Global Cement Newsletter

Issue: GCW562 / 21 June 2022

Headlines


Boral admitted this week that high energy costs in Australia had forced it to reduce production levels. Chief executive officer Zlatko Todorcevski revealed to Reuters that the company was temporarily cutting back some unspecified areas of its operations. He also said that it was going to have to pass on growing energy prices directly on its customers.

This has followed mounting alarm at fuel prices in successive financial reports by the building materials company leading to revised earnings guidance being issued in May 2022. Bad weather was responsible for the larger share of the expected additional adverse impact to underlying earnings in its 2022 financial year but around US$10m was anticipated from rising fuel prices. Growing coal and electricity prices were said to be impacting its production and logistics costs, with price rises in January and February 2022 having proved insufficient to keep up with inflation. In a trading update in March 2022 the company said that its exposure to coal prices was unhedged for the second half of its 2022 financial year, to June 2022.

An energy crisis in Australia may seem hard to understand given that the country is one of the world’s biggest exporters of coal and gas. Yet, the country has faced a number of problems with its electricity generation sector in 2022 with disruptions to coal supplies to power stations, outages, ongoing maintenance and a cold winter that adversely affected the market. This led the Australian Energy Market Operator to suspend the country’s main wholesale market on 15 June 2022 in an attempt to stabilise the supply of electricity. New South Wales has also reportedly forced coal mines to prioritise the local market over exports. Energy minister Chris Bowen even asked the residents of New South Wales to try and reduce electricity use in the evenings in an attempt to prevent blackouts. However, with the consumer electricity market now looking more stable, attention has turned to industrial users such as Boral.

Global Cement Weekly has covered energy costs for cement producers a couple of times in the last year. There has been plenty of angst about growing energy costs on cement company balance sheets since mid-2021 as the logistics problems following the lifting of the coronavirus-lockdowns became clear. The biggest story at this time was an energy crisis in China that caused supplies to be rationed to industrial users. This then intensified with the start of the war in Ukraine in February 2022 and energy prices went up everywhere as economic sanctions were imposed upon Russia. One standout was Turkey where cement producers publicly raised the alarm about jumps in coal prices.

Recently, some North American lime producers such as Lhoist North America and the Mississippi Lime Company have been notably bold in announcing price rises due to energy costs and other factors. This week, for example, Lhoist North America said it had raised the price of its lime products by up to 45%. It cited the ‘challenging circumstance’ for all parties at an ‘unprecedented’ time. One alternative to the direct approach of simply putting up prices has been the use of energy surcharges. Japan-based Taiheiyo Cement announced earlier in June 2022 that it was going to introduce a coal surcharge for its cementitious products in September 2022 due to rising energy prices. Its system is based on the coal price with revisions planned every two months. The scheme will run for one year in the first instance. How customers will react to this remains to be seen.

We have looked above at a few disparate examples of the problems that energy costs have been causing cement and lime producers over the last month. These issues look set to continue in an acute phase while the war in Ukraine rages on, but the longer term trends from the economic recovery from coronavirus will undoubtedly last for longer. As examples in Australia and China have shown, local energy crises can easily spill over into the industrial sector as domestic users are prioritised. So, even if cement companies source their supplies carefully, they may face issues if the wider market struggles. Meanwhile, cement producers face the dilemma of justifying price rises to customers adapting to mounting inflation. Taiheiyo Cement has shown one way of doing this. The problems caused by surging energy prices to other cement companies look set to become more apparent in the next few months as reporting of the first half of the year emerges.


Greece: Titan Cement has appointed Marcel Cobuz as the chair of its executive committee. He will succeed Dimitri Papalexopoulos in the post from 15 October 2022. Papalexopoulos, in turn, will become the chair of the board of directors, succeeding Efstratios-Georgios Arapoglou.

Cobuz, a French and Romanian national, has worked for Holcim and its associated companies for over 20 years. He joined Lafarge Group in 2000 and has held various leadership roles in Europe, Asia, the Middle East and Africa. He later became the Europe Region Head for LafargeHolcim from 2018 to 2021. Prior to his time at Lafarge, Cobuz started his career in investment banking at Creditanstalt Investment Bank and worked as an entrepreneur in Romania. He studied law and economics in Bucharest, completed an Advanced Management Program at Harvard Business School and has attended executive programs at INSEAD, the IMD Business School and Singularity Group.


France: Holcim France has announced its successful industrial-scale production of the world's first 100% recycled clinker. The La Tribune newspaper has reported that the company's Altkirch, Alsace, cement plant produced the clinker. Holcim France chief executive officer Francois Petry said that the plant's team collaborated with researchers at the Holcim Innovation Center to develop a recipe that incorporated multiple waste streams, including mineral wastes and wood ash. The producer says that most of the waste materials were locally sourced.


Spain: Cemex España has received clearance from the Balearic Islands Environmental Commission (CMAIB) to import up to 10,000t/yr of granulated blast furnace slag (GBFS) to Majorca. Ultima Hora Online News has reported that the producer will substitute some of the limestone used in the company's Lloseta plant's cement production with the material.

Waste management company Tirme previously handled the Lloseta cement plant's slag supply.


Denmark: Swisspearl Group has concluded an agreement to acquire fellow fibre cement board producer Cembrit. The Switzerland-based group said that it is creating the second-largest supplier of fibre cement products in Europe.


Mexico: The Mexican Federal Economic Competition Commission (COFECE) has fined Cemex US$89,000 for failing to notify it of a transaction that exceeded the threshold for notification. COFECE also approved the transaction in question.

Cemex has the right to seek legal recourse against the fine.


Pakistan: DG Khan Cement has despatched a shipment of 50,000t of cement for Houston, US, from Karachi. The Balochistan Times newspaper has reported that the shipment is the first of 12 consignments of the same size under an order for 600,000t of low-alkali cement. If successful, the order may double to 1.2Mt. The producer is using jumbo bags to transport the product on its 42-day journey overseas.

Marketing director Fareed Afzal said that Pakistani businesses need to diversify their export markets and strengthen foreign currency reserves. He added that DG Khan Cement continues to reduce its products' carbon footprints by using renewable energy, waste heat recovery (WHR) and alternate fuels (AF).


UK: Global Cement Magazine is ready for the Hillhead 2022 quarrying, construction and recycling show that takes place on 21 – 23 June 2022 taking place in Derbyshire. You can find Global Cement Magazine at stand PB14 in the Main Pavilion. The event was originally planned to take place in June 2021 but was postponed for one year following the UK coronavirus-related lockdowns. Held in a limestone quarry, the organisers say that it is the largest exhibition of its kind anywhere in the world.

Global Cement Magazine exhibits at Hillhead 2022


India: Shree Cement’s board of directors has approved the company’s plans to establish a new US$321m cement plant in Andhra Pradesh’s Guntur district.

Shree Cement currently commands an installed capacity of 46.4Mt/yr. In the 2022 financial year, it produced 30Mt of cement, corresponding to a capacity utilisation of 30%.


India: Kesoram Industries has announced plans to raise its installed cement production capacity to 15Mt/yr. The expansion constitutes an increase of 36% from its presently installed 11Mt/yr-worth of capacity.


Australia: Adbri is part of a consortium of eight Australian industrial manufacturers, developers and port operators collaborating with AGL Energy on a feasibility study for a green hydrogen plant at the site of the latter’s Torrens Island power plant in South Australia. AFR Online News has reported that any future hydrogen plant established by the partners would rely on solar and wind power, which has large potential in the region.

The South Australian government previously launched its first US$414m green hydrogen project in Whyalla in March 2022.


Pakistan: Fauji Cement says that its sustainability initiatives across its three cement plants reduced CO2 emissions by 215,000t in the 2022 financial year. The Pakistan Today newspaper has reported that clinker factor reduction in reduced-CO2 products such as Askari Green cement and Pamir cement eliminated 89,900t-worth of emissions, 42% of total reductions. Waste heat recovery (WHR) plants eliminated 79,400t of emissions (37%), solar power plants eliminated 31,500t (15%), alternative fuel (AF) substitution eliminated 8030t (3.5%) and reforestation eliminated 600t (2.5%).


India: Police in Madhya Pradesh’s Rewa District have raided a fake cement facility in the village of Ghuma. The Times of India newspaper has reported that the raid uncovered 3000 bags of fake cement, as well as vehicles used for their distribution.


Russia: Akkermann Cement reportedly plans to invest US$442m in its construction of the upcoming 3.5Mt/yr Kaluga cement plant. The company says that it expects to complete the project in late 2027. State-owned Prime News has reported that, when operational, the plant will generate 400 new jobs in Kaluga Oblast.

Akkermann Cement acquired the site of the upcoming plant in April 2022.


Kyrgyzstan: United Cement Group (UCG) subsidiary Kant Cement has begun installation of a lining on its Kant cement plant’s rotary kiln in order to reduce losses and improve the efficiency of the plant. The producer expects the lining to raise its kiln’s temperatures by 100°C. It consists of wear-resistent RMAG–H2 bricks and HALBOR–400 refractory bricks.

UCG said “Energy efficiency and energy saving are among the most important factors for the successful implementation of ongoing economic and social reforms.”


Belgium: Holcim Belgium hopes to complete its Obourg cement plant’s Go4Zero oxyfuel kiln conversion and carbon capture installation project by 2025, in order to achieve carbon neutrality at the plant by 2030. The producer says that the plans involves establishing a new 135m-high cooling tower, instead of a 145m-high tower as previously planned.

In an effort to rally local support, Holcim Belgium will begin offering virtual reality (VR) tours of the upgraded plant plans in September 2022.

Chief executive officer Bart Daneels said “We would like to start this project, which will be a world premiere in the cement industry.”


Canada/US: Lime company Lhoist North America raised the price of its lime products by up to 45% from 13 June 2022. The producer acknowledged the ‘challenging circumstance’ for all parties at an ‘unprecedented’ time. It said “We look forward to continuing to deliver the expected value to our customers.”


Russia: Eurocement says that its subsidiary Peterburgcement’s Slantsy cement plant in Leningrad Oblast is undergoing an upgrade in order to co-process 100,000t/yr of alternative fuel (AF) in its cement production. The group claims that the upgrade will improve the efficiency of the 1.9Mt/yr plant and reduce its consumption of natural gas by 25%. The purported cost of the upgrade is US$1.77m.

Eurocement previously implemented the same technology at another of its cement plants in the Republic of Mordovia.


Turkey: Fernas Group has acquired Çimsa Çimento’s 1Mt/yr Kayseri and 1.2Mt/yr Niğde integrated cement plants and Ankara grinding plant, as well as ready-mix concrete assets in Aksaray, Ambar, Basakpinar, Cirgalan, Ereğli, Nevsehir and Kahramanmaras. Reuters News has reported the pre-tax value of the deal as US$110m.


Ireland: CRH bought a further US$300m-worth of its shares between 17 March 2022 and 15 June 2022. The purchases bring the group’s total investment in its on-going share buyback programme to US$3.5bn since May 2018. It will now proceed with a further US$300m buyback, ending on or before 30 September 2022.

On 28 April 2022, CRH’s annual group meeting voted for the group to repurchase a total of 10% of its shares.


Mexico: Cooperativa La Cruz Azul has taken to Twitter to thank the executive and judicial authorities of Mexico City for their work in dismantling the criminal network which had previously taken control of the producer. Prosecutors have indicted former Cooperativa La Cruz Azul legal director Victor N, who went into hiding in July 2020, and an alleged accomplice, Joel N.


Argentina: A man has died in a concrete silo collapse at Holcim Argentina’s Malagueño cement plant in Córdoba Province. Pedro Rivero, 67, had been working on the site at 11am on 15 June 2022 when the disaster occurred. Local press has reported that the collapsing silo crushed the crane which Rivero had been operating.

An investigation by the Argentinian Judicial Police into the causes of the event is currently underway.


Uzbekistan: BekabadCement plans to launch a testing laboratory at its Bekabad cement plant, from which it will run a dedicated customer support service. The facility will focus on automatic sampling. BekabadCement expects to launch the service to customers in late 2022.