Global Cement Newsletter

Issue: GCW535 / 08 December 2021

Headlines


Cementos Argos announced this week that it is starting the process for an initial public offering (IPO) for its US business. It said that this had followed several months of consideration by its board of directors. Getting listed on the New York Stock Exchange is expected to help the company ‘optimise’ its capital structure and promote growth, due in part to the recent approval of the US$1Tn Infrastructure Bill in the US and a general positive cycle expected for the local construction materials sector over the next decade.

Argos’ decision to go public in the US comes hot on the heels of several recent attempts in Colombia to buy stakes in two of the major shareholders of Grupo Argos, the parent company of Cementos Argos and Argos USA. First, Grupo Gilinski tried to buy a majority stake in Grupo Nutresa in early November 2021. Then, at the end of November 2021, Grupo Gilinski put in an offer for a large minority share, up to 32%, of Grupo SURA.

Argos, Nutresa and SURA are all part of a highly interconnected group of companies known as the Grupo Empresarial Antioqueño (GEA), which each own stakes in each other. In part this structure helps to prevent hostile takeover attempts. However, Grupo Gilinski appears to be trying to challenge this, in the eyes of some market observers. Grupo Argos is the next obvious target for such an attempt after Nutresa and SURA. In response Grupo Argos has said that it won’t take part in Grupo Gilinski’s public acquisition offer to buy shares in Nutresa (it owns around 10% itself). Instead it has accelerated its plans for Argos USA and also wants to consolidate its interests in road and airport concessions, energy and real estate into a single entity, also to be listed in New York. All of this can be seen as action intended to make any further moves by Grupo Gilinski on GEA harder. Corporate tussles between Grupo Gilinski and GEA also hark back to a long-running legal dispute from the late 1990s over the formation of Bancolombia.

It is reasonable for the US subsidiary of Cementos Argos to want to raise funds from an IPO. The business has gradually been expanding over the last 15 years or so. First it acquired ready-mix concrete operations in the southern US from 2005. Then it purchased two integrated cement plants from Lafarge in 2011, at Roberta in Alabama and Harleyville in South Carolina respectively. This was followed by the integrated Newberry plant in Florida from Vulcan Materials in 2014, along with two grinding units in Florida. Finally, it picked up the integrated Martinsburg plant in West Virginia from HeidelbergCement in 2016. More recently it has been divesting some of its concrete plants in the US. At present Argos USA is the ninth largest cement producer in the country by cement production capacity.

Its cement sales volumes have grown by 4.5% year-on-year to 4.6Mt in the first nine months of 2021 and earnings before interest, taxation, depreciation and amortisation (EBIDA) rose by 25% to US$239m although sales revenue dipped very slightly to US$1.09bn. Ready-mixed concrete sales volumes have also fallen, by 12% to 3.98Mm3. The growth has been attributed to both residential and commercial markets and the Infrastructure Bill is expected to keep demand brisk for the next few years. Looking at the wider picture, cement generated about 64% of Grupo Argos’ revenue in 2020, its biggest share after energy generation and a concessions business. A third of Cementos Argos’ revenue so far in 2021 came from the US.

It’s fascinating to glimpse what may be some of the inner corporate workings of Grupo Argos and the various things it has to consider for its US cement business. The US subsidiary is clearly a major earner for it with a buoyant future. The Portland Cement Association (PCA) was forecasting cement consumption growth of nearly 8% in 2021 and 2% in 2022 in its summer summary and that was before the infrastructure bill made it into law. Further expansion in the US by Argos is to be expected and the planned IPO underlines this. Meanwhile whether this and other actions are enough to stymie Grupo Gilinski remain to be seen.


Saudi Arabia: Hail Cement has elected Abdul Malik Khaled Al-Rajhi as its chair. Abdul Aziz Majed Abdullah Al Kasabi has been appointed as the vice-chair and Fahad Musaad Al Rasheedi as secretary to the board of directors. Each position is for a duration of three years until November 2024.


Germany: Beumer Group has formally announced Bodo Schlenker as its Divisional Director Software Solutions. He has been in post since April 2021.

Schlenker started his career at a software company for automation and warehouse management systems. He then worked for logistics company Vanderlande for around 20 years, where he rose to become its Operations Director. From 2017 to early 2021 he worked as the Senior Director of Corporate Product Strategy for Kion Group, a manufacturer and supplier of forklift trucks and warehouse technology as well as supply chain solutions.


Sri Lanka: Insee Cement says it has eased a local cement shortage by operating at maximum production capacity and optimising its distribution channels. It reported a record output of 0.7Mt for the third quarter of 2021, according to the Colombo Post newspaper. The company also introduced two new import ships to help the situation.

Gustavo Navarro, the chief executive officer of Insee Cement Sri Lanka said, “We continued to fully support government regulations and industrial policies to first stabilise the market, and were able to deploy our island-wide distribution and dealership network to ensure an uninterrupted supply across the island. The loyalty and patience of our customers gave us that extra encouragement we needed to overcome the challenge.”


Peru: Germany-based Christian Pfeiffer is supplying grinding and separation equipment for Cementos Inka’s grinding plant project near Pisco. A 4.2m diameter 3500KW mill and a QDK 143-Z type separator with gas recirculation, to help dry the raw material without hot gases, are being provided. Cementos Inka’s 0.7Mt/yr plant was previously reported to have a budget of US$20m.


Turkey: Steel company Erdmir has received the Turkish Competition Board (TCB)'s approval for its acquisition of a 100% stake in refractory and magnesia producer Kümaş Manyezit Sanayi. Erdemir's parent company is OYAK Group, an industrial conglomerate with interests in cement alongside other industries. Thus, the TCB considered the deal's competition impacts on the cement industry. The board ruled that the vertical merger would not have a negative effect on competition because it does not give rise to horizontally affected markets, hence neither creating nor strengthening any dominant market position.


Zimbabwe: Industry and Commerce Minister Sekai Nzenza says that the government will continue to issue cement import permits until local production returns to normal. The situation has been blamed on a breakdown at Lafarge Zimbabwe’s cement plant, according to the Herald Zimbabwe newspaper. The company is importing cement from Zambia to compensate. A roof collapse over the mill at Lafarge Zimababwe’s Manresa plant was reported in October 2021.


India: Ambuja Cements has celebrated the recognition of its water management practices through its listing on CDP's Water A List 2021. The company is the first cement producer to acheive the rating. It said that it succeeded through 'prudent' use of water- for instance through modular curing and concrete mix proportion adjustments - and harvesting. In addition, it continues to evolve its cement portfolio to minimise its consumption of natural resources, with a focus on water. Ambuja Cements' Sustainable Development Ambition 2030 strategy commits it to a freshwater withdrawal reduction of 15% by 2030. Its initiatives have so far saved 70Ml of water, according to the company. It called this a 'robust step' on the global path to sustainable construction and said that it will continue to advocate for environmentally friendly solutions.

Managing director and chief executive officer Neeraj Akhoury said "Water has always been the key focus area for Ambuja Cements. This achievement reaffirms our will to remain committed to address water scarcity issues in future and contribute to the establishment of sustainable tomorrow."


Rwanda: PPC subsidiary CimeRwa reached a total of US$115,000-worth of donations given to its host communities in the 23-month period which ended on 30 November 2021. The New Times newspaper has reported that the company distributed the donations under five pillars: education, health, enterprise development, environmental protection and sustainable infrastructure development. It partnered with the Rwanda Ministry of Education to build classrooms for schoolchildren and gave its backing to self-help initiatives for local women. Helping to overcome the effects of the Covid-19 pandemic in host communities during the past two years gave a specific focus to all of the producer's efforts.

CimeRwa said "The company rose to the challenge by putting measures in place to safeguard the community it operates in. This includes the provision of face masks to employees and surrounding community members and launching extensive Covid-19 awareness campaigns." It continued “The CimeRwa team also made a contribution towards the Covid-19 fund and helped the Ministry of Health by facilitating screening and testing of all CimeRwa staff and people in surrounding communities.”


US: France-based Saint-Gobain has entered into a deal to buy GCP Applied Technologies for around US$2.3bn. It said the move was a ‘decisive’ step in helping it to become a leader in construction chemicals with total sales of over Euro4bn. It is also expected to promote the group’s strategy as leader in light and sustainable construction. Saint-Gobain expects to conclude the deal by 2023 and will finance the acquisition through cash on its balance sheet.

Benoit Bazin, the chief executive officer of Saint-Gobain, said, “The acquisition of GCP is an excellent and significant step for Saint-Gobain to further reinforce its worldwide leadership in construction chemicals and strengthen its geographic presence in North America and emerging markets, both objectives being at the core of our ‘Grow & Impact’ strategic plan.” The proposed purchase follows Saint-Gobain’s acquisition of Chryso, another constructions chemicals company, for Euro1.02bn in October 2021.

GCP Applied Technologies is a global producer of specialty construction chemicals with approximate revenues of US$1.0bn/yr, 50 manufacturing plants in 38 countries and it employs around 1800 employees. It manufactures cement additives, concrete admixtures and products for infrastructure and commercial and residential waterproofing.


France: Germany-based ThyssenKrupp has won a contract for the installation of a new 4000t/day clinker line at Ciments Calcia’s Airvault cement plant in Poitou-Charentes. The supplier expects the new line to double the plant’s clinker capacity while also reducing its CO2 emissions. It is intended to replace the two existing lines at the site.

ThyssenKrupp will supply a 1200t/hr double-shaft hammer crusher, a longitudinal blending bed, a 370t/hr Quadropol QMR² 45/23 type vertical roller mill and a 10,000t tangential blending silo to process raw materials for the line. A single-string, five-stage Dopol type cyclone preheater with integral calciner will be supplied that is suitable to use with alternative fuels, with the possibility of conversion to oxyfuel in future. ThyssenKrupp plans to preassemble the preheater, reducing anticipated construction time ‘by several months.’ The plant also includes a Polytrack clinker cooler, a solid recovered fuel (SRF) preparation line and dedusting systems. Commissioning is scheduled for mid-2024.

No value for the project has been disclosed by Ciments Calcia or ThyssenKrupp. However, Ciments Calcia previously announced a proposed investment of Euro300m in January 2021.


US: Australia-based Boral has agreed to sell its US fly ash business to Eco Material Technologies for US$755m. The parties expect to conclude the transaction by the start of 2023. The proceeds of the sale will add to Boral’s surplus capital.

Boral’s chief executive officer Zlatko Todorcevski said “Together with the sale of our North American building products business and our stake in Meridian Brick, we will have divested the North American businesses for more than US$3bn.” He added “This is a significant milestone that supports our strategy to refocus on our construction materials business in Australia.”


Belgium: Environmental disclosure organisation CDP has listed Cemex, HeidelbergCement and Holcim among 200 companies on its 2021 Climate Change A List for actions to mitigate their CO2 emissions. Holcim’s Indian subsidiaries ACC and Ambuja Cements also received A ratings. Both ACC and Ambuja appeared on CDP’s 2021 Water Security A List, while Holcim scored an A-.

Chief executive officer Jan Jenisch said “Building on the launch of our nature-positive strategy this year, we set new and ambitious goals to achieve water security across our operations worldwide, with our colleagues from Ambuja in India leading the way. CDP’s rankings this year are a testimony to the tremendous work carried out by our 70,000 people around the world and a great encouragement for all of us to keep raising the bar.”


US: Cementos Argos plans to begin trading publically in mid-late 2022 with the launch of an initial public offering (IPO) on the New York Stock Exchange.

The company said “The listing in the US will contribute to the purpose of fully capturing the business value of the company, optimising the capital structure and obtaining the necessary resources to continue executing the growth strategy that the company plans to achieve in that country as a result of the recent approval of the Bipartisan Infrastructure Law for US$1tn and the positive cycle expected for the construction materials industry in the residential, commercial and civil works segments during the next 10 years.”


US: ASGCO has launched its Grizzly Screw-Splice, a conveyor belt splicing and fastening system. The splice is available in various rubber compounds with a tensile strength of up to 1650PIW. The supplier says that the product is stronger, wears less and has a lower-profile silhouette than traditional metal fasteners for conveyor belts. It features self-tapping and self-drilling screws that uphold the toughness of the conveyor belt by passing through the belt carcass instead of creating holes.


India: Dalmia Cement plans to invest US$75.2m in a 2.6Mt/yr expansion to its Bokaro grinding plant in Jharkhand. The company says that the work will increase the plant’s capacity by 70% to 6.3Mt/yr from 3.7Mt/yr. US$33.2m will go towards the installation of new solar power plant. The company will also set up a waste management facility at the site, using US$1.06m of the investment.

Managing director Puneet Dalmia said “As we are further investing in the Eastern India market to participate in its economic growth story, we are also taking our corporate responsibility seriously by placing the utmost importance on environmental protection and social impact. We are confident that the employment generated through our investments and the skill enhancement in our social initiatives will help create a progressive ecosystem where we help people become independent and self-sufficient. We are excited and look forward to partnering with the state to achieve our business, social and sustainability goals.”


Philippines: The Philippines Department of Trade and Industry has enacted a temporary duty on some imports of cement from Vietnam. The Manila Times newspaper has reported that the measure will be in force until April 2022 and only apply to ‘dumped’ cement. Importers will pay a duty of between US$1.02/t and US$10.50/t on ordinary Portland cement and between US$1.16/t and US$12.80/t on blended cement.

The measure follows a probe carried out on the basis of a petition by domestic cement producers APO Cement, Holcim Philippines, Republic Cement and Solid Cement. The probe found that the domestic cement industry had suffered a loss of market share and declining domestic sales between July 2019 and December 2020.

Trade Secretary Ramon Lopez said "We do not anticipate that these duties will result in an increase in the retail price of cement, because its effect on landed cost is minimal.” He added “Any price increases in imported cement will be discouraged by competition from domestic cement producers. The provisional anti-dumping duties will be imposed only on specific Vietnamese exporters found to be dumping cement to the Philippines. Vietnamese exporters who are not dumping can continue to export cement without having to post the provisional anti-dumping cash bond.”


India: Udaipur Cement Works has increased its solar power generation capacity by 43% through the installation of a new 4.35MW solar power plant at its Udaipur cement plant in Rajasthan. The 1.4Mt/yr cement plant now has a total solar power capacity of 14.5MW. Udaipur Cement Works says that solar power generated at the plant will reduce it operations’ CO2 footprint by 14,000t/yr.


India: The Indian Green Building Council (IGBC) has certified the sustainability claims of Dalmia Cement’s portfolio of blended cements. The portfolio consists of composite cement, Portland pozzolan cement and Portland slag cement. The council employed a full-cycle assessment of the cements’ impacts.

Head of sales, marketing and logstics Sanjay Wali said “We see GreenPro’s accreditation as a milestone in our journey to becoming carbon-negative by 2040. This also reaffirms our blended cement products’ green supremacy, which is accelerating the global transition from a grey to green reality.”


Kenya: Affordable housing joint venture 14Trees and UK-based development finance company CDC Group have 3D printed a complex of 52 houses near Kilifi, Kilifi county. The development, called Mvule Gardens, uses an IFC-EDGE Advanced-certified sustainable design to support the ecological regeneration of its locale. Swtizerland-based Holcim, which holds a stake in 14Trees, supplied its TectorPrint ink for use in buildings’ walls to increase strength.

Holcim CEO Jan Jenisch said “We are excited to be building one of the world’s largest 3D-printed affordable housing projects in Kenya. With today’s rapid urbanisation, over 3bn people are expected to need affordable housing by 2030. This issue is most acute in Africa, with countries like Kenya already facing an estimated shortage of 2m houses. By deploying 3D printing, we can address this infrastructure gap at scale, to increase living standards for all.”


Uzbekistan: China-based Anhui Conch has started building a 2.5Mt/yr cement plant in Akhangaran district in Tashkent. It will invest US$200m in the upcoming plant, of which it has already spent US$16.7m on imported equipment, according to the Podrobno news agency. The plant will occupy a 183ha site.


Argentina: Loma Negra has inaugurated the second production line at its L’Amalí cement plant. The El Cronista newspaper has reported that the InterCement subsidiary invested US$350m in the line, which expands the plant’s capacity by 40%. It previously started up the new line’s kiln in June 2021 but was later forced to suspend all clinker production at the plant due to a union dispute. It previously said it was close to commissioning the grinding mill and despatch unit for the line in August 2021.


India: UltraTech Cement plans to increase the production capacity at its Maihar cement plant by 50%. Denmark-based FLSmidth will carry out the expansion project, which also involves the installation of a new calciner and JetFlex burner, along with other pyroprocessing equipment. The supplier says that the upgrade will facilitate greater alternative fuel substitution at the plant in Madhya Pradesh.

FLSmidth’s cement president Carsten Riisberg Lund said “We are pleased to continue our long-lasting collaboration with UltraTech Cement. With the new upgrades to the pyro sections, installing MissionZero flagship offerings, such as the low-NOx calciner and JetFlex burner, UltraTech makes a significant investment in future-proofing its sustainable production.”


Canada: France-based Fives FCB has secured a contract to upgrade the grinding unit at Ciment Québec’s Saint Basile integrated plant in Quebec. The supplier will install two FCB Horomill grinding workshops with FCB TSV 5000 THF classifiers, FCB aerodecanters and flash dryers and Fives TGT process filters. It said that its mills met the customer’s specifications: namely zero water use; minimum power consumption; data processing; and full automation with rapid recipe change.

Ciments Québec president and chief executive officer Luc Papillon said “After a thorough technical review of the various technologies available today for cement grinding, we have selected the Horomill, being confident that it is the best adapted solution for our multiple cements portfolio and our quest to reduce our cement environmental footprint.”


China: Australia-based FCT Combustion has announced a formal alliance with air pollution control partner Enelco Environmental Technology (EET). Together the companies will target the Chinese cement, steel, glass and other markets. EET has become the exclusive China representative of FCT Combustion, with which it shares its capabilities and resources in the service of Chinese customers.

The two companies have set up a joint office in Nanjing, Jiangsu province. A workshop in Bengbu, Anhui province will support its work. FCT Combustion and EET also plan to launch local technical support, engineering and procurement teams for customers in China.

FCT Group chief executive officer Adriano Greco said “We have great respect for our growing customer base within China and believe that it is important to establish a locally based business unit so that we can deliver the best outcomes and customer experiences, providing customer service and engineering according to the local culture and language, as well as local procurement to offer the most cost-effective solution.”


UK: Innovative Ash Solutions has received a Euro588m Scottish government grant to establish a 20,000t/yr ash processing plant in South Lanarkshire. The Herald newpaper has reported that the plant will process boiler ash, cyclone ash and incineration fly ash for use in local cement production. When commissioned in 2022, the plant will eliminate 6104t/yr of CO2 emissions, according to the operator. The government granted the funding under its Zero Waste Scotland circular economic investment scheme.

The company said “Using this new patented process, which diverts waste materials from landfill and avoids the use of virgin sand, creates a product which is cheaper and will reduce the environmental impact of cement production compared to the use of imported pulverised fuel ash.”

Innovative Ash Solutions is a joint venture of waste management company Levenseat and consultancy Organic Innovative Solutions.


US: LafargeHolcim US has announced the launch of TerCem, a blended cement which offers 65% reduced CO2 emissions compared to ordinary Portland cement (OPC), according to the company. LafargeHolcim US will produce TerCem at its Whitehall, Pennsylvania, cement plant. The product joins its ECOPlanet low-carbon cement range.

Senior vice president sales Patrick Cleary said "We are leading a market transformation and taking a step towards a net-zero future. Our cement organisation has invested heavily in broadening the industry's range of superior sustainable products designed to lower our carbon footprint with no compromise in quality and long-term durability."


Germany: Aerzen Rental has added its new TVS2500 air compressor to its 10-bar range of air compressors. Parent company Aerzen said that it developed the TVS2500 to set the standard for power density, energy efficiency and quiet running. The compressor is designed for large material volumes. A frequency converter facilitates optimal pressure and volume flow control, while variable speed control also enables a gentle start with a low starting current. The device can be used in any existing power network. Efficient cooling inside the units further ensures a regular supply of compressed air at ambient temperatures of up to 45°C.


France: Holcim has issued a statement after another day of the on-going criminal court case against Lafarge Syria on charges of financing a terror organisation, violating an embargo, endangering its employees and being complicit in crimes against humanity. Aljazeera News has reported that the company stands accused of paying US$15.3m to armed groups including ISIS, to which it allegedly also supplied cement. Prior to the outbreak of the Syrian Civil War, Lafarge Syria had invested US$601m in its cement operations in the country. Holcim called the alleged crimes a ‘legacy issue’ for Lafarge Syria. Following the group’s discovery of the historic conduct in 2016, it engaged third-party investigators and shared their findings with the courts.

Chair Beat Hess said “All the alleged charges against Lafarge SA are in stark contrast with everything that Holcim stands for as a company. The described events concerning Lafarge SA were concealed from the Holcim Board at the time of the merger in 2015 and go completely against the values of our company.” He added “On behalf of the board of directors of Holcim, I would like to reiterate how extremely shocked and appalled we are by the alleged charges against Lafarge SA.”