Global Cement Newsletter

Issue: GCW414 / 17 July 2019

Headlines


The UK waste fuels industry is facing potential challenge from changing Dutch environmental legislation. As part of its new National Climate Agreement the government in the Netherlands is considering imposing a tariff of Euro32/t on imported refuse-derived fuel (RDF) from the start of January 2020. It also wants to add a CO2 tax of Euro30/t on industrial emitters from the start of 2021.

This is bad news for the UK’s waste export market because 1.28Mt or 44% of exported waste fuels from the UK in 2018 went to the Netherlands. The majority of this was RDF. That was more than the next two biggest destinations, Sweden and Germany, combined. Andy Hill of Cynosure Partners summed up the UK situation in the June 2019 issue of Global Cement Magazine when he said, “The UK generates more far more waste than it has landfill, recycling and alternative fuel capacity combined. Quite simply, that’s why the UK exports and has become a leading force in Europe in terms of RDF and solid recovered fuel (SRF) exports.”

Graph 1: International Waste Shipments exported from England, 2011 – 2018. Source: Environment Agency. 

Graph 1: International Waste Shipments exported from England, 2011 – 2018. Source: UK Environment Agency.

Graph 2: Destinations of English waste fuels exports in 2018. Source: UK Environment Agency. 

Graph 2: Destinations of English waste fuels exports in 2018. Source: UK Environment Agency.

Waste management companies and their representative associations on both sides of the North Sea are not taking this terribly well. Robert Corijn, chair of the RDF Industry Group, a European waste organisation, summed up his members response by pointing out both the environmental cost of the new legislation and the risk to jobs in the UK. “RDF export forms a vital and flexible part of the UK’s waste management system, supporting over 6800 additional jobs in the UK, and saving over 0.7Mt/yr CO2e emissions.” Robert Loos of the Dutch Waste Management Association made a similar response questioning what exactly the Dutch government was attempting to achieve.

Steve Burton, one of the directors of UK-fuels producer Andusia, went further by saying that the Dutch had proposed the move on environmental grounds because it has an incineration capacity of 8Mt/yr but produces only 6Mt/yr of waste. “So they think that by setting a tax it will significantly curtail how much gets incinerated in the Netherlands and thus produce less CO2. All very sensible if you consider CO2 in isolation in your own country. However, the Dutch Government aren’t looking at the bigger picture…” He then went on to point out that the RDF would then either get burnt elsewhere or landfilled resulting in no overall CO2 emissions reduction. His further assessment, which you can read here, goes on to speculate amongst other things that Dutch Energy for Waste (EFW) plants could end up having to cut their gate fees by more than the import tariff in order to keep running. The state-owned EFW plants would then made a loss for the tax payers until the market stabilised. It should be noted that the data from the Environment Agency indicates that Andusia exported just under 38,000t of RDF to the Netherlands in 2018.

The more prickly issues of using waste fuels may prove tricky for Dutch legislators. Corijn’s distinction above of using CO2e for the savings from RDF usage is important in this argument since burning RDF and alternative fuels, either for generating energy or making cement, still releases CO2. In the European Union (EU) it’s the biomass fraction of RDF that’s important for the Emissions Trading Scheme (ETS) and the like because biomass emissions are counted as carbon-neutral. Remove this effect and the benefit of waste fuels are more to do with the waste hierarchy and reusing materials rather than leaving them to rot and release methane, a gas with a more potent global warming effect than CO2. Despite this, at face value, importing rubbish and then burning it to release yet more unwanted CO2 may seem nonsensical to the parliamentarians. Perhaps the other thing they should consider is that waste-derived fuels are manufactured products to set specifications. On-going arguments around the world about the developed world ‘exporting its rubbish’ frequently ignore this point.

Since the new Dutch National Climate Agreement is currently at the proposal stage it has a long way to go before it becomes law. First it has to be turned into legislation and then this has to be approved by the Dutch Parliament. As indicated so far the waste management industry will continue to fight its corner with vigour.


US: Vulcan Materials has elected Michael Wilson to its board of directors. He will serve on the Audit and Safety, Health and Environmental Affairs Committees of the construction aggregates producer. Wilson is the president and chief executive officer (CEO) of Ingevity Corporation and a member of Ingevity's board of directors. Ingevity is a global supplier of specialty chemicals, carbon materials and engineered polymers. With the addition of Wilson, Vulcan's 10-member board consists of nine independent directors.


Oman: Raysut Cement’s revenue fell by 5% year-on-year to US$108m in the first half of 2019 from US$114m in the same period in 2018. Its profit after tax dropped by 27% to US$1.3m from US$1.8m.


Egypt: Suez Cement’s consolidated profit rose by 82% year-on-year to US$12.8m in the first quarter of 2019 from US$7.04m in the same period in 2018. However, its revenue fell by 14% to US$109m from US$127m. Its standalone business reported both a loss and falling sales.


Peru: Cement production rose by 6% year-on-year to 5.02Mt in the first half of 2019 from 4.75Mt in the same period in 2018. Local despatches rose by 5% to 4.84Mt from 4.60Mt. Data from the Asociación de Productores de Cemento (ASOCEM) shows that clinker exports fell by 18% to 0.45Mt from 0.55Mt. Clinker imports remained stable. Consumption increased by 3% to 5.50Mt from 5.33Mt.


Sri Lanka: Lanwa Sanstha Cement has ordered two MVR 5000 C-4 type roller mills from Germany’s Gebr. Pfeiffer. The vertical roller mills will be used for the production of various cement types based on clinker, gypsum, granulated blast-furnace slag and fly ash. The end customer is part of Onyx Group, which mainly operates in Sri Lanka and the UAE. The contract was signed in February 2019. No value for the order has been disclosed.

Most of the components of the grinding plants will be supplied by Gebr. Pfeiffer (India). The core components of the mills - including the grinding rollers, the tension systems and the gear units - will come from Europe. Gebr. Pfeiffer (India) will also provide the entire engineering for the grinding plants and make available staff to support and supervise the erection and commissioning and assist with the performance test. The two grinding plants will each produce about 180t/hr of Ordinary Portland Cement (OPC) ground to a fineness of 4000cm²/g acc. to Blaine and they will be set up at staggered intervals. Delivery of the first plant is slated for the end of 2019 and scheduled to be commissioned in the second quarter of 2020.


India: Germany’s ThyssenKrupp plans to build a procurement centre for its engineering business in India. Marcel Fasswald, the chief executive officer (CEO) of ThyssenKrupp Industrial Solutions, said that the company is trying to reverse its poor performance in 2018, according to Reuters. He views the cement and mining industries as key drivers of the company’s growth in India as state-backed infrastructure projects take shape. He added that India had cost benefits that made the country a preferred location for the project.


India: The Jharkhand Industrial Area Development Authority (JIADA) has cancelled an allotment of land to UltraTech Cement for a project to build a 1.5Mt/yr plant. The cement producer was allotted 48 acres of land by JIADA in 2016, according to the Times of India. The industrial development body for the state government also sent notices to 20 other companies warning them that their allocations would be nullified. The action is being taken to free up land for development.


UK: Climate change protestors from the Extinction Rebellion group have been arrested for blockading a ready-mixed concrete plant operated by London Concrete at Bow in London. Concrete from the plant is being used to supply a major road tunnel project at Silvertown beneath the River Thames, according to Reuters. Extinction Rebellion blamed concrete production for being a major source of CO2 emissions and it also has concerns about dust pollution. Seven people were arrested by the Metropolitan Police for aggravated trespass. London Concrete is part of LafargeHolcim Group. It operates 12 concrete plants in London.


Philippines: Holcim Philippines is promoting its retail mobile app called Easybuild. It is intended to allow customers to place orders, check delivery status and review account history and credit, among others functions. The company has initially partnered with leading financial institution Metrobank for an online payment facility. Nearly 700 customers are using the system. It is the latest version of Holcim Philippines’ online customer service portal, which it pioneered in the cement industry in 2001. Already available for the Android operating system, an iOS version will be launched in August 2019.


France: Lafarge France plans to launch a reusable cement pallet scheme in October 2019. The new single-size wooden pallets for bagged cement will be reinforced for use at least six times. They will be used at all of the company’s sites across its range of bagged cement products. The pallets will also include Lafarge branding. A saving of 7500t/yr of wood is anticipated. The scheme is part of the Lafarge 360 initiative.


Ireland: CRH has agreed to sell its Europe Distribution business to private equity funds managed by Blackstone for Euro1.64bn. The business comprises CRH’s entire General Builders Merchants business in Europe, including its Sanitary Heating and Plumbing business. It supplies building materials to professional builders, specialist contractors and DIY customers through a network of local and regional brands across six countries in Western Europe. The divestment follows a strategic review of the business in 2019. The transaction is subject to regulatory approval.


India: Emami Group has chosen Arpwood Capital and Credit Suisse to manage the sale of its cement business. It is seeking a sale value of around US$1bn according to sources quoted by the Business Standard newspaper. However, the company is still deciding the size of the stake it wants to sell. UltraTech Cement was reported to be in talks to buy a stake in Emami Cement in late June 2019.


Germany/US: Germany’s Baltrader and US-based United Bulk Carriers (UBC) have launched the Cement Carrier Alliance (CCA) to cooperate the marketing of their respective fleets of pneumatic cement carriers. The aim of the deal is to offer a wider range of vessel sizes to existing and new customers while enhancing marketing to current and developing markets. The two companies operate 15 self-discharging cement carriers with a range of 3000 – 15,000DWT vessels.

Both companies will remain independent entities each operating out of their own offices while offering continuity in their customer relationships. CCA will be jointly represented by the UBC office in Philadelphia and the Baltrader office in Hamburg.


Netherlands: Holcim Nederland Bouwmaterialen has recevied certification from the Concrete Sustainability Council (CSC) for its five concrete plants. The certification process was handled by Kiwa Netherlands.


Kenya: Savannah Cement is set to complete US$50m upgrade to its grinding plant at Athi River by the end of 2019. It is installing a second 1.2Mt/yr mill at the unit supplied by Denmark’s FLSmidth, according to the Kenya Broadcasting Company. Contractors are also installing belt conveyors, storage silos, a packing plant and dust filters as part of the new vertical roller mill line.

The cement producer made the announcement at an event celebrating its seventh anniversary. The existing mill at Athi River has a production capacity of 1.2Mt/yr.


Nepal: Flooding has damaged the Huaxin Narayani Cement plant being built at Benighat Rorang Rural Municipality in Dhading. Rising water from the Malekhu River caused around US$90,000 damage to the construction site, according to the Himalayan Times newspaper. The deluge wrecked a storeroom and swept away five vehicles. Work on the US$137m project started earlier in 2019.


Australia: Southern Cross Cement, a joint venture between Brickworks, Neilsen Group and Neumann Group, is planning to open a 0.2Mt/yr terminal by October 2019. The US$60m unit will import cement from south east Asia, according to the CourierMail newspaper. It is anticipated to supply 10% of Queensland market. A 12,000t/day mechanical ship unloader will be installed at the site.


Ireland: Local environmental activists have accused the Irish Environmental Protection Agency (EPA) of ignoring European Union (EU) NOx emission limits by granting an exemption to Irish Cement’s Limerick integrated plant. Limerick Against Pollution group alleges that the plant has been allowed a limit of 800mg/m3 despite a EU directive reducing the limit to 500mg/m3, according to the Limerick Post newspaper.


Romania: LafargeHolcim has signed an agreement with Oresa to buy Somaco, precast concrete producers. The transaction will allow LafargeHolcim to develop its position on the Romanian building materials market, where the company is already present in the cement, ready-mix concrete and aggregates segments. No value for the transaction has been disclosed. It is subject to regulatory approvals and is expected to close in late 2019.

“This is our sixth bolt-on acquisition this year and we are delivering on our commitment to further develop our Solutions & Products business segment as part of Strategy 2022 – ‘Building for Growth.’ The acquisition enables LafargeHolcim to enter Romania’s fast growing precast concrete market and to become an integrated solutions provider for our local customers,” said Jan Jenisch, chief executive officer (CEO) of LafargeHolcim.

Somaco operates five precast concrete plants and one plant for aerated blocks in Romania. The company reported net sales of Euro56m in 2018 and has 750 employees. It has a portfolio of precast products for bridges, tunnels, subways and logistics platforms and supplies products for the residential sector.


Philippines: Holcim Philippines has completed the upgrade to its integrated cement plant at Davao. The expansion involved the activation of a finish mill and installation of a new pipe for loading cement to the silos from the pier, eco-hoppers to improve dust emissions and an overhead crane. Cold commissioning started in April 2019 while full production began in late June 2019. The improvements add 0.7Mt/yr to the cement production of the plant.

The expansion of the Davao plant is part of the company’s on-going program to improve operations to better support the positive growth of Mindanao. In March 2019, the company launched in a new blended cement product, Solido. It also opened its first construction laboratory outside Metro Manila at Davao in 2018. Holcim Philippines will hold a ceremony in August 2019 to inaugurate the facilities with partners from the public and private sector.


Philippines: The Philippine Competition Commission says that its investigation on alleged violations of competitive practice by the cement industry will be kept separate from a review of the acquisition of Holcim Philippines by San Miguel Corporation. The commission made the statement in a reply to questions raised by consumer group Laban ng Konsyumer, according to the Manila Bulletin newspaper. However, the commission’s Mergers and Acquisitions Office said that, although both cases are being considered independently, this would not preclude them from considering the pre-merger activities of the companies.


Azerbaijan: Turkey’s Dal Teknik Makina is set to start work on an upgrade project at Akkord Cement’s integrated plant at Gazakh. It will increase the clinker production capacity to 3300t/day from 2500t/day. The supply of equipment is expected to be completed in six months and the shutdown period is planning to be five weeks. No value for the order has been disclosed.

The first phase of the upgrade project will be the retrofit of the raw mill unit. A static drying separator will be placed in front of the raw mill to dry clay and some of limestone. Equipment to be replaced in the raw mill unit include a dynamic separator, ball charge modification, all parts of separator cyclones and the raw mill fan. The raw mill grinding capacity will be upgraded by drying the raw materials and enhancing the separation efficiency.

The next phase will consist of replacing the raw mill/kiln bag filter and filter fan to reach the desired upgraded capacity. Finally, the pyro-processing system unit will be modified. In order to reach the target production capacity the equipment to be changed will be the first four stage cyclones with the modification of the calciner-TAD connection and new splash boxes will be installed.


Nigeria: Oyebamiji Dauda, the chairman of the Lagos State Bricklayers’ Association, has urged the government to cut the price of cement. He wants it to make cement manufacturing more competitive by allowing more producers to operate in the market, according to the News Agency of Nigeria. He added that the ‘high’ cost of cement was negatively affecting building construction. Dauda’s ideas to ease the price of cement include government subsidy, tax breaks for local producers of building materials and further penalties for imported products.


Democratic Republic of Congo: Data from the Central Bank of the Congo shows that cement production more than doubled to 1.84Mt in 2018 from 0.90Mt in 2017. Consumption showed a similar trend rising to 1.83Mt from 0.88Mt. Production during the first quarter of 2019 grew by 13% year-on-year to 0.30Mt. The growth in production and consumption has been attributed to new plants, a ban on imports and a strong housing market in Kinshasa.


Brazil: Data from SNIC, the Brazilian national cement industry union, shows that sales rose by 1.5% year-on-year to 25.8Mt in the first half of 2019 from 25.5Mt in the same period in 2018. SNIC president Paulo Camillo Penna said that the growth was in line with SNIC’s forecasts and that more ‘robust’ growth was anticipated the second half of the year. He added that the growth in cement sales had been supported by the real estate market and that the industrial sector was also growing.


Ethiopia: The Endowment Fund for the Rehabilitation of Tigray (EFFORT) plans to sell its shares in Messebo Cement. The shares will go on sale at the International Tigray Diaspora festival later in July 2019, according to Fana Broadcasting. EFFORT is also selling its shares in SUR Construction and Trans Ethiopia.


Belarus: The Council of Ministers has required companies to obtain a special license for importing Ordinary Portland Cement (OPC) from outside the Eurasian Economic Union (EEU). The requirement will take effect later this month and will be in effect for six months, according to the Belapan news agency. The new regulations have been introduced to support the local sector.

In January to April 2019, Belarus imported 0.13Mt of cement including 65,000t from other EEU countries, according to the National Statistical Committee. In the same period, Belarus’ companies made 1.25Mt of cement, an increase of nearly 12% year-on-year, and exported 0.44Mt.


Togo: Eric Goulignac, a regional director of HeidelbergCement based in West Africa, says that the company believes in the local market despite competition. He expressed confidence due to the quality of its products, according to Télégramme228. The building materials producer is currently finalising a call for tenders for a Euro25m upgrade to its operations, including a new mill, at Cimtogo’s cement grinding plant in Lomé and a photovoltaic (PV) solar energy plant.


Kazakhstan: Steppe Cement turnover grows by 34% year-on-year to US$36.7m in first half of 2019 from US$27.5m in the same period in 2018. Its cement sales volumes rose by 6% to 0.78Mt from 0.74Mt. The cement producer said that the local market declined by 3% in the reporting period. Imports represent 8% of the market and they remained stable. Exports fell by 5% to 0.87Mt.


Nepal: The government has approved changes to allow domestic cement to be labelled under 33, 43 and 53 grades. Previously cement could not be certified higher than 33 grade due to a lack of legal provision, according to the Himalayan Times newspaper. The extended quality certification process will be managed by the Nepal Bureau of Standards and Metrology.

Before this latest change some local manufacturers were selling 43 and 53-grade products despite lacking certification. Importers have also benefited from the lack of legal clarity over higher strength grades of cement. It is hoped that the new regulations will reduce imports.


Paraguay: Industria Nacional del Cemento (INC) has launched CPII – C40, a composite cement product. The pozzolanic product is intended for use in structural projects. Its properties include high initial resistance and increased resistance against water. The new product was publicly launched at the EXPO-FAIR Mariano Roque Alonso.