Displaying items by tag: India

Taking a look at the most read news stories on the Global Cement website in 2022 reveals what readers have been interested in. The usual bias applies due to the prominence of countries where English is prevalent and there is a concentration on stories from earlier in the year. Yet, even with these constraints, key trends identified elsewhere emerge. Read the December 2022 issue of Global Cement Magazine for a roundup of what we think has been noteworthy.

Top 10 news stories on Global Cement website in 2022

1. Holcim receives bids for Ambuja Cements
2. JK Lakshmi Cement and TARA to launch limestone calcined clay cement production
3. Ramco Cements to commission new plant at Kurnool in February 2022
4. CalPortland to buy Redding cement plant from Martin Marietta
5. ACC launches Houses of Tomorrow in India
6. CRH exits Russian market
7. HeidelbergCement freezes investments in Russian operations
8. US facing cement shortage
9. HeidelbergCement, Holcim and Sabancı Holding are potential buyers for Sika’s US assets
10. Jaiprakash Associates seeking to sell all assets

The two large India-based acquisition and merger (M&A) stories are both present at early stages of their development. Firstly, Adani Group went on to buy Holcim’s two subsidiaries, Ambuja Cements and ACC, becoming the second largest cement producer in the country. Secondly, Jaiprakash Associates was reported to be in dire financial straits in the autumn and looking to sell off more assets. This came to pass in mid-December 2022 when Dalmia Cement (Bharat) reached a deal to buy Jaiprakash Associates’ cement assets for US$684m. Incidentally, Adani Group made the news this week when it published plans to suspend production at two of its newly acquired cement plants in Himachal Pradesh due to high freight rates. The state government responded with a court order requiring the cement producer to justify its actions that, in its view, would detrimentally affect the lives of many. While it seems unlikely that the plants will close permanently, this incident does demonstrate that Adani Group is starting to take action with its new cement business.

The other M&A story concerns cement companies buying assets outside of the standard cement, concrete and aggregates triad. Global Cement has covered this business shift increasingly since Holcim acquired Firestone Building Products in 2021. The story in 2022 that readers were interested in concerned potential buyers for Sika US, an admixture manufacturer. This one also has a sustainability angle because admixtures can be used to make cement and concrete more efficient in different ways. A more obvious example of cement production becoming more environmentally friendly was that of an India-based cement producer preparing to start production of limestone calcined clay cement (LC3). The increased production of blended cements around the world has been a big story in 2022, particularly in the US.

Cement shortages in parts of the US were a theme we picked up on a few times in 2022. Nationally it followed supply issues in the southwest in early 2021 that led Cemex to restart a mothballed kiln at a plant in Mexico with the express aim of serving the export market.

In April 2022 shortages were being reported on the other side of the country in Alabama and South Carolina. Ultimately this was blamed on labour and supply chain issues in the aftermath of the coronavirus shutdowns. The other big US story in 2022 was back in California where CalPortland agreed to buy the Redding cement plant from Martin Marietta. The subsidiary of Japan-based Taiheiyo Cement later struck a further deal to buy the Tehachapi plant, also from Martin Marietta, in August 2022. Both of these integrated plants were previously sold by Lehigh Hanson to Martin Marietta in 2021. In November 2022 Lehigh Hanson announced that its remaining integrated unit in California, the Permanente plant near Cupertino, was going to be transitioned to a distribution and quarry site.

Finally, the top news stories in 2022 where not immune to the effects of the Russian invasion of Ukraine. The big underlying narrative has been a jolt to global energy prices. What could be seen here though were the efforts of the multinational cement producers to limit their exposure to the market in Russia and any potential legal action. CRH led the exodus, although it had a relatively small business to offload. Heidelberg Materials froze its investments in its Russia-based subsidiary in March 2022. Holcim completed the divestment of its business to local management in mid-December 2022. Buzzi Unicem withdrew from any operational involvement with its subsidiary SLK Cement in May 2022.

That’s it from Global Cement Weekly for 2022. Enjoy the seasonal and New Year break if you have one.

Global Cement Weekly will return on 4 January 2023

India: Purvanchal Cement plans to invest US$24m in cement acquisitions and new grinding capacity construction projects before 2026. Under the plans, the producer will double its cement production capacity to 1Mt/yr. The Economic Times newspaper has reported that the plans include the establishment of a grinding plant in West Bengal and a second new plant with an associated quarry in northern Assam.

Purvanchal Cement operates the 0.5Mt/yr Kamrup grinding plant in Assam.

India: Adani Group has explained that truck drivers' unions are responsible for its subsidiaries ACC and Ambuja Cements' indefinite closures of their Gagal and Darlaghat cement plants in Himachal Pradesh. In a statement, the group said that the unions prevent cement truck drivers from operating at competitive rates.

The Hindustan Times newspaper has reported that Adani Group said "We are deeply aggrieved with the situation caused by the adamant stand of the truck unions in Himachal Pradesh. Such matters can be resolved only by understanding the issues faced by all the stakeholders."

India: Gujarat Sidhee Cement has temporarily shut down the kiln of its Sidheegram cement plant in Gujarat's Junagadh District for maintenance work. Reuters has reported that the closure will last from 19 December 2022 until 27 December 2022 at the earliest, during which time cement grinding and despatch operations will run as normal.

India: Visaka Industries plans to invest US$15.7m in the construction of a new cement boards plant in West Midnapore, West Bengal. United News of India has reported that the plant will produce the company's Vnext fibre cement board product. When commissioned in August 2023, it will increase Visaka Industries' Vnext boards production capacity to 72,000t/yr. The producer will equip the plant with an ATUM Solar Roof integrated solar power unit, eliminating 840,000t/yr of Scope 2 CO₂ emissions. Visaka Industries plans to employ 500 people at the plant, and additionally support its host community in Shalbani Dakhinshole through its corporate social responsibility (CSR) initiatives.

India: The state government of Himachal Pradesh has issued a show cause notice to Adani Cement subsidiaries ACC and Ambuja Cements. The notice requires the producers to submit grounds for the government not to pursue 'appropriate administrative action' against the companies over the planned closures of their respective 4.4Mt/yr Gagal and 1.6Mt/yr Darlaghat cement plants. The administration says that it is prepared to take such action as is necessary to 'safeguard lives and livelihoods' across the various sectors impacted by the move.

The regional government said, "It is indeed alarming that you have not taken the state government or its functionaries into confidence before taking such a major decision involving the lives and livelihoods of so many stakeholders. Moreover, you have not even tried to approach or exhaust various forums, avenues, or channels available with the state machinery in order to resolve whatever concerns, grievances or issues that they might have."

The state of Himachal Pradesh owns the land on which the Gagal and Darlaghat cement plants are built and the associated limestone reserves.

India: The government is planning to introduce new quality standards for cement. Reuters has reported that the central government plans to implement the change before the end of December 2022. A government source said "Better standards help comply with international standards." It hopes that the cement sector will increase its export opportunities as a result.

India: Adani Cement has published its plans for the closure of two integrated cement plants in Himachal Pradesh. The Hindustan Times newspaper has reported the plants as ACC's 4.4Mt/yr Gagal cement plant in Bilaspur District and Ambuja Cements' 1.6Mt/yr Darlaghat cement plant in Solan District. The management of the Gagal cement plant said that losses ensuing from high operating costs, including transport costs, are the reason behind the decision to shut down that plant. ACC employs 1000 company staff and contractors at the site, and an additional 4000 truck drivers in its cement despatch operations. 3500 truck drivers also work in delivering cement from the Darlaghat cement plant. The Gagal cement plant alone reportedly despatches 5000t/day of cement for the Himachal Pradesh, Haryana and Punjab markets.

The Bilaspur District Truck Operators' Society said "The transport sector of Bilaspur is heavily dependent upon the Gagal cement plant. It's the source of livelihood for thousands of people, including operators, drivers and conductors. This decision should be reconsidered in the interest of the people." It added "Most roadside restaurants and mechanics' shops will also lose business. We never thought that this plant could ever stop functioning. It has been part of our landscape and economy for decades now."

India: The government of West Bengal plans to commence mining activity at the Deocha Pachami cement block in Birbhum District. The state hopes that the block will support further development of industries, including cement. Financial Express Online News has reported that Mangalam Cement, Purbanchal Cement and Shree Cement all plan to build new cement facilities in West Bengal. Shree Cement will invest US$102m in its planned Purulia grinding plant. Mangalam Cement's potential upcoming grinding plant will serve its planned new integrated cement plant in Chhattisgarh.

Further consolidation of the Indian cement sector looked closer this week with the news that Dalmia Bharat’s cement subsidiary has agreed to buy the remaining cement plants from Jaiprakash Associates. The US$685m deal covers cement and power plants in Madhya Pradesh, Uttar Pradesh and Chhattisgarh. It includes clinker production capacity of 6.7Mt/yr, cement capacity of 9.4Mt/yr and 280MW of captive power capacity.

Chart 1: Map of Dalmia Bharat’s cement plants in November 2022 with region of proposed new plants highlighted in orange. Source: Adapted from Dalmia Bharat investor presentation.

The acquisition gives Dalmia Bharat the opportunity to draw level with Shree Cement in terms of cement production capacity. If the deal completes, then both cement companies will hold a capacity of around 46Mt/yr. This puts them behind UltraTech Cement and Adani Group nationally. In terms of the cost, the proposed acquisition works out at around US$73/t of cement capacity, although this doesn’t take into account the additional captive power generation capacity. This compares to US$119/t for UltraTech Cement’s purchase of Jaiprakash Associates plants in 2017 and US$97/t for Adani Group’s purchase of Holcim’s Indian-based business in September 2022.

Dalmia Bharat’s rationale for its move this week was that it wants to grow in the Central Region of the country and work towards a capacity target of 75Mt/yr by the 2027 financial year and at least 110Mt/yr by the 2031 one. It backed this up in an investors’ presentation by saying that cement consumption was around 170kg/capita locally and that the region represented about 15% of national demand at 54Mt/yr. This roughly checks out with regional integrated/clinker production capacity distribution analysis that Global Cement Weekly carried out in June 2022. Only the East region was lower, but this didn’t take into account grinding plants or new projects.

Completion of the agreement is planned by December 2023 and is subject to the usual regulatory approvals. However, readers may recall the difficulties UltraTech Cement had in the mid-2010s when it attempted to buy two plants from the subsidiary of Jaypee Group. Problems stemming from an amendment to the Mines and Minerals (Development and Regulation) (MMDR) Act caused the original proposal to be rejected by the Bombay High Court in early 2016. UltraTech Cement bounced back though with a deal to buy far more plants instead. This deal completed successfully in mid-2017.

Jaypee Group’s debts have also caused problems along the way. Indeed, this is the reason why it has finally decided to leave the cement business altogether. In early December 2022 it reported its latest default on interest payments towards some of its loans. Overall its outstanding debt was US$3.39bn. Due in part to this, there have been plenty of stories in the local press over the last decade on whoever was reputedly buying the Jaypee Group’s cements assets. In October 2022, for example, Adani Group was reportedly in advanced talks to buy Jaypee Group’s remaining cement business until it denied it publicly. One deal that did reach fruition was Dalmia Bharat’s purchase of Bokaro Jaypee Cement back in 2014 from a joint-venture majority controlled by Jaypee Group. That agreement gave it full control of the 2.1Mt/yr Bokaro grinding plant in Jharkhand. Looking at the current proposed acquisition, one commentator from HDFC Securities in the local business press noted that detail on the transaction is lacking, such as what will happen to existing limestone reserves. Another pointed out that the deal was probably 30 – 40% below the replacement cost because the plants were old, lack of interest from potential buyers and due to the “likely need for additional CAPEX to run operations.”

If the Dalmia Bharat - Jaiprakash Associates deal completes then it marks the end of an era for the Indian cement industry as one of the big players bows out of the sector. It shows once more that, despite the mounting fuel and raw material costs in 2022, companies are still seeing big opportunities. In its December 2022 report, the ratings agency ICRA found that cement sales volumes grew by 11% year-on-year to 187Mt in the first half of the 2023 financial year. The acquisition might also, hopefully, put an end to the endless speculation about who Jaypee Group might be selling its cement plants to! Although, of course, the question then becomes who else might be considering divesting cement assets.