Global Cement Newsletter

Issue: GCW684 / 06 November 2024

Headlines


When we think about ‘up and coming’ regions for the global cement sector, Africa is high on many people’s lists. This is unsurprising given that Africa is the youngest continent on Earth, with a population set to boom to 2.5 billion by 2050 – or 1 in 4 of the global population for that year, according to the UN. This population, 1 billion higher than today, will drive rapid urbanisation. Cement capacities, currently around 350Mt/yr across the continent, will have to rise substantially to meet demand.

Filling part of this rise will be Amsons Group. This week it announced plans for a US$320m investment in a 1.6Mt/yr greenfield cement plant in Tanzania. It also promised a whopping US$400m to revamp Bamburi Cement in Kenya, should its existing US$180m bid for the Holcim subsidiary be accepted. Based on the numbers for Tanzania, this investment might be enough to take Bamburi Cement from 1.1Mt/yr to around 3Mt/yr, assuming similar project scope and equipment suppliers.

So, what is Amsons Group? Founded in 2000, Amsons is a Tanzania-based conglomerate with interests in construction, transport, flour, container depots, cement and concrete. It already operates Camel Cement, a grinding plant, in the Mbagala suburb of Dar es Salaam and it owns a 65% stake in the 1.1Mt/yr integrated Mbeya Cement plant, which it bought from Holcim in September 2023. The group’s website states that it emphasises local production of materials to reduce the nation’s reliance on imports. A greenfield cement plant fits right into that philosophy.

Looking at recent market trends, we see some positive news for Amsons. In Tanzania, cement production rose by 6.2% to 8Mt in 2023, according to the country’s Ministry of Industry. This followed a 9.7% rise in the prior year. Data is so far lacking for 2024. To the north, cement consumption ramped up strongly in Kenya in the second half of 2023, following a less than stellar start to the year. Thanks to a particularly strong June to September period, consumption finally ended 2023 around 0.8% higher than the previous year, at 9.6Mt. However, consumption tailed off in the final quarter. Worse, the first four months of 2024 - the most recent data available from the Kenya National Bureau of Statistics - saw a 10% decline in cement consumption relative to the same period of 2023, falling to 2.6Mt/yr.

As Africa lacks cement capacity compared to other regions, it is important to highlight that Amsons’ new plants will have to take on not just existing capacity in East Africa, but countries that export to the continent too. Indeed, this week Pakistan, a long-time agitator of South African cement producers, reported a year-on-year rise in exports for October 2024. Exports rose to 4.36Mt, a 9% increase compared to 4Mt in October 2023. This news comes amid precipitously falling domestic demand within Pakistan, with September 2024 shipments down by 22% year-on-year. It is also worth noting that Tanzania itself exported around 1.1Mt of cement to Rwanda, Burundi, Malawi, the DRC and Zambia in 2023. This figure will likely be higher in 2024, given the February 2024 launch of Huaxin Cement Tanzania Maweni Company’s 1.3Mt/yr plant in Mavini, which has a focus on exports.

This apparent abundance of existing capacity, plus exposure to imports, would appear to give an investor like Amsons Group pause for thought. However, it has committed to a total investment of US$900m. This is not small change. If we add in the money it paid for Mbeya Cement in September 2023 – the amount was not disclosed – Amsons will likely shell out more than US$1bn in just a few years. It is going ‘all in’ to become, in the words of its Managing Director Edha Nahdi, “one of the largest cement manufacturers in Kenya and Tanzania by 2030.” It will be very interesting to follow it on its journey.


Pakistan: Fecto Cement has announced the withdrawal of Rohail Ajmal as a Director of its Board. This decision was made by Saudi Pak Industrial and Agricultural Investment Company, as per the rules outlined in Regulation 5.6.1 of the Pakistan Stock Exchange (PSX) Rule Book. The Board of Directors of Fecto Cement will appoint a replacement for the vacant position in due course.


Türkiye: Limak Çimento has carried out a month-long test on hydrogen fuel blends at its cement plant in Ankara. The company partnered with France-based Air Liquide for the supply of hydrogen, which was injected into the preheater tower. The pair previously used a 50% hydrogen blend during a test at Limak’s Polatli plant in June 2024, with ‘excellent results’, according to Hydrogen Insight.

Erkam Kocakerim, CEO of Limak Çimento, said "The purpose of this investment is to enable safe and effective use of hydrogen technologies in our cement kilns and to increase the rate of alternative fuel substitution. We aim to operate the kilns in our seven integrated cement plants with a low-carbon fuel mix between 2030 and 2035."


Oman: Raysut Cement Company has launched a programme to recycle industrial byproducts for use as alternative fuel in cement production and electricity generation, to align with Oman's goal of net zero emissions by 2050.

Hilal bin Saif Al-Dhamri, Acting CEO of Raysut Cement, said "We use secondary industrial materials resulting from production processes across various industries. These are recycled in cement manufacturing and are categorised into two types: one that can be reused as an alternative fuel in plants, the other is used as a partial replacement to the main raw materials leveraged for cement production.” He added "We implemented a project to reuse exhaust heat and convert it to electrical energy at the Raysut Cement plant in Salalah. This innovative approach permits the plant to generate approximately 30% of its electrical energy, by reducing around 50,000t/yr of CO₂. As a result, the Salalah Raysut Cement plant stands out as environmentally friendly, distinguished by its capability to provide clean energy for cement production."

Al-Dhamri also noted that the company was able to enhance the efficiency of its Salalah plant through this programme, by reducing the clinker content while improving the performance of cement in concrete. This has reportedly contributed to a CO₂ emissions reduction of around 18% compared to ordinary cement.


Morocco: Cement deliveries in Morocco reached 11.12Mt from January - October 2024, up by 8% compared to the same period in 2023. The Moroccan Cement Association (APC) reported that cement sales in October 2024 increased to 1.3Mt, a 20% rise from 1.08Mt in October 2023. The APC has attributed this growth to high demand across various construction segments.


Vietnam: Vietnam produced 149Mt of cement between January and October 2024, up by 1.7% year-on-year. In October 2024, production was 16Mt, marking a rise of 7.1% from October 2023. Total production in 2023 was 120Mt, down by 4.5% year-on-year.


Nigeria: ABC Haulage, the heavy-duty vehicle division of ABC Transport, has expanded its operations at one of Lafarge Africa's cement plants by introducing a new fleet of compressed natural gas (CNG) powered vehicles. Victor Nneji, head of innovation & strategy at ABC Transport, said that adopting CNG technology has reduced operating costs by reducing dependency on diesel. This expansion increases the company’s capacity at the unnamed plant by 250,000t/yr.


Argentina: Cement shipments remained below pandemic and pre-pandemic levels in October 2024, which marked the sixth decline so far in 2024, according to Clarion newspaper. October 2024 saw shipments down by 20% year-on-year and 1.1% month-on-month, according to the Portland Cement Manufacturing Association (AFCP). In October 2024, sales dropped to 907,421t. 7.9Mt of cement was sold in the first 10 months of 2024 compared to 10.7Mt in the same period in 2023. Consumption also suffered a year-on-year decrease of 20% ​​and a monthly decline of 1.3%. The industry attributes the downturn primarily to a halt in national public works, as well as rising costs such as taxes on limestone and quarry exploitation fees.

Damián Altgelt, executive director of AFCP, said "The cement sector is going through a difficult year, with a drop of close to 25% compared to 2023. We confidently hope that the macroeconomic measures that the government is undertaking will allow us to overcome this transition period soon and recover the highest levels of activity again. In the past four months we have seen around 0.9Mt of cement sold (per month), which is clearly higher than the very depressed levels we had in the first half of 2024.”


Philippines: The Department of Trade and Industry (DTI) has launched a safeguard measures investigation on cement imports to counter the ‘persistent influx’ affecting the Philippine market, according to the Manila Standard. This investigation has been praised by the Cement Manufacturers’ Association of the Philippines (CeMAP), and aims to support local producers who are reportedly facing competition, despite the country’s production capacity of 50Mt/yr exceeding national demand, which is currently around 35Mt/yr.

Executive director of CeMAP Renato Baja said that imported cement from countries like Vietnam, where domestic demand is low and exports are high, affects local manufacturers. Vietnam contributes 93% of the Philippine’s cement imports, followed by China and Indonesia. According to Baja, local production currently operates at only 55- 60% of its installed capacity, which has increased production costs and forced temporary shutdowns of some plants. The DTI has invited cement manufacturers to submit their views on the imposition of safeguard measures. According to The Philippine Star, the DTI will conduct a preliminary investigation to decide if safeguard measures on cement imports are necessary. This is in line with Republic Act 8800, which allows the imposition of temporary safeguards or increased tariffs to protect domestic industries from an increase in imports.


Pakistan: Despite low domestic cement demand, exports rose in October 2024, with total despatches reaching 4.36Mt, a 9% increase compared to 4Mt in October 2023. The All Pakistan Cement Manufacturers Association reported a 51% increase in export despatches, from 714,325t in October 2023 to 1.1Mt in October 2024. This increase offset the slow local market demand, which saw a minor decline of 0.5% in domestic despatches to 3.28Mt from 3.3Mt.

Over the first four months of the 2024 financial year (July – October 2024), total cement despatches (domestic and exports) fell by 8% to 14.6Mt from 16Mt in the previous year's corresponding period. Domestic despatches decreased by 15% to 11.4Mt, whereas exports grew by 31%, reaching 3.2Mt from 2.5Mt.


Kazakhstan: Aktobecem will build a cement plant in the Aktobe region with a production capacity of 2Mt/yr. The company intends to invest US$143m in the facility, which will create over 500 jobs, according to Trend. Construction is set to begin in spring 2025, with operations commencing in 2026. The construction of the new plant will reportedly supply 80% of the cement needs of the region and reduce logistics costs.


Romania: CRH has launched a wind farm to supply renewable electricity to its Medgidia cement plant. The wind farm comprises five turbines with a total capacity of 30MW and is expected to generate 80GWh/yr. Now fully operational, the facility can reduce the CO₂ footprint of the cement produced at the plant and contribute to reducing Romania's energy-related CO₂ emissions by 40,000t/yr.


Türkiye: IFC has provided a US$70m 'green' loan to Çimsa to support its decarbonisation efforts, according to a press release from the IFC. The investment will fund energy efficiency projects, modernisation and the installation of solar photovoltaic panels. Expected outcomes include a 10% reduction in greenhouse gas emissions and increasing renewable energy usage to 20% by 2025. IFC's Cement Decarbonisation Tool Advisory Service will also assist Çimsa in identifying operational enhancements and further investments for achieving its sustainability goals.


Jamaica: Caribbean Cement has reported a decline in its September 2024 quarter sales by 11% year-on-year, falling to US$37.2m. Third quarter operating earnings dropped by 76% to US$3.6m, largely due to Hurricane Beryl impacting sales and production, alongside increased costs from a scheduled plant maintenance. Earnings before taxation for the third quarter also saw a 69% decline to US$4.8m, and net income dropped by 66% to US$4.2m. ​

From January – September 2024, however, revenue slightly rose by 1% to US$129m. Operating earnings for the nine-month period reached US$36m, up by 4.3% year-on-year. Earnings before taxation for the nine months grew by 11% year-on-year to US$37.2m, while consolidated net income was US$30m, a 12% increase year-on-year.


Belarus/Russia: Belarusian Cement Company has reached an agreement with the Republic of Khakassia for the delivery of regular coal shipments for its cement plants. The new agreement will ensure the weekly transport of approximately four trains loaded with coal from November 2024 - January 2025, meeting 100% of the demand of the Belarusian plants.


Thailand: Siam Cement Group (SCG) plans to cut costs by US$147m in 2025 to address a 75% year-on-year fall in nine-month profit to US$202m. Despite stable revenue of US$11.2bn during the period, earnings before interest, taxation, depreciation, and amortisation (EBITDA) dropped by 10% year-on-year to US$1.15bn.

In the third quarter of 2024, SCG reported revenue of US$3.79bn and EBITDA of US$292m, with profits dropping by 81% to US$21.3m due to currency exchange losses.

SCG aims to boost liquidity by selling assets and enhancing production efficiency, including a 50% increase in alternative fuel use in cement production, according to The Nation newspaper. Non-profitable businesses will be suspended, with further evaluations by mid-2025.

Thammasak Sethaudom, president and CEO of SCG, anticipates only a 3% rise in revenue for the coming year amidst global economic fluctuations and regional market challenges.


Tanzania/Kenya: Amsons Group will build a US$320m cement plant in northern Tanzania's Tanga area with a production capacity of 5,000t/day, Bloomberg reports. The company also plans to implement a major upgrade at the recently acquired Mbeya Cement in Tanzania, including a new grinding mill, according to Capital News Kenya. Additionally, Amsons plans to invest US$400m in Holcim’s Kenyan subsidiary Bamburi Cement, contingent on its successful US$180m bid.

Edha Nahdi, managing director at Amsons Group, said "Thanks to the support of the Tanzanian and Kenyan governments, our regional expansion plans are now firmly on course. We plan to be one of the largest cement manufacturers in Kenya and Tanzania by 2030."


US: Summit Materials has announced a 50% year-on-year increase in net revenue to US$1.11bn for the third quarter of 2024, attributed largely to the acquisition of Argos US. The company's operating income rose by 52% in the third quarter to US$195m. Despite these gains, net income decreased to US$105m from US$230m in the same period in 2023. Adjusted earnings by interest, taxation, depreciation and amortisation (EBITDA) for the quarter increased by 51% to US$314.7m, reflecting contributions from the Argos US assets, pricing gains and operational improvements.

The cement segment saw net revenues rise to US$323m. However, organic sales volumes fell by 11% due to adverse weather and moderating demand, leading to lower imported volumes. For the full year 2024, Summit has adjusted its EBITDA forecast to between US$970m and US$1bn and expects capital expenditures to be between US$390m and US$410m.


North Macedonia: Cementarnica Usje, a subsidiary of Titan, reported a 40% year-on-year increase in net profit to US$26.5m for the January - September 2024 period. The company's total operating revenues remained stable compared to 2023’s figures at approximately US$79.7m, while its total operating expenses decreased by 12% year-on-year to around US$50.9m, according to its financial statement.


Canada: Lafarge Canada has selected ABB to update the process control system at its Bath cement plant in Kingston, Ontario. ABB will supply, commission and support its ABB Ability System 800xA distributed control system, which aims to enhance plant process visibility and control. The Bath plant produces over 1Mt/yr of OneCem low-carbon cement and is the site of a pilot carbon capture project.

Andrew Stewart, vice president of cement at Lafarge Canada, said "We are dedicated to advancing sustainable construction, not least through rigorous decarbonisation efforts. From working with ABB to upgrade our process control system, to integrating low-carbon fuels and upgrading to energy-efficient kiln technology, we are significantly leading the way in sustainable construction by reducing our carbon emissions per tonne of cement produced. For example, our pilot carbon capture initiative with Hyperion has also been critical, as it leverages innovative processes to capture and sequester CO₂, bringing us closer to our goal of net-zero emissions."


India: Global Cement & Concrete Association (GCCA) India has entered talks with UK-based Xynteo and the Build Ahead coalition to scale up decarbonisation in India’s construction sector. The partners have signed a memorandum of understanding to promote low-carbon cement and concrete usage. This two-year collaboration will develop emission thresholds for cement and concrete as a basis for future policy on production and use of low-carbon materials. The initiative will also include joint governmental engagement and the sharing of research for low-carbon building materials.

Deepak Khetrapal, GCCA India co-chair and Orient Cement managing director, said "The reduction of clinker factor and the increasing use of supplementary cementitious materials in cement manufacturing is an important decarbonisation lever for the industry. Developing an India-specific definition for ‘low-carbon’ or ‘green’ cement and concrete is the need of the hour, and it is crucial for the development of a net zero CO2 roadmap for the Indian cement and concrete industry."


Zimbabwe: Representatives from the Magunje community appeared before the Parliamentary Portfolio Committee on Lands, Agriculture Mechanisation and Irrigation, voicing concerns over Labenmon Investments Pvt’s noncompliance with legal procedures in establishing a cement production plant near Kemureza Dam and Magunje Growth Point. Led by Zimbabwe National Organisation of Associations of Residents Trust (ZNOART), the community alleged that their views were ignored in the environmental impact assessment process for the plant, which will occupy 135 hectares. The Parliament Committee plans to visit the site soon to gather information from residents. The project is expected to employ over 1500 people and boost the local economy.

Thomas Chidzomba, representative for Hong Kong-based Labenmon Investments Pvt, said "Our project is clear and will follow all the country's laws. In addition, the plant is going to use state-of-the-art technology which ‘minimises or eradicates’ air pollution. We will also not pollute the Kemureza Dam as we will not draw water from it for our operations."


India: Kanodia Cement plans to launch an initial public offering to raise approximately US$95m, with a draft red herring prospectus expected to be filed with market regulator SEBI by the end of December 2024. The company currently has a production capacity of 5Mt/yr, with plants in Uttar Pradesh and Bihar. CEO Gautam Kanodia said that the company has plans to expand its cement capacity to 10Mt/yr.