Global Cement Newsletter

Issue: GCW624 / 06 September 2023

Headlines


Dangote Cement felt compelled to issue a statement clarifying its prices at the end of August 2023. In the release it stated what its ex-factory price was in Nigeria and added that transport costs and the location of a delivery could add additional expense. It made the declaration in response to alleged “misinformation” on social media channels that the company had been selling its cement more cheaply in the neighbouring country of Benin. A subsequent investigation by the This Day newspaper reported that Dangote Cement does not officially export cement to Benin and that the average price in the country was actually slightly higher than the end prices Dangote Cement provided. Competitor BUA Cement wasted no time though in saying at its annual general meeting that it would ‘crash the price of cement.’

All of this may sound familiar because a similar argument broke out in early 2021. At that time prices were rising following the outbreak of Covid-19, although other factors were at play. Then as now, Dangote Cement, the largest domestic producer, defended itself by publishing its prices and BUA Cement made another showy claim saying that it had no plans to raise the ex-factory price of its cement at the present time or in the future, “…barring any material, unforeseen circumstances.” The government also became involved with the Senate of Nigeria discussing the matter in relation to potential legislation at the time. Part of the problem here has been that Dangote Cement is the biggest producer and it has gradually started exporting cement from Nigeria in recent years and, regardless of any effects to the domestic market, it leaves it exposed to the kind of unsubstantiated scuttlebutt it has faced recently. Back in 2021 it briefly stopped exporting cement for a while before resuming it again in May 2021.

Graph 1: Half-year sales revenue from selected large cement producers in Nigeria. Source: Company reports.

Graph 1: Half-year sales revenue from selected large cement producers in Nigeria. Source: Company reports.

Graph 1 shows how some of the large cement producers in Nigeria did in the first half of 2023. Dangote Cement is the market leader by a considerable margin and the figures here do not even include its sales elsewhere in Sub-Saharan Africa. Despite its market dominance its sales revenue has fallen so far in 2023 and the company blamed election uncertainty, a “cash crunch”, negative currency exchange issues and the weather. That said though it did manage to increase its earnings through initiatives such as using alternative fuels, making efficiencies at its plants and utilised compressed natural gas in its truck fleet.

BUA Cement and Lafarge Africa provided less descriptive context in their release. Both BUA Cement’s revenue and profit after tax rose year-on-year but Lafarge Africa’s profit after tax fell. This may have been due to a rise in fixed production costs such as staffing, by-products costs and electricity, although depreciation was also an issue.

For all of BUA Cement’s talk of “crashing the cement price” it is preparing to commission two new 3Mt/yr production lines at its Obu and Sokoto plants respectively in the first quarter of 2024. Given everything else that is going on in the Nigerian economy, such as inflation, and the large size of the country it seems unlikely to lower the price although it might slow down the rate by which the price continues to rise. In its 2022 annual report BUA Cement’s managing director Yusuf Haliru Binji said that the new production lines would enable it to potentially increase its exports. This is the logical next step for a local sector outgrowing its domestic bounds and this is exactly what Dangote Cement has done. Yet, as the recent price debacle has shown, the price of cement matters to Nigerians. If the price keeps going up all of the local producers may end up facing negative attention whether warranted or not.


South Africa: PPC has appointed Matias Cardarelli as its new chief executive officer for four years, with effect from 1 October 2023. He will replace Roland van Wijnen, whose contract began in 2019. Cardarelli has held various positions at private cement companies, including chair of Natal Portland Cement (NPC), part of InterCement Group. He also led the operational and financial turnaround of Amreyah Cement in Egypt and the expansion of Yguazú Cementos in Paraguay.


UK: The Mineral Products Association (MPA) has appointed Lex Russell as its chair for a two-year period. He succeeds Simon Willis, the head of Hanson UK, who has been in post for three years.

Russell is the managing director of Cemex UK Materials. He has worked in the building materials industry for 40 years, initially starting in 1984 with Scotland-based quarrying and concrete product company Alexander Russell, holding a variety of operational and technical roles. In 1989 he joined RMC’s technical department before progressing through the organisation as Quarry Manager, Operations Manager, Business Manager and director.

In 2005 RMC was acquired by Cemex and two years later Russell moved to Australia to lead a team in the post-merger integration of Rinker, acquired by Cemex in 2007. He returned to the UK as Vice President before becoming managing director of the Cemex UK Materials business in 2018.


Sri Lanka: Praveen Gnanam has been appointed to the Board of Tokyo Cement Company (Lanka) as a Non-Independent Director. He joined Tokyo Cement in 2012 as Special Projects Coordinator and was promoted to Head of Innovation Department in 2015.

Gnanam holds over a decade of experience in the hardware and construction materials industry as well as in renewable energy. Prior to joining Tokyo Cement, he worked in consulting for Los Angeles-based firm Innovation Protocol, and as a Research Analyst and a Brand Associate for clients such as eBay, PayPal and Republic Waste Management.


Pakistan: Data from the All Pakistan Manufacturers Association (APCMA) shows that local cement industry recorded a 37% year-on-year surge in dispatches during August 2023, with total shipments reaching 4.52Mt, up from just 3.29Mt in August 2022. While impressive on the surface, this appears to represent a return to normality following nationwide disruption due to massive flooding in the summer of 2022.

The APCMA’s data shows that a significant driver of this growth was the domestic market, where cement dispatches rose by 30% to 3.79Mt, compared to 2.91Mt in August 2022. Simultaneously, exports surged by 87%, with volumes growing from 387,440t in August 2022 to 724,777t in August 2023.

Cement plants in the north of Pakistan dispatched 3.25Mt in August 2023, marking a 25% increase from the 2.0Mt dispatched in August 2022. In the southern region, plants dispatched 1.27Mt of cement, an 81% rise compared to the 700,436 tonnes in August 2022.
Exports from northern-based plants increased by 79%, from 91,963t in August 2022 to 164,195t in August 2023. Similarly, southern mills reported a significant increase, with exports surging by 90% to 560,582t in August 2023, up from 295,477t during the same month in the previous year.

An APCMA spokesperson emphasised the industry's challenges, including rapid currency depreciation, soaring petroleum prices and rising electricity tariffs. These factors are driving up production costs and affecting transportation, potentially impacting consumer prices. The spokesperson urged the government to address these issues to support the industry as it navigates this ‘challenging terrain.’


Pakistan: Cherat Cement made a net profit of US$52.9m during the 2023 financial year (FY2023), which ended on 31 July 2023, around 1% lower than the previous year. This was despite a 13% year-on-year rise in gross profit in FY2023 to US$32.9m, as cost of sales rose by 18% to US$88.4m. Distribution costs also rose by 15%, while financial costs, mainly higher interest rates, rose by 41%.


India: Birla Corporation plans to increase its cement production capacity to 25Mt/yr by the end of the 2026 financial year from 20Mt/yr at present. It intends to do this by upgrading its 3.9Mt/yr Mukutban plant in Maharashtra, installing a second grinding unit at Maihar in Madhya Pradesh as well as building new grinding plants, according to the Times of India newspaper.

Birla Corporation chair Harsh V Lodha said "With the commissioning of Mukutban, we have virtually ring-fenced our core market of Central India, which we can service seamlessly from our six plants, namely Maihar, Satna, Kundangunj, Raebareli, Chanderia and now, Mukutban. The strategic location of these plants and standardisation of product quality allows us to interchange source of supplies to maximise realisation and serviceability for our customers." He made the comments at the company’s annual general meeting.


Tunisia: Carthage Cement made a net profit of US$7.7m in the year to 30 June 2023, a year-on-year increase of 57% from US$4.9m a year earlier. At the end of June 2023, the company recorded total operating revenues of US$68.7m, an increase of 22% from US$56.3m.


Argentina: Cement production in the province of Buenos Aires rose by 11% year-on-year between January and July 2023, to reach 4.18Mt. This was the highest first seven-month figure since 2012.

However, the capital was not representative of the wider national picture. Across Argentina, consumption fell by 0.3% year-on-year over the seven months to 7.22Mt. Production fell by 0.7Mt to 7.25Mt over the same timeframe.


Russia: Cemros is starting the commercial operation of its ‘Pilot’ vehicle monitoring system. The scheme is being rolled out as the main monitoring method at its plants following tests. It uses satellite navigation and wireless data transmission methods to track individual vehicles in the fleet in both real time and retrospectively. At present over 3500 vehicles are being monitored including the company’s own fleet and vehicles operated by contractors. Once the system is scaled up it will be able to track up to 6000 vehicles. Active testing of the system started in late 2022.


Switzerland/France: The Swiss multinational building materials producer Holcim has launched a global Innovation Hub to accelerate sustainable building at its Global Research & Development Center in Lyon, France. The Hub showcases Holcim's innovative and sustainable building solutions to scale up low-carbon, circular and energy-efficient buildings. Spread across three floors, it offers working spaces to host start-ups and think tanks to accelerate innovation together. It will also serve as a platform to explore the future of sustainable cities and their construction via interactive exhibits and events.

The showroom showcases how Holcim is decarbonising building across its lifecycle, featuring low-carbon materials like ECOPact concrete and ECOPlanet cement products, roofing and insulation systems that drive energy efficiency - from Elevate boards to Airium, and circular construction solutions, such as its proprietary ECOCycle circular technology platform to recycle construction demolition materials into new building solutions.

Nollaig Forrest, Holcim’s Chief Sustainability Officer, said, "It's a very exciting time for the building sector, with so much momentum in innovation to advance sustainable solutions. At Holcim we want to partner with the best and brightest innovators to accelerate the transition to low carbon, circular and energy-efficient buildings. Our Innovation Hub, within our Global Research & Development Center, is designed to host partners from start-ups to architects to explore new solutions together."


Saudi Arabia: Hoffmann Green Cement Technologies (HGCT) has signed a deal with Shurfah Group to build several Hoffman plants under a 22-year exclusive licensing agreement. A first ‘clinker-free’ cement plant will be built in 2024. It will be a copy of HGCT’s H2 plant in France, which uses a combination of activated clay, ground granulated blast furnace slag (GGBFS) and gypsum to manufacture its products.

The engineering and production process will be carried out by Germany-based IBAU Hamburg. HGCT signed an exclusive partnership agreement with IBAU Hamburg in June 2022 to support the construction of Hoffmann units worldwide. In return for the industrial and technological transfer and this exclusivity, Hoffmann Green will receive an entry fee and fixed and variable annual royalties from Shurfah Group based on sales generated by the marketing of Hoffmann cements in Saudi Arabia.

Julien Blanchard and David Hoffman, the co-founders of HGCT, said "Just few weeks after signing a pre-agreement, we have given concrete expression to our commitment by signing this licensing contract with Shurfah, a major player in the Saudi Arabian construction industry. After Switzerland and the UK, we are continuing our international deployment with the aim of supporting, through this new contract, the kingdom's ambitious ‘Vision 2030’ project and participating in the decarbonisation of their construction industry through the construction of several of our units on their territory and the marketing of our 0% cement clinker."

Shurfah Group is a real estate investment conglomerate with interests in other sectors including petrochemicals, food and beverages.


Europe: Six cement plants were reportedly issued around Euro88m in free European Union emissions allowances (EUA) from 2019 to 2022 despite the clinker kilns at the units being idle or running at low levels. Research by the Oil Price Information Service (OPIS) has revealed that plants operated by Buzzi, Cementos Portland Valderrivas (CPV), Cemex, Holcim and Votorantim Cimentos all benefited from the scheme despite only emitting 36,370t of CO2. The companies would then have been able to use the subsidy to cover emissions costs at other plants or sell the permits. OPIS identified five plants in Spain and one in Germany.


India: Shree Cement has held a ceremony inaugurated its new its new Purulia grinding plant in Digha, West Bengal. Commercial production at the 3Mt/yr unit started in late July 2023. It had an investment of US$66m. Mamata Banerjee, the Chief Minister of West Bengal, attended the event.


India: A worker had been killed and two others seriously injured at a fire that broke out at Dalmia Cement’s Banjari cement plant on 1 September 2023. The staff were reportedly cleaning the kiln at the unit in Bihar when the incident took place, according to the Hindustan Times newspaper. The name of the dead worker has been confirmed as Sanjiv Kumar Singh.


Sweden: SaltX Technology and SMA Mineral have agreed a joint roadmap until 2028 to work on developing and building electrified lime plants. The agreement means that mineral producer SMA Mineral plans to build several units where SaltX's electric arc calciner (EAC) technology will be installed. The companies have worked together since mid-2022.

Carl-Johan Linér, the chief executive officer at SaltX, said "We have now signed a long-term cooperation agreement in which the respective parties' roles and responsibilities are regulated, which is an important step for both parties."

SaltX Technology is intended to allow SMA Mineral to halve its CO2 emissions by 2027. The agreement allows SMA Mineral to use the EAC technology to produce quicklime in the Nordic region. The forecast is that SaltX will receive orders for 7 - 9 EAC units from SMA Mineral during the contract period. SaltX intends to market and sell the EAC technology to lime manufacturers outside the Nordic region and other stakeholders, such as cement manufacturers, worldwide. SaltX and SMA Mineral are accelerating work on SMA Mineral’s first electric lime plant at Mo i Rana.


Dominican Republic: Cemex is considering selling its subsidiary Cemex Dominicana according to Bloomberg. The Mexico-based group is reportedly working with JPMorgan Chase & Co on a potential divestment worth over US$1bn. Proceedings are at an early stage, with Cemex starting to talk to interested parties to assess potential interest.

Cemex has been operating in the Dominican Republic since 1995 when it acquired Cementos Nacionales. It runs the integrated 2.4Mt/yr San Pedro de Macorís cement plant. It also has ten concrete plants, three sea terminals, two aggregate quarries and a gypsum mine. It employs 1500 people directly. Cemex sold its subsidiaries in Costa Rica and El Salvador to Cementos Progreso for US$329m in 2022.


Paraguay: Andrés Wardle, the head of Yguazú Cementos, has warned that the government does not need to allow the current levels of cement imports. He said that the Ministry of Industry and Commerce was issuing “unnecessary” licences for imports because local demand levels were too low, according to the ABC Color newspaper. He added that local cement producers were able to meet domestic demand for cement as they had idle production capacity. The government has authorised import licences for 80,000t of cement and licences for another 60,000t have been authorised but are pending entry.


Egypt: Lafarge Egypt has confirmed that it is aiming to reduce its CO2 emissions in excess of 20% by 2030. Its key steps to achieve this include increasing its use of alternative fuels and lowering its clinker factor, according to the Daily News Egypt newspaper. Chief executive officer Jimmy Khan added that the company is also working on developing digital methods to reduce emissions by improving transport logistics. The cement producer launched its Shatbna Masonry Cement product in 2022, part of parent company Holcim’s ECOPlanet range.

Holcim has set a worldwide target to reduce its gross Scope 1 CO2 emissions from cement production of 22% by 2030 from a baseline of 590kg/t in 2018. It reported a 5% reduction to 562kg/t in its 2022 sustainability report. Ultimately the group is targeting net zero emissions from its activities by 2050.


Kenya/Uganda: Bamburi Cement’s profit after tax has been adversely affected by a tax claim in the first half of 2023. The cement producer said that its profit after tax was reduced due to the “settlement of corporation tax matters in Uganda.” Its turnover grew by 11% year-on-year to US$153m from US$138m in the same period in 2022. However, its profit after for tax fell by 7% to US$604,000 from US$652,000. As well as operating plants in Kenya, the subsidiary of Switzerland-based Holcim runs Hima Cement in Uganda.

Reporting by the Business Daily newspaper has revealed that the Uganda Revenue Authority (URA) started a review in 2020 of Hima Cement’s transfer pricing compliance between 2014 and 2018. The URA then raised its corporation tax assessment for Hima Cement in December 2022. Bamburi Cement has also faced additional penalties and interest charges from the Kenya Revenue Authority.


Nigeria: Dangote Cement has publicly confirmed the price of cement from its plants. It made the announcement in response to allegations that it has been selling its products at “significantly” lower prices in neighbouring countries including Benin, according to the Daily Trust newspaper. It also detailed how much transportation costs and the location of a delivery could affect the end price. Arvind Pathak, the Group Managing Director of Dangote Cement, added that the company’s ex-factory price could be different from the end retail price.


Indonesia: Hongshi Indonesia Tonga Cement has commissioned the first phase of its new cement plant in East Kutai, East Kalimantan. At this phase of its development, the plant has a capacity of 4Mt/yr. It holds 1Bnt of limestone reserves and is equipped with a 50,000t marine terminal. The plant is situated over 250km away from the site of Indonesia’s upcoming new capital city, Nusantara, also in East Kalimantan. Hongshi Indonesia Tonga Cement plans to subsequently raise the plant’s capacity to 8Mt/yr.


Libya: Representatives of China-based Senomaly carried out feasibility assessments to investigate the possibility of restarting the Mahrouga cement plant near Sebha in late August 2023. The Libya Herald newspaper has reported that National Mining Corporation hosted the delegation at the mothballed plant.

Chinese president Xi Jinping directly instructed Chinese businesses to return to Libya on 27 August 2023.


India: JSW Cement may be planning to launch an initial public offering (IPO) to raise up to US$484m, according to Reuters.

JSW Cement managing director Parth Jindal reportedly said “In 2024, we are planning to take this company public, for which we will be filing the draft red herring prospectus in the next six months. We will be timing the market listing after the national elections.” Parliamentary and state legislative assembly elections are due to take place in September, November and December 2023.


India: JK Cement laid the foundation stone of its upcoming 2.5Mt/yr Prayagraj grinding plant in Uttar Pradesh on 29 August 2023. The plant will cost around US$60m. The company expects to complete the project in the 2025 financial year, which begins on 1 April 2024. This will increase the producer’s grey cement capacity by 11%, to 25Mt/yr. Its ‘medium-term’ capacity goal is a further 20% growth, to 30Mt/yr.


World: Nine new members have joined the Alliance for Low-Carbon Cement & Concrete (ALCCC), a global association of low-CO2 cement and concrete developers, producers and users, since its launch in May 2023. The alliance has welcomed alternative cement and concrete companies Betolar, 3Béton, CarbonRE, Cemvision, the European Environmental Bureau, Greenmade, Materrup, Nomad and Sublime Systems.

Joren Verschaeve, Programme Manager at ALCCC founder Environmental Coalition on Standards, said “It is great to see that so many actors - particularly innovators from within the industry - are committed to speeding up the decarbonisation of cement and concrete through better standards and policies. We are eager to work with our members and other stakeholders to (finally) help put the right incentives in place for low-carbon cement and concrete solutions.”


US: GCC has ordered pyroprocessing equipment from ThyssenKrupp Polysius for the expansion of its Odessa cement plant in Texas. The upgrade will more than double the plant’s capacity to 1.9Mt/yr, and reduce its CO2 emissions by 13%. Contractor H&M Construction says that the project will be the third on which it has collaborated on design and construction.

H&M Vice President Casey Rushing said “H&M is proud to have the opportunity to serve GCC as its design-builder on this great project. H&M has a very strong active presence in Texas and a very strong veteran self-perform team that has recently completed with Polysius a near identical pyroprocessing expansion in the Southeast US. We intend to improve on our successes from our previous pyroprocessing lines by executing this project for GCC with superior safety, quality and customer satisfaction.”


India: The Organized Crime and Corruption Reporting Project (OCCRP) has obtained documents which allegedly show how two people with close ties to the owners of Adani Group invested significantly in the group. Nasser Ali Shaban Ahli and Chang Chung-Ling traded in Adani Group shares through a Mauritius-based investment fund. The OCCRP reports that Ahli and Chang might be found to have been acting on behalf of Adani promoters. If so, their shareholding would bring insider investment in Adani Group to over 75%. This would potentially indicate stock manipulation under Indian law. Ahli and Changs’ investment management company reportedly paid a company owned by Vinod Adani, the brother of Adani Group chair Gautam Adani, for investment advice.

Nasser Ali Shaban Ahli is a Dubai-based business consultant, who is listed as an officer in a British Virgin Islands-based securities investment firm linked to Adani Group. Meanwhile, China-based Chang Chung-Ling has held positions on the boards of multiple Adani Group companies.

Adani Group replied “Contrary to your claim of new evidence/proofs, these are nothing but a rehash of unsubstantiated allegations levelled in the Hindenburg report. Our response to the Hindenburg report is available on our website. Suffice it to state that there is neither any truth to nor any basis for making any of the said allegations against the Adani Group and its promoters, and we expressly reject all of them."


Nigeria: Lafarge Africa has installed a new bag filter at its 3.9Mt/yr Ewekoro cement plant in Ogun State. The filter cost US$8.51m. Lafarge Africa says that the equipment has successfully reduced the plant’s dust emissions to below 50mg/Nm3. The company said that it has made ‘significant adjustments’ to its production activities, besides introducing air quality measurement systems across a 10km radius of the plant.

Lafarge Africa’s head of health, safety and environment Rachael Ezembakwe said “Care for the environment and for our host communities is built into all aspects of our operations within the country. Our social impact is focused on the areas of the most need: education, empowerment, health and safety, and shelter/infrastructure.”


Spain: Cemex España has bought two new quarries near Madrid. The producer said that the quarries will strengthen its limestone reserves. It added that they include ‘all necessary elements’ for it to increase its services to the Madrid market.

Cemex’s Europe, Middle East, Africa and Asia regional president Sergio Menéndez said “These acquisitions strengthen our existing network and enable us to better serve a growing market with high-quality, sustainable and circular products. We are excited to be part of Madrid’s growth, which contributes to improving the quality of life of its residents and setting an example for more sustainable and circular cities.”


Indonesia: The UK-based World Cement Association (WCA) has announced the inclusion of the Indonesian Cement and Concrete Institute (ISBI) as an affiliate member. The ISBI has over 20 years’ experience in providing engineering training and consulting services to the cement sector and related industries in Indonesia.

WCA chief executive officer Ian Riley said "The WCA is further expanding its involvement with industry players operating in emerging economies, particularly in Indonesia which is one of the world’s largest cement markets.”