Global Cement Newsletter

Issue: GCW547 / 09 March 2022

Headlines


Türkçimento’s Volkan Bozay took to the airwaves last week to raise the issues that the war in Ukraine is causing for Turkey-based cement producers. The head of the Turkish Cement Manufacturers’ Association explained, to the local Bloomberg HT channel, that the dramatic jump in the price of Newcastle Coal posed a serious threat to the sector. The price jumped nearly US$100/t in a single day in early March 2022. Bozay said that the cost of cement from a plant using imported coal would consequently rise by around US$15/t. He added that the association’s members had an average of 15 – 20 days of coal stocks.

Graph 1: Price of coal, March 2020 – March 2021. Source: Trading Economics.

Graph 1: Price of coal, March 2020 – March 2021. Source: Trading Economics.

In a separate press release Türkçimento revealed that Turkey, as a whole, imported approximately US$1.5bn of coal from Russia in 2021. The cement industry imported about 5Mt of coal in 2021, from all sources, although the majority of this came from Russia. Coal shipments from Russia since the start of the war were reported as ‘very limited or even not possible.’ It was further explained that each US$10/t increase in the price of coal put up plant production costs by US$1.5/t of cement.

Naturally Bozay’s appearance on a television news show carried a lobbying aspect. He called for government import standards – such as the sulphur ratio, lower heating values and volatile matter limits - to be relaxed to allow coal to be imported more freely from sources such as Colombia, Indonesia and South Africa. There was also a push to let in more alternative fuels such as tyres and waste-derived fuels. The bit that Bozay didn’t mention though was how many of his members had long term coal supply contracts in place to cushion them, from short term price inflation at least. Yet, if coal shipments from Russia have simply stopped, then the price is irrelevant. A cement kiln configured to run on coal stops when it uses up its stocks.

Turkey was the world’s fifth largest cement producer in 2021 according to the United States Geological Survey (USGS). Türkçimento data shows that in 2020 it exported 145,000t of cement to Russia by sea. Overall it exported 16.3Mt of cement and 13.5Mt of clinker. The US, Israel, Syria, Haiti and Libya were the top destinations for cement. Notably, Ukraine was the sixth largest recipients of cement, with 752,000t imported, although anti-dumping legislation introduced in mid-2021 looked set to reduce it until the war started. Ghana, Ivory Coast, Guinea, Cameroon and Belgium were the principal recipients of clinker. Cumulative cement exports for the year to October 2021 were up by 3% year-on-year compared to the first 10 months of 2020. Clinker exports were down by 27% though. Overall domestic production and sales in Turkey rose by 9.5%, suggested an estimated production figure of 79Mt for 2021.

Other fallout in the cement sector from the war in Ukraine this week included Ireland-based CRH’s decision to quit the Russian market. It entered the region in 1998 through a subsidiary based in Finland and was operating seven ready-mixed concrete plants via its LujaBetomix joint venture. CRH says that all operations in Russia have now stopped. In 2021 it sold its lime business in Russia, Fels Izvest, to Russia-based Bonolit. Although selling concrete plants is not trivial, these are far cheaper assets than clinker production lines. Germany-based HeidelbergCement, Italy-based Buzzi Unicem and Switzerland-based Holcim each operate at least one integrated cement plant in Russia. So far these companies have publicly expressed dismay at the humanitarian crisis unfolding in Ukraine and made donations to the Red Cross.

Graph 2: European Union Emission Trading Scheme price, 2020 – March 2022. Source: Sandbag.

Graph 2: European Union Emission Trading Scheme price, 2020 – March 2022. Source: Sandbag.

Finally, one more surprise this week has been a crash in the European Union (EU) Emission Trading Scheme (ETS) carbon price from a high of Euro96/t in early February 2022 to Euro58/t on 7 March 2022. As other commentators have stated, normally the carbon price would be expected to follow the energy market, but this hasn’t happened. Instead investors have pulled out, possibly to maintain liquidity for other markets.

With the US set to ban Russian oil, gas and coal imports and phase-outs to varying degrees promised by the UK and the EU in 2022, we can expect more turbulence from energy markets in the coming days. As the Turkish example above shows, all of this can... and will... have effects on cement production.


Chile: Andrés Pérez Algarra has been appointed as the general manager of Cemento Polpaico. He succeeds Javier Moreno Hueyo who has been in the post for five years, according to the Valor newspaper. Andrés Pérez Algarra, who is currently working as the commercial manager for the company, will take up his new position in April 2022.


US: Solidia Technologies has appointed Padmaja Parakala as its director of research and development.

She holds 20 years of experience working in corporate material science, most recently working for Innovantage, a professional services firm she founded that has worked with Solidia Technologies and the Boral Innovation Factory. Prior to this she worked as the principal scientist and product performance leader at James Hardie Building Products in Australia. Earlier in her career she also worked for GE at the John F Welch Technology Center.

Parakala holds s PhD in material engineering from the Queensland University of Technology and master’s degrees from the Indian Institute of Technology in Kharagpur and the Indian Institute of Technology in Varanasi.


US: Cement shipments grew by 4.2% year-on-year to 107Mt in 2021 from 103Mt in 2020. Data from the United States Geological Survey (USGS) show that domestic shipments and imports rose by 2.3% to 90.8Mt and 16% to 16.3Mt respectively. Regionally, particular gains were reported in New England and Middle Atlantic, West North Central, Arkansas, Oklahoma, Arizona and New Mexico. Puerto Rico reported a 47% decline in shipments. The largest cement exporting nations to the US were Turkey, Canada, Greece, Mexico and Vietnam. Turkey, Greece and Vietnam each increased their imports by over 30% in 2021.


China: China Tianrui Group has forecast its full-year profit and total comprehensive income as US$187m - 218m in 2021. This corresponds to a 30 - 40% year-on-year decline from its US$312m profit and comprehensive income in 2020. The company attributed the expected decrease to a year-on-year rise in coal prices and decline in cement prices, the latter due to flooding-related demand disruptions in Henan Province.


UK: Breedon Group’s sales revenue grew by 33% to Euro1.48bn in 2021 from Euro1.11bn in 2020. Its statutory earnings before interest and taxation more than doubled to Euro153m from Euro74m. Cement and concrete sales volumes increased by 20% to 2.4Mt and 23% to 3.2Mm3 respectively. The group described 2021 as an ‘exceptional’ year for its cement business due to pent-up demand following the outbreak of the Covid-19 pandemic.

“2021 was a record year for Breedon. We navigated the second year of the pandemic successfully, supplied our customers with more materials than at any point in our history and fully integrated the Cemex assets,” said chief executive officer Rob Wood.


UK: Hercules Enterprises plans to establish an up to 0.5Mt/yr grinding plant at Sheerness on the Isle of Sheppey in Kent, according to Kent Online News. The plant would comprise two clinker grinding lines, a mobile ecohopper, a mechanical transport system for transfer of material into storage, a 47,000m3 clinker storage hall, six 3000m3 cement silos, three 3000m3 fly ash silos, two packing plants and a palletising hall.


Egypt: Misr Cement Qena recorded a consolidated net profit of US$11.1m in 2021, more than seven times its 2020 net profit of US$1.46m. Its net sales were US$160m, up by 0.4% from slightly below US$160m.


India: ISGEC Heavy Engineering has received an order from Shree Cement to supply a waste heat recovery (WHR) unit for the integrated 3.8Mt/yr Nawalgarh plant in Rajasthan. The scope of work includes design, manufacture and supply of the system. The supplier says that this will be one of the world’s largest steam-based WHR units by capacity. ISGEC previously supplied two WHR units for Shree Cement’s Raipur plant.


Algeria: The Entreprise des Ciments et Dérives d’Ech-Cheliff (ECDE) plant plans to export 1.5Mt of cement in 2022. Exports will be sent to countries in Europe, Africa and Latin America, according to the Algeria Press Service. The subsidiary of Groupe des Ciments d'Algérie’s (GICA) opened a third production line at the site intended solely for exports. The unit has a production capacity of 4.2Mt/yr.


Ghana: The Chamber of Cement Manufacturers (COCMAG) has lobbied against the government’s decision to reduce the benchmark value to 30% from 50%. It says that a reduction in discounts on selected imports will result in higher production costs that could be passed on to the price of cement, according to the Business and Financial Times newspaper. Local limestone producers are also reported to be trying to increase their prices by over 60%, which could also put up prices. COCMAG has cited growing clinker, transport and fuel input costs as a potential source of higher production costs as well as negative currency exchange effects. COCMAG wants the government to maintain the benchmark value at 50% for input materials for cement production

The benchmark system was introduced in 2019 as a way of discounting the price of certain imports. Under the policy, certain commodities were benchmarked to world prices as a risk management tool.


Germany: Schmersal Group has asked its Russian sales partner to suspend the supply of safety switchgear and systems. It said that the action was not easy for the company as it meant stopping a ‘noticeable’ sales volume. Managing director Philip Schmersal said, "We do not want to contribute to the economy and production of a country that disregards the sovereignty of another country and brings great suffering to its people.”


China: Anhui Conch plans to invest around US$800m in its Anhui Conch New Energy subsidiary towards the development of photovoltaic (PV) projects. By the end of 2022 the company plans to have installed PV power generation capacity of 1GW with an output of 1bn kWh. Anhui Conch fully acquired the subsidiary in August 2021.


Spain: HeidelbergCement is starting the Neuclicem carbon capture use and storage (CCUS) project at its integrated Arrigorriaga plant near Bilbao. Local electricity company Volbas and the Tecnalia Research & Innovation centre are participating in the initiative. The project intends to look at a process based on the mineralisation of alkaline waste, such as residual construction waste or steel slag, by accelerated carbonation using CO2 from the flue gas at the plant. The resulting materials will then be used as additives in cement production or to reduce the use of clinker. The scheme will study its viability of the process on an industrial scale.

The Neuclicem project has an estimated duration of 14 months. Its results are intended to prepare the way for scaling up to a subsequent industrial prototype. The project is partially financed by Ihobe, an environmental management division of the regional Basque government.


US: A court has instructed Continental Cement to pay a worker who acted as an employee representative during Mine Safety and Health Administration (MHSA) inspections at its Hannibal, Missouri, quarry. The Insurance Journal newspaper has reported that the producer reduced the worker's pay as a mobile equipment operator by a total of US$388 over a period of days in March and April 2020. In addition to paying the worker, Continental Cement must pay a US$17,500 fine to the US Treasury for violation of the Mine Safety and Health Act. It is also required to expunge any adverse information related to the whistleblower complaint from the employee's personnel record and to post information on miner's rights in employee areas.

MSHA district manager Robert Simms said "The MSHA investigation found Continental Cement clearly discriminated against the worker for serving as the miners' representative. Federal discrimination laws exist to protect workers from penalties for serving as safety and health representatives while on the job." Simms concluded "The judge's decision sends the message that retaliation is a costly mistake for employers."


Spain: FYM will host 350 pupils from Malaga's primary schools on its Feet on the Ground sustainability awareness initiative. The initiative consists of using digital resources and fieldwork to explore Malaga's biodiversity. It will highlight the work of HeidelbergCement's Spanish quarry restoration partner Tormes Foundation. FYM said that the initiative is part of its strategy to improve quality of life and the environment in areas where it operates, informed by transparency and dialogue with host communities.


Mexico: Cemex says that it plans to restart Line 2 at its CPN cement plant in Sonora State. The line has a capacity of 0.8Mt/yr. Cemex will invest US$29m in restarting it, bringing its total recent investments in the CPN plant to US$44m. It previously invested US$15m in a restart of the plant’s 1Mt/yr Line 1 in 2021. When operational in mid-late 2022, Line 2 will join the existing line in supplying cement to Arizona, California and Nevada in the US.

Cemex USA president Jaime Muguiro said “Many cement customers in the western US have been impacted by tight supply constraints for several months, and at Cemex, we are proactively looking for opportunities to further alleviate those conditions and enrich customer experiences by enhancing how we operate while utilising our global reach.” He continued “Customers require more cement to keep pace with the region’s growth, and we want to ensure they have stable and steady access to the high-quality materials that are essential to meet their needs.”


Argentina: Loma Negra’s full-year sales rose to US$655m in 2021, up by 17% year-on-year from 2020 levels. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 15% to US$215m. Nonetheless, an increased operating income only partially offset the impacts of a higher income tax rate. During the year, the producer inaugurated its L’Amali cement plant’s new Line 2.


Mexico: Cemex has successfully commissioned its new Line 2 at its Tapeaca, Puebla, cement plant.

Cemex’s Mexico regional vice president operations and technology Ernesto Felix said that the work ‘brought together a great team’ of Cemex colleagues.


Saudi Arabia: Yanbu Cement’s sales recorded a 0.6% year-on-year decline to US$251m in 2021 from US$249m in 2020. Arab News has reported that the company’s net profit fell by 43% compared to 2021 levels.


Sri Lanka: Lanwa Sanstha Cement says that it will invest US$60m in expanding its newly commissioned Hambantota grinding plant in order to enable it to serve 60% of local demand.

President Gotabaya Rajapaksa said "Construction is a key contributor to the local gross domestic product (GDP). Our construction sector has a competitive edge in the global context, given its focus on technology and its emphasis on ethics and sustainability. We are certain this endeavour would serve to boost investor confidence, which is timely."


Germany: Rohrdorfer and Austria-based Andritz Group are in the process of installing a 2t/day CO2 separation plant on the roof of the former’s Rohrdorf cement plant in Bavaria. The pilot plant will capture CO2 from the plant’s emissions for use by the regional chemicals industry. The Ingenieur newspaper has reported that it will cost Euro3m and is scheduled for commissioning before June 2022. It is the first installation of its kind at a German cement plant.

Rohrdorfer’s plant and process engineering manager Helmut Leibinger said “We must begin to see CO2 as a product of value rather than a problem. With CO2 as a carbon source, Germany can protect the climate and at the same time become less dependent on oil and natural gas. In addition, value creation and jobs will remain in the country.”


Sri Lanka: Lanwa Sanstha Cement has successfully commissioned its 2.8Mt/yr Hambantota grinding plant in the Mirijjawila Export Processing Zone. Daily News (Sri Lanka) has reported that the facility is equipped with two bridge ship unloaders and an automated stacker reclaimer yard. It will produce the company’s full range of cements, including ordinary Portland cement (OPC), Portland composite cement (PPC) and blended hydraulic cement (BHC) catering to the rising local demand from landmark projects including the Port City and the network of expressways.


Trinindad & Tobago: The Caribbean Court of Justice has ruled against Hard Rock Cement in its challenge against Trinidad & Tobago’s 50% tariff on hydraulic cement. Nation News has reported that the Caribbean Community (CARICOM)’s Council for Trade and Economic Development (COTED) granted Trinidad & Tobago’s application to implement the new tariff in 2020. It remained in force for all of 2021. Cement importer Caribbean Cement challenged both the decision and the conduct of the application process.


New Zealand: Golden Bay Cement has obtained two hydrogen-fuelled cement trucks produced by Hyzon. TR Group leased the vehicles to the cement company.

Golden Bay Cement said “These two zero emission green trucks signal the future, and are just another step we take to a smaller carbon footprint across our business.”


Switzerland: Vigier Ciment is operating a self-charging electric dump truck at its limestone and marl quarry in Biel. The 45t truck’s regenerative braking system recharges its 600kwh lithium battery on the downhill trip from the quarry to the primary crusher. Its 65t capacity more than doubles its weight when laden, easily enabling it to recover charge for the return trip. Each trip generates an estimated 10kwh of surplus energy. In ordinary use, this would equate to 77Mwh/yr. It saves 50,000 – 100,000l/yr of diesel and eliminates an estimated 196t/yr of CO2. Green Car Reports has reported that Kuhn Schweiz built the dump truck, based on Japan-based Komatsu’s HB model truck. It is the world’s largest electric vehicle.


Russia/Ukraine: CRH says that it has withdrawn from the Russian building materials market. It operated seven ready-mix concrete batching plants and a concrete panel plant in St Petersburg through its subsidiaries LujaBetomix and Rudus. CEO Albert Manifold estimated the group’s investments in the businesses to be Euro1.5 – 2m. RTÉ News has reported that Manifold called the operations ‘infinitesimally small,’ and said that a Russian withdrawal had previously been on the group’s radar anyway.

CRH says that it has suspended its Ukrainian operations, which reportedly generated Euro281m in sales in 2021, and continues to support its 820 employees in the country in every way it can.


Nigeria: Germany-based Kreisel is supplying an RDG 2000 rotary valve to the site of a Nigerian cement plant project. The supplier says that the RDG 2000 can provide material flow rates of 570t/hr and is one of the largest rotary valves on the market.


Jamaica: Caribbean Cement recorded revenues of US$153m in 2021, up by 19% year-on-year from US$129m in 2020. Its operating expenses rose by 6.4% to US$16m from US$15.1m. The company recorded a loss for the year of US$3.31m, just under half of the US$6.79m loss that it recorded in 2020.


US: Cemex Ventures says that it has invested in industry and construction sector on-demand delivery platform PartRunner. The startup operates a fleet of trucks which provide flexible service to warehouses, retailers and job sites across the US. Under Cemex Ventures’ guidance, it plans to expand its services to also cover Mexico.

Cemex Ventures director Gonzalo Galindo said "This solution fits perfectly with Cemex's commitment to offer our customers greater control over their businesses by improving efficiency and transparency in the delivery of construction products and materials.”


Benelux/France: Cementir Holding has introduced its Futurecem limestone calcined clay cement into the Benelux and French cement markets. Futurecem cement applies Cementir Holding’s patented processes to substitute over 35% of clinker in cement with limestone and calcined clay, preserving the cement’s strength and quality while reducing its carbon footprint by 30% compared to ordinary Portland cement (OPC).

Cementir Holding previously rolled out Futurecem cement in Denmark in 2021. In 2022, it plans to launch InBind high performance concrete (HPC) and ReCover ultra-high performance concrete (UHPC) to expand its range of HPC and UHPCs using Futurecem technology.

Eddy Fostier, managing director of Cementir Holding’s Belgian subsidiary CCB, said “Thanks to the joint efforts of the group and CCB teams, Futurecem technology is the main pillar for CCB’s low carbon transition within the Group roadmap. This product technology is matching customer needs, highlighted through a specific survey carried out across the most relevant market areas and applications.” Fostier concluded “I’m fully convinced that Futurecem will play a relevant role in the decarbonisation of the construction industry, where cement and concrete are essential building materials both in the present and in the future.”


Pakistan: All Pakistan Cement Manufacturers Association (APCMA) members exported 405,000t of cement in February 2022, down by 34% year-on-year from 616,000t in February 2021. Domestic deliveries also dropped, by under 1% to 3.95Mt from 3.96Mt. Amid the declines, Pakistani cement producers have reported a steep rise in their costs due to increases in international freight rates and coal prices and the country’s on-going ban on trade with neighbouring India. Cheaper Iranian cement has undercut Pakistani cement sales to Bangladesh, while the Afghan market has yet to recover following the withdrawal of peacekeeping forces.


Ireland: CRH’s consolidated sales rose by 12% year-on-year in 2021 to Euro28bn. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) for the year rose by 16% to Euro4.83bn.

CEO Albert Manifold said "Our 2021 performance reflects the outstanding commitment and resilience of our people as well as the benefits of our integrated, customer-focused business strategy. Despite an inflationary input cost environment, we expanded our margins and delivered good growth in profits, returns and cash generation. This further underpins our strong and flexible balance sheet, providing us with significant opportunities for future growth and value creation.” Looking to the future, Manifold said “While the demand backdrop remains favourable across our markets, there are a number of challenges and uncertainties which we must continue to manage carefully as we look to deliver further value for our shareholders in the year ahead."


Canada: Switzerland-based Sika has acquired cement products and mortars company Sable Marco. The group hopes that the acquisition will open new opportunities for it in Eastern Canada. Sable Marco reportedly generated full-year sales of US$21.7m in 2021.


India: Dalmia Bharat Group’s refractories subsidiary Dalmia-OCL has consolidated its businesses as Dalmia Bharat Refractories. The company said that the consolidation aims to strengthen the businesses’ financial standing, increase investment capabilities and positioning the new entity as a trustworthy and long-term partner for its customers in the cement industry.

Dalmia Bharat Refractories managing director and CEO Sameer Nagpal said "Our refractory business was divided into different companies which resulted in division of our financial, managerial and technical resources. This consolidation will lead into a more centralised, efficient and a robust management system with a stronger resource base for the future. The formation of Dalmia Bharat Refractories will allow us to offer a wider portfolio of products and services and deeper client relationships.” Nagpal added that the consolidation ‘Will enable us to become an alternative supply source to China in international markets.’


US: Titan America’s Essex cement distribution facility at the Port of Newark, New Jersey, has made its first dispatches of Type IL Portland limestone cement (PLC) to New Jersey and the New York Metropolitan Area. The producer said that the Essex terminal is due to complete its transition to 100% reduced-CO2 cement dispatches in 2022. Titan America says that it is the leading supplier of Type IL PLC on the US domestic market.

Sales Manager Joe Tedesco said “We see an increase in demand as infrastructure money is budgeted by transportation agencies requiring construction with the use of lower-carbon cement.”


Malaysia: India-based Larsen & Toubro Ltd and Tamco Switchgear (Malaysia) have filed a patent application for a jointly developed switchgear panel structure. The companies’ customers include cement producers in Malaysia.