Global Cement Newsletter

Issue: GCW477 / 14 October 2020

Headlines


There’s no single theme this week, just a few news stories of note that may have wider significance.

Firstly comes the news that Semen Indonesia subsidiary Semen Padang has been exporting 25,000t of cement to Australia. This follows a consignment of 35,000t of clinker to Bangladesh. The company is hoping to hit a cement and clinker export target of 1.58Mt in 2020 in spite of the on-going coronavirus pandemic. It reached 1.09Mt (about 70%) of this by mid-September 2020 through exports to Bangladesh, Myanmar, Philippines, Australia, Sri Lanka and Maldives.

The wider picture here is that local sales in Indonesia fell by 7.7% year-on-year to 27.2Mt in the first half of 2020 from 29.4Mt in the same period in 2019, according to data from the Indonesian Cement Association (ASI). Cement and clinker exports are up by 32.8% to 3.7Mt from 2.8Mt. Semen Indonesia’s revenue is down but it has managed to hold its earnings up so far. During press rounds in late August 2020 its marketing and supply chain director, Adi Munandir, told local press that he expected domestic demand to fall by up to 15% in 2020 due to effects of coronavirus on private construction and government infrastructure plans. Analysts reckon that the worst of the demand slump hit in the second quarter of 2020 when government-related coronavirus restrictions were implemented, so Semen Indonesia’s third quarter results will closely scrutinised.

One of Semen Padang export targets is the Maldives. This chimes with another story this week because Oman-based Raysut Cement has just bought a majority stake in a cement terminal from Lafarge Maldives for US$8m. The 9000t capacity Thilafusi cement terminal is located on the island of Thilafusi, Kaafu and was expanded in 2015. Raysut Cement has tended to stick to markets in the southern Arabian Peninsula and the east coast of Africa, with projects planned in Madagascar and Somaliland. Yet expansion plans in places further away such as India and Georgia have also been mentioned publicly. A greater presence in the Maldives is a solid step towards Raysut heading eastwards. This would also mirror the plans of the country’s gypsum sector to dominate African and Asian markets and a general longer term shift in global markets from west to east.

One place west that has been doing well in cement though is Brazil. National Cement Industry Union (SNIC) data for September 2020 show a 21% year-on-year boom in cement sales to 5.8Mt and a 9.4% year-on-year increase to 44.6Mt for the first nine months of 2020. Earlier in the year the country’s limited coronavirus suppression methods were attributed for letting the recovering cement sector grow. Now, SNIC has directly thanked government support for civil construction. However, Paulo Camillo Penna, the president of SNIC said. “The results are surprising so far, but that doesn't give us security in the long run,” due to a bubble of real estate and commercial activity that already appears to be declining. Given the slump in cement demand from 2015 to 2018 it’s understandable that SNIC is taking the recovery cautiously.

And to finish we have two connected stories about Cemex. Following the release of its resilience strategy in September 2020, the company has now declared that its integrated Rüdersdorf cement plant in Germany will be the centrepiece of its CO2 reduction plans as part of ‘Vision Rüdersdorf.’ Details are light at present but we expect some kind of carbon capture and storage or usage project. An addendum to this – or perhaps it’s the other way round (!) – is that Cemex has also just announced further credit amendments but with sustainability-linked metrics. Cemex’s chief financial officer (CFO) Maher Al-Haffar said, “We are especially proud that this transaction represents one of the largest sustainability-linked loans in the world.” The teeth of this arrangement remain to be seen but the integration of finance and sustainability has serious implications generally.

Watch out for a research and development themed interview with Cemex and Synhelion in the December 2020 issue of Global Cement Magazine


Turkey: The Turkish Cement Manufacturers’ Association (TÇMB) has appointed Volkan Bozay as its chief executive officer (CEO). Outgoing CEO Ismail Bulut will continue his activities as an advisor to the chairman of the board of directors.

Bozay has held a mixture of public and private sector jobs during his career including a role at the R&D Unit of Undersecretariat of Treasury and Foreign Trade, head of the Finance Department of the Housing Development Administration of Turkey (TOKI) and as a board member of the Emlak Konut Real Estate Investment Company. He also worked as the Assistant General Manager at the General Directorate of Promotions of the Ministry of Culture and Tourism and has worked as a Corporate Relations Manager at British American Tobacco, Turkey.

Bozay holds a Master of Business Administration (MBA) on finance and strategy from the Peter F Drucker School of Management at Claremont Graduate University, US and has a BA degree in Business Administration from the Middle East Technical University (METU) in Ankara. He has also served as a board member for the Turkish Exporters’ Assembly and the National Association of Tobacco Products Manufacturers at Aegean Exporters' Association (EIB).


Australia: Boral has appointed Tino La Spina as its Chief Finance & Strategy Officer. He succeeds Rosaline Ng, who will work with La Spina during a transition period and then leave Boral in early 2021.

La Spina is a qualified chartered accountant whose early career was in taxation and audit functions and who has spent the past 25 years in finance, strategy and leadership roles primarily in the airline industry. In 2019 Tino was appointed as the chief executive officer (CEO) of Qantas International, before leaving Qantas in August 2020 due to coronavirus-related industry disruption. He held a variety of strategy and financial roles before being appointed Group Chief Financial Officer in 2014. Prior to joining Qantas in 2006, he spent five years as Finance Director and Deputy CEO of the National Express Group and five years with Ansett.

He has a Bachelor of Business (Accounting) from Swinburne University in Melbourne, a Graduate Diploma Investment & Finance from the Australian Securities Institute and is a Member of the Institute of Chartered Accountants.


Mexico: Cemex says that it has agreed upon an amendment to its facilities agreement to extend US$1.1bn of term loan maturities to 2025 from 2022, and US$1.1bn of commitments under the revolving credit facility to 2023 from 2022. It says that the sustainability criteria incorporated into the interest rates of the facilities agreement, now worth US$3.2bn, make it ‘one of the largest sustainability-linked loans in the world.’ The company adds that it will prepay US$530m to institutions participating in the extension, corresponding to the July 2021 amortisation under the facilities agreement, and extending its debt maturity profile through to July 2023.

The group has also decided to redenominate its debt away from the US dollar. US$313m of exposure under the term loans that are part of the facilities agreement will convert to Mexican Pesos and US$82m will convert to Euros.


Brazil: Cement sales rose by 21% year-on-year to 5.8Mt in September 2020 from 4.8Mt in September 2019. Data from the National Cement Industry Union (SNIC) shows that sales increased by 9.4% year-on-year to 44.6Mt in the first nine months of 2020 from 40.8Mt in the same period in 2019. Particular gains for the year to date were noted in the North-East and Central-West regions. SNIC has attributed the sales growth to government support for civil construction.

“The results are surprising so far, but that doesn't give us security in the long run,” said Paulo Camillo Penna, president of SNIC. “Sales are being sustained, in the great majority, by real estate construction, the maintenance of the pace of works and small residential reforms and also in the commercial activity that already presents a decline in consumption due to its operation,” However he also noted that activity had been, “subjected to a huge and unexpected pressure of demand, especially since June 2020.” As such SNIC has called for resumption of infrastructure work to stabilise demand.


South Africa: PPC recorded sales of US$618m in the 2020 financial year, which ended 31 March 2020, down by 2.4% year-on-year from US$634m in the 2019 financial year. Earnings before interest, taxation, depreciation and amortisation fell by 17% to US$97.0m from US$118m.

Chief executive officer (CEO) Roland van Wijnen said, “The 2020 financial year was characterised by difficult trading conditions, especially in South Africa. The global Covid-19 pandemic, which emerged during the last month of the financial year, further exacerbated an already difficult trading cycle. While we have seen a decline in our financial performance, we also see that the actions we have taken to reposition PPC to deliver sustainable value for all our stakeholders are beginning to yield results.”

He added, “After the resumption of trading in the 2021 financial year, the performance across all of our core businesses has been encouraging. The group’s capital restructuring remains a key priority. Over the next nine months, we will take the strategic and operational actions needed to improve the group’s financial position and performance. It is encouraging to see how PPC employees have come together to drive performance to sustain our purpose to empower people to experience a better quality of life.”


Germany: Cemex Zement has announced the start of carbon-neutral building materials development at its 1.9Mt/yr Rüdersdorf, Brandenburg cement plant. Called Vision Rüdersdorf, the project consists of, “the comprehensive investigation of various approaches to breakthrough technologies in order to prevent process-related carbon dioxide (CO2) from entering the atmosphere, but to use it for beneficial purposes. The investigation areas can be divided into capture, storage or use of CO2. This will help towards Cemex’s target of 55% CO2 emissions reduction across Europe by 2030 and its commitment to deliver carbon-neutral concrete by 2050.

Chief executive officer (CEO) Rüdiger Kuhn said, “For years, sustainable success has been achieved here in the reduction of fossil fuels and in the selection of alternative recipe ingredients for cement. The experienced team is always looking for possible improvements. When it came to determining the best possible CO2 emission values, the Rüdersdorf plant was always at the forefront of the European cement industry and has thus also earned an excellent reputation in the global Cemex organisation.”

In order to realise Vision Rüdersdorf, the producer has partnered with companies from other industries. Managing director and plant manager Stefan Schmorleiz said, “In an interesting approach, the CO2 that we capture is used as a raw material for downstream processes in the chemical industry. Another approach is to innovate in the storage of CO2. With these efforts, and our commitment to review and invest in these technologies, Cemex Zement is making a contribution to the decarbonisation of the cement industry.”


Bangladesh: Production at Premier Cement’s new plants at Narayanganj and Chattogram has been delayed until November 2020 due to the coronavirus pandemic. Mohammed Amirul Haque, managing director of the cement producer, said that the projects have been delayed due to the absence of some technical personnel from China and Denmark, according to the Daily Star newspaper. The units were originally scheduled to start commercial production in June 2020 but this is now expected to start in December 2020. Both plants have a combined budget of around US$150m. Denmark-based FLSmidth was reported to be supplying mills for the plants.


Maldives: Lafarge Maldives has rebranded to Raysut Maldives Cement following its 75% acquisition by Oman-based Raysut Cement. State Trading Organization retains its 25% stake in the joint venture, which operates the 75,000t/yr-capacity Thilafushi Island cement terminal. The company says that it plans to expand the terminal’s capacity by 167% to 0.2Mt/yr by 2022.

Raysut Cement group chief executive officer Joey Ghose said, “Our foray into the Maldives will help drive self-sufficiency of cement in Maldives, which currently is predominantly an import market. Raysut is looking at adding local value in the Maldives by installing production facilities to ensure there is at least 40% local content. This will also make the market more competitive from a price point of view, which will have a positive impact on infrastructure development in the country.”


India: Naveen Patnaik, the chief minister of Odisha, has attended the inauguration of Ramco Cement’s new cement grinding plant at Haridaspur. The unit had a cost of just under US$100m and has created 105 direct jobs. A LM 46.2+2 CS type vertical roller mill with a capacity of 3750kW has ordered from Germany-based Loesche in 2018 for the project. The cement producer says that the plant is designed to be ‘totally dust free,’ including bag filters designed to ensure emission levels below 30mg/m3.


Canada: Testing specialist Giatec has launched Roxi, an artificially intelligent (AI) concrete visualisation programme for builders. PR Newswire has reported that Roxi “provides insights regarding the amount of cement that is needed, including the amount that can be removed without compromising the concrete's setting time or strength development,” aiding project completion while diminishing extraneous cement demand.

The company thanked Sustainable Development Technology Canada for its US$1.83m grant towards the development of Roxi, part of the fund’s US$44.6m total contribution to “clean technology projects” so far in 2020.


Poland: The Cement Producers Association (CPA) has celebrated the 30th anniversary of its founding with the release of a report entitled ‘The Influence of the Cement Industry on the Polish Economy.’ The report states that the industry’s 13 cement and grinding plants, which employ 3500 people across the country, have received Euro2.23bn in investments since 1990.

CPA chair Krzysztof Kieres said, “We have started actions aimed at achieving emission neutrality at our 60th anniversary in 2050. These ambitious climate goals, the economic situation and legislative changes constitute new challenges for the cement industry, and it needs to look for partners with similar goals - to care for the development of the construction industry and the entire Polish economy.”


China: Gansu Qilianshan Cement has announced that it expects to record a profit of US$208m in the first nine months of 2020, up by 41% year-on-year from US$147m in the corresponding period of 2019, according to Reuters. It said the results would be in line with its growth trajectory thanks to a significant increase in demand towards the end of the first half of 2020.


India: The state of Odisha has announced a US$1.2bn infrastructure investment package aimed at “reviving the industrial economy, which has been impacted by the coronavirus outbreak.” National Business Media News has reported that the plans, encompassing “micro, small, medium and large scale” projects across sectors including cement and steel production, renewable energy and IT and will create “huge job generation avenues” and significantly increase cement demand.

State governor Ganeshi Lal said, “The new industrial units will provide an added impetus to the confidence of investors in the industrial sector.”


China: Huaxin Cement has published a figure for its predicted profit for the first nine months of 2020 of US$135m, down by 44% from US$241m in the first nine months of 2019. The company attributed the forecasted decline “mainly to the severe impact of the coronavirus epidemic in the first half of 2020 and the large-scale flooding in the River Yangtze in July.” It added, “The production and sales of the company’s leading products were greatly affected, and prices also fell, resulting in operating income decline.” The company noted that third-quarter profit is expected to increase by 5% year-on-year.


Maldives: Oman-based Raysut Cement has announced its acquisition of a 75% stake in Lafarge Maldives for US$8m. The subsidiary of LafargeHolcim operates the 9000t-capacity Thilafusi cement terminal on the island of Thilafusi, Kaafu Atoll, which it opened in June 2015.


Vietnam: Siam Cement Group (SCG) subsidiary SCG Packaging has launched Doozypack, a Kraft paper cement bag made using recycled paper. The company “applied the circular economy principle to the product’s development, enabling consumers to live sustainably,” according to general director Ekarach Sinnarong. Viet Nam News has reported that SCG Packaging partner Vina Kraft Paper is able to recycle Doozypack bags, along with all other SCG paper cement bags, thereby “extending the circular economic principle into the next cycle of use.”


India: JK Cement has started grey cement production at its 0.7Mt/yr-capacity Balasinor grinding plant in Gujarat. Accord Fintech News has reported that the plant, which dispatched its first batch of cement on 10 October 2020, brings JK Cement’s total grey cement production capacity to 4.2Mt/yr.


Kazakhstan: Steppe Cement’s sales in the first nine months of 2020 were US$26.0m, up by 5% year-on-year from US$24.7m over the corresponding period of 2019. Dow Jones Institutional News has reported that cement sales volumes fell by 4% to 556,000t from 535,000t. Steppe Cement forecast full-year cement market growth of 2% to 9.0Mt in 2020 from 8.9Mt in 2019.


Cuba/US: A court in Florida has accepted a request for damages worth US$270m from LafargeHolcim to over 20 parties from Cuba whose land was nationalised and subsequently had a cement plant built on it. The claim alleges that Switzerland-based Holderbank has held a stake in the partly-state owned Carlos Marx cement plant near Cienfuegos since 2001 via a deliberately “complex network of letterbox companies and transactions” in the Netherlands and Spain, according to the Tages Anzeiger newspaper. Holderbank later became Holcim and then LafargeHolcim.

The building materials producer’s alleged involvement may constitute a violation of the US embargo on trade with Cuba for companies active in the US. The claim has been aided by a clause in the US’s Cuban blockade law, activated by President Donald Trump, enabling Cubans to claim damages in US courts for expropriated property from private companies which profited from them.


Austria: RHI Magnesita has launched Ankral Low Carbon, a 14% reduced carbon dioxide (CO2) refractory brick. Instead of raw magnesite, Ankral Low Carbon bricks contain used refractory bricks as a dead burned magnesia (DBM) source.

The company says, “Adaption of production cycles is one of four ways in which RHI Magnesita is contributing to environmental sustainability, alongside shortening transportation routes, increasing of energy efficiency and reducing the carbon footprint of raw material.”


Malaysia: Belgium-based Etex has merged its cement boards subsidiary Kalsi Malaysia with fireproofing specialist Promat Malaysia under the new brand Etex Malaysia. The company says that the name change “reflects Etex's broader commitment to inspire ways of living through innovation.” PR Newswire Asia has reported that by combining its Malaysian subsidiaries under the Etex Malaysia brand the group aims to strengthen its offerings to local and export Association of South East Asian Nations (ASEAN) markets.


Iraq: China-based China Machinery Engineering has secured a contract for the establishment of an integrated cement plant in Erbil, Kurdistan. Dow Jones Newswire Chinese News has reported that the plant is scheduled for completion in April 2023, at a total investment cost of US$210m.


US: LafargeHolcim subsidiary Holcim US has opened a 10MW solar power plant at its Hagerstown, Maryland cement plant in partnership with Greenbacker Renewable Energy Company. The producer says that the power plant will supply 25% of the cement plant’s energy needs, reducing its carbon dioxide (CO2) emissions by 12,400t/yr.

LafargeHolcim cement US operations chief executive officer (CEO) Jamie Gentoso said, “As solar technologies continue to improve, this abundant energy source stands out as both a sustainable and economical solution to follow through on our commitment to minimise emissions and reduce our carbon footprint. We already have access to large areas of land with a high concentration of sunlight, so utilising solar energy is an easy decision. As we strive toward becoming a net-zero company, clean energy is a key part of our strategy. We hope to install enough renewable energy to power all of our plants and give back to the surrounding communities by 2026; this new solar array is just the beginning for us.”


Portugal: Germany-based ThyssenKrupp Industrial Solutions has announced its appointment by Secil for modernisation of its 2.0Mt/yr Outão integrated cement plant. The supplier says that it will, “modify the existing rotary kiln and preheater tower, install a new AS-MSC calciner equipped with a Prepol SC-S calcining system to increase fuel flexibility and maximise the use of a wide range of alternative fuels (AF) with a minimum substitution rate of 85%.”

Additionally, a new Polytrack 7T/5-3R grate cooler, including a new cooler dedusting system, will replace the existing planetary cooler. The upgrade aims to “bring the plant to the highest energy efficiency, low nitrous oxides (NOx) and the lowest carbon dioxide (CO2) emissions among European cement producers” and is partly funded by the Portuguese government.

ThyssenKrupp Industrial Solutions chief executive officer (CEO) Samir Abi Ramia said, “This project marks a milestone for our Grey2Green initiative and is proof of the rising demand for green technologies in the cement industry. Secil is aware of the stakes for tomorrow and beyond and places great value on sustainability. With our energy-saving and emissions-reducing technologies, we are proud to play our part in the transition towards carbon-neutral cement production.” He added, “Secil can be confident that, with this investment, its Outão plant will rank among the top 10% of efficient cement plants in Europe.”


US: The North Dakota Department of Transportation (NDDOT) has signed a contract with drone supplier Botlink InSite to serve its drone surveying and mapping needs for management of aggregates used in building transport infrastructure.

Chief executive officer (CEO) Terri Zimmerman said, “We’re excited to add the NDDOT to our ever-growing list of customers. Our users see real cost savings by quickly getting accurate data, including reducing overproduction and underproduction.” She added that the drones can also serve cement companies in managing their raw materials stores.


US: The Wildlife Habitat Council has named Cemex USA the winner of the Corporate Conservation Leadership Award 2020. The award signifies “an exemplary corporate commitment to biodiversity and conservation education, and meaningful alignments with global conservation objectives.”

Director of Sustainability Vicente Saiso said, “We are privileged to receive the Corporate Conservation Leadership Award from the Wildlife Habitat Council. This recognition is testimony to our successful efforts and fosters our commitment to continue embedding sustainability in every aspect of our operations. To date, we have achieved certification for 30 programmes and community environmental initiatives in our operations around the world, with the highest standards of environmental conservation and biodiversity restoration.”

Projects include collaborations in the US and further afield with the California State Wildlife Action Plan, the Friends of Verde River Cooperative Invasive Plant Management Plan, BirdLife International, the El Carmen Nature Reserve Action Programme and a black bear research initiative, as well as the Mexican Strategy for Chihuahuan Grasslands Conservation, the Dominican Republic National Annual Plan and Panama's Alliance for a Million Hectares.


Indonesia: Semen Indonesia has said that it expects a 14% year-on-year decline in domestic cement demand to 50Mt in 2020 from 58Mt in 2019. The Jakarta Post newspaper has reported that the coronavirus outbreak was the primary cause of a 7.7% first-half decline in cement consumption to 27Mt from 29Mt.

Marketing and supply chain director Adi Munandir said, “Our projection is based on the delay in private construction projects and the government’s infrastructure development as a result of the Covid-19 crisis. This has caused demand to slump by 8.8% in July 2020, and we expect this slump to continue to the end of the year.” He noted the retail housing market as a potential sales boost, saying, “We saw an uptick in cement bag sales during the first half of 2020, as home renovations rose due to the pandemic.”


France: The council of Paris has voted to withdraw permissions for a planned expansion to LafargeHolcim subsidiary Lafarge France’s Bercy concrete plant after protesters captured footage of a slurry spill that the company called ‘exceptional.’

Finanznachrichten News has reported that the council also voted to launch a “mission to reassess cement and building materials production by 2040” to preserve the local environment, as a result of which it expects the city to shift its reliance to imports of cement and concrete from surrounding areas.


Philippines: LafargeHolcim subsidiary Holcim Philippines has launched a new social media marketing campaign for its flagship general purpose Excel brand cement. The Business Mirror newspaper has reported that the campaign uses the words “support and lift” in relation to the attributes consumers most associate with Excel cement.

The company said, “Holcim Philippines has sold over 1bn bags of Excel since 2000. This reflects the trust of local contractors, who in turn have used this to build many of the things that benefit us today. This campaign is a reminder that Excel will continue to be reliable partner in building a better Philippines moving forward.”


US: The Portland Cement Association has launched greenercement.com, an informative website site dedicated to Portland Limestone Cement (PLC) applications and benefits. The organisation says that PLC’s 10% reduced carbon dioxide (CO2) emissions when compared with Ordinary Portland Cement (OPC) make it the sustainable choice for innovative construction.

President and chief executive officer (CEO) Mike Ireland said, “PLC is another example of the cement industry evolving over the years, continuing to innovate and sustainably producing the high-quality cement that is needed to help keep America’s infrastructure strong and resilient.” He added, “This initiative will help educate engineers and other specifiers on how PLC can easily be incorporated into numerous projects.”