Global Cement Newsletter

Issue: GCW545 / 23 February 2022

Headlines


International tensions reached a new high this week with Russia’s formal recognition of the breakaway Donetsk and Lugansk regions in eastern Ukraine and its decision to deploy troops accordingly. However, what of the local cement industry in Ukraine going into the current crisis?

Ukrcement, the Ukrainian Cement Association, says that its members reported a record 11Mt of cement production in 2021. Clinker production totalled 8.11Mt during the same period. The cement figure is close to Ukrcement’s forecast in the autumn of 2021 of 11.5Mt, a rise of 17% year-on-year from 9Mt in 2020. At that time association head Pavlo Kachur added that the local cement industry operated at 66% capacity utilisation in the first nine months of 2021.

The big industry story locally was the start of tariffs on cement imports from Turkey that was announced in September 2021. After much complaining by local producers and an investigation the year before in 2020 the Interdepartmental Commission on International Trade (ICIT) introduced anti-dumping duties of 33 - 51% on cement imports from Turkey for five years. Other than this the usual energy preoccupations have been present in Ukraine. In an interview with Interfax in November 2021, Pavlo Kachur expressed alarm that the price of coal had tripled from the start of 2021 to August 2021. At the same time he explained that the biggest driver of cement consumption was infrastructure projects.

CRH, the largest producer locally, rebranded its subsidiary as Cemark in November 2021 with the intention to start shipping cement bags with the new marking from January 2022. It operates three integrated plants at Mykolaiv, Podilsky and Odessa. It reported that its local operating profit grew year-on-year in 2020, despite a “challenging pricing environment” as cost savings initiatives and lower fuel and logistics costs resulted in improved performance. In September 2021 CRH said that sales were up due to growing cement sales volumes resulting from market demand. Although once again it complained about competitive pricing forcing it to lower its prices. Despite this though lower maintenance costs and cost controls had boosted its operating profit.

Buzzi Unicem runs two integrated cement plants in Ukraine, Volyn and Yugcement, as well as terminals at Kiev and Odessa through its Dyckerhoff Ukraine subsidiary. In 2021 it noted recovery in the construction sector, helped by government stimulus and the introduction of tariffs on imports from Turkey. It said that prices fell in the first half of the year before recovering in the second half. Ready-mixed concrete output showed more growth. Dyckerhoff Ukraine’s net sales rose by 9.4% year-on-year to Euro127m in 2021 even despite negative currency exchange effects.

As for the other producers, NEQSOL Holding Ukraine filed an application to the Antimonopoly Committee of Ukraine (AMCU) in October 2021 to acquire a stake in Ivano-Frankivskcement. Azerbaijan-based NEQSOL Holding also operates the Norm Cement plant near Baku in Azerbaijan. HeidelbergCement used to operate in Ukraine, including the Amvrosiyivka Plant in the contested part of Donetsk region, but it sold up in 2019 to local investors. Its two former integrated plants now operate under the Kryvyi Rig Cement brand. Finally, Russia-based Eurocement runs two plants in Ukraine, at Balakleya in Kharkiv region and Kramatorsk in Donetsk region, under its Balcem subsidiary, which formed in 2019. However the status of the second plant is currently uncertain. Balcem said that the Balakleya plant resumed full cycle production in March 2021 when it restarted kiln two. Kiln one was restarted in June 2021 after a down period since 2008. The plant currently has a production capacity of around 1Mt/yr.

Ukrcement’s Pavlo Kachur said that the cement market in Ukraine was experiencing a positive period in November 2021. Whether this continues is very much in the balance given events in the east of the country. The wider implications for cement producers in the rest of Europe and Russia are the fallout from the economic warfare between both sides. A number of countries have started to react to Russia’s actions with the US, European Union, UK, Japan and Australia announcing economic sanctions and Germany halting approval of the Nord Stream 2 gas pipeline. However, Russia supplies a significant share of Europe’s gas supply. All of this could disrupt energy supplies and force input costs up. This has already been reflected in higher oil prices.

Meanwhile, one aspect of the current situation to watch is how multinational cement producers with a presence in Russia will cope. Moving money in or out of the country is likely to become harder. HeidelbergCement told Reuters this week that it did not expect any major impact on its Russian operations, even if the conflict escalated. Its three cement plants supply local markets and do not export outside of Russia, it added. Other companies straddling the potential sanctions divide include Holcim, Buzzi Unicem and Eurocement.

The crisis continues.


China: Nanjing Kisen International Engineering has secured a collaboration agreement with Canada-based Delta CleanTech for the implementation of the latter’s carbon capture and storage (CCS) systems at two China National Building Material (CNBM) cement plants. SCMP News has reported that there is a one-time licencing fee - which is not paid by Nanjing Kisen International Engineering but is traditionally paid by the CO2 capture plant customer - of 4.5 - 5% of capital costs. Installations cost upward of US$40m, depending on capacity.

There are currently 40 operational or upcoming CCS installations nationally with a total capture capacity of 3Mt/yr, chiefly in the oil, coal chemicals and energy sectors.The Chinese Academy of Environmental Planning has forecast that China’s cement industry CCS demand will reach 200Mt/yr by 2060. Delta CleanTech president Jeff Allison said that current challenges for Chinese cement producers seeking to reduce their CO2 emissions include difficulties disposing of captured CO2 and a lack of rewards and penalties around emissions control beyond the basic national efficiency requirements.

Nanjing Kisen International Engineering previously launched its first 155kg/day pilot CCS study in partnership with the Canada-based International CCS Knowledge Centre in July 2021.


Mexico: The Mexican Chamber of the Construction Industry (CMIC) has voiced cement price concerns following the introduction of a new environmental tax on mining activity in the state of Nuevo León. Cemex operates a quarry in the state, and has resultingly experienced a rise in the cost of its cement production. The El Norte newspaper has reported that the producer’s Monterrey, Nuevo León, cement plant supplies cement across northeastern Mexico.

CMIC also lobbied the government to begin awarding public works contracts to private investors instead of the Mexican armed forces. It argued that this would help to generate jobs.


Mexico: GCC has signed an engineering, procurement and construction (EPC) contract with ThyssenKrupp Polysius for an upgrade to its integrated Samalayuca plant to increase clinker production capacity, raise the usage of alternative fuels and reduce emissions. The project includes the engineering, supply and modification of the preheater, including cyclones, and an extension to the calciner, with the installation of a Prepol SC-S type system to increase the utilisation of alternative fuels. The work also includes fitting a Polytrack type clinker cooler and the installation of a bypass system. The project will begin in 2022 with operations scheduled to start in the second quarter of 2023.


Peru: The Ministry of Labour and Employment Promotion has initiated talks with cement producers, exporters and unions with a view to changing the standard national cement bag weight. The ministry recognised the 42.5kg/bag standard as a historical anachronism and unsafe. The Federation of Civil Construction Workers (FTCCP) has reported lower back injury as the main cause of ‘desertion of construction site.’ Beside the risk of injury, the standard has allegedly contributed to discrimination against older builders, because site managers often consider even those well below the state early retirement age of 55 to beunfit. The union has argued that 25kg bags would reduce the risk of harm to quality of life to 15%, while 15kg bags would entail a risk of just 5%.

Standards authority Produce will now hold a round table with stakeholders to review the possibility of a 41% weight reduction to the international standard of 25kg. Federation of Cement and Ready-Mix Workers of Peru (FETRACEPPE) general secretary Luis Gilvonio said that this will not solve problems overnight: where firms start instructing workers to carry two bags at a time, their net load will have increased. As such, he argued for continued awareness-raising alongside the law change.

Bagged cement accounted for 70% of Peruvian producers’ cement sales in 2021.


Canada: Lafarge Canada is supplying its ECOPact reduced-CO2 concrete to contractor PCL for its construction of the upcoming Genesee power plant in Alberta.

Lafarge North America president and general manager Prez Skiba said "The original concrete proposed was already a low carbon design, but we knew we could take it further. We brought in further emissions reductions with our ECOPact design, and we were able to reduce embodied CO2 by an additional 20%. That's 20% over and above the original design, which already offered a 20% reduction. The combined 36% CO2 reduction is equivalent to the energy used by 70 houses in a year."


France: Hoffmann Green Cement Technologies has signed a 25-year occupation permit in the port of La Rochelle. The agreement will allow the company to build storage silos at the port near to its Bournezeau plant. Construction of the first two 3500t silos will begin in mid-2022 and are expected to be completed in the spring of 2023. The company intends to build a further two silos subsequently. The project investment is around Euro10m.

The cement producer says it met its target and sold 10,000t of cement in 2021. Sales were mainly of its H-UKR blast-furnace slag product.


Algeria: Lafarge Algeria says it exported 2.6Mt of cement in 2021, more than double the 1.18Mt it exported in 2020. It aims to export over 3Mt in 2022. The subsidiary of Holcim also announced that it will carry out two new large simultaneous shipments from the port of Oran, one of 35,000t of cement in bulk, and the other of 30,000t of white cement in big bags. Both shipments will be exported to the Americas.


Kazakhstan: A new 0.58Mt/yr cement plant is being considered in West Kazakhstan Province. The project has an estimated investment value of US$170m, according to local government and Kazakhstan Newsline. Negotiations are underway with foreign investors. The plant has been included in plans to develop the region. It is expected to create 60 jobs.


Bangladesh: Seven Rings Cement has signed an agreement to supply cement to Soyo BD International. The China-based ready-mixed concrete supplier has recently started business in Bangladesh and is supplying different projects locally, according to the Daily Star newspaper.


Austria: RHI Magnesita is celebrating the tenth anniversary of first opening its Training Centre Cement in Leoben, Styria. The centre supports the regional cement industry with RHI Magnesita’s knowledge and experience of refractory bricks and mixes installation. It has held more than 50 instructive courses.

Centre leader Peter Steinkellner said “We are very pleased that more than 550 professionals from various countries have attended our trainings in the past 10 years.”


Portugal: Cimpor is participating in a consortium, led by power company Rega Energy, which plans to invest Euro100m in developing scalable green hydrogen production plant technologies. The consortium will deploy infrastructure for its upcoming Vale Hidrogénio Verde Nazaré (NGHV) green hydrogen plant by 2023, including a dedicated 40MW solar-powered electricity grid. It will commission its first green hydrogen plant by 2026, creating 140 new jobs. The consortium aims subsequently to scale up the plant to a renewable power consumption of 600MW. It hopes that, when fully commissioned, the NGHV plant will be a reference project for green hydrogen production.


Papua New Guinea: Mayur Resources has signed a collaboration agreement with First Graphene Limited for the production of low-carbon cement using the latter’s PureGraph graphene-based grinding aids and performance improvers. Mayur Resources operates a 0.9Mt/yr cement plant, where it also produces a further 0.75Mt/yr of clinker and 0.2Mt/yr of lime, near Port Moresby in National Capital District. The Australia-based partners hope to export their cement across Melanesia and to Polynesia and Australia.


Trinidad & Tobago: Current and former employees of Trinidad Cement have held two-day weekly protests since 10 January 2022 outside the company’s Claxton Bay plant in Couva–Tabaquite–Talparo Region. Staff from the past 10 years reportedly say that the company owes them their agreed cost of living allowance, gain shares and backpay.


Denmark: Cement and wood-based acoustic board producer Troldtekt has agreed to a takeover offer from Ireland-based Kingspan Insulation. The producer uses ordinary Portland cement (OPC) produced ‘from Danish mineral resources’ along with shredded Norway spruce to produce its boards.

Kingspan Insulation managing director Alan Lawlor said "I am delighted to welcome Troldtekt to the Kingspan family. As the global leader in high-performance insulation and building envelope solutions, we have the capacity to help them expand beyond their core markets, whilst bringing acoustic and decorative boards and natural insulation materials into our portfolio. Troldtekt has been able to continuously innovate and it sets the bar impressively high in the field of the circular economy.” He concluded "We will invest significantly in the company's production facilities to set them up for geographic growth."


Greece: Titan Cement has advised the Athens Stock Exchange (ATHEX) that it has bought back a total of 2.2% of its shares under its share buyback scheme between 14 and 18 February 2022. It made the purchases both through the ATHEX and the Euronext Brussels exchange.


Peru: Cementos Pacasmayo recorded full-year sales of US$519m in 2021, up by 49% year-on-year from US$348m in 2020. Sales exceeded pre-Covid levels of US$373m in 2019 by 39%. The company’s profit for the year was US$41m, more than double its profit of US$15.5m in 2020 and up by 16% from US$35.4m in 2019.

The Semana Económica newspaper has reported that Cementos Pacasmayo aims to maintain its 2021 full-year cement sales volumes in 2022. The company is in the process of a US$70m, 600,000t/yr clinker capacity expansion in order to increase its clinker capacity to 100% of its grinding capacity, from 61% currently. This will eliminate the producer’s reliance on clinker imports.


Australia: Boral plans to install chlorine bypass technology at its Berrima cement plant in New South Wales. The Illawara Mercury newspaper has reported that the installation will help the plant to double its alternative fuel (AF) substitution rate to 100%. This is one of the ways in which the producer aims to reduce its Scope One and Two emissions by 46% between 2020 and 2030.

In mid-February 2022, Boral acquired new land at the site of its Dunmore quarry, also in New South Wales.


Algeria: Some cement truck drivers have launched protests against a change in the law which limits their vehicles’ loads below the previous maximum weight. The L’Expression newspaper reports that protests include refusals to depart and the establishment of roadblocks. The actions have prevented the export of some Algerian clinker. Lafarge Algérie said that it raised drivers’ pay per tonne of goods following the law change. The company stated that the new level of pay ensures that transporters will not lose out as a result.

Algeria is targeting cement and clinker exports of 10Mt in 2022.


Canada: Concrete Economics managing director and long-time figure in the North American cement industry Colin Sutherland has died. Colleagues from throughout his 30 year-career spanning Canada, France and the US have been posting memories of Sutherland. Olsen Management Consulting president and Sutherland’s former Lafarge and Votorantim Cimentos colleague Richard Olsen said “We've lost a dear friend and long-time colleague. Colin was highly respected and valued in the cement industry and had developed a depth of knowledge and insight that was unique.” He continued “Colin's infectious laughter, ever-positive attitude and charm endeared him to many. He'll be sorely missed.”

Before joining Concrete Economics in May 2021, Sutherland was president and co-founder of SC Market Analytics and a board member of US Concrete. Previous positions also included vice president, commercial strategy, for Votorantim Cimentos North America; vice president, business development, integration and strategy for Holcim US and vice president, cementitious materials for Lafarge Cement. Between 1995 and 2001, Sutherland served as director of corporate development for Blue Circle North America, where he subsequently became group integration director following its merger with Lafarge Cement.


Nepal: Residents of the Arghakhanchi, Palpa, Pyuthan and Rolpa hill districts of Lumbini Province have reported that increased contamination with residues from limestone extraction has made many traditional water sources unreliable. the Kathmandu Post newspaper has reported that Alpha Cement, BS Cement, Kanchan Quarries, Hongshi Shivam Cement, Palpa Cement, Sarbottam Cement, Satyawati Cement and Siddhartha Minerals operate a total of 10 mines in the affected districts. Springs reportedly took 10 years to recover following the closure of Arghakhanchi Cement’s Narpani quarry in 2012.


India: Ambuja Cement plans to invest US$469m in a 7Mt/yr expansion to its total grinding capacity. BusinessLine Online News has reported that the new capacity will consist of a new grinding plant at Barh, Bihar, and expansions to the company’s Farakka and Sankrail grinding plants in West Bengal. The company says that the new grinding capacity will become crucial after it completes its planned 3.2Mt/yr clinker capacity expansion to its Bhatapara cement plant in Chhattisgarh.


Colombia: Grupo Argos subsidiary Argos recorded consolidated sales of US$2.57bn in 2021, down by 9.1% year-on-year from US$2.27bn in 2020. It sold 17.1Mt of cement across all regions, up by 16% from 14.6Mt in 2020. In the US, its cement sales rose by 5.7% to 6.1Mt, in Colombia they rose by 23% to 5Mt and in the Caribbean and Central America they rose by 27% to 6Mt. The producer’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 34% year-on-year to US$443m from US$406m.

CEO Juan Esteban Calle “I am extremely proud of these achievements, which are the result of a disciplined strategy of expansion, efficiencies and customer-centricity that has been carried out based on a long-term vision of sustainability, growth and profitability, aiming at delivering sustained and increasing value to our shareholders.”


India: Ghohari Cement says that it has ignited the new kiln of its Laxmipur cement plant in Dang District. Shivam Cement assistant engineer Nilesh Chouhan said that kiln inlet temperature monitoring was underway on 18 February 2022.


UK: A consortium led by Australia-based First Graphene dedicated to developing graphene-enhanced cement has won Euro228,000 in UK government funding. Innovation agency Innovation UK selected the consortium for its work’s potential to contribute towards cement and concrete’s carbon footprint reduction of 25% by 2030. UK-based Breedon Cement represents the cement industry within the consortium.


China: Jiangxi Wannianqing Cement and the administration of Qingyuan District in Jiangxi Province have signed a strategic framework cooperative agreement. Reuters has reported that the agreement sets out ways in which the partners can advance green building materials use in public procurement, in line with the Jiangxi provincial government’s District Revitalisation and Development plant.


Ivory Coast: Société de Ciment de Côte d’Ivoire has inaugurated its second grinding plant in Abidjan. The producer says that the new facility doubles its installed cement production capacity to 3Mt/yr. The Afrique Sur 7 newspaper has reported that it will create 3000 new direct and indirect jobs.


UAE: Shree Global has agreed to acquire a further 40% stake in Union Cement Norcem for US$3.95m. The deal will increase Shree Global’s stake in the company to 100%. It is expected to complete the transaction by the end of June 2022. Union Cement Norcem markets and sells oil well cement, while Shree Global’s parent company, India-based Shree Cement, operates a 4.8Mt/yr cement plant at Ras Khaimah.


US: The Portland Cement Association (PCA) has responded positively to a raft of new measures launched by President Joe Biden to aid industrial decarbonisation. The new measures include: US$8bn investment in regional clean hydrogen hubs and a further US$1.5bn investment in associated initiatives; new carbon-based trade policies; greater incentivisation for carbon capture, utilisation and sequestration (CCUS) projects; and the launch of a Buy Clean Taskforce for government procurement and two interdisciplinary industrial advisory bodies to support research and innovation.

PCA chief executive officer and president Michael Ireland said “We are pleased to see our thinking reflected in many of the actions proposed today. We are delighted the White House has recognised that carbon reductions cannot be achieved via a single industry in isolation: it requires collaboration across an entire value chain.” He said that the White House’s approach aligns with the organisation’s own in its lifecycle approach to evaluating construction materials, encouraging collaboration, engaging the workforce and incentivising private sector innovation. Ireland continued "We look forward to working together with the White House Office of Domestic Climate Policy and the Council on Environmental Quality on this vital initiative.”


Uruguay: Workers at Administación Nacional de Combustibles, Alcohol y Portland’s (ANCAP) Paysandú and Minas cement plants held two days of strikes without warning in early February 2022. The La República newspaper has reported that the Single National Union of Construction and Annexes (SUNCA) called the action to put pressure on the producer not to sell the businesses to private investors. The potential buyers are reportedly planning to visit the plants.


Colombia: Cementos Argos has announced the launch of its new modular concrete solutions subsidiary Soluciones Modulares Argos. The company will produce precast concrete elements for use in housing and infrastructure construction. It aims to build 500 new homes in the second half 2022 and says that its products will halve building times.

Cementos Argos Colombia regional vice president Carlos Horacio Yustysaid "Modular concrete solutions revolutionise the execution of traditional structures and constitute a disruptive bet in construction systems technology."