Global Cement Newsletter

Issue: GCW438 / 15 January 2020

Headlines


Here’s a fun idea: providing building materials as a service. Instead of the owner of a building possessing all the materials in it forever, they simply rent them. It would be like a music or television streaming service. A ‘Netflix’ or ‘Spotify’ for the construction industry. ‘Rentacrete’ if you will…

The Guardian Cities series has been discussing the idea this week in a feature on whether buildings should be demolished at the end of their lifetime. The feature largely looks at the ideas of Dutch architect and commentator Thomas Rau, the author of Material Matters. He talks about his ‘materials passport’ concept whereby all the materials in a building are logged with their properties to highlight their value when the structure is demolished. This is a refinement of the Building Information Modelling (BIM) system. Rau has put his passport premise into action for a couple of projects through his firm and the Madaster Foundation promotes its use.

The next steps that he envisages are buildings where the materials that constitute it are simply rented from the manufacturer. Since the material owners would now become companies they would have an interest in efficiency where the materials can be refitted, such as lighting, and/or recycled for when the building is torn down. In Rau’s view these companies would be in a better position to recoup the value of these materials when a building is demolished. He estimates that 18% of a building’s original construction cost can be preserved in this way. Suddenly, sustainability becomes much easier by changing one’s perspective on who owns what exactly in a building.

How this idea would work in practice raises all sorts of questions. For example, most buildings in the developed world last for as least as long as humans do. Which companies could be relied on to hang around this long? Building materials as a service might work for soft materials that are replaced more often, such as lighting and other interior fittings, but could this extend to a structure’s shell? One answer to this is that people invest in pension schemes and use banks quite happily over long periods time, so why not a building’s very fabric? Another issue is of liability and whether a manufacturer would want to take on additional responsibilities for its products decades later. This, and the idea in general, have similarities to the extended product responsibility strategy. Obviously someone needs to try out building materials as a service for real to tackle these questions and many more.

Building materials as a service is compelling but one reason that the construction industry has proved resistant to the digital revolution across the entire business, so far, is because it ultimately deals with physical products that people need permanently. Consumer digital renting services for media, like Netflix and Spotify, are ‘disposable’. Hence, the mindset is different. That’s not to say that building materials as a service is impossible just that it is a harder shift in thinking. A country with a high level of residential renting, for example, might find it easier to move to this model than one with high levels of home ownership.

One more thing to consider is that the media renting companies mentioned above are dependent on other companies producing the content. Due to this they have moved towards vertical integration as the producers themselves, notably Disney in 2019 which has started to set up its own online rental platform. The point here being that in a product rental environment, whoever produces the product, holds a large amount of influence. Building materials manufacturers take note. Building materials as a service might just be a talking point on the lecture circuit along the road towards sustainability in the construction industry. Yet if it did happen at any scale then the producers of concrete, mortar, bricks, steel and all the rest would be well placed to benefit from it.


Ivory Coast: LafargeHolcim Ivory Coast has appointed Serge Gbotta as its new managing director. He succeeds Xavier Saint-Martin-Tillet, who has become the head of the West Africa region of the group. Gbotta was previously the Commercial and Logistics Director at LafargeHolcim Ivory Coast since 2015. Prior to this he has worked at Maersk, Air Liquide, DHL and ADM. Gbotta trained as a civil engineer at the ENSTP Yamoussoukro in Abijan. He also holds an MBA from the China Europe International Business School (CEIBS).


China: West China Cement has appointed Chu Yufeng as its chief financial officer (CFO). He suceeds Chan King Sau, who has been appointed as a financial controller of the company and will continue to be the company secretary.

Chu Yufeng, aged 41 years, joined Yaobai Special Cement Group (Shaanxi Yaobai), a subsidiary of the West China Cement, as deputy chief financial officer in 2012. He was the deputy administration, finance and control director of Fuping Cement, another subsidiary of West China Cement, from 2010 to 2012. In 2014, Chu was appointed as the chief financial officer of Shannxi Yaobai and he has been responsible for financial management and audit matters of Shaanxi Yaobai and its subsidiaries for over five years. Prior to joining the group, Chu was a finance manager in a software company and an electric equipment manufacturer, both in China.

Chu holds a master’s degree in business administration from an international business program jointly organised by Maastricht School of Management (MSM) of Netherlands and Independent University of Bangladesh in 2005. He also graduated with a bachelor’s degree in commerce in international accounting from Xi’an JiaoTong University in 1999. He is a member of the Association of Chartered Certified Accountants.


Belgium: Carol Jackson, the chairman and chief executive officer (CEO) of HarbisonWalker International (HWI), has started a two-year term as president of the World Refractory Association (WRA). She suceeded Stefan Borgas, the CEO RHI Magnesita, who led the organisation since January 2018.

Jackson, aged 47 years, became CEO of HWI in 2017 following three years as its Senior Vice President and General Manager. She has spent over 20 years of her career in the paint, coatings, chemicals, glass, ceramic materials, and specialty steel industries, serving automotive, industrial, consumer, and construction markets. Before joining HWI in 2014, she served as Vice President of the bar, wire, and strip business units of Carpenter Technology Corporation. She also held various roles at PPG Industries, where she rose to became Director of Global Raw Materials Purchasing.

Jackson is a licensed attorney in Pennsylvania, US and she holds a Juris Doctorate from the University of Pittsburgh and a master’s degree from Carnegie Mellon University, Tepper School of Business. She earned her undergraduate degree from Duquesne University.


Uzbekistan: Chinese investors have announced the launch of a 0.9Mt/yr integrated cement plant in the Fergana region of Uzbekistan as a result of a total investment of US$113m. Trend News has reported that a second phase of work beginning in May 2020 will further increase the cement plant’s production capacity. This is one of five upcoming Chinese-owned integrated plants in Uzbekistan, with a shared capacity of 6.0Mt/yr.


Belgium: Cembureau, the European Cement Association, says it will undertake a review of the targets set out in its 2050 Low Carbon Roadmap (2013/2018) in order to align the industry’s efforts with the carbon neutrality objectives contained in the European Green Deal published in December 2019. Following this reassessment, the association says it publish a revised low-carbon roadmap setting out the key role of cement and concrete in the circular economy and a path to achieving carbon neutrality along its value chain in Europe by 2050. Cembureau expects the revised roadmap to be published in early spring 2020.

“As an industry we are determined to ensure that we play our part in helping Europe to meet its emissions reduction targets. With concrete, our industry has a sustainable building material that is uniquely positioned as an essential enabler of the transition to a carbon neutral society,” said Cembureau’s president Raoul de Parisot.


Bangladesh: Producers exported US$5.03m-worth of cement and clinker from Bangladesh in the six months to 31 December 2019 - down by 13 from US$5.75m in the corresponding period of 2018 and 1.6% below the government’s target of US$5.11m. Arab News has reported that the recipients of Bangladeshi cement and clinker included India, Myanmar, Nepal, the Maldives and Sri Lanka.


South Africa: Morag Evans, the chief executive officer (CEO) of Databuild, says that local cement manufacturers are being ‘severely’ undermined by cheap imports from countries such as China, Vietnam and Pakistan. She adds that the government’s failure to stem the influx of these products could have a severe detrimental impact on an already struggling industry.

“In an industry already in the grips of a severe downturn owing to the decline in infrastructure development, not only are these imports negatively impacting the competitiveness of our local manufacturers, but independent studies have shown the quality of these international products to be inferior,” said Evans.

She also cited quality concerns with imported cement mentioning a study conducted by local manufacturer PPC. It found that, from 14 products tested from 10 different producers, most were either over or underweight and were also of inconsistent quality.

Evans has supported the Concrete Institute’s lobbying for a 45% import tariff on cement imports. However, she acknowledges that such a move could raise the price of cement and increase inflation in the general economy.

Databuild provides information about the construction industry in South Africa.


Australia: German refractory producer Refratechnik has acquired Queensland Magnesia (QMAG). The acquisition adds 300,000Mt/yr of magnesium oxide to Refratechnik’s supply of raw materials. The company said, “With a common focus on performance excellence, we will deliver greater value to our customers.”


US: The Wildlife Habitat Council (WHC) has awarded Conservation Certificates to Cementos Argos’ 1.5Mt/yr integrated Newberry plant in Florida and 0.6Mt/yr Atlanta grinding plant in Georgia. Cementos Argos has installed a bat roost at the Newberry plant and planted bee and butterfly gardens with bird boxes for year-round resident bluebirds. The company said that the certification signals its ‘long-term commitment to managing quality habitats for wildlife.’


India: Integrated cement and grinding plants expansions by companies including Dalmia Bharat, JK Cement and Aditya Birla subsidiary UltraTech of an additional 23Mt/yr are set to bring India’s total installed cement capacity to 508Mt/yr by the end of 2020. Business Standard newspaper has reported that steady prices year-on-year and ‘softening input costs’ have facilitated the expansions in spite of a ‘flattish trend in industry-wide volume growth.’


India: Dalmia Bharat has successfully lobbied the Sundargarh, Orisha district government to request the inclusion of the company’s proposed 446 acre expansion to its Lanjiberna limestone and dolomite mine in the agenda of a village meeting in Kukuda, in which public opinion and suggestions will be recorded. The New India Express Newspaper has reported that, due to the special status of Kukuda as a Scheduled Tribal area, the village meeting forms a necessary preliminary step prior to district government permission of planned works. In October 2018, villagers in nearby Jhagarpur successfully blocked construction of Dalmia Bharat’s proposed Industrial Training Institute. The Lanjiberna mine will serve Dalmia Bharat’s 2.3Mt/yr integrated Rajgangpur plant, which was completed in 2019 at a cost of US$281m and awaits commissioning.


Thailand: Siam Cement Group’s concrete and aggregates division SCC Concrete Products and Aggregates (CPAC) has entered into a joint venture agreement with Swedish digitisation specialist BIMobject for the formation of BIMobject Thailand Co., Ltd. (BIMobject TH) on a 51:49 basis in favour of CPAC. This will provide building information modelling (BIM) - a service platform for use in conceptual design, material selection, and construction simulation of customers’ projects. Siam Cement Group president and CEO Roongrote Rangsiyopash said, “This is in line with SCC’s strategic plan to extend its breadth of innovative construction solutions.” The joint venture will have US$170,000 registered capital.


India: The Confederation of Indian Industry (CII) has lobbied the government in its Pre-Budget Memorandum 2020-21 over customs duties. The body is suggesting a reduction on the customs duty on packaging for use in bagging cement to 5% from 10%. There is currently no import tax on cement and duties of 5% and below on various clinker constituents.


Austria: w&p Zement has announced that it has donated an ABB robotic arm from a laboratory at its 0.8Mt/yr Weitersdorf plant to the mechatronics department of Klagenfurt Higher Technical College (HTL). The company replaced the 10kg-capacity, 1.55m armature with a fully automated POLAB cement laboratory as part of an upgrade for Industry 4.0. w&p Zement Weitersdorf operations manager Florian Salzer said, “We are pleased that the robot will continue to be of use, increasing the quality of technical training and thus laying the foundation for training tomorrow's top specialists.” He said that the equipment is in perfect condition because of the low weight of samples for which it was used.


Georgia: Germany-based engineering, management and consultancy firm Sustained Visions has announced its appointment by German Cement Georgia for provision of concept development and project management services at its upcoming Kaspi plant. German Cement Georgia plans to commission the plant in early 2020.


US: Eagle Materials has received clearance from the Federal Trade Commission for its November 2019 acquisition of Kosmos Cement, which operates the 1.7Mt/yr integrated Louisville plant in Kentucky, as well as raw materials reserves and seven cement terminals, from Mexico-based Cemex and Italian Buzzi Unicem for US$665m. Eagle Materials board chair Mike Nicolais said the acquisition was ‘timely in light of our plans to separate our Heavy Materials and Light Materials businesses into two independent, publicly traded corporations.’ It will pay using existing funds and a loan withdrawn for the purpose.


India: The state government of Maharashtra has granted Aditya Birla Group subsidiary UltraTech Cement environmental clearance for a planned 16MW waste heat recovery (WHR) generator at its 3.6Mt/yr integrated Awarpur plant in Chandrapur district. Projects Today has reported that the state’s Environmental Impact Assessment Authority has also cleared the company’s plan to expand its Korpana coal-fired power plant in Chandrapur to 15MW from 10MW. The producer will place orders for construction contracts in February 2020.


Algeria: Algeria sold cement and clinker worth US$59.3m in the first 11 months of 2019 – up by from US$17.5m in the corresponding period ending 30 November 2018. The country’s 40Mt/yr-capacity cement industry serves a domestic demand of 22Mt/yr. Algeria Press Service has reported that Algeria’s key trade partners for exported cement were sub-Saharan African nations, according to former Minister for Trade Saïd Djellab.


Togo: HeidelbergCement has announced plans to bring the capacity of its subsidiary Cimtogo’s grinding plant in Lomé up to 1.6Mt/yr from 0.6Mt/yr at an investment of Euro27.0m. Agencé Ecofin has reported that this will bring the German group’s total investment in Cimtogo to Euro225m since its acquisition in 2012.


China: Preliminary calculations from Huaxin Cement’s financial division have projected a net profit attributable to shareholders for 2019 of between US$0.88bn and US$0.95bn – an increase of 18% - 28% year-on-year from US$0.74bn. The company attributed the forecasted rise to an increase in the production and sales scale of its leading products.

China Cement Association Information Centre deputy director and Digital Cement Network CEO Chen Bailin estimated that demand will remain steady across China in 2020, according to Yicai News.


Gabon: Gabon produced 0.42Mt in 2019, exceeding production figures for 2018 of 0.33Mt by 21%. Sales were US$50.6m – up by 16% from US$42.5m. Direct newspaper attributed the growth to both domestic producers, reporting that CimGabon has improved the efficient use of production equipment, while CIMAF also ramped up production.


Japan: Ofunato biomass power plant began generating electricity on 1 January 2020. The 75MW plant is the result of a 65:35 partnership between Taiheiyo Cement and electrical engineering firm Elex formed in July 2016, with a total investment of US$36.5m. It will primarily burn coconut matter to provide electricity for sale and supply to Taiheiyo Cement’s 1.9Mt/yr integrated Ofunato plant. Taiheiyo Cement says that its will generate 520,000MWh/yr, replacing fossil fuels responsible for 0.3Mt/yr of CO2 emissions.


Germany: Buzzi-Unicem subsidiary Dyckerhoff has paved the 3700m2 of road outside the limestone quarry at its 0.4Mt/yr integrated Geseke plant in North Rhine-Westphalia. It used a concrete blend containing PKZ Doppel N cement produced at the Geseke plant, which it applied to a thickness of 20cm over an asphalt base. Dyckerhoff made the decision to pave the road ‘to minimise dust emissions, especially in prolonged dry spells.’ It says the concrete’s low water content and good compression give the road a strength rating of 50N/mm2.


Brazil: Brazil has reported a growth in annual sales volumes for the first time since 2014. Producers sold 54.5Mt of cement – up by 3.5% from 52.8Mt in 2018 and exceeding SNIC president Paulo Camillo Penna’s January 2019 forecast of 3.0% growth. Penna has predicted a 3.6% increase to 56.5Mt in 2020. Valor newspaper has reported that Penna bases his assumption on favourable interest rates and low inflation of the Brazilian real as well as the government’s implementation of anticipated industrial policies favourable to production.


Saudi Arabia: Producers in Saudi Arabia sold 4.7Mt of cement in December 2019, representing a year-on-year increase of 24%. The figure exceeded November’s sales volumes of 4.3Mt by 9.3%.


Turkey: Sabanci Holding and HeidelbergCement joint subsidiary Akçansa achieved an undisclosed Turkish record figure for nine-month cement exports over the period ending 30 September 2019. The exports included 1Mt of clinker. Akçansa general manager Umat Zenar said, “We achieved a 46% increase in our port capacity utilisation rate,” in attributing the growth to its logistics advantage over competitors and effective port management.