Global Cement Newsletter

Issue: GCW513 / 07 July 2021

Headlines


There was good news from the corporate finance sector for cement producers this week in the form of an approving statement by Fitch Ratings. It declared that it expected the sector to be able to pass on the costs of decarbonisation to customers due to a lack of alternatives. It recognised the challenges posed by regulators, investors and societal pressure but, even so, it suggested that cement was still an industry worth backing. Or at least for now. Added to this, it forecast that demand for building materials would grow to support the transition to a low carbon economy and to combat the damage caused by climate change. It did admit that the capital or operating costs required to decarbonise are seen as being potentially large, especially with uncertainty over how much governments will pay or incentivise. Yet the timescales involved are beyond the ratings agency’s ‘horizon’ hence no really disruptive shifts in producer economics are expected anytime soon.

This was obviously a win for the cement industry and its cheerleading associations led by the Global Cement and Concrete Association (GCCA), the World Cement Association and the regional associations. After all, the increasingly convergent message to the wider world has been along the lines of ‘concrete is part of the solution and you need our products because there’s nothing else.’ Good timing then for the GCCA to launch its collaboration with the World Economic Forum, the ‘Concrete Action for Climate’ (CAC) initiative. The collaborative platform is planned to help drive the industry’s journey to carbon neutral concrete by 2050 as part of the wider Mission Possible Partnership, a wider coalition of public and private organisations working on setting the heavy industry and transport sectors towards net-zero. Expect lots more of these kinds of announcements on the road to the 26th UN Climate Change Conference of the Parties (COP26) taking place in Scotland in late October 2021.

Fitch Ratings did point out that societal awareness was likely to accelerate decarbonisation. The sharp end of this trend was experienced by the building materials industry this week when environmental activist group Extinction Rebellion forced operations to stop temporarily at LafargeHolcim’s Port de Javel ready-mixed concrete plant in Paris on 30 June 2021. This followed a similar incident by the same group at a LafargeHolcim subsidiary ready-mix plant in London in mid-2019. Given the share of global CO2 emissions from the cement-concrete production chain, it is perhaps surprising that climate activists haven’t targeted clinker-producing cement plants directly in the same way that they have gone after coal-fired power stations. Clinker kilns are, after all, the source of the majority of the sector’s emissions. However, blockading a concrete plant in the city may conjure up a more potent media image than doing the same to a factory out in the country.

Instead the battles with cement plants and their quarries tend to be of a ‘not in my back yard’ (Nimby) nature. Or rather ‘not in my monastery (Nimmon?) this week, with the news that a subsidiary of YTL Cement in Malaysia is attempting to evict a group of Buddhist monks and their underground place of worship from a quarry on Mount Kanthan in Perak. In the latest twist of the long running saga, the monks have hit back with an attempt to get their portion of the site recognised as a place of worship and a heritage site. Thankfully a more positive example of how quarries can fit in with the wider community could be found this week in the guise of an archaeological dig at CRH subsidiary Tarmac’s Knobb’s Farm quarry in Cambridgeshire, UK. The discovery of a Roman Britain-era cemetery with a high proportion of decapitated bodies may have been gruesome but the relations between the operator and the archaeologists were much more harmonious. Another recent example was the discovery of what may be a new precursor species of humans, unearthed at a quarry run by Nesher-Israel Cement Enterprises site at Ramla in late June 2021.

The paradox building materials producers pose to environmental activists could be summed up by the record heat wave that hit the north-western region of North America recently. CO2 emissions, in minor part produced by the cement and concrete industries, are the most likely reason for an increased frequency of extreme weather events such as this. Yet, infrastructure such as pavements and roads were widely reported as having buckled in the heat, principally because they weren’t built for such high temperatures. They will have to be rebuilt to withstand similar temperatures in the future. Building materials can thus be seen as both part of the problem and part of the solution. Yet with net zero targets nearly 30 years away it seems likely that continued extreme weather events and their potentially lethal consequences will speed up the public demand for decarbonisation. It is worth noting here that one of Extinction Rebellion’s demands in the UK is that the country should become net zero by 2025.

Fitch Ratings has cast its vote for now and Extinction Rebellion and its fellows are set to continue to wage their political campaigns. In the meantime it is debatable how much spiritual solace will be found by the monks of Mount Kanthan during blasting hours at the neighbouring quarry.


Dominican Republic: The Dominican Association of Portland Cement Producers (ADOCEM) has appointed Félix González as the president of its board of directors. He succeeds Adriano Brunetti in the post and will serve a term until 2023, according to CDN. González, a Colombian-Venezuelan national, holds over 45 years of experience in the cement sector. He has been the general manager of Cementos Santo Domingo since 2010.


Belize: Cementos Rocafuerte has commissioned its new Belmopan grinding plant at a 10ha site adjacent to the George Price Highway. The Belizean has reported that the grinding plant is the first in the country, which previously imported Cementos Progreso’s cement from Guatemala. The value of the Cementos Progreso subsidiary’s investment in the new facility was US$8m. In its first phase, the plant will employ 28 Belizeans.

Chief executive officer Jose Raul Gonzalez said that the plant, “meets all environmental and quality standards that this country deserves.” He added, “Life must go on, and the development of Belize shouldn’t be stopped by the virus or by the lack of proper building materials.”


Egypt: The Egyptian Competition Authority has approved a request by 23 cement producers for permission for a temporary reduction in their cement output by 11%, with additional cuts of 3% per kiln line. Reuters has reported that the reduced quotas will be in force between 15 July 2021 and 15 July 2022. Previously, two cement executives quoted by the source said that the proposed cuts seemed unfair on multinational companies, like them, that operate older plants.


Sweden: Cementa says that the decision by the Supreme Land and Environmental Court to reject its renewal application to continue mining limestone at its quarries in Gotland will create a ‘crisis’ for consumers in the autumn of 2021. The quarries supply its integrated Slite cement plant. The producer said that the ‘majority’ of Swedish cement production could cease in November 2021 following the expiry of the current licence in October 2021.

“We are seriously concerned but also surprised by the court's ruling today,” said Magnus Ohlsson, the chief executive officer of Cementa. “Limestone has been mined in Slite for over 100 years, which has built up a huge knowledge bank about how the business affects the surrounding environment. Our application is solid and clearly shows that it is possible to conduct a continued sustainable limestone mining in the area. We must go through the decision carefully and then set up the strategy for how we will handle the situation,” He added, “For Sweden, our customers and for us and our employees, it is important that political decision-makers and authorities quickly draw up new guidelines for how the supply of critical building materials such as cement and concrete should work.”

The subsidiary of Germany-based HeidebergCement originally received clearance in 2020 to renew its mining operations at the site until 2041. However, this was subsequently challenged. The current decision by the Supreme Land and Environmental Court was reached as they said they had insufficient evidence to assess the environmental impact of the application.


Paraguay: Industria Nacional del Cemento (INC) says it has developed new software in-house to manage its weighbridges. The new system it intended to supply reports in real time about truck and material movements at its plants. Use of the new system started in July 2021.


Iran: Cement and steel producers have been ordered to stop production for up to three weeks due to insufficient electricity supplies. A spokesman for the electricity industry said that the cut in supply was now necessary after heavy industrial customers had failed to observer a voluntary request, according to the Fars News Agency. Electricity supplies will be reduced to 10% of normal levels during the period.


Argentina: Data from the Asociación de Fabricantes de Cemento Portland (AFCP) shows that cement shipments grew by 44% year-on-year to 5.52Mt in the first half of 2021 from 3.83Mt in the same period in 2020. Local consumption of cement increased at a similar rate. The association has forecast the local market to grow by 15% year-on-year to 11.4Mt in 2021 from 9.87Mt in 2020.


US: Lhoist and Maerz Ofenbau have started up a lime kiln at the Montevallo plant in Alabama. The R4S type PFR kiln supplied by Switzerland-based Maerz Ofenbau has a nominal production rate of 600t/day of lime and is able to fire gas and coal.


Germany: Switzerland-based Holcim has agreed to acquire ready-mix concrete and aggregates producer Heinrich Teufel. The Strassburg, Baden-Württemberg-based company employs 160 people across its operations in southern Germany. No value for the purchase has been disclosed and the transaction will be subject to regulatory approval.

Europe, Middle East and Africa regional head Miljan Gutovic said "The acquisition of Heinrich Teufel will strengthen our footprint in southern Germany in aggregates and ready-mixed concrete. We were especially impressed by their shared commitment to advancing the circular economy. We look forward to warmly welcoming the Heinrich Teufel colleagues joining our team.”


Canada: Lafarge Canada has signed a non-binding memorandum of understanding with carbon utilisation company, Carbon Upcycling Technologies. The agreement allows for the potential integration of Carbon Upcycling’s CO2-embedded concrete additive into Lafarge operations and will explore opportunities to expand Carbon Upcycling’s operating capacity by developing larger processing facilities.

Carbon Upcycling produces an additive that makes concrete both stronger and more sustainable with the ability to reduce the carbon footprint of concrete by up to 25% on a lifecycle basis. Carbon Upcycling’s involvement into construction materials began in 2018 through its participation in the LafargeHolcim Accelerator program, which aimed to accelerate the growth of innovations in the building materials industry.

The deal aligns with Lafarge's Net-Zero 2030 pledge to accelerate green construction and combat the climate change crisis with low carbon concrete and circular economy solutions, and Carbon Upcycling goal to reduce overall CO2 emissions by 600Mt by 2030.


UK: The Global Cement and Concrete Association (GCCA) has launched Concrete Action for Climate (CAC) in partnership with the World Economic Forum. The GCCA says that CAC will support industry, civil society, governments and investors to coordinate global climate actions towards 2050 net-zero targets. The initiative represents 40% of the global concrete and cement industry through the GCCA and will bring it together with external expertise and influence. It will achieve its aims by helping to help deliver and coordinate global climate action, stimulating demand for sustainable materials and ensuring appropriate financing and public policy is in place to help the sector reduce its carbon footprint, according to the association.

CAC chair Dominik von Achten said, “Concrete is vital to the development of the modern world, being used to develop key infrastructure like safe homes, bridges and hospitals, as well as supporting the transition to clean energy. Strong action to improve the sustainability of cement and concrete is already underway, but the industry needs to engage and collaborate with others to help drive collective action towards achieving carbon neutral concrete for the world. Today’s launch of the CAC platform is a great example of such collective action. It’s encouraging and exciting to see influential, global organisations from across the world come together to support the cement and concrete industry on its path to carbon neutrality.”


Vietnam: The Building Material Forum has predicted that Vietnam’s cement export volume will undergo a 25 – 30% short and medium-term decline if the government of China suspends its stimulus package on infrastructure. The Viet Nam News newspaper has reported that China’s subsidisation of infrastructure and industrial construction totalled US$163bn in 2020, up by 34% year-on-year.


France: Cemex France has inaugurated a multi-service green building materials outlet and recycling centre at Genevilliers in Paris, Île-de-France. The company says that the facility will stock its reduced-CO2 Vertua concrete range. It will also receive construction waste, excavated earth and rubble for use in concrete production or resale as aggregates. The company will offer complete traceability of waste received, and non-recyclable waste will be used in quarry restoration.

France North director of materials Alain Plantier said, "Developing construction in high-growth urban locations requires circular economy solutions which mitigate climate change and save natural resources while improving the wellbeing of inhabitants." He added “Cemex is uniquely positioned to provide integrated solutions for building and maintaining more sustainable and resilient cities, and this new site demonstrates this perfectly. Clients in Paris need low-carbon construction solutions which perform throughout their life cycle. Working together with our clients, this site will help to reduce the carbon footprint of new projects in line with Cemex’s Future In Action strategy – committed to net zero CO2.”


Germany: Aumund has taken over all customer support services for KoWey conveyors and bucket elevators. The company assured customers that it would be there ‘anytime, worldwide’ to provide services, spare parts, conversions or support for their KoWey products.


UK: Archaeologists have completed the excavation of a 52-grave cemetery dated to 3rd century Roman Britain at Ireland-based CRH subsidiary Tarmac’s Knobb’s Farm quarry in Cambridgeshire. The company said that the find is remarkable for its high proportion of decapitated bodies (33%), indicating the proximity of an execution site. The graveyard is situated near a settlement on a peninsula in the Fens wetland area. The settlement itself is lost to the quarrying activities of the previous owner.


India: JK Cement has targeted a 10% year-on-year sales growth in its 2022 financial year, which ends on 31 March 2022. The Economic Times has reported that the company foresees sales growth due to the on-going government infrastructure investment push, minimal monsoon disruptions and pent-up cement demand following Covid-19-led disruptions. Cement chief operating officer Rajnish Kapur said that growth momentum from the end of the 2021 financial year will likely continue throughout the coming nine months, despite a Covid-19 led sales drop in the first quarter of the 2021 financial year.

The cement producer also expects that its new cement plant project at Panna in Madhya Pradesh is likely to be completed in the 2023 financial year due to Covid-19 related delays. The plant will bring its total cement production capacity to around 20Mt/yr from nearly 15Mt/yr at present once it is finished. The company is also considering acquisitions to further increase its capacity to 25Mt/yr by the mid-2020s.


India: The Kerala state government aims to establish 25% state ownership of the cement industry locally. The New Indian Express newspaper has reported that the policy aims to control rising cement prices. The government said that state-owned Malabar Cements and Travancore Cements will increase their cement production. The former has already lowered its cement prices, according to the administration.


India: The government of Andhra Pradesh will subsidise the purchase of cement for 122,000 new houses in rural Guntur district under its Housing for All scheme. The Hans India newspaper has reported that builders have laid the foundations of 14,000 of the properties, and will have completed a further 46,000 by the end of the working day on 9 July 2021. District revenue collector Vivek Yadav said that the administration will announce further housing projects under the scheme after builders complete 116,000 units.


Malaysia: Buddhist monks at the Dhamma Sakyamuni Caves Monastery have filed a petition to the state government of Perak to have the site recognised as a place of worship and the local Mount Kanthan area approved as a national heritage site. Mongabay has reported that the caves lie in YTL Cement’s Mount Kanthan quarry. The religious site is located on the still unquarried southern face of Mount Kanthan.

YTL Cement started eviction proceedings at the site in late 2020. It said, “Contrary to what has been claimed by irresponsible parties, we have co-existed harmoniously with the local community. The real issues at hand are safety and the sanctity of the law.” It added with regard to the safety issue, “As the rightful owner of the land, we are responsible for all that occurs on it. We cannot stand by the misleading of the public nor allow such negligence.”

A predecessor company of YTL Cement leased the site in the 1960s. However, the monks allege that they were using the area several decades prior to this. The relationship between both parties broke down in 2013 when the cement company started to ask the monks to leave the monastery during rock blasting.


Kenya: Nairobi Business Ventures (NBV) says it intends to buy 11.33 hectares of land in Machakos, near Nairobi, from its subsidiary Shreeji Enterprises Kenya to build a new cement grinding plant. It plans to invest US$140m in the project according to the Business Daily newspaper. A feasibility study for the construction of the plant has been concluded and the preliminary work to establish the plant is currently being conducted.

The former shoe manufacturer announced plans in late 2020 to build a 1Mt/yr cement plant following its acquisition by UAE-based Delta International Holding. The project will run as a grinding unit first before moving to clinker production at a later stage. The company also plans to diversify into vehicle and aircraft maintenance.


Austria/Australia: Refractory producer RHI Magnesita and Calix say they have started a memorandum of understanding to develop a flash calciner for use in the production of refractory materials, to enable CO2 separation for either utilisation or storage. The companies have agreed to run studies up to and including basic front-end engineering and design for a commercial-scale demonstration facility at an RHI Magnesita site.

RHI Magnesita and Calix started discussing a collaboration in early 2019. The application of Calix's technology to refractory products has been the subject of pilot scale test work during 2020, with larger scale test work currently underway.

Luis Bittencourt, chief technology officer of RHI Magnesita said, "We are pleased to be working with Calix on this project, which is a key part of the research and development programme on CO2 emissions reduction that we are carrying out over the next five years. Together with our partners at Calix, we are seeking to develop new technologies for the capture, storage and utilisation of CO2 that would otherwise be emitted during the refractory production process." Phil Hodgson, the managing director of Calix added that the company was also looking at strategic opportunities in its magnesium oxide businesses.


India: Researchers at the Visvesvaraya National Institute of Technology in Nagpur, Maharashtra, have shown in laboratory studies that an enzyme called urease found in watermelon seeds can strengthen cementitious materials and repair cracks in concrete. The Times of India newspaper has reported that the study found around a 22% increase in compressive strength, a 19% reduction in water absorption and improvements in durability. It is hoped that the food industry waste product could potentially be used to replace chemical admixtures commonly used in concrete production. Field studies are now set to follow.

Study leader associate professor Madhuwanti Latkar said, “Watermelon seeds are magic beans when it comes to importing strength to cementitious materials.”


Brazil: Votorantim Cimentos is preparing to bid for some of LafargeHolcim’s assets in Brazil. However, the company is limited by local competition rules so it is unable to try and buy all of LafargeHolcim’s assets, according the Valor Economico newspaper. In a statement to Reuters, Votorantim said that it had not made a bid yet but that it was always open to new opportunities. LafargeHolcim was reported by local press in April 2021 as wanting to sell its assets in the country.


Uruguay: The Administación Nacional de Combustibles, Alcohol y Portland (ANCAP) and the Administración de Ferrocarriles del Estado (AFE) have signed an agreement to exchange logistics services, materials and real estate. Under the deal ANCAP estimates that 380,000tt/yr of fuel and 390,000t/yr of cement and limestone can be transported by rail. The arrangement also includes: offering preferential transport rates to ANCAP; moving cement and limestone between ANCAP’s plants and quarries; conducting restorative work at ANCAP’s Queguay limestone quarry and its integrated Paysandú cement plant; and supplying rail ballast to AFE.


Philippines: Holcim Philippines says it is focusing on sustainability and invocation to its customers. At a virtual conference held in mid-June 2021, the building materials producer said that it is using more alternative low-carbon fuels and developing new products that contain less clinker. It added that builders could improve their carbon footprint by ensuring that structures are made with the right materials to meet strength and durability requirements without being overdesigned and that hardware stores could play a role in guiding customers to the correct building materials for their projects. The company is also working on its digital platforms to make customer transactions smoother.

“With our commitment to sustainability and innovation, we will develop the next generation of building materials that will help the country build better for the future. We want to continue to strengthen our collaboration with our customers to raise consumer awareness that these products support their aspirations for a greener and healthier Philippines," said Horia Adrian, Holcim Philippines’ president and chief executive officer.


Cyprus: Eureka Shipping has ordered two cement carriers from Netherlands-based shipbuilder Royal Bodewes. This latest order represents the fourth and fifth ships in a series that Eureka Shipping, a joint venture between SMT Cement Ships and the CSL Group, has requested from the shipbuilder, according to Maritime Reporter & Engineering News. The new ships follow the Aalborg White, Kongsdal and Norden that were built in 2019. Each vessel has a capacity of 4252dwt. Eureka Shipping operates a fleet of 13 cement carriers with a range of 3000 – 23,000dwt.


New Zealand: Stevenson Concrete is set to bring concrete made using CarbonCure technology to the country in July 2021. The Auckland-based concrete producer is currently conducting final internal quality assurance at its Drury quarry and concrete plant before opening the product up on general sale. Canada-based CarbonCure’s technology uses a CO2 mineralisation process during production to reduce carbon footprint of concrete.

"Along with a number of other carbon-decreasing initiatives we are using, this technology is going to change the way New Zealand builds houses, footpaths, roads, pipes, and thousands of other man-made, everyday objects. Stevenson has brought it into the New Zealand mainstream, just as this technology is used in countries like Singapore, North America and parts of Europe," said Anthony Bitossi, general manager of Stevenson Concrete.


Brazil: Companhia Siderúrgica Nacional (CSN) has agreed to buy Cimento Elizabeth for US$220m from Farallon Capital. The acquisition will give CSN an additional 1.3Mt/yr cement production capacity bringing its total to 6Mt/yr, according to the Valor Econômico newspaper. The deal will also give it a presence in the Northeast, add modern equipment to its assets and ‘substantial’ reserves of limestone, The purchase will be subject to regulatory approval.


India: Wonder Cement has ordered its eighth vertical roller mill from Germany-based Gebr. Pfeiffer. A MPS 3070 BK type mill has been selected for grinding petroleum coke and coal. The throughput rate for pure petcoke grinding will be 40t/hr with a product fineness of 2% R 90µm. The mill will be equipped with an SLS 2900 BK type classifier. Due to the high abrasiveness of Indian coal, the mill and classifier will be designed with a correspondingly robust wear protection. The new mill will support the fourth 8000t/day production line at the producer’s plant at Tehsil Nimbahera, Chittorgarh in Rajasthan.

Most of the components of the coal mill will be manufactured by Gebr. Pfeiffer India including the housing and foundation parts, the grinding bowl and a large part of the force-transmitting parts. Delivery of the mill is scheduled for the end of 2021. Commissioning of the entire kiln line with the new grinding plant is scheduled for spring 2022.


Cameroon: Luc Magloire, the Minister of Commerce, has written to Cimenteries du Cameroun (CIMENCAM) threatening to close its production facilities if it raises its prices without approval. In the letter the minister accused the subsidiary of LafargeHolcim of increasing its wholesale prices and of preparing to do so again without consent, according to the Ecofin Agency. Prices have reportedly risen by up to 8% in some places.

Friction occurred between the government and CIMENCAM in 2020 when LafargeHolcim renewed the term of Benoît Galichet as the chief executive officer of its local subsidiary. The government, a large minority shareholder of the company, opposed the decision. The government and the cement producer have also disagreed previously over the price of cement.


UK: Fitch Ratings says it does not expect the financial profiles of cement producers to be changed by decarbonisation efforts in its rating horizon. The credit rating agency expects that regulatory scrutiny, investor pressure and societal awareness are likely to accelerate the building materials sector’s decarbonisation drive. However, it predicts that producers will pass on costs to consumers as there are no substitutes for its products. In addition, demand for building materials will grow, supported by increasing needs for infrastructure to cope with the transition to a low-carbon economy and the physical effects of climate change.

It added that, since there are no low carbon solution readily available, such improvements will require ‘significant’ investment and research. Fitch Ratings expect this to arrive after 2030 to meet the tight 2050 sustainability targets by both governments and companies. The cost of this may be large especially as government incentives to support it are, as yet, uncertain.

Fitch Ratings noted that the industry had made significant progress with an 18% reduction in the global average CO2 intensity of cement production since 1990. However, due to growing demand for cement, the sector’s gross emissions have increased by 50%. It pointed out the large role China and India have to play in emissions reductions as they are the largest concrete producers in the world. However, Europe is seen as the most demanding region for decarbonisation regulations at present.


 

France: Extinction Rebellion activists forced operations to stop temporarily at LafargeHolcim’s Port de Javel ready-mixed concrete plant in Paris on 30 June 2021. Members of the climate activist group trespassed on the site to denounce what they called the company’s firm's environmentally damaging pursuit of profit, according to Reuters. The building materials producer was forced to divert its trucks to another site during the chaos. Earlier in the week protestors from Extinction Rebellion and the non-government organisation Soulevements de la Terre targeted another LafargeHolcim site near Paris.

In late 2020 the council of Paris 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.’

LafargeHolcim currently has a target to reduce its CO2 intensity in cement to 475kg net CO2/t by 2030. The group says it hopes to become ‘net zero’ in the future. It is currently working with the Science-Based Targets Initiative (SBTi) to define a roadmap to 2050 to, “reduce scope one CO2 emissions to a target consistent with a net zero pathway endorsed by SBTi.”