition and Consumer Commission (ACCC) investigated it. Barro Group’s course was cleared in 2020, with the ACCC determining that the acquisition would not ‘substantially lessen’ competition in the market between the two companies that overlap for the supply of cement, ready-mixed concrete and aggregates. It also found Barro and AdBri would continue to face competition locally from Boral, Holcim and Hanson. However the ACCC added that it might reopen its investigation if it received further information that altered its conclusion at that time.
The dynamic between Barro Group and AdBri is complicated because they are, at present, both partners and rivals. Barro owns a significant minority stake in AdBri, and its managing director, Raymond Barro, became the chair of the latter company in 2019. The two companies operate a joint venture, Independent Cement and Lime, which distributes cement and lime in Victoria and New South Wales, and runs a slag cement grinding plant in Melbourne. They sell goods to each other too. Yet Barro Group and AdBri also compete against each other, principally in the sale of concrete. Comments made by Raymond Barro to the Australian Financial Review newspaper indicate that this competition looks set to continue even if CRH and Barro Group buy AdBri, given the family ownership structure of the former company. To this end AdBri set up a governance framework for its board in 2015 in part to handle the interaction between the business interests of itself and Barro Group, and this was further revised in 2019. Due to this convoluted relationship, it set up an independent board committee to assess the current proposal from CRH and Barro Group with Barro family nominee directors removed from the consideration process. It then approved the proposal to the next step of negotiations.
The general consensus is that the CRH-Barro Group deal looks likely to succeed. CRH has a limited presence in Australia and Barro Group’s ownership of AdBri doesn’t seem to change much under the limited details released publicly about the proposal. Potential problems could arise from a rival bidder, if the ACCC decided to re-evaluate the situation or if the Foreign Investment Review Board became involved, but we’ll have to wait and see about these. AdBri owns two of the country’s five clinker plants, both in South Australia. Subsidiary Cockburn Cement also used to produce clinker at its Munster plant in Western Australia but this moved over to grinding-only in the mid-2010s. The company also runs three grinding plants. One of these, Cockburn Cement’s Kwinana plant, has been undergoing a costly upgrade project that overshot its original estimate. Purely in terms of active integrated cement production capacity, this places the deal at US$875/t, a high figure but not as much as CRH stumped up to buy Martin Marietta Materials’ South Texas business in November 2023.
This then leads to how CRH and Barro Group might interact running the business in the future. CRH is by far the bigger company, in charge of a multinational building materials concern, and among the world’s largest producers of cement and concrete outside of China. Its decision to make a large acquisition outside of Europe and North America marks a turning point in its growth strategy since the late 2010s. In a statement, CRH’s head Albert Manifold was quick to compare how Australia was “similar in nature to the Southern US and Central and Eastern Europe where we have a significant presence.” Barro Group, meanwhile, has doggedly been taking over AdBri bit by bit over a quarter of a century. What it gains from the current proposal is mostly unknown, but simplifying the ownership structure and delisting from the Australian Stock Exchange could offer a number of advantages to it. Their ambitions appear aligned for the moment but this may not stay the case forever.
That’s it from Global Cement Weekly for 2023. Enjoy the seasonal break if you have one. Global Cement Weekly will return on 3 January 2024.
Adbri updates market on Kwinana grinding plant expansion
15 December 2023Australia: Adbri says that the cost and timing of its on-going expansion of its Kwinana grinding plant in Western Australia remain ‘on track.’ To date, the producer has invested US$161m in the expansion, towards a projected cost of US$385-420m.
In an accompanying trading update, Adbri said that it expects its full-year earnings before interest, taxation, depreciation and amortisation (EBITDA) to be US$208 -212m in 2023, ‘moderately’ above its previous outlook. In 2022, its earnings before interest and taxation (EBIT) amounted to US$106m. The company has forecast total capital expenditure investments for 2023 of US$208-215m. It previously expected to invest US$221-235m during 2023.
Adani Group to invest US$204m in Uttarakhand cement sector
12 December 2023India: Adani Group announced planned investments of US$204m in its cement operations in the state of Uttarakhand. The Business Standard newspaper has reported that the investments are made up of US$36m in an expansion to more than double the capacity of Ambuja Cement’s Roorkee grinding plant to 3Mt/yr and US$168m in the construction of a new 4Mt/yr grinding plant.
Kenya: Frontier Energy subsidiary Momnai Energy has begun building two solar power plants at sites belonging to Bamburi Cement. One 14.5MW plant will be situated at the producer’s 1.1Mt/yr Mombasa cement plant, while another 5MW plant will be situated at its Nairobi grinding plant. When commissioned, they will cover 30% of the producer’s energy consumption. Momnai Energy will finance, manage and maintain the solar power plants on the basis of a power purchase agreement (PPA) signed between the parties in 2021.
Bamburi Cement chief executive officer Mohit Kapoor said that the project ‘represents one of Kenya's most substantial commercial solar endeavours undertaken by a cement company, and a first for Holcim in Sub-Saharan Africa.’ He added that it will lead to cost savings, reduced vulnerability to load shedding and ‘substantial’ progress towards achieving net zero CO2 emissions.
UltraTech Cement buys Patratu grinding plant from Burnpur Cement
30 November 2023India: UltraTech Cement has bought the 540,000t/yr Patratu grinding plant from Burnpur Cement for US$20.4m. The Hindu Business Line newspaper has reported that the purchase brings UltraTech Cement’s installed cement capacity to 133Mt/yr.
Taiwan Cement heads west
29 November 2023Taiwan Cement Corporation (TCC) has struck a deal to take control of the Türkiye and Portugal-based parts of OYAK’s cement business. The arrangement will see TCC grow its share of the joint-venture business in Türkiye to 60% from 40% at present and it will fully take over the Cimpor joint-venture in Portugal by purchasing OYAK’s 60% stake. Overall TCC is expected to pay around Euro740m for its acquisitions. A final agreement on the deal is expected to be signed in early December 2023.
The proposed deal follows on from when TCC originally spent US$1.1bn towards setting up joint-ventures as a junior partner with OYAK back in 2018. The situation now appears to have reversed with TCC becoming the main owner of the cement business in Türkiye and the sole owner of Cimpor in Portugal. In Türkiye this gives TCC control over the largest cement producer with seven integrated plants, three grinding plants, 47 ready-mixed concrete (RMX) plants, three aggregate quarries and one paper packaging plant. In Portugal (and Cape Verde) this puts TCC in charge of three integrated plants, two inactive grinding plants, 42 RMX plants, 15 quarries, two mortar plants and a cement bag unit.
This contrasts with last week’s news that CRH is buying one cement plant in Texas (with associated assets) for US$2.1bn. TCC is taking control of 10 plants in Türkiye and Portugal for Euro740m. It is not a fair comparison given the woes of the Turkish economy in recent years, prior joint-venture business ownership and so on. Yet it is one more example of the changing nature of cement company ownership around the world since the mid-2010s.
The state of the economy in Türkiye may well be a factor for the change in ownership at OYAK and Cimpor as well as negative exchange rate trends. High inflation has caused problems in recent years, although the government changed its stance on avoiding putting up interest rates following the elections in May 2023. Yet, in a statement about the OYAK deal, chair Nelson Chang said that “companies that do not understand carbon will not survive in the future.” His company is about to spend Euro740m and become the fifth largest cement producer in the world on the assertion that it does understand carbon. Good luck!
Accordingly, the language in the press releases both OYAK and TCC have released is all about sustainable growth and reducing carbon emissions. However, the detail on how exactly they intend to do this is vague. What is clearer though is that OYAK is hoping that TCC invests in energy storage and related industries such as lithium-ion battery additive carbon black in Türkiye. To this end a TCC subsidiary and OYAK are collaborating on a carbon black plant in Iskenderun and further investments may be in the pipeline. TCC and OYAK are also responsible for a couple of calcined clay projects in Sub-Saharan Africa.
Readers may recall that the chair of Chang pronounced in June 2023 that TCC was aiming to diversify the business towards over 50% sales from non-cement sectors by 2025. However, the share from the cement business was around 68% in 2022 and this latest deal with OYAK will likely send it in the ‘wrong’ direction. The company already has a production capacity of around 77Mt/yr from its cement plants in China and Taiwan. Majority ownership of OYAK Çimento and Cimpor Portugal will bump this up to 99Mt/yr and put the company into the top five of the world’s largest cement producers by capacity.
The final question here is what kind of owner TCC intends to be to its growing cement businesses in West Asia and Europe. Publicly at least, it has come across as a backseat investor since 2018 although it has been a minority owner. This has now changed but it will be interesting to observe whether the subsidiaries in the west will be run at arm’s length or more closely and if TCC unifies its global branding and so on. Watch this space.
Update on Iraq, November 2023
08 November 2023Northern Region Cement announced this week that it is planning to build a new cement production line in Iraq. It has signed an engineering, procurement, and construction deal with Germany-based KHD and its parent company AVIC for the supply of a 1.3Mt/yr production line. The contract has been valued at US$139m with a duration of 16 months, suggesting that the earliest the new plant might be commissioned would be from early 2025.
The Saudi Arabia-based company operates an integrated cement plant at Arar in Northern Borders Province and an integrated plant at Muwaqar, near Amman, in Jordan. It also took over a grinding plant in Basra, Iraq, in 2017 and runs this via its Um-Qasr Northern Cement subsidiary. It has not been disclosed so far where the new production line in Iraq will actually be or what type of equipment is being supplied. However, the price suggests a clinker pyro-processing line.
The timing of this project is noteworthy as it follows a number of other such announcements so far in 2023. In mid-August 2023 China-based Sinoma International Engineering said that it had signed a US$219m deal with Al-Diyar Company for Cement Industry and Industrial Investment to build a 6000t/day clinker production line with a 50MW captive power plant. The project is located in the Samawah area of Al Muthanna Province. First clinker production is scheduled from mid-2025. This followed the start of construction at another project in the Erbil province in the Kurdistan region of the country in June 2023. Kurdistan Region Prime Minister Masrour Barzani laid the foundation stone for a new 6000t/day cement plant. The DCCP Cement and Power plant is being built by local partner Dabin Group and China-based China Power Investment Corporation (PowerChina).
In May 2023 Pakistan-based Lucky Cement revealed that it was preparing to build a second production line at its integrated plant at Samawah. It runs the plant under the Najmat Al Samawah joint venture together with UAE-based Al Shumookh Group. The first 1.31Mt/yr line at the plant was started up in 2021. It said that the new proposed 1.82Mt/yr production line was intended to take advantage of renewed economic activity in Iraq, benefit from increasing numbers of construction projects and further supply clinker to Lucky Cement’s grinding plant joint-venture at Basra. Construction work on the new line was expected to start by September 2023 with a completion date scheduled by mid-2025. Earlier still in March 2023 the Iraqi General Cement Company signed a deal with Turkey-based Zodiac for the latter to build a new 1.8Mt/yr plant at the Hammam Al-Alil Complex in Nineveh Governorate.
The Cement Manufacturers Association in Iraq (CPA) has reported various meetings in 2023 it has held with the Minister of Industry and Minerals with the aim of supporting the sector. In March 2023 it was discussing developing a five year plan to increase cement production with the aim of surpassing a capacity of 40Mt/yr. For reference the Global Cement Directory 2023 placed local capacity at just under 10Mt/yr. Then, in June 2023, the conversation had moved on to talking about awarding new licences to build plants on a regional basis, warnings that capacity is growing too fast and setting standards.
All of this is positive news 20 years on from the US-led invasion of Iraq in 2003 and the insurgency that followed. The local economy has benefited from high oil prices and a period of political stability, followed by infrastructure investment. Holcim runs two cement plants in Iraq via its Lafarge Iraq subsidiary and it noted “strong domestic cement demand” in the country in 2022. The number of new cement plant projects so far in 2023 underlines a new confidence in the market. Unfortunately the war between Israel and Hamas in the Gaza Strip threatens to undermine the previous period of calm should hostilities spread. However, the news from Northern Region Cement about its proposed new plant suggests that some level of business confidence remains for now.
SRMPR Cements launches Portland pozzolana cement
02 November 2023India: SRMPR Cements has launched its Portland pozzolana cement (PPC) for the first time, in Tamil Nadu. The Hindu BusinessLine newspaper has reported that the company controls 420,000t/yr of cement production capacity across three facilities in Tamil Nadu and neighbouring Andhra Pradesh. It invested a total US$27m in its production facilities and warehouses. SRMPR Cements will sell its PPC in 50kg bags. It also plans to launch ordinary Portland cement (OPC) in the future. It said that its products will help to meet ‘massive’ demand from public construction projects.
CEO Ohm Prakash said that the producer has already concluded deals with 100 different regional retailers of cement.
India: Andhra Cements has commenced work to dispose of grinding mills from its Visakha grinding plant in Andhra Pradesh’s Visakhapatnam District, Reuters has reported. The plant previously had a capacity of 600,000t/yr.
Sagar Cements concluded a deal to acquire Andhra Cements in January 2023.
Local authorities advise against Cemminerals’ planned Ghent grinding plant expansion
25 October 2023Belgium: The municipal council of Evergem has advised planning authorities to reject Cemminerals’ application to expand it Ghent grinding plant to 1.6Mt/yr in production capacity. The Het Nieuwsblad newspaper has reported that the expansion will entail the construction of a new grinding unit and six storage silos. Cemminerals currently holds a licence to produce 700,000t/yr at the site.
Councillor Josse Verdegem said that 400 residents signed a petition against the planned expansion of the Ghent grinding plant. He said that dust from the plant ‘regularly’ covered solar panels, cars and garden furniture. Residents have also complained about its noise and vibrations.