Global Cement Newsletter

Issue: GCW528 / 20 October 2021

Headlines


UltraTech Cement, Taiheiyo Cement, Cimtogo and the Chinese Cement Association (CCA) have all been talking about the same thing recently: energy prices.

India-based UtraTech Cement reported this week that coal and petcoke prices nearly doubled in the second quarter of its current financial year, leading to a 17% rise year-on-year in energy costs. Japan-based Taiheiyo Cement released a statement earlier in October 2021 saying that due to mounting coal prices it was planning to raise the price of its cement from the start of 2022. It principally blamed this on increased demand in China and a stagnant export market. It added that it was ‘inevitable’ that prices would rise further in the future. Meanwhile in West Africa, Eric Goulignac, the chief executive officer of Cimtogo, complained to the local press that the reason the company’s cement prices were going up was due to a 250% increase in the cost of fuels for the Scantogo plant and an increase in the price of sea freight of over US$35/t for transporting gypsum and coal.

Other places where the cost of energy has been biting cement producers include Turkey and Serbia. In the former, Türk Çimento, the Turkish Cement Manufacturers' Association, warned in June 2021 that the price of petcoke had nearly tripled over the previous year. Whether it was connected or not, the Turkish Building Contractors Confederation (IMKON) organised a strike in September 2021 due to high costs. The confederation claimed that the price of cement had tripled over the last year. In Serbia electricity prices have risen sharply in recent months in common with much of Europe. Local press reported comments last month from President Aleksandar Vučić saying that an unnamed cement producer had warned of a 25% rise in the price of cement if electricity prices remained high. In the UK the Energy Intensive Users Group (EIUG), a network of lobbying groups for heavy industry including cement, has been holding talks with the government on how to cope with growing energy costs. Finally, in the US, Lhoist warned in September 2021 that is was going to increase the cost of all of its lime products from the start of November 2021 due to increasing gas prices. These are just some of the reactions by cement and lime producers to the current global energy market. No doubt there are many more.

The current global energy crunch has widely been attributed to the waking up of economies following coronavirus-related dormancy in 2020 with supply failing to meet demand. Gas prices have risen to record highs and this has promoted electricity producers to switch to coal in the US, Europe and Asia. This in turn has put pressure on industrial users as both electricity and coal prices have grown and governments have taken action in some cases to protect domestic users. In Europe price pressure has lead to reductions in ammonia and fertiliser production. Power cuts have been reported in China and India.

In China a variety of factors have converged to create a crisis. These include shutting down coal mines on environmental and safety grounds, anti-corruption measures and even promoting mine closures to facilitate clean skies for national events such as the Communist party’s 100th anniversary. Disruption to import sources such as a ban on Australian coal on political grounds, flooding in Indonesia and a renewed coronavirus outbreak in Mongolia can’t have helped either. Thermal coal futures traded on the Zhengzhou Commodity Exchange hit a high of US$263/t on 15 October 2021 marking a 34% rise through the week and the largest weekly growth since trading started in 2013. The International Energy Agency estimates that coal demand in China grew by over 10% year-on-year in the first half of 2021 but coal production increased by just over 5%.

Industrial users have suffered as energy supplies have been rationed and producers asked to cut output. In September 2021 cement output fell by 12% year-on-year to 205Mt from 233Mt in September 2020. This is the lowest monthly figure for September since 2011. It’s also not the usual direction of double-digit rate of change that the Chinese cement sector is used to. The CCA attributed this mainly to energy controls, power shortages and high coal prices in Jiangsu, Hunan, Zhejiang, Guangdong, Guangxi, Yunnan, Shandong and elsewhere. Cement output for the first nine months of 2021 is still ahead of 2020 at 1.77Bnt compared to 1.67Bnt but it’s been slipping noticeably since July 2021.

This will leave energy users, including cement producers, watching the weather forecasts rather closely this winter. Should the Northern Hemisphere suffer a cold one then energy prices such as coal will reflect it. Industrial users may also become subject to energy rationing in many places. The knock-on effect of this then will be higher cement prices. However bad the winter does turn out to be though we can expect more cement companies trying to explain bashfully why their prices are going up. On the plus side any producer that can diversify its energy mix through solar, alternative fuels or whatever else is likely to be doing so soon if they are not already.


India: HeidelbergCement India has appointed Ramakrishnan Ramamurthy as its chairman following the resignation of Akila Krishnakumar. Krishnakumar said she wanted to increase her work in the development sector. Ramamurthy started his career with Bosch (India) as an apprentice and worked with Murugappa Group for around twenty years. More recently he was the managing director of GMR Group, the president of Mytrah Energy and the chief executive officer of Sanmar Engineering.


UK: Aggregate Industries has appointed Lee Sleight as the managing director of its Readymix Concrete division. He has also been appointed to the company’s executive committee. He succeeds Barry Hope, who will remain on Aggregate Industries’ executive team managing strategic projects in a new role as Business Development Director. Sleight previously worked for Sika for over a decade. Most recently he held the position of Business Unit Manager with responsibility for concrete and waterproofing divisions.


Cameroon: Cimenteries du Cameroun has begun building a new US$88.4m 0.5Mt/yr line at its 0.15Mt/yr Figuil cement plant. Agence Ecofin News has reported that the line is scheduled for commissioning in October 2023. It will have an additional clinker capacity of 0.1Mt/yr. When commissioned, the expanded plant will serve northern Cameroon, Chad and the Central African Republic, and bring the company's total cement capacity to 2.5Mt/yr.The LafargeHolcim Maroc Afrique subsidiary, in which the Cameroon National Investment Company (SNI) holds a minority stake, aims to compete with market leader Dangote Cement in Cameroon.


India: ACC's third-quarter sales in the 2022 financial year were US$501m, up by 6% year-on-year from US$472m in the third quarter of the 2021 financial year.Its cement sales were 6.57Mt, up by 1.2% from 6.49Mt, while its costs rose by 5.3% to US$428m from US$406m. Press Trust of India News has reported that the company's net profit in the quarter rose by 24% to US$60.1m. The company attributed its 'solid' quarterly performance to its focus on sustainability while meeting customers' needs.

Managing director and chief executive officer Sridhar Balakrishnan said "Despite a steep increase in fuel costs, our cost efficiency measures under Project Parvat have enabled us to maintain robust performance." Regarding the full-year outlook, he added "We are positive that the cement sector will benefit from increasing demand in various sectors such as housing, commercial and industrial construction."


Philippines: Big Boss Cement has reportedly suspended business operations until 2022. An unnamed source at the company quoted by the Philippine Daily Inquirer newspaper said that the company is ‘rehabilitating’ its facilities. It added that the company is using a lull in business to make changes.

The company was set up by SM Group heir Henry Sy Jr in 2018. It opened a grinding plant at Porac in Pampanga, Luzon in 2018 and commissioned a third mill at the site in late 2020. Notably the unit manufactures its own secondary cementitious material, which it calls Granulated Activated Sand by Heating, as well as importing clinker and other raw materials.


Ivory Coast: LafargeHolcim Côte d'Ivoire has announced plans for the launch of white cement production at its Abidjan grinding plant in 2022. APA News has reported that the plant's clinker costs increased by 80% quarter-on-quarter in the third quarter of 2021. This, along with a drop in grey cement prices, inspired the strategic change.

Chief executive officer and managing director Rachid Yousry said "Our ambition is clear; it is to be the benchmark cement supplier in the Ivory Coast through our services." The 2.5Mt/yr-capacity producer held a 20% market share in the country in 2020.


Togo: Cimtogo has blamed price rises for its cement on mounting fuel and transport costs. Eric Goulignac, the chief executive officer of the subsidiary of HeidelbergCement, said that the company had seen a 250% increase in fuels for the integrated Scantogo plant in Tablogbo and a rise in sea freight costs of over US$35/t to import coal and gypsum, according to local press.


China: Anhui Panjing Cement has ordered an upgrade to its production line from KHD and AVIC. The project includes: installing new triple cyclones in conjunction with existing preheater top stage twin cyclones; a partial modification of downcomer duct; installing a new preheater fan; adding optimised and larger dip tubes for the existing cyclones; installing a new Pyrobox type calciner firing system; adding new raw meal pipes for the two lowest cyclone stages; making calciner modification within the existing preheater building; and installing a new kiln drive system. Where possible the project plans to use reuse existing equipment. It is scheduled for completion by January 2022. It follows a previous upgrade at the plant in 2020 – 2021.

Other recent orders that KHD has announced with China-based cement companies include an upgrade to a production line at Hongshi Group’s Lanzhou plant in Gansu province and the installation of NOx-reducing modifications on a 5000t/day clinker production line operated by China United Cement Baoding.


Brazil: Votorantim Energia and Canada-based CPP Investments have announced the consolidation of their Brazilian energy assets in a new jointly owned renewable energy platform called VTRM. The new company's assets will reach 3.3GW in capacity by October 2022, consisting of 2.3GW in hydroelectric power and 1.0GW in wind power. Its planned projects, including hydroelectric, solar and hybrid power plants, will increase its capacity by 58% to 5.2GW.Its existing assets sold 2.6GW of electricity in 2020. The partners said that the new company will also be well-positioned for future growth, including the acquisition of operational assets and those in planning or under construction. CPP Investment will inject and additional US$269m into the venture following the conclusion of the deal.

As part of the restructuring, Votorantim Energia will cease to manage Votorantim's cement subsidiary Votorantim Cimentos' dedicated energy assets. The cement producer will then incorporate these into its own operations. This will enable Votorantim Energia to focus on energy generation for sale.

Group president João Schmidt said that the consolidation reflects the major role that energy business will play in the company's future. He said "Globally, there is a growing urgency around renewable energy and the energy transition. Alongside a partner like CPP Investments, which has shared our long-term views on energy since 2017, we are ready to accelerate our role in the sector." He added "Through the assets consolidation into a single platform, Votorantim and CPP Investments will share in a new cycle of growth and value generation together."


Germany: Holcim Deutschland has signed a memorandum of understanding with Cool Planet Technologies (CPT) to build a pilot CO2 capture unit at Holcim’s Höver cement works, near Hannover, based on Hereon’s PolyActive membrane technology. The objective of the unit is to demonstrate the performance, economics and operability of the capture technology at scale. Following this the partners will seek to establish a framework for the technology’s implementation in Holcim’s other cement plants in Germany.

Initial tests are scheduled to commence in the first quarter of 2022 with the first phase of the project, capturing 5600t/yr of CO2, scheduled for start-up in the second quarter of 2023. If successful, it is planned to expand the unit in two further phases capturing 170,000t/yr and 1.3Mt/yr starting-up in 2024 and 2026 respectively. The final phase will capture over 90% of the carbon dioxide emissions from the Höver plant and deliver the CO2 in high-purity liquid form for use or sequestration.

CPT is working with Hereon, part of the Helmholtz Association of Research Centres, Germany’s largest research organisation, to commercialise their PolyActive membrane technology after a decade of development. This technology is designed to capture CO2 from carbon rich gas streams and has already been technically proven in the laboratory and piloted in two coal-fired power stations.


France: Vicat says it aims to start cultivating spirulina at its Montalieu-Vercieu cement plant in the summer of 2022 as part of its Cimentalgue project. It plans to grow 1t/yr until 2024 as part of a trial looking at volume and quality, according to the Agence France Presse. It will use CO2 and waste heat from the plant to grow the cyanobacteria that can be used as a food source.

The project is being conducted with Algosource and the GEPEA (Process Engineering for Environment and Food) laboratory at the University of Nantes. TotalEnergies is also involved as a financial backer. The project has a budget of Euro2m and is also supported by the Environment and Energy Management Agency (ADEME).


France: Ireland-based Ecocem has opened its new innovation centre, the Centre of Excellence, in Paris. The purpose of the facility is to help to accelerate the development of new technology for the decarbonisation of the cement and construction industries. Ecocem's innovation team will use it for industrial-scale trials in collaboration with industry and academic partners, including Paris-Saclay University and The University of Toulouse. It says that it hopes that one outcome will be the further developmentof the Ecocem reduced-CO2 product range. Breakthrough Energy Ventures provided funding towards the centre's construction.

Ecocem innovation director Laurent Frouin said “Ecocem is committed to the deep and rapid decarbonisation of the global cement industry. It is essential for the planet and future generations, and it can be achieved through innovation and technology." He added “The cement and construction industries are developing and deploying a range of emission reduction technologies – Ecocem and our new Centre of Excellence will add a further dimension to these efforts.”


Ukraine: NEQSOL Holding Ukraine has filed an application to the Antimonopoly Committee of Ukraine (AMCU) to acquire a stake in Ivano-Frankivskcement. The group will take a loan from ‘leading international’ banks to pay for the stake.

NEQSOL Holding Ukraine manager Volodymyr Lavrenchuk, said “We are hopeful for an approval of the new deal by the AMCU so that we can welcome the high-tech enterprise Ivano-Frankivskсement into the NEQSOL Holding group of companies. We recognise the long-time outstanding results achieved by the Ivano-Frankivskсement management team and staff, who have created one of the most state-of-the-art cement plants in Europe.” He added “Our group of companies has successful experience in financing, including engagement of international financial institutions, which will help to secure the required investments for maintaining a high rate of growth of the cement plant.”


India: Penna Cement has received clearance for a US$207m initial public offering (IPO). The company will offer a US$33.3m stake for sale along with the fresh issue of US$173m. The Times of India newspaper has reported that the company plans to use US$73.3m of the fresh capital to settle its debts and to invest US$14m in the construction of second line at its Krishnapatnam grinding plant Andhra Pradesh. It will invest a further US$10.7m in an upgrade to raw material and clinker grinding mills at its Talaricheruvu cement plant, also in Andhra Pradesh.


Pakistan: The government of the Punjab will charge cement producers in the state up to US$0.93/m3 for ground water used in their cement production. The Dawn newspaper has reported that the charge will depend on water availability, and be US$0.6/m3 in water secure areas, US$0.85/m3 in semi-critical areas and US$0.93/m3 in critical areas most affected by drought. The measure aims to encourage rainwater harvesting in order to preserve water tables. The charges will fall upon Maple Leaf Cement, Gharibwal Cement, Dandot Cement, Flying Cement, Askari Cement and Fauji Cement. They will remain in force until the establishment of a Punjab Water Services Regulatory Authority and its enactment of water extraction rates.


Trinidad & Tobago: Trinidad Cement has launched production of its new reduced-CO2 cement, called ECO, at its Claxton Bay cement plant. Trinidad & Tobago Government News has reported that the company invested US$73,800 in the development of the product.


UK: 200 Hanson UK cement truck drivers have ended a one-month strike after accepting an improved pay deal. Construction Enquirer News has reported that the producer has retroactively increased drivers’ pay by 2.8% from 1 January 2021 and agreed to increase pay by a further 3.3% from 1 January 2022. Drivers’ overnight allowance will retroactively increase to Euro49.7/night from 1 October 2021, and the company has committed to a transformation of bank holiday working arrangements. Additionally, its management will share its fleet replacement programme with its drivers.


Spain: Corporación Noroeste has completed its acquisition of Cementos Balboa. The companies agreed to the deal in June 2021. Agencia EFE News has reported that the acquisition brings parent company Votorantim Cimentos’ installed cement capacity to 57.4Mt/yr globally.


Nepal: The Nepal Electricity Authority (NEA) has completed and commissioned a switching station to supply power for Huaxin Cement and Vaidya Group’s upcoming Dhading cement plant in Rorang. The Republic newspaper has reported that, when operational, the plant will receive 20MW of power via the switching station. Two transmission lines with capacities of 33kV and 11kV connect the facilities.

The US$125m Dhading cement plant awaits commissioning following the completion of its construction in August 2021.


India: Ratings agency Emkay Global has forecast an 11% year-on-year rise in UltraTech Cement’s second-quarter sales in the 2022 financial year to US$1.5bn from US$1.36bn. It expects the producer’s cement sales to rise by 6% in the period to 20.4Mt, and its net profit to grow by 6.4% to US$174m from US$163m.

The Economic Times newspaper has reported that Emkay Global predicted that UltraTech Cement’s costs will rise by 7% and that its earnings before interest, taxation, depreciation and amortisation per tonne of cement will fall by 5% year-on-year.


Australia: Cockburn Cement has begun a US$152m upgrade of its Kwinana grinding plant. Business News has reported that the project will consolidate the company’s Kwinana and Munster grinding operations at a single 1.5Mt/yr plant. The company says that this will increase its production capacity by 36% and reduce its cement’s CO2 emissions by 20%.

The company will manage operations at the plant directly. Managing director Nick Miller said "We've all seen through the Covid-19 outbreak that domestic manufacture of essential products such as cement and industrial lime becomes critically important. Reliability of supply has become a very important driver for decision makers." He added "We have turned away from a turnkey contract to a self-delivery model. Part of the self-delivery model is to access small to medium sub-contractors in the market, where we have seen better value in what is a very heated market."


Sweden: Cementa has announced that its Stockholm cement terminal will no longer receive deliveries of its Slite brand cement and will instead begin solely stocking the company’s fly ash cement from 1 December 2021. The producer says that the transition will reduce the carbon footprint of the terminal’s products by 30,000t/yr. Slite cement will continue to be available from the nearby Köping and Oxelösund cement terminals.


Russia: Krasnoyarsk Cement has installed a continuous monitoring system for emission control at its Krasnoyarsk cement plant. It carried out the upgrade under the government’s national Ecology project. The system will transmit daily average emissions data to the Krasnoyarsk Territory Ministry of Ecology and Nature Management. Members of the public will be able to access the submissions on the ministry’s website.

Managing Director Dmitry Kireev said “According to the current legislation, the installation was supposed to start working before 31 December 2028. However, due to the fact that the enterprise is located within the city, we voluntarily assumed increased obligations and launched online monitoring of emissions ahead of schedule."


India: Rain Industries has expanded the capacity of its Kurnool grinding plant in Andhra Pradesh. Reuters News has reported that the expansion enlarges the plant’s capacity by 38% to 2.8Mt/yr from 2Mt/yr.


Japan: Taiheiyo Cement says that the cost of producing its cement has increased throughout 2021. The company said the coal prices have risen due to increased coal demand in China and a reduction in exports from coal-producing countries. It anticipates further rises in the price of coal. Additionally, it foresees a rise in maintenance costs as the equipment at its plants nears the end of its service life. The producer says that it is endeavouring to improve productivity and reduce costs.


US: LafargeHolcim US and ECOncrete Tech have launched a research and development collaboration to design and manufacture a fully structural concrete scour protection unit for offshore wind turbines. The unit’s specifications include seabed stabilisation and promotion of the growth of marine organisms. The collaboration includes a large-scale pilot project to evaluate the ecological performance of units in an offshore environment. The US/Canada Binational Industrial Research and Development (BIRD) Energy programme are funding the project, which will conclude in May 2024.

LafargeHolcim US commercial excellence vice president Josep Maset said “There are many paths to achieving our net zero commitment, and most require innovative partnerships and out-of-the-box thinking. The work we’re doing with ECOncrete Tech is a notable example of searching for solutions that enable increased use of renewable energy in an environmentally responsible way.”


Spain/Norway: A team from Cartagen Polytechnic and Ostfold University College has demonstrated that Cementos La Cruz could reduce the cost of its concrete production by Euro1.45/m3, or Euro29,000/month by curing concrete with captured CO2. EuropaPress has reported that the use of CO2 would reduce the amount of cement required by 7 – 8%. This in turn would remove an estimated 4.6% of CO2 from the concrete’s production.


India: UltraTech Cement says that it will commission a total of 1.2Mt/yr-worth of additional cement capacity in Eastern India throughout October 2021. The company invested US$53.1m in the new infrastructure.


India: Rating agency ICRA has forecast that Indian cement production will rise by 12% year-on-year to 332Mt in 2022. It said that pent-up pre-Covid-19 lockdown demand, rural housing demand and a pickup in infrastructure activity would drive the rise. ICRA predicted that demand would rise by a further 8% year-on-year to 358Mt.

In the first quarter of the 2022 financial year, domestic rose by 44% year-on-year and by 2% compared to the first quarter of the 2020 financial year to 142Mt. ICRA estimated that the top 12 Indian cement producers will record their highest ever average operating profit per tonne of cementitious material in the 2022 financial year. It said that this is likely to occur due to an increase in net sales realisation and cost optimisation measures.


Spain: The eruption of the La Cumbre Vieja volcano has destroyed a concrete plant on La Palma in the Canary Islands after engulfing it with lava. EuroNews has reported that the eruption, which begun on 19 September 2021, has displaced 6000 people on the island. The La Cumbre Vieja volcano previously erupted in 1971.


Greece: Titan Cement has signed the Science-Based Targets Initiative (SBTi)’s Business Ambition for 1.5°C pledge. In so doing, it joins the UN’s Race to Zero campaign for collaboration towards a global zero-CO2 future. The Group’s decarbonisation plans consist of an increased reliance on alternative fuel (AF), accelerated energy efficiency improvement efforts and a shift to low-carbon products and processes.

Titan Cement said “Through the participation in European and international consortia, as well as through collaborations in research and development projects, Titan will continue to develop low-carbon cementitious products and pilot carbon capture technologies in its plants, actively contributing to the industry’s ambition for a carbon-neutral future.”