Global Cement Newsletter

Issue: GCW413 / 10 July 2019

Headlines


The big announcement from LafargeHolcim this week was the launch of its Industry 4.0 plan known as ‘Plants of Tomorrow.’ The scheme hopes to use automation technologies and robotics, artificial intelligence, predictive maintenance and digital twin technologies across the company’s entire production process. Operational efficiency gains of 15 - 20% are promised.

There wasn’t much detail beyond the use of the Siggenthal integrated cement plant in Switzerland as the ‘lighthouse’ of the scheme, where around 30 proof-of-concept technology ideas will be tested. One technology it did flesh out a little was its long-running Technical Information System (TIS). This follows the work between Holcim and the power and automation product supplier ABB. LafargeHolcim says that over 80% of its plants around the world use the TIS to provide data transparency at plant, country, regional and global level. It added that some country operations have more than a decade of historic technical data available. This last point is pertinent as the data could potentially be used to support the training of any machine learning algorithms the company might want to invest in. The building materials company also mentioned its LH Maqer subsidiary. This startup incubator was launched at the end of 2018.

LafargeHolcim appears to be playing catch up here with Cemex, which has steadily been promoting its own Industry 4.0 developments in recent years. Emphasis on ‘promotion’ here as only yesterday, the day LafargeHolcim made its big reveal, Cemex happened to release information about a recent roundtable in France that it participated in on digitisation and productivity in the construction sector.

Notably in March 2019, the Mexican multinational struck a deal with Petuum to implement its Industrial AI Autopilot software products for autonomous cement plant operations at its plants around the world in March 2019. Readers can find out more about Petuum’s work with Cemex in the June 2019 issue of Global Cement Magazine. In late 2017 Cemex too set up a division, Cemex Ventures, to engage with startups, universities and other organisations. Cemex has also been building its digital customer integration platform Cemex Go since around the same time.

One interpretation of Industry 4.0 is as a German-industrial approach to the so-called fourth or digital revolution pushed by Anglophone software companies. The idea of taking as much data from a production process, such as making cement, is enticing but the prospect of actually doing something useful with this tsunami of information is daunting. Typically algorithm techniques or predictive maintenance seem so far to focus on discrete parts of a process such as a finish grinding mill or final product logistics networks. Companies like Germany’s Inform focus on the latter for example and, incidentally, it celebrated its 50th anniversary this week.

If automated systems start making apparently nonsensical yet useful decisions across the whole raw materials, production and supply chains, then Industry 4.0 will reach its full potential. This moment, if it comes, will be analogous to the time IBM’s computer Deep Blue managed to beat chess grandmaster Garry Kasparov in the late 1990s. What’s more likely are automated systems that can perform consistently outside the human operator comfort zone edging up against hard physical process constraints.

Meanwhile, what will be interesting to watch here is whether LafargeHolcim will be able to leverage any advantage over Cemex by having more cement plants to pull data from. Before LafargeHolcim started selling off its south-east Asian subsidiaries it had more than three times as many cement plants as Cemex. If data really is more valuable than oil these days then starting late in the industrial digital arms race may not be as deleterious as one might first think.


Turkey: The Turkish Cement Manufacturers' Association (TÇMB) has appointed Tamer Saka as its president. He has been the president of Sabancı Holding Cement Group since early 2018.

Saka holds a doctorate from the School of Business at Istanbul University. He worked as the Manager and Senior Manager of Arthur Andersen and Ernst & Young companies, respectively, and he was in charge of Risk Management Consulting Services and then he joined Sabancı Holding family in 2004 as the Risk Management Director. He served as the Executive Director responsible for business development operations of nearly 20 countries, including Turkey, at Willis London in 2010 and 2011. In August 2011, he was appointed as the Strategy and Business Development Coordinator of Kibar Holding and then he was appointed as the Head of Automotive and Corporate Functions Group in May 2012 and as the Kibar Holding Board Member. Tamer Saka became the CEO of Kibar Holding in 2014.


India: The National Company Law Tribunal (NCLT) in Mumbai has approved Dalmia Bharat’s offer for debt-laden Murli Industries, subject to conditions intended to stop the company going into liquidation. The tribunal has given Dalmia Bharat until 12 July 2019 to decide if it wants to proceed, according to the Economic Times newspaper. The conditions include forcing the buyer to reinstate lapsed mining leases related to Murli Industries itself and removing clauses allowing Dalmia Bharat to modify or withdraw its plans at any stage. Dalmia Bharat bid around US$60m to buy Murli Industries’ 3Mt/yr cement plant in Maharashtra in late 2017.


Philippines: Big Boss Cement has reportedly stopped plans to build a new grinding plant at Bamban in Tarlac province following a series of protests by local residents. Local mayor Jose Feliciano said the cement producer had withdrawn its US$117m investment, according to the Philippine Daily Inquirer newspaper. The project was going to be built an agricultural land around 0.5km from a school with 4000 students. However, Feliciano noted that the loss of the factory would reduce local municipal funds.


China: Jidong Cement and its subsidies have received US$30m in subsidies from the Chinese government in the first half of 2019. It said that the subsidies were related to its daily activities, according to Reuters. The cement producer said that its estimated profit nearly doubled to US$134m in the reporting period following restructuring the company. Its cement and clinker sales volumes by 15% year-on-year to 45.76Mt.


El Salvador: Holcim El Salvador is marking its 70th anniversary with the launch of a 42.5kg limited edition bag for its Fuerte cement brand. The new bag features the traditional red and black colours and landmark buildings constructed with Holcim’s cement product packaging, such as Torre Futura, the San Salvador Metropolitan Cathedral and the Divino Salvador del Mundo monument, according to the El Mundo newspaper. The new limited edition bag will be sold until the end of 2019.


Saudi Arabia: Najran Cement has renewed its clinker export licence. It is valid for one year from 9 July 2019.


France: Lafarge France has launched its Lafarge 360 initiative. The scheme aims to aid specifiers, contractors and builders make low-carbon structures through reducing CO2 emissions, preserving natural resources and responsible innovation. It will start the initiative by proving a Lafarge 360 score on its associated digital platform to allow customers to assess the environmental impact of Lafarge’s products. By providing a rating of A to D the tool will offer information on the concrete types.


Switzerland: LafargeHolcim has launched a four-year industrial automation plan called ‘Plants of Tomorrow.’ It includes Industry 4.0 concepts such as automation technologies and robotics, artificial intelligence, predictive maintenance and digital twin technologies for its entire production process. The plan is expected to show 15 – 20% operational efficiency gains. It also claims that the initiative is, “one of the largest roll-outs of Industry 4.0 technologies in the building materials industry.”

“Transforming the way we produce cement is one of the focus areas of our digitalisation strategy and the ‘Plants of Tomorrow’ initiative will turn Industry 4.0 into reality at our plants. These innovative solutions make cement production safer, more efficient and environmentally fit,” said Solomon Baumgartner Aviles, Global Head Cement Manufacturing.

The building materials company is presently working on more than 30 pilot projects covering all regions where the company is active. The company’s integrated cement plant at Siggenthal in Switzerland will be a trial site where the integration of all relevant modules will be tested.

One examples of where LafargeHolcim has started the plan include a partnership with Swiss start-up Flyability to use drones to increase the frequency of inspections at plants while simultaneously reducing cost and increasing safety for employees by inspecting confined spaces. The concept is being rolled out to several markets, including Switzerland, France, Germany, the UK, the US, Canada, India and Russia. It is also using a subsidiary, Maqer, to identify technology startups with promising technology. It aims to harness the potential of this through new partnership models with both manufacturing and software companies.

LafargeHolcim has already launched technology to track performance centrally and allocated resources to support the plant network in real time. More than 80% of LafargeHolcim’s cement plants are already connected to its Technical Information System that provides data transparency at plant, country, regional and global level. Some country operations have more than a decade of historic technical data available. Other systems allow the remote control of certain parts of the operations through online condition monitoring systems. Since its implementation in 2006, this system has saved over Euro70m and an additional 3Mt of cement sold through fewer breakdowns.


US: Lehigh Cement has received permission from the Indiana Department of Environmental Management for a US$600m upgrade to its integrated Mitchell plant. IDEM's Office of Air Quality granted a modification to the unit’s air permit in late June 2019 following a period of public comment, according to the Times-Mail newspaper. The subsidiary of Germany’s HeidelbergCement plans to increases the production capacity at the plant to 2.8Mt/yr from 0.8Mt/yr. Construction is scheduled to begin in 2020 and completion of the new plant is anticipated by the end of 2022. Once finished the upgrades will create 52 new jobs at the unit.


Egypt: El Nahda Cement has suspended production at its 1.7Mt/yr plant at Quena for six months. It has taken the decision due to lower sales and increased supply in the local market, according to Mist News. The local industry has reported production overcapacity in recent years. In mid-2018 the 13Mt/yr government/army-run El-Arish Cement plant at Beni Suef was fully opened


Pakistan: DG Khan has signed a deal with Sinoma Energy Conservation for upgrades at the integrated Hub cement plant in Baluchistan. The agreement includes a 10MW waste heat recovery (WHR) unit and a 30MW coal power plant. No cost of the project or date of completion has been disclosed.


Myanmar: U Aung Kyaw Thu, the Hluttaw representative of Mon State Parliament and chairperson of the public budget scrutiny, finance planning and economics matters review committee has warned that cement plant projects granted licenses by the Myanmar Investment Commission (MIC) that have not implemented their plans will not be granted permission to extend their licenses. During a meeting with legislators, local farmers from Kaw Won Village, Kyaikmaraw Township in Mon State complained that the Myanmar-Korea Cement Group should not be allowed to extend its permit, as they had not implemented anything yet, according to the Mons News Agency. Normally companies that have received a permit are allowed to build at the site for three years. They can then extend this by up to three years if they provide a legitimate reason.

The June Cement Industry project has reportedly finished 15% of its construction and the Myanmar-Korea Cement Group project has finished 10% of its construction. The companies have blamed operational difficulties on the delays. They were granted permits by the MIC in 2016 and 2017 respectively.


Austria: Data from the Austrian Cement Industry Association (VÖZ) shows that cement production rose by 7.4% year-on-year to 5.2Mt in 2018. The increase has been attributed to a construction boom. Sales of cement grew by 4.7% to Euro432m. Sales continue to increase at a similar rate in the first quarter of 2019 but this has slowed down in the second quarter.

The association has said that environmental investment more than doubled in 2018 to Euro45m. The local industry’s alternative fuels substitution rate was 82% and CO2 emissions fell by 0.8% to 521kg/t of cement.


US: Hawaii’s Department of Transportation plans to use carbon-injected concrete for its new projects. This will include a new structure to protect a highway tunnel from rockfalls, according to Reuters. The Department of Transportation was testing CO2-injected concrete on an access road project with CarbonCure Technologies in May 2019. The latest decision follows a resolution by state legislators that city administrators ‘consider’ using CO2-injected concrete in city and county infrastructure where concrete is used.

In late June 2019 CarbonCure announced that its had formed a partnership with HC&D Ready Mix, a local concrete producer, to use its CO2-injected concrete process. It is the second deal with a concrete producer in the state that CarbonCure has arranged.


US: Mississippi Lime Company has executed a definitive agreement to acquire Southern Lime, the lime business of Covia based in Calera, Alabama. No value for the transaction has been disclosed. The deal is also subject to regulatory approval.

Southern Lime supplies high-calcium quicklime and hydrated lime products to customers in the Southeastern US, and across a range of end uses and applications. The Calera operation will increase Mississippi Lime’s production facilities to nine locations, supported by a network of distribution sites throughout the country. The business will be fully integrated into existing Mississippi Lime operations.


China: The China Building Materials Federation has released plans to cut cement production capacity by 70Mt in 2019 as part of its efforts to reduce air pollution and increase industry efficiency through consolidation. Ideally the federation’s work plan wants the largest 50 national producers to cut all production lines with a capacity below 2000t/day and tp upgrade old technology on the remaining lines, according to Yicai Global. Typically larger cement production lines in the country manufacture 5000 – 7000t/day.

China produced 2.2Bnt of cement in 2018. The new work plan will order all cement companies to shut down production lines producing below 2000t/day in areas where pollution is high. The Beijing-Tianjin-Hebei region in northern China has been identified as one of these areas. The scheme also encourages industry consolidation, aiming to bring over 60% of national production to the top 10 cement makers, and wants to eliminate poor-quality cement products so that they make up less than half of all cement made. It wants to use mergers and restructuring to do this and it supports integration through cross shareholdings and asset exchanges.


Czech Republic: Lafarge plans to invest around Euro2m on upgrades to clinker and cement production at its Cizkovice integrated cement plant, according to the Česká Informační Agentura. The subsidiary of LafargeHolcim is also planning rebuild an access road to the plant, improve noise protection and work on fire protection measures. The cement producer is anticipating an increase in cement production in 2019.


Zambia: Dangote Cement has denied that it will cut jobs in response to a new sales tax by the Zambian government. The local subsidiary of the Nigerian cement producer clarified comments by its chief executive officer (CEO) Albert Corcos that the new tax would negatively affect production costs, according to the Lusaka Times. The General Sales Tax will replace the existing value added tax (VAT) with a standard 9% rate and a 16% rate for imports. However the new tax has been delayed to September 2019.


Iraq: The government has approved a series of recommendations from the Ministerial Economic Council to support the growth of Iraq’s cement industry and to ensure that production capacity continues to meet domestic demand.

The cabinet approved a loan agreement between the Republic of Iraq and the International Bank for Reconstruction and Development for an electricity services reconstruction and enhancement project. It also approved a recommendation from the housing consultative group that investors in housing projects need to complete a percentage of the planned building work before they are allowed to own the land.


Myanmar: Four local activists have been sentenced to 14 months hard labour for protesting in May 2018 against a new cement plant being built at Patheingyi Township in Mandalay Region. The residents of Aungthabyae, Patheingyi were charged and convicted of Roads and Bridges Law offenses for blocking a road to prevent access by vehicles, according to Radio Free Asia. The activists allege that they were not allowed to testify in court describing the process as ‘totally unfair.’

Around 20 people were injured in 2018 when police fired rubber bullets and tear gas into a crowd protesting against the construction of the Alpha Cement Plant, a joint venture between China’s Anhui Conch and a local company. During the protest, activists blocked factory vehicles and demanded compensation for land they claim they lost when a road was built to support the plant. Police said that over US$40,000 worth of damage was caused at the site. The cement plant is scheduled to be commissioned in 2021.


Germany: Siemens has agreed to acquire the shares of Industrial Control Technology (IST), a company that produces industrial control technology. It will become part of Siemens’ Digital Industries division in April 2020. IST’s headquarters in Chemnitz is planned to become a centre of excellence for motion control in industrial machinery. No value for the transaction has been disclosed.


India: Ambuja Cement is looking for ready-mix concrete (RMX) and aggregate assets to buy as part of its growth plans. A company source quoted by the Business Standard newspaper said that it was considering ‘growth options’ in all of its core businesses of cement, RMX and aggregates. Industry analysts have interpreted this as an effort to diversify the business away from dominance by the cement sector. However, expansion in the RMX market is expected to be difficult owing to the lack of local organisation in the market.

The subsidiary of LafargeHolcim has a cement production capacity of 63Mt/yr, including those of ACC. Both Ambuja Cement and ACC use a master supply agreement to coordinate sales, marketing and logistics.


Italy: Buzzi Unicem says that its Unical subsidiary is the first national concrete producer to earn silver level RSS certification from the Concrete Sustainability Council. The accreditation asserts that a company meets criteria for sustainable practices and operates in a sustainable, environmentally positive manner. Unical’s Strada Berlia concrete batching plant in Turin received the certification in June 2019. The CSC procedure also included certifying the cement produced by Buzzi Unicem’s Robilante Cement plant and the aggregates from Ceretto quarry. The certificate was issued by ICMQ, the Italian Certification Body member of CSC. Unical manages more than 100 concrete plants in Italy.


UK: Hanson Cement says that the first phase of a Euro27m upgrade project to its integrated Padeswood plant in Wales has been completed. The upgrade has included the installation of a 0.65Mt/yr cement grinding mill as well as enhancements to production capacity and efficiency gains. The plant can now, with the aid of existing ball mills, match cement grinding with its kiln capacity.

“The nearly new Loesche vertical roller mill, housed in a 34m-high building, started its life at a grinding plant in Bilbao. It had only 7000 operational hours on the clock and was in excellent condition. After dismantling it piece by piece, specialist contractors moved it to the UK where it was reassembled on site at Padeswood,” said Jim Claydon, Hanson UK cement managing director.

Other improvements at the site include the installation of three new rail cement silos that have been installed alongside the existing railhead. This will allow up to three trains a week to be loaded for deliveries to Hanson depots in London, Bristol or Glasgow. The new silos will reduce the transportation of cement produced at Padeswood to customers by road. In addition to the increase in grinding capacity, other recent capital investment at Padeswood include the installation of a plastic packing machine, and the re-commissioning of an existing paper packaging machine and an upgrade in the capability to use recycled paper and plastics as fuel.


Turkey: Turkish Cement Manufacturers’ Association (TÇMB) chairman Nihat Özdemir says that the local industry needs to focus on exports rather than for local consumption. He made the comments at a meeting between the TÇMB and the Cement Industry Employers' Association (ÇEİS) hosted by Deloitte, according to the Dünya newspaper. Exports grew by 46% year-on-year in the first half of 2019 to a value of US$444m driven by deliveries to the US, Ghana and Israel. ÇEİS chairman Suat Çalbıyık called on the Turkish State Railway company to abolish its fixed tariff for goods moved up to 150km to further support the industry.
TÇMB data shows that local consumption fell by 24% year-on-year to 5.12Mt in the first quarter of 2019 from 6.74Mt in 2018. Domestic sales fell by 34% to 3.98Mt from 5.99Mt. Exports rose by 37% to 0.94Mt from 0.68Mt. Local decline in the market has been blamed on a weak housing market and a slowdown in the Turkish economy.


Costa Rica: Cemex has taken legal action to query a local 5% tax on the sale of cement in the provinces of Cartago, San José and Guanacaste. The issue is commercially relevant because its competitor Cementos Fortaleza operates a grinding plant at Salinas Esparza in Puntarenas where the tax is not liable, according to Diario Extra magazine. Cementos Fortaleza opened its unit in 2018. Cemex operates an integrated and a grinding plant in the country.


Argentina: Cement sales fell by 6.4% year-on-year to 5.51Mt in the first half of 2019 from 5.89Mt in the same period in 2018, according to data from AFCP. This trend was driven by a fall in local sales. Local sales fell by 6.6% to 5.46Mt but exports rose by 28% to nearly 50,000t.


Russia: Oligarch Oleg Deripaska has moved the ownership of BaselCement’s Serebryansky Cement Plant by MKAO Fenestraria Consultants from Cyprus to Kaliningrad, Russia. Companies associated with Deripaska underwent redomiciling procedures in May 2019, according to Interfax. The change follows the creation of Russian special administrative regions in 2018 to encourage companies to relocate domestically in response to international sanctions.


France: Hoffmann Green Cement Technologies and Bouygues Construction have signed a 30-month initial technical and commercial collaboration agreement to develop and test concrete formulations using new cement made from Hoffmann’s H-EVA technology. Hoffmann Green Cement inaugurated its pilot plant at Bournezeau, Vendée in late 2018. The unit will manufacture cement products using flash-calcined metakaolin and blast-furnace slag. Bouygues Construction is a global construction company with a presence in over 60 countries.


Brazil: InterCement is to stop production at its integrated Pedro Leopoldo plant in Minas Gerais. It plans to temporarily run the unit as a cement terminal, according to Por Dentro De Tudo. The plant has 53 employees. 28 will be relocated to other plants in the company and the remaining 25 will be made redundant.


Somaliland: Oman’s Raysut Cement has agreed to build a 1Mt/yr grinding plant with MSG Group. The project will have an investment of US$40m. Raysut Cement will own 55% of the joint venture with MSG Group holding the remainder. Raysut Cement previously had plans to build a cement terminal in the country with Barwaaqo Cement Company.


Finland: Metso and Outotec have agreed to merge Metso Minerals and Outotec to create a company specialising in process technology, equipment and services serving the minerals, metals and aggregates industries. The new company will be called Metso Outotec. Metso Flow Control will be excluded from the merger and renamed as Neles and run as a separate company. The companies comprising Metso Outotec had combined sales of around Euro3.9bn in 2018.

The merger will be implemented through a partial demerger of Metso, in which all assets and liabilities of Metso that relate to Metso Minerals will transfer to Outotec in exchange for newly-issued shares in Outotec to be delivered to Metso shareholders. Outotec shareholders will continue to own their shares in Outotec.
The transaction will be dependent on shareholder and regulatory approval. The process is expected complete in the second quarter of 2020.

The current chief executive officer (CEO) of Metso, Pekka Vauramo, will become Metso Outotec’s CEO, and the current CEO of Outotec, Markku Teräsvasara, will become the Deputy CEO of Metso Outotec. Eeva Sipilä will become the chief financial officer (CFO) and Deputy CEO of Metso Outotec. The board of Metso Outotec will include board members from both companies. It is proposed that Metso Outotec’s chairman will be Mikael Lilius and that the Vice Chairman will be Matti Alahuhta.

“Today is an exciting day as we announce the transformational combination of two great companies and simultaneously create an independent leader in flow control. The combination of Metso and Outotec is a unique opportunity to deliver significant value for our shareholders with a broad presence across minerals, metals and aggregates value chains and an even stronger platform for growth and innovation,” said Mikael Liliu.


India: Piyush Goyal, the Minister of Commerce and Industry, says that the cement industry has a capacity utilisation rate of 67%. In a written reply to the Indian Parliament, he said that the country had an installed production capacity for cement of around 510Mt/yr and that 337Mt was produced in the 2018 – 2019 financial year.


Pakistan: Power Cement says it has completed the procurement and installation of machinery on the new third production line at its Nooriabad plant. This includes a 2.46Mt/yr clinker line and a 2.72Mt/yr cement and dispatch line. The equipment was ordered from Denmark’s FLSmdith. The cement producer says the upgrade has made it the largest in southern Pakistan with a total clinker production capacity of 3.42Mt/yr and a cement capacity of 3.73Mt/yr.


Belgium: WindEurope, the European Chemical Industry Council (CEFIC) and the European Composites Industry Association (EUCIA) have created a cross-sector platform to look into using glass fibres and fillers from old wind turbine blades as a raw material for cement production. Other methods, such as a mechanical recycling, solvolysis and pyrolysis, are being developed and considered.

In 2018 wind energy supplied 14% of the electricity in the European Union (EU), from 130,000 wind turbines. Wind turbines blades are made up of a composite material, which boosts the performance of wind energy by allowing lighter and longer blades. At present 2.5Mt of composite material are in use in the wind energy sector. In the next five years 12,000 wind turbines are expected to be decommissioned.

“Wind energy is an increasingly important part of Europe’s energy mix. The first generation of wind turbines are now starting to come to the end of their operational life and be replaced by modern turbines. Recycling the old blades is a top priority for us, and teaming up with the chemical and compositors industries will enable us to do it the most effective way,” said Giles Dickson, the chief executive officer (CEO) of WindEurope.


Germany/Switzerland: LafargeHolcim has reportedly placed a bid for BASF Construction Chemicals, according to sources quoted by Bloomberg. The cement producer has reached the second round of the bidding processing, along with companies including Bain Capital, Cinven and Standard Industries. The auction of the subsidiary of BASF that produces admixtures, mortars and grouts is expected to reach as much as Euro3bn. LafargeHolcim chief executive officer (CEO Jan Jenisch said in May 2019 that the company is considering at least 10 bolt-on assets purchases for 2019.


North America: Humboldt Wedag, a subsidiary of Germany’s KHD, has concluded a non-binding letter of intent with an unnamed customer in North America. The letter of intent for the engineering, supply of equipment and structural steel as well as advisory services related to erection and commissioning covers a potential order volume of more than Euro100m. The customer and Humboldt Wedag intend to enter into negotiations with the aim of concluding a corresponding engineering and procurement contract. Most of KHD’s orders come from the cement sector.


India: Basant Kumar Birla, chairman of BK Birla Group, has died at the age of 98 in Mumbai. He is survived by his grandson Kumar Mangalam Birla, the head of Aditya Birla Group, the owner of UltraTech Cement, amongst many other family members, according to the Times of India.

Part of the influential Birla family of industrialists, Basant Kumar Birla originally started working at Kesoram Industries before turning the business into a conglomerate with concerns in cement, engineering, medium-density fibreboards, pulp and paper, rayon, shipping, tyres, tea, chemicals and other sectors. BK Birla Group reported a turnover of US$2.4bn in the 2018 – 2019 financial year. At present the group now comprises five major companies - Kesoram Industries, Century Textiles & Industries, Century Enka, Mangalam Cement and ECE Industries - and several smaller subsidiaries.

Image of Basant Kumar Birla by Biswarup Ganguly CC BY 3.0