Global Cement Newsletter

Issue: GCW476 / 07 October 2020

Headlines


Çimsa and its parent company Sabancı Holding renewed their ambition to become a global leader in the global white cement market this week with the formation of Cimsa Sabanci Cement. The new subsidiary brings together most of Çimsa’s international white cement companies including Cimsa Americas Cement Manufacturing and Sales Corporation in the US, Cimsa Cement Sales North in Germany, Cimsa Cementos Espana in Spain and Cimsa Adriatico in Italy. Notably, the new entity does not include businesses in Romania and Russia or at home in Turkey. The move coincides with regulatory approval from the Comisión Nacional de los Mercados y la Competencia (CNMC) for Çimsa’s purchase of Cemex’s white cement business in Spain, including its integrated Buñol white cement plant, for around US$180m, which was first announced in March 2019.

The acquisition in Spain came with conditions though since Çimsa has now become the market leader in both bagged and bulk white cement locally, with a combined share of over 50% in the case of bulk white cement. Firstly, Çimsa has agreed to give Cementos Molins the rights to use its silo in Alicante along with a customer list over the last three years. Secondly, it has agreed to supply all its customers previously supplied from a silo in Seville from one in Motril instead for two years. The Motril terminal was purchased from Cemex. The idea here is to give Cementos Molins time to establish itself in the new market and for customers in the south of Spain to find alternative white cement suppliers if they want to. The latter condition was enough for the CNMC to approve the Cemex purchase in Spain. It was proposed on 24 September 2020 and then approved by the end of the month.

The wider picture is that Çimsa has been playing up its ambitions in white cement for a while now. At the time that the acquisition in Spain was announced, Tamer Saka, the president of Sabancı Holding Cement Group and chairman of Çimsa said, “With the integration of the Buñol white cement plant to our production and distribution networks, we will increase our white cement production capacity by 40%, translating into Çimsa becoming the world's largest white cement company.” This compares to Cementir’s self-declared world share of around 27% white cement production capacity, through its Aalborg White brand and others. Other recent developments at Çimsa include the commissioning of a 0.35Mt/yr white cement grinding plant in Houston, Texas by Cimsa Americas Cement Manufacturing and Sales Corporation in July 2019 with commercial sales starting later that year.

Back home in Turkey the domestic grey cement industry has faced difficulties in the last few years as the economy suffered, the capacity utilisation rate fell, competition increased in export markets and then coronavirus-related lockdowns caused further stress this year. By contrast the world white cement market has remained quite buoyant over the last decade, rising by around 7% year-on-year to 21Mt in 2018 and then remaining at a similar level in 2019.

HeidelbergCement memorably described white cement as a “niche product” when it left the scene in 2018 by selling its remaining shares in Lehigh White Cement in the US to Cementir. It has faced problems of its own this week with the decision by the European General Court (EGC) to uphold the European Commission’s (EC) previous ruling in 2017 to block a proposed takeover of Cemex Croatia by HeidelbergCement and Schwenk Zement. Funnily enough, that acquisition also revolved around a cement terminal. In this case the EC didn’t think that the offer by the potential buyers to grant access to a cement terminal in Metković in southern Croatia would be enough to assuage concerns about reduced competition following the transaction. Some you win, some you lose.


UK: Breedon Group plans to appoint Rob Wood as its Group Chief Executive in 2021. He is currently the Group Finance Director. Recruitment for a new Group Finance Director is underway. This will follow the retirement of current head Pat Ward who has held the post since early 2016.


Sri Lanka: Insee Cement has appointed Gustavo Navarro as its chief executive officer (CEO) of its operations in Sri Lanka. He succeeds Nandana Ekanayake, according to the Nation newspaper. Ekanayake will remain at the company as chairman of the board. Navarro has previously held chief executive positions for Holcim in Serbia and Russia, and for CRH in Romania.


Nigeria: BUA Cement has appointed Jacques Piekarski as its chief financial officer (CFO).

Piekarski holds over 26 years of experience in finance with executive level roles in cement, trading, mining and fast-moving consumer goods (FMCG). Prior to joining BUA Cement, he was Group CFO for TGI Group Nigeria, a food and agricultural conglomerate, and he held the same role at Flour Mills of Nigeria. His knowledge of the cement industry comes from working as the CFO for Holcim in Egypt with a joint venture with the Orascom Group.

A Swiss and French National, Piekarski was born in Switzerland. He is a graduate from the Business School in Lausanne, Switzerland and holds an MBA from the Robert Kennedy College in Zurich, Switzerland.


Mexico: The total cement demand generated by infrastructure projects in 2020 will be 1.9Mt, down by 95% from 40Mt in 2019. The El Sol de Mexico newspaper has reported that the government plans to invest US$12.1bn in 32 projects throughout the course of 2020.

Cemex president Rogelio Zambrano welcomed the decision to continue investing in infrastructure, saying that the promised sum would likely stimulate private sector investment in construction exceeding US$13.8bn. He added, “Both self-construction and infrastructure activity are to thank for the recovery in the construction industry since June 2020.”


Argentina: The Asociación de Fabricantes de Cemento Portland (AFCP) has reported a 10% year-on-year increase in cement shipments to 1.04Mt in September 2020 from 948,000t in September 2019. Clarín News has reported that this corresponds to month-on-month growth of 13% from 924,000t in August 2020, signalling the start of a recovery from the economic effects of the coronavirus lockdown.

Chamber of Construction president Iván Szczech said, “There are beginning to be positive indices, such as these cement sales. The sector has been working with the government in different lines to encourage both public and private works while waiting for all projects to be completed.” Szczech attributed the longer-term increase in sales to streamlined business models.


US: A US federal court has upheld the ruling of a Colorado district court that Mexico-based Grupo Cementos de Chihuahua (GCC) must pay around US$36m compensation to Compañía de Inversiones Mercantiles (CIMSA) for failing to grant it a right of preference prior to GCC’s sale of its 47% stake in Sociedad Boliviana de Cemento (SOBOCE).

Peru-based Consorcio Cementero del Sur obtained 100% ownership of Bolivia-based SOBOCE following its acquisition of GCC’s stake in 2011.


Egypt: Suez Cement has approved the appointment of Grant Thornton Financial Consulting as a financial advisor as it prepares for a fair value study of its shares. This follows a desire expressed by Heidelberg Cement France, the parent company of Simon France. which directly and indirectly owns 55% of Suez Cement shares, for the submission of a bid to fully buy the company’s shares, according to the Daily News Egypt newspaper. In late September 2020 Suez Cement approved the launch of a tender offer to acquire a 100% stake in its subsidiary, Egyptian Tourah Portland Cement.


UK: UK Concrete and the Mineral Products Association (MPA) have launched a roadmap for the concrete and cement industry to become net negative by 2050. It plans to do this through decarbonised electricity and transport networks, fuel switching, greater use of low-carbon cements and concretes as well as carbon capture, use or storage (CCUS) technology.

“We have already made significant progress to reduce carbon emissions but are under no illusion about the scale of the net zero challenge,” said Nigel Jackson, chief executive of the MPA. “Achieving this will require the wholesale decarbonisation of all aspects of concrete and cement production, supply and use. The concrete and cement industry as one sector alone cannot deliver net zero and we will only be able to go beyond net zero with concerted support from government, as well as with significant changes across the wider construction, energy and transportation sectors.” He added that the roadmap could be delivered without offsetting emissions, offshoring production facilities or ‘carbon leakage.’

The ‘Roadmap to beyond net zero’ calculates the potential of each technology and the carbon savings which can be achieved. CCUS technology is vital to delivering net zero manufacturing and according to the roadmap will deliver 61% of the required carbon savings. It intends to achieve a net negative industry by 2050 by the ability of concrete to absorb carbon dioxide during use and the thermal properties of concrete in buildings and structures to reduce operational emissions.

The MPA is also lobbying the government for a financial support model including for the capital and operational costs of carbon capture by no later than 2021. This is desired to ensure the technology can be developed, deployed and become an investable proposition in the 2030s.


France: Social housing developer Immobilière 3F says that it has signed a contract with construction company Groupe GCC for the use of Hoffmann Green Cement Technologies' 78% reduced-carbon dioxide (CO2) emissions concrete for the construction of an 85-unit housing project in Saint-Leu-la-Forêt, Île-de-France.

Groupe GCC says that it participated in the development of the concrete as part of a three-year development partnership agreement with Hoffmann Green Cement Technologies signed in July 2020.


Ivory Coast: LafargeHolcim Côte d'Ivoire says that it is proud to have contributed 60,000t of its Bélier Extra cement to the construction of the Ebimpé Olympic Stadium. Chief executive officer (CEO) Serge Gbotta said, “It is a real honour for all our teams to see their products accomplish international wonders. This is what we are working hard for. We are satisfied to see that, for its quality, Bélier Extra cement remains undeniably the first choice of construction and public works players.”

Nicknamed the ‘Arc de Triomphe,’ the Olympic Stadium will be the official home of the Ivory Coast national football team.


Croatia: A European Union (EU) court has ruled in favour of the European Commission’s antitrust veto of Germany-based HeidelbergCement and Schwenk Zement’s 2017 acquisition agreement with Mexico-based Cemex for acquisition of its subsidiary Cemex Croatia. The court said that the deal was anti-competitive in that it had the potential to push up cement prices in Croatia, in spite of HeidlebergCement and Schwenk Zement’s offer to grant other cement suppliers access to a terminal.


Pakistan: Provincial Minerals Minister Hafiz Yasir has issued licences for the construction of eight new cement plants. The News International newspaper has reported that the state has already invested US$244m in one of the plants, and a further US$1.83bn-worth of upcoming cement production capacity will be located in the Punjab, Pakistan’s most populous province.


Nigeria: BUA Cement has broken ground at the site of its upcoming 3.0Mt/yr-capacity integrated cement plant in Guyuk, Adamawa State. Governor Ahmadu Fintiri proposed nearby Yola as the site for a second BUA Cement plant in the state, which he said would “further diversify the economy away from sole reliance on petroleum products.”

The company is currently building a 50MW waste heat recovery (WHR) plant in Lamurde, Adamawa State.


Philippines: LafargeHolcim subsidiary Holcim Philippines says that it will “strengthen its commitment to development as a supporter of manufacturing and construction” on Mindenao, where it operates the Davao and Misamis Oriental cement plants, to help the island recover from the economic effects of the Covid-19 outbreak.

Sales senior vice president William Sumalinog said, “We are not slowing down at this time when the government has deemed it essential to continue upgrading infrastructure. Doing so not only raises the level of competitiveness of the manufacturing industry, but also shields the economy from the blows of the pandemic. We remain confident that we are well-equipped to deliver great value and support to builders working to improve the competitiveness of Mindanao’s economy and to all our stakeholders in the region who are united in their dreams of a better Mindanao."


US: SSI has announced the launch of the Pri-Max, a primary shredder “built to reduce the volume of bulky materials while achieving processing rates of up to 150t/hr.” The product design incorporates new patented technologies, including “a new method for maintenance and replacement of wear parts as well as major assemblies.” The company says that this will “substantially decrease maintenance costs and improves ease of use.”

Director of sales and marketing Dave Fleming said “The Pri-Max is typically the first step in large processing systems, making it a critical component to customer productivity and success. Customers wanted longer service intervals and more flexibility in how they could choose to maintain wear parts in their machines.”


Pakistan: Cement producers sold a record 5.21Mt of cement in September 2020, up by 22% year-on-year from 4.27Mt in September 2019. Exports were 1.12Mt, up by 41% from 790,000Mt. The Pakistan Observer has reported that domestic cement dispatches rose by 27% in northern Pakistan to 565,000t from 446,000t and by 16% in southern Pakistan to 3.52Mt from 3.03Mt.


Australia: Boral plans to increase raw limestone production at its Marulan South quarry in New South Wales to 4.0Mt/yr. Additionally, the company will increase aggregate extraction at the site to 1.0Mt/yr. The Goulburn Post reports that the new South Wales state government has agreed to the US$3.23m upgrade on condition that the building materials company upgrades and realigns a local access road to improve safety. Boral originally applied to expand the open cast mine in 2018.


Mexico: Cuautinchán city council granted permission for Cemex to resume cement production at its 7.2Mt/yr integrated Tepeaca plant in Cuautinchán following its suspension on 1 October 2020 for failure to pay city rates.

The Municipios Puebla newspaper has reported that Cuautinchán mayor José Pérez opposes the reopening, accusing Cemex of quarrying over 4.44km2 in a remote area where its licence extends over a site of just 12.0km2. He stated that Cemex has caused environmental deterioration and failed to comply with road upkeep requirements, adding, “It is not a company that has established co-responsibility against municipalities.”


UK: Quinn Industrial Holdings has announced an upcoming rebranding, to take place in October 2020, to Mannok. The new branding will extend to its subsidiaries Quinn Building Products and Quinn Packaging, as well as to its Quinn brand cement. Chief executive officer (CEO) Liam McCaffrey said that the group’s 2019 results, the strongest since its acquisition from Seán Quinn in 2014, signalled the time for the change. The new name derives from the Gaelic name for Fermanagh, the UK county in which Quinn Industrial Holdings is based.

McCaffrey said, “We are extremely pleased to unveil Mannok as our new brand identity, which we believe better reflects the ownership, evolution and future focus of our business. It marks a major milestone for us following a five-year transformation programme that has empowered our staff and repositioned our businesses for continuing growth and innovation.” He added, “2019 marked our fifth successive year of earnings growth and a robust performance given Brexit uncertainty. Our targeted investment of recent years has established strong foundations for continuing growth across Ireland and the UK.”


France: Hoffman Green Cement Technologies recorded a net loss of Euro 4.41m in the first half of 2020, up by 320% year on-year from a loss of Euro1.04m in the first half of 2019. Its revenues nearly tripled to Euro96,000 from Euro33,000.

Co-founders Julien Blanchard and David Hoffman said, “The first half of 2020 was very active, notably on the industrial and commercial fronts. We continued our actions in all of our strategic areas under sometimes delicate conditions as a result of the Covid-19 pandemic. The rollout of our industrial plan is progressing in line with our objectives. We have used this period to integrate additional resources that will enable us to accelerate our development in the coming months and years.” They added, “Thanks to the recent resumption of building sites activity and more generally of the construction sector, we have been able to reactivate our commercial negotiations and have signed a number of new contracts since July 2020.”


Australia: Adelaide Brighton says that it has begun bagging its cement in water-resistant bags developed in partnership with packaging supplier Mondi, which supplied its Advantage Protect White water-resistant sack kraft paper product, and local bagging solutions provider Pope Packaging.

Adelaide Brighton is promoting the high tensile strength and water repellent surface of the bags, which it says can withstand rain for up to six hours and exposure to damp for 120 hours, earning them the nickname ’rain barriers.’ The company said, “After being actively involved in testing and developing the new product, Adelaide Brighton is the first business in the country to market the new innovative product. We are in the process of converting all of our cement and hydrated lime paper bags, manufactured in South Australia and the Northern Territory, across to rain barrier bags.”


Denmark: FLSmidth has announced the signing of a takeover agreement with mineral processing digital solutions specialist KnowledgeScape. No value for the acquisition has been disclosed.

Chief Digital Officer (CDO) Mikko Tepponen said, “The addition of KnowledgeScape’s advanced solutions to FLSmidth’s already robust digital ENABLR portfolio will deliver an expanded and exciting range of benefits to cement industry customers, from increased automation to improved reliability and enhanced productivity, increasing the total output of plants by 4% - 10%. At the same time, their solutions reduce power, water and reagent consumption, contributing significantly to the goals of FLSmidth’s MissionZero sustainability strategy.” He added, “With this acquisition, FLSmidth reinforces a strong track record of integration with a special emphasis on the retention of local talent.”


Denmark: Novo Holdings has reduced its stake in FLSmidth to 4.8% from 10%. The equipment supplier said that the investor now holds 2.46m of its shares.


India: The city corporation of Mysore, Karnataka and non-governmental organisation (NGO) Susthira have announced plans to set up a waste building materials recycling plant. The Projects Today newspaper has reported that the corporation has purchased a 20,000m2 site in the suburb of Kuppalur on which for Susthira to build and operate the plant, which will process waste cement slabs and concrete bricks from construction and demolition sites.


Spain: The Andalusian Labour Foundation for Cement and the Environment (FLACEMA) has announced the shortlist for the Award for the Best Communication on Sustainable Development in the Andalusian Cement Industry 2019 - 2020. The jury will select a winner from 19 articles by 13 writers, published between 1 January 2019 and 31 May 2020, taking into account “aspects such as the journalistic quality of the piece, its rigour and provision of data, the sources consulted and the investigativeness of the work” in highlighting the regional cement industry’s commitment to “principles such as sustainable development and the circular economy.”

FLACEMA said, “Due to Covid-19, 2019 – 2020 presents a novel situation. As such, the jury has especially taken into account those works on sustainable development in the industry that address initiatives designed to combat the outbreak.”

The jury announces the winner of the Euro2000 prize and runner-up for the Euro1000 prize on 1 November 2020.


Netherlands: Turkey-based Sabanci Holding and subsidiary Çimsa have announced the launch of Cimsa Sabanci Cement, a 60:40 subsidiary of both companies, based in the Netherlands. Reuters News has reported that Sabanci Holding plans to use the new company “to reach its goal of becoming a leading player in the global white cement trade.”

Cimsa Sabanci Cement will buy 70% of shares in Cimsa Adriatico Cement, Cimsa Americas Cement, Cimsa Cementos España and Cimsa Cement Sales North. Other assets will be sold off, including its 1.5Mt/yr Alicante integrated grey cement plant to Cementos Molins, according to Alimarket-Construcción News.


South Africa: PPC has announced the postponement of its full year results for the financial year that ended 31 March 2020 “as a result of required restatements and the finalisation of the year-end audit.” The company has twice delayed the results already, most recently to 18 August 2020 due to a “restructuring and refinancing project.”

In a notice to the Johannesburg Stock Exchange, PPC said, “The company wishes to advise shareholders that during the audit process for the year ended 31 March 2020, and subsequent to 18 August 2020, additional prior year errors were identified and corrected.”


Turkey: Exports of cement to Iran have fallen by 34% year-on-year in value in the first eight months of 2020 to US$9.30m from US$14.1m. All Turkish cement exports over the period totalled US$2.30bn, down by 2.3% from US$2.35bn. Cement accounted for 2.6% of the country’s total exports (US$88.4bn).


Mexico: Cemex has announced the signing of a collaboration agreement with Switzerland-based alternative fuel (AF) specialist Synhelion, through which the pair aim to develop the use of solar power as an alternative heat source to fuel in clinker production. Pilot testing of Synhelion products will begin at a Cemex plant in late 2022, at a total investment cost of up to US$10m.

Head of global research and development Davide Zampini said, "Thanks to the technology that Synhelion is developing, we can bring the solar heat up to 1500°C. In the process, we can also capture the carbon dioxide (CO2), and that fits perfectly into the process of the synthetic fuel."