Global Cement News

US: Improving underlying economic fundamentals, the existence of large pent-up demand balances and the diminishment of economic 'fiscal cliff' uncertainty will combine to result in strong growth rates in 2013 and an increase in cement consumption, according to a new forecast by the Portland Cement Association (PCA).

According to the latest forecast there will be 8.1% growth in cement consumption in 2013 compared to 2012, significantly higher than the tepid growth projected in the PCA's autumn 2012 report. The upward revisions reflect adjustments made in light of the recent fiscal cliff accord, recognition of stronger economic momentum and markedly more optimistic assessments regarding residential construction activity. The January 2013 report marked 2012 consumption at 78.5Mt, an 8.9% increase compared to cement consumption in 2011.

"Growth in 2013 cement consumption will be largely driven by gains in residential construction," said PCA Chief Economist Ed Sullivan. "Housing starts should reach nearly 950,000 units, with single family construction near 700,000 starts during 2013. We see starts hitting the one million mark in 2014 or 2015."

Sullivan did caution, however, that the first quarter of 2013 would actually show declines compared to the same period in 2012. "It is important to point out that this potential decline in first quarter growth rates does not signal a weakening in market fundamentals, but rather a hangover from favourable 2012 weather conditions," said Sullivan. "Stronger gains in cement consumption growth are expected during the second quarter."

The accelerated consumption predicted during the second half of 2013 should carry into the following year, when the PCA projects a cement consumption increase of 8.3%. The PCA also upwardly revised its long-range projections for 2015-2017. Annual growth during that period is expected to be as high as 9.2%/yr.

Rwanda: Rwandan President Paul Kagame laid the foundation stone for the extension of Rwanda's largest cement-producing factory, CIMERWA, on 17 January 2013. The expansion of the factory follows a deal in December 2012 that saw South Africa's largest cement firm, PPC (Pretoria Portland Cement), acquire a 51% share of CIMERWA's equity with a buyout of US$69.4m. With PPC's investment the production capacity of the factory is expected to increase from 0.1Mt/yr to 0.6Mt/yr.

"As a fast-developing nation, there is need for more and cheaper cement," said President Kagame, speaking after the laying of the foundation stone. "With the new investor in CIMERWA we expect the factory to perform much better than it did before."

Kagame said that residents of Rusizi, where CIMERWA is located, will be among the key beneficiaries of the factory's expansion through the creation of jobs. He also announced that the government will partner with the factory to put tarmac on the road leading to the factory. The government will pay 60% and the company will pay 40% of the cost of the road improvements.

Nigeria: German vertical roller mill (VRM) producer Loesche GmbH has been awarded a contract for five new VRMs from China's Sinoma International Engineering, which is building a two kiln extension to the existing Dangote Cement Ibese plant. Loesche previously delivered equipment for the first and second lines at the same plant.

The five VRMs to be supplied are two 450t/hr Loesche Mill Type LM69.9 for raw material and three 310t/hr cement LM 63.3+3C cement mills. As with previous work at Ibese, the high moisture of the material of up to 20%, the sticky nature of the raw material and the low grindability of the raw material represent special challenges for the project.

In addition to the mills and the mill motors, Loesche will deliver metal detectors and hopper discharge feeders. The supply of the equipment will be split between Loesche, which is supplying key parts, and a Chinese-manufactured portion arranged by Sinoma International under supervision of Loesche. Delivery is scheduled at the end of 2013.

France: Lafarge has announced that it has completed a industrial-scale trial to make Aether®, its new generation clinker formulated for lower carbon cements and has 25-30% lower CO2 emissions than normal clinker.
 


The trial mobilised a team of around 100 people over a 10-day period at the group's plant in Le Teil, France. It allowed the production of 10,000t of Aether clinker and, according to a Lafarge press release, confirmed the feasibility of industrial-scale production using traditional raw materials. 



The result of several years of research by Lafarge's research and development teams, the new clinker offers similar properties to OPC and can be produced in traditional cement plants after minor process adjustments. However, it has a lower overall environmental footprint, which is derived from having a lower limestone content in the raw mix, a kiln temperature in the region of 1300°C and lower-energy grinding.


Following sustained CO2 emission reductions since the early 1990s, Lafarge says that the Aether project will help it to reduce CO2 emissions per tonne of cement by 33% by 2020, one of its Sustainability Ambitions 2020 targets.

The first Aether products will be launched in 2014.

This week Donal O'Riain, the Irish chief executive of Ecocem, cried out for an 80% tax on cement producers in Ireland. His reason? In his words, Irish producers are making profits from an over-allocation in the European Union (EU) Emissions Trading Scheme (ETS) despite demand dropping in the Irish industry. The tax was his suggestion to address this 'anomaly' and give the Irish Exchequer a boost.

The timing of his comments are interesting given that the EU ETS entered its third phase at the start of 2013. Towards the end of 2012 environmental campaign group Sandbag questioned in a report whether the scheme was actually helping the environment or not. As Sandbag pointed out generally, not just for the cement industry, carbon prices in the scheme had remained low due to an excess supply in the market. Due to the oversupply, prices were so low that the EU ETS has ceased to function.

The European Commission conceded this failing of the EU ETS in November 2012 by announcing that it was taking steps to address the supply-demand imbalance of emission allowances in the scheme. Firstly 'back-loading' action volumes, revising the auction time profile and delay of the auctioning of 900 million allowances, came into effect from 1 January 2013. Secondly the Commission launched a debate on broad structural measures with a report on the carbon market.

Any emissions trading scheme can distort the market in unexpected ways. With regards to the cement industry, if O'Riain is correct, then parts of the Irish cement industry are making profit on carbon credits despite demand falling. Or, to put it as O'Riain did, the EU ETS may be subsidising environmentally-unfriendly plants at the expensive of more environmentally sensitive ones. Such as Ecocem we must presume. What would be really interesting here is to find out whether other European cement producing countries are also benefitting from over-allocation as demand falls, specifically in Portugal, Spain, Italy and Greece.

Another distortion is that in the EU ETS, offsets generated from developing countries can be surrendered by companies in competing sectors in the EU, giving, in effect, a subsidy to competitors outside the EU. For example, as ETS schemes spread then staying outside of such regulation could prove profitable for cement exporters.

Koen Coppenholle the chief executive of CEMBUREAU, the European Cement Association, tackled this in his response to the European Commission's report, "It is essential that any further reduction of CO₂ emissions above the targets agreed should remain conditional upon the conclusion of an international agreement between all major greenhouse gas emitting countries. This should be undertaken with a view to establish a global crediting scheme, characterised by a comparable methodology to measure greenhouse gas emission reductions and equivalent monitoring and reduction efforts." Hence the interest in regional Chinese ETS schemes such as the emissions trading schemes that were launched in Beijing, Shanghai and Guangdong in 2012. China currently plans to introduce its own national scheme in 2015.

Despite the bureaucrats' efforts to improve emissions trading schemes, Petroleum Review summed up their effect in June 2012, "Carbon trading appears to have pulled off the noteworthy achievement of uniting oil and gas producers and environmentalists in their appraisal of its shortcomings." We could add cement producers to that list.