Global Cement Newsletter

Issue: GCW586 / 07 December 2022

Headlines


Derba MIDROC Cement signed a contract with Sinoma International Engineering in recent weeks to build a US$282m upgrade at its integrated Derba cement plant in Oromia. The move is the latest in a steady stream of projects that have been announced in Ethiopia over the last few years. Other recent developments include a deal in July 2022 by businessman Getu Gelete to buy PPC’s stake in Habesha Cement and plans in August 2022 by investor Worku Ayetenew to build a US$1bn cement plant with a production capacity of 12,000t/day. Alongside these capital intensive projects, the government has been trying to regulate the price of cement through measures such as setting fixed prices, limiting the volumes that individuals can buy and asking producers to cut distributors out of the supply chain.

To summarise some of the plant projects over the last couple of years, the Derba MIDROC Cement upgrade project intends to double the production capacity of the integrated Derba cement plant in Oromia to 15,000t/day. The other big ongoing project was announced in early 2021 when East African Holding and China-based West China Cement agreed to build a 10,000t/day plant at Lemi in Amhara Region. East African Holding is the parent company of National Cement, one of the larger producers in the country. Then in July 2021 Sinoma International Engineering’s subsidiary Suzhou Sinoma signed an initial deal with Western International Holdings, West China Cement’s international arm, to build the plant. Prime Minister Abiy Ahmed visited the construction site in March 2022 to lay the foundation stone but no commissioning date has been disclosed so far. Based on Sinoma’s assessment when it signed the contract, construction would take around 20 months, so a commissioning date by late 2023 seems reasonable. There are also a number of other projects that have been announced in the local press such as Abay Industrial Development Share Company plant at Dejen. FLSmdith said that the contract to build the 5000t/yr plant became effective in late 2020. However, not much more has been released publicly. Another project at Berenta in Amhara is also reportedly under construction.

The Global Cement Directory 2022 places the country’s production capacity at around 12Mt/yr. This compares to 15Mt/yr from 13 companies as reported by a local news source although this figure is likely to also include grinding plants. Yet the same source also placed the actual working capacity at 6Mt/yr due to old machinery and poor maintenance. As for the market in Ethiopia, Dangote Cement said that the sales from its Mugher plant rose by 1.8% year-on-year to 1.7Mt in the first nine months of 2022 and that the unit was running at full capacity in the third quarter. It reckoned that it held a 42% market share during this period, out of a total market of around 4.2Mt. Previously it said that the total market for the whole year was 7Mt in 2021.

Unfortunately it also mentioned issues with security in the region. This became a live issue this week with news that at least 30 employees of Dangote Cement were reportedly kidnapped in early December 2022 by an armed group that calls itself the Oromo Liberation Army. This is particularly sad for the company given that its country manager was shot dead in 2018. Two employees of the Mugher Cement plant were also taken hostage by the same group in October 2022 although thankfully they were later freed.

A number of projects have been announced in Ethiopia over the last few years but they appear to be taking a while to materialise. This time though a couple of the projects do seem to be on the way and the change in ownership of Habesha Cement seems to suggest a renewed vigour to the local construction market since the government opened up investment. Unfortunately, security concerns are pressing as demonstrated by what happened to some of Dangote Cement’s staff this week.


India: ACC has appointed Ajay Kapur as its chief executive officer (CEO). He succeeds Sridhar Balakrishna in the post. Kapur is already the CEO of ACC’s parent company Ambuja Cement. His appointment as CEO and an independent director at ACC is intended to enable the two companies to work together better and improve synergies.

Ajay Kapur holds over 25 years of experience in the cement and construction, power and heavy metals sector. He joined Ambuja Cement in 1993 as an executive assistant to the then managing director (MD). He held various strategic positions over the past two decades, and from 2014 to 2019, he served as the CEO and managing director of the company. Prior to joining Adani Group in June 2022, Kapur was CEO - Aluminium and Power and MD - Commercial at Vedanta. Most recently he served as CEO of Special Projects at Adani Ports and Special Economic Zone. Kapur is an economics graduate from St Xavier's University in Mumbai and holds a Master’s of Business Administration (MBA) from the KJ Somaiya Institute of Management. He has also attended the Advanced Management Programme at the Wharton School of the University of Pennsylvania.


Türkiye: Akçansa has appointed Vecih Yılmaz as its general manager. The cement producer is a joint-venture between Sabancı Holding and Heidelberg Materials.

Yılmaz, started his career as an auditor at Deloitte in 2005 and later joined Sabancı Group in 2009. Between 2015 and 2017, he was the chief financial officer at Assan Panel and Financial Affairs Director at Kibar Holding. Both companies are part of Kibar Group. He rejoined Sabancı Group in 2017 as the finance director at Sabancı Holding and also served as a member of the board of directors at Kordsa and Yünsa. He has worked as the Deputy General Manager of Finance and Financial Affairs at Çimsa since 2019.

Yılmaz is a graduate from the Department of Business Administration at the Middle East Technical University in Ankara. He completed the Political Science and Public Administration minor program at the same institution. He also holds a master's degree in financial economics from Galatasaray University in 2012.


China: Chen Xuanlin has resigned as the chief investment officer of Dongwu Cement. In a statement the company said that Chen wanted to, “to pursue his career development and concentrate on his own business engagement.”


Mexico: Cemex Mexico plans to install hydrogen injection systems at four cement plants across Mexico. The producer will use the technology to increase alternative fuel (AF) substitution at the plants by 8 - 10%. A 40% reduction in Scope 3 purchased fuel emissions forms part of Cemex's 2020 - 2030 CO2 emissions reduction strategy. Through the decarbonisation and circular economy pillars of its Future in Action plan, the group aims to become carbon neutral by 2050.

Cemex Mexico president Ricardo Naya said "Hydrogen is a key technology to accelerate the implementation of our climate action roadmap."

The El Financiero newspaper has reported that Cemex set a new group record AF substitution rate of 34% in September 2022. It uses hydrogen at all of its European cement plants and at one plant in the Dominican Republic.


China: Tangshan Jidong Cement and Xinjiang Tianshan Cement have announced the planned launch of a new joint venture in the cement industry. Reuters News has reported that the new cement producer will have registered capital of US$129m.

Tangshan Jidong Cement and Xinjiang Tianshan Cements' headquarters lie 3000km apart, in Beijing, Hebei Province, and Ürümqi, Xinjiang Province, respectively.


India: UltraTech Cement plans to raise funds from the sale of commercial papers over a three-month period from 6 December 2022. Reuters News has reported that the producer has already received buyers' commitments worth US$60.6m. The group will offer a yield of 6.8% on the issue.


Egypt: The Egyptian Exchange has published a filing regarding the acquisition of US$5.66m-worth of Sinai Cement shares by an investor on 7 December 2022.

France-based Vicat holds the majority stake in Sinai Cement, while investor Asmaa Amer Gharib acquired a 7.5% stake in the producer in March 2022 for US$4.05m.


Argentina: Pampa Energía has signed an agreement with Holcim Argentina to supply it with wind power to its four cement plants. The supply will provide 25% of the cement producer’s electrical energy requirements, according to Grupo La Provincia. Previously Holcim Argentina signed a deal with YPF Luz to supply wind power to its plants in 2019. The current arrangement is expected to bring the company portion of renewable electrical energy to 65% or 220GWh. The electricity from the latest deal with Pampa Energía will be generated at the Pampa Energía III Wind Farm located in the Coronel Rosales district of Buenos Aires Province.


Algeria: A fire has been reported at Groupe des Ciments d'Algéries’ (GICA) Hadjar Soud plant operated by Société des Ciments des Hadjar Soud (SCHS). An explosion occurred whilst narcotics and other substances were being incinerated in the plant’s kiln under the supervision of the Gendarmerie Nationale, according to the Reporters newspaper. 12 people were injured in the incident including five workers at the plant, five police officers and two soldiers. Most of the victims suffered third degree burns in the blast and are being treated locally.

GICA holds the majority stake in SCHS, while Italy-based Buzzi Unicem owns a 35% share.


Nigeria: The Daily Independent newspaper has reported that BUA Cement is allegedly preparing a 'multi-million dollar lawsuit' against its gas supplier, Greenville Liquefied Natural Gas (Greenville LNG). The supplier reportedly raised prices, as stipulated in the parties' gas supply contract, following an increase in its costs. Greenville LNG attributed the increase to the dilapidation of roads and collapse of upstream gas infrastructure due to flooding, as well as a lack of access to imports. It said that none of its 44 other industrial customers has challenged the price change.

Greenville LNG chair Eddy Van Den Broeke said "It is not a breach of contract because not only are we continuing the gas supply to the BUA cement plant in Sokoto, but also because we are discussing in good faith the changed business and economic conditions that afflict both companies." He concluded “In this case, we only activated the contractual price adjustment clause. We cannot explain how it is possible that social media misrepresented so grossly the present circumstances and the conditions of our contract, which were not reflected at all."


Italy: Colacem has issued notices of dismissal to the remaining seven employees at the site of the former Maddaloni cement plant, now a cement storage facility. The Il Mattino newspaper has reported that the producer has offered all workers bonuses in exchange for their resignations.

Cement production at the Maddaloni site in Campania ceased in late 2021, after a period of grinding-only operations following the shutdown of the kiln in 2019.


India: Sanghi Industries has borrowed US$60.6m from Kotak Investment Advisors. The cement producer secured the funds in the form of non-convertible debentures (NCDs).

Sanghi Industries produces its Sanghi Cement brand cement in Gujarat.


Dominican Republic: Cemex Dominicana has announced the signing of a new sustainability agreement with food producer Nestlé Dominicana. Under the agreement, Cemex Dominicana will co-process Nestlé Dominicana's non-recyclable high-calorific solid industrial waste as alternative fuel (AF) in its cement plant.

Cemex's Dominican Republic, Puerto Rico and Haiti regional director José Antonio Cabrera said "This agreement with Nestlé allows us to continue promoting our Future in Action strategy by operating our cement plant with AF." He concluded "We are committed to becoming a net-zero CO2 company."


India: Siam Cement Big Bloc Construction Technologies has bought 60,000m3 of land at Ramosadi in Gujarat's Kheda District. The concrete producer informed the BSE Exchange that it plans to build an autoclaved aerated concrete (AAC) panel and block plant at the site.


India: UltraTech Cement says that it recently commissioned two new grinding units in Northern India. The Aditya Birla subsidiary commissioned a new 1.8Mt/yr grinding unit at its expanded Dhar integrated cement plant in Madhya Pradesh on 27 November 2022. The company also inaugurated its new 1.8Mt/yr Dhule grinding plant in Maharashtra. The projects form the first phase of 12.9Mt/yr-worth of planned expansions, announced by the company in late 2020.

UltraTech Cement's managing director Kailash Jhanwar visited the Dhar cement plant to congratulate the team there on its contribution to the expansion drive.


Vietnam: Thailand-based Siam City Cement has launched construction of Mill 2 of its 1.3Mt/yr Thi Vai grinding plant in Ba Ria-Vung Tau Province. Việt Nam News has reported that the company plans to invest US$35m in the project.

The Thi Vai grinding plant cost US$53m when built in 2003.


Brazil: Votorantim Cimentos has revised its Scope 1 CO2 emissions reduction goal down to 475kg/t of cementitious product by 2030, from 520kg/t previously. The new target is 8.7% lower than the previous one, which it set in November 2020. Votorantim Cimentos previously reduced its emissions per tonne by 20% between 1990 and 2021. The group's targeted reduction from a 2018 base year now equates to 25%. The Science-Based Targets Initiative (SBTi) validated the ambitious target on 1 December 2022.

Votorantim Cimentos expects to achieve its aim through increased alternative fuel (AF) co-processing, substitution of supplementary cementitious materials, improved efficiency and use of renewable power and the development of new technologies, including carbon capture.

The group's global sustainability, institutional relations, product development and engineering director Álvaro Lorenz said “The fight against the negative effects of climate change is at the heart of our strategy and reflects our focus on competitiveness and on creating a positive legacy. The most competitive businesses will be those with the lowest greenhouse gas emissions. After all, the environmental crisis is also an economic and social crisis. The validation of our new target by SBTi reinforces our commitment and continuous efforts toward the net-zero agenda.”


India: Ecologists have established a connection between the activities of cement plants in Khrew, Kashmir, and massive disruptions to local red deer herds. The deer, known locally as hangul, are now mainly restricted to one national park throughout their 600km-long historic range. Scroll News has reported that Khrew, where eight cement plants are situated, adjoins forest forming an important corridor for hanguls. Local conservation campaigners say that cement plants' incursion on traditional grazing land has driven farmers' herds into this ecologically important forest.

Some zoologists class the hangul as a species in its own right. The International Union for the Conservation of Nature categorises the animal as critically endangered.


Pakistan: Fauji Cement is among 50 Pakistani industrial companies to win a prize at the 12th Fire Safety 2022 on 4 December 2022, the Balochistan Times has reported. Fire Protection Industry of Pakistan (FPIP) and the National Forum for Environment and Health (NFEH) selected the winners for their fire safety investments, training time, awareness practices and state of equipment, with the aim of controlling incidents of fire and saving lives.


Kenya: Savannah Cement has ordered a new US$300m production line from China-based Sinoma international Engineering for its Kitui plant. The project scope covers supplying an integrated clinker production line from limestone crushing to cement packaging and logistics. The line will have a clinker production capacity of 8000t/day. Commissioning of the new line is scheduled for about two years after the contract takes effect.


Zimbabwe: Lafarge Zimbabwe has finalised a deal to sell a 76% stake in the company to Fossil Mines. The transaction is now set to conclude once the shares are transferred in exchange for the agreed price. The divestment by the subsidiary of Switzerland-based Holcim was first announced in June 2022. No amount for the transaction has been disclosed publicly.


Australia: AdBri says that the cost of an ongoing upgrade at its Kwinana grinding plant has risen to US$177m - 200m following a review of the project. Initial findings reported that the project cost had been inflated by a range of factors, including the escalating cost of construction in Western Australia and constraints on available labour. The project was originally budgeted at around US$140m. The company has already invested US$64m in it.

The cement producer is now conducting a more thorough analysis of the project. It says it might be able to ‘optimise value’ through re-scoping, cutting costs and improving the synergies with AdBri’s existing operations and logistics network. It expects the review of the project to be complete by early 2023. The upgrade was previously scheduled for commissioning in mid-2023.


India: Adani Group is negotiating with several international banks to extend and refinance loans worth US$3.5bn that it used to buy Ambuja Cement and ACC. The Business Standard newspaper reports that the company hopes to extend the bridging loans it originally secured to a tenure of five years. Adani Group purchased the former subsidiaries of Switzerland-based Holcim for around US$6.5bn in September 2022. It later said it planned to invest a further US$2.5bn into its new cement business to double its production capacity.


Ethiopia: Derba MIDROC Cement has signed a US$282m contract agreement with China-based Sinoma International Engineering to upgrade its integrated Derba cement plant in Oromia. The project is intended to double the plant’s cement production output to around 15,000t/day, according to Fana Broadcasting Corporate. Takele Uma, the Minister of Mines, attended the signing ceremony.


Morocco: NovaCim has ordered the SLV Cement logistics software product from Portugal-based Cachapuz for its forthcoming 1.2Mt/yr integrated cement plant in Ouled Ghanem in El-Jadida Province. The product is intended to improve and optimise dispatch processes. Denmark-based FLSmidth announced in 2019 that it was going to build the plant for TEKCIM in conjunction with the Société Générale des Travaux du Maroc (SGTM). The plant is expected to start production in 2023.


Mali: Mahamoud Ould Mohamed, the Minister of Industry and Trade, has laid the foundation stone of the Mali Sahel cement plant in Bema, Bamako District. Sacko Holding is financing the project and it was previously reported as costing around US$300m, according to Mali Actu. The plant is expected to create around 600 direct jobs. It is scheduled to become operational in 2025. Sacko Holding and Energie du Mali (EDM), the state-owned electricity company, are also planning to provide an electricity supply to Bema as part of the initiative.


US: Purebase and Fortera have signed a non-binding agreement to build a commercial plant at Purebase’s headquarters in Ione, California. The companies are working towards a definitive agreement to build a plant using Fortera proprietary recarbonation process that uses captured CO2 and mineralises it into a secondary cementitious material.

Scott Dockter, the chairman, and chief executive officer of Purebase, said, “We believe that a strategic partnership with Fortera would put Purebase on a fast-track to bring a lower carbon product to market.” He added, “We believe Fortera has developed a unique solution to reduce carbon emissions in cement, and it will have the advantage of using Purebase’s mineral resources and location in Ione, California which is ideally located in northern California near major ports which can effectively serve the western-US markets and abroad.”

Purebase acquires, develops, and markets minerals for use in agriculture, construction, and other specialty industries.


Taiwan: Japan-based Kataoka Corporation has successfully carried out an order for US$43.4m-worth of equipment for Taiwan Cement Corporation. Reuters News has reported that the order consists of cement plant machinery.

Kataoka Corporation is a developer and producer of laser processing systems and rechargeable battery inspection systems.


Paraguay: Cementos Concepción says that it will begin to commercially supply cement to Paraguay's major cities in early December 2022. The La Nación newspaper producer commissioned its US$300m Concepción cement plant in November 2022. It now operates with a production capacity of 20m 42.5kg bags annually.


India: Grasim Industries has informed investors that it has raised US$123m through allotment of 7.6% rated, listed, unsecured redeemable non-convertible debentures (NCDs).

CRISIL and ICRA have rated the NCDs as AAA (stable).


Costa Rica: Holcim Costa Rica has acquired the heavy precast unit of Productos de Concreto for US$3.35m. The La Nación newspaper has reported that the company also increased its stake in prefabricated construction company Tecnología de Construcción to 100% from 49%. The latter deal's value was US$774,000.

Holcim Costa Rica's corporate affairs manager José Alfredo Alpízar Guzmán said that these latest acquisitions complement the producer's existing abilities to supply its customers.


Sri Lanka: INSEE Cement and the International Union for Conservation of Nature and Natural Resources (IUCN) have signed a memorandum (MoU) of understanding to extend their global biodiversity management partnership until 2026. Projects include quarry restoration, wildlife rescue and release and field surveys of the Koggala and Aruwakkalu mangrove restoration sites and Unawatuna manmade coral reef.

INSEE Cement's environment and corporate social responsibility manager Rohan Lakmal said "Biodiversity is one of the fundamental pillars of INSEE's Sustainability Ambition 2030. Our partnership with IUCN enables INSEE Cement to meet our own ambitious sustainability targets, while also creating more awareness of the general decline in Sri Lanka's biodiversity, and the urgency to do our part to conserve our natural habitats."