Displaying items by tag: Cemex
US: The Portland Cement Association (PCA) has received the 2022 Energy Star Partner of the Year award from the Environmental Protection Agency and the Department of Energy. This is the third year in a row that PCA has earned this award.
"We are proud to have won this award for the third consecutive year. This latest award confirms our commitment to reducing cement sector CO2 emissions through longstanding, long-term efforts to improve energy efficiency," said Michael Ireland, president and chief executive officer of the PCA. "This award shows once again that the cement and concrete industries are leading the way toward a more sustainable future, even as demand for our products grows."
The 2022 Energy Star Partner of the Year Award follows the launch of PCA's Roadmap to Carbon Neutrality in October 2021. In addition to PCA's recognition, two member companies also earned awards. CalPortland and Cemex won Partner of the Year awards in the energy management category. This is the fifth year in a row that Cemex has won this award, and the 18th successive year for CalPortland.
Many first quarter financial results for cement producers are out already and what can be seen so far deserves discussion. The first observation is that the sales revenues of Chinese companies have suffered compared to their international peers. As can be seen in Graph 1 (below) CNBM increased its sales slightly in the first quarter of 2022 but Anhui Conch and China Resources Cement (CRC) had significant falls. Stronger results from CNBM’s non-cement production subsidiaries released so far suggest that the parent company’s slow performance is likely due to the cement market. The China Cement Association has reported that national cement output dropped by 12% year-on-year to 387Mt in the first quarter of 2022. It blamed this on the latest local coronavirus wave, limited construction project funds and poor weather.
Graph 1: Sales revenues in the first quarter of 2022 from selected cement producers. Source: Company financial reports. Note: SCG data is for its building materials division only.
Outside of China sales revenue growth has been better with Holcim and Dangote Cement leading the companies presented here. Holcim attributed its success to “strong demand, acquisitions and pricing”. Demand and pricing have been familiar refrains in many of the results reports this quarter. The undertone though has been the destabilising effects upon energy prices by the ongoing war in Ukraine. Holcim’s head Jan Jenisch summed it up as navigating “challenging times, from the pandemic to geopolitical uncertainty.” The producers with operations in the Americas and Europe seem to have coped with this so far mostly due to resurgent markets. Quarterly sales revenue growth for Holcim, CRH (not shown in the graphs) and Cemex each exceeded 10% year-on-year in both of these regions.
The regionally focused companies presented here have suffered more. India-based UltraTech Cement said that its energy costs grew by 48%, with prices of petcoke and coal doubling during the period. Nigeria-based Dangote Cement reported that its group sales volumes were down 3.6% mainly due to energy supply challenges in Nigeria. Internationally, its operations relying on cement and clinker imports – in Ghana, Sierra-Leone and Cameroon – were also hit by high freight rates caused by global supply chain issues. Thailand-based SCG said that national demand for cement demand fell by 3% due to negative geopolitical effects causing inflation, a delay to the recovery of tourism and a generally subdued market.
Graph 2: Cement sales volumes in the first quarter of 2022 from selected cement producers. Source: Company financial reports.
It’s too early to read much into it but one final point is worth considering from cement sales volumes in the first quarter of 2022. They have appeared to fall for the companies that have actually released the data. The reasons for CRC in China and Dangote Cement in Sub-Saharan Africa have been covered above. Holcim’s volume decline was 2% on a like-for-like basis and the others were all very small changes.
To summarise, it’s been a good quarter for those cement producers covered here with operations in North American and Europe. Energy instability caused by the war in Ukraine so far seems to have been passed on to consumers through higher prices with no apparent ill effect. The regional producers have suffered more, with the Chinese ones having to cope with falling demand and the others finding it harder to absorb mounting energy costs and supply chain issues. Plenty more first quarter results are due from other cement companies in the next few days and weeks and it will be interesting to see whether these trends hold or if others are taking place.
Cemex boosts first-quarter sales and earnings in 2022
28 April 2022Mexico: Cemex recorded consolidated sales of US$3.77bn in 2022, up by 13% year-on-year from first-quarter 2021 levels. The group recorded operating earnings before interest, taxation, depreciation and amortisation (EBITDA) growth of 3% year-on-year, to US$691m. Cemex said that sales growth in its Europe, Middle East and Africa region led the earnings increase, supported by strong underlying demand conditions with robust volume growth in Europe and the US. It recorded double-digit like-for-like price rises across its global operations. During the quarter, group CO2 emissions fell by 4% year-on-year.
Chief executive officer CEO Fernando González said “We are quite pleased with our first quarter performance despite the unprecedented global macro challenges. Against the backdrop of the worst inflation headwinds in more than 40 years, we achieved strong pricing traction across our products. Given the tight supply and demand dynamics in most of our markets, we are optimistic that we can recover input cost inflation. In addition, our diversified energy, supply chain and Climate Action strategies are paying off and helping us respond to energy cost pressures.”
Regarding the quarter’s sustainability achievements, González said “Our performance gives me great confidence that we can reach not only our 2030 climate goal but also our Net Zero ambition.”
Dominican Republic: Mexico-based Cemex has reopened the second production line at its integrated San Pedro Macoris plant. The decision will add 0.5Mt/yr to the plant’s production capacity bringing its total to 2.5Mt/yr. The decision has been made to support customers in the Caribbean market. Other recent investment in the country by Cemex include new packaging machines, palletisers, hydro combustion, new trucks and tanks.
Jesús González, the president of Cemex South, Central America and the Caribbean said “The reactivation of the production line is a clear example of our commitment to the sustainable development of the Dominican Republic. This investment contributes to the revitalisation of the national economy, promotes exports, reduces the need for imports and supports employment and a more sustainable environment in the country."
Cemex turns flue gases into carbon nanomaterials
26 April 2022Mexico: Cemex has reported its successful completion of laboratory tests aimed at converting CO2 emitted by cement kilns into carbon nanomaterials. The producer said that it was able to turn 50% of available carbon in a flue gas stream into nanomaterials. Possible industrial uses for carbon nanomaterials include in building materials, biomedicines, electronics and agriculture. Cemex says that its next step will be to scale the technology for a cement plant pilot study.
CEO Fernando Gonzalez said “This breakthrough technology is significant for Cemex, not only because it offers the potential to commercialise carbon emissions, but because it demonstrates the value of our Smart Innovation platform. The path to carbon neutrality will be built with innovation, and we remain committed to being at the forefront in developing new circular technologies and processes.”
Canada: Carbon Upcycling Technologies has secured US$6.15m in financing from a group of companies led by Clean Energy Ventures, Cemex Ventures, Amplify Capital and Oxy Low Carbon Ventures (OLCV). The investment round includes participation from Zero Carbon Partners, Purpose ESG, Clean Energy Venture Group, Fund for Sustainability and Energy, Prithvi Ventures, Bryan Trudel, and Mark and Faye McGregor. Carbon Upcycling intends to use the funding to grow its team and build its second commercial-scale facility in North America, with a production capacity of over 200t/day of its cement and concrete additive. Carbon Upcycling sequesters CO2 in secondary cementitious materials such as fly ash, which are then used in cement or concrete production.
Update on Egypt, April 2022
13 April 2022Vicat’s plans to buy another 42% stake in Sinai Cement became public this week. Once completed, the France-based company should own 98% of the Egyptian company, based on previously published ownership figures. The announcement heralds a rapprochement in the relationship between the cement producer and the Egyptian government.
Last year Vicat raised a case against the government with the International Centre for Settlement of Investment Disputes (ICSID) over an argument about how it could invest in Sinai Cement as a foreign company. All seems forgiven and forgotten now with a settlement agreement signed in March 2022 between Rania el Mashat, the Minister of International Cooperation on behalf of the Egyptian government, and Guy Sidos, the chairman and chief executive officer of Vicat Group. Local press reported that the government is trying to attract more direct foreign investment. Sinai Cement reported a loss attributable to its parent company of around US$19.1m in 2021, down from a loss of US$30.3m in 2020. However, its sales rose by 63% year-on-year to US$78m.
Sinai Cement has some specific operating issues related to its geographic position in the Sinai Peninsula and ongoing security concerns. Yet its mixed fortunes also sum up some of the continuing challenges the Egyptian cement industry is facing. After years of overcapacity, the government introduced reduced cement production quotas in July 2021 and this is mostly perceived to have improved prices in the second half of the year. Vicat described the arrangement as having capped the local market at 65% of its production capacity and it said that prices recovered ‘significantly’ as a result in the second half of 2021. Cemex’s regional chief Carlos Gonzalez told local press that the move had given plants “A glimmer of hope for the return of balance to the cement market.” The company has also announced a US$20m local investment backing up this view. Not all the foreign multinational companies entirely agreed, with HeidelbergCement reporting a ‘sharp’ decline in sales volumes although chief executive officer Dominik von Achten did describe the country as ‘coming back’ in an earnings call about his company’s financial results in 2021. Solomon Baumgartner Aviles, the chief executive officer of Lafarge Egypt, was also cooler about the production cap in a press interview in October 2021, describing it as too early to assess how well the cap was working and noting that the gap between supply and demand was still large.
Vicat said in its annual report for 2021 that, “Provided no further adverse geopolitical, health or security developments occur, the current climate is unlikely to jeopardise the prospects of an improvement in the subsidiary’s profitability, which should begin to gradually occur.” The geopolitical bit was timely given that Russia’s war in Ukraine started on 24 February 2022. It also targets the latest problem hitting Egyptian cement producers: energy costs. The head of Arabian Cement told Enterprise Press that initially some producers had opted to temporarily stop production and use stocks instead to attempt to try and wait until the energy price volatility ended. However, it stayed high so the cost of cement has gone up generally. Producers are now trying to switch to using a high ratio of natural gas, such as 10%, but this is dependent on the government letting them.
The Egyptian government, for its part, is facing a decision whether to supply subsidised gas for domestic industry or to export to Europe. The backstory here is that Egyptian cement producers are facing yet another step change in fuel supply. In the mid-2010s lots of plants switched from heavy fuel oil and gas to coal. High international coal prices could be heralding another change.
Alongside this the value of Egypt’s cement exports rose by 151% year-on-year to US$456m in 2021 from US$182m in 2020. The Cement Division of the Federation of Egyptian Industries has attributed this to growth mainly on the African market. This trend continued in January and February 2022 with cement exports up by 141% year-on-year to US$104m from US$43m. The main destinations were Ghana, Cameroon, Ivory Coast and Libya.
HeidelbergCement summed up the current state of the Egyptian cement market in its 2021 annual report as follows “The development of the Egyptian cement market continues to be determined by government intervention.” What happens next is very much in the hands of the state as it decides whether to extend the production cap, which fuels to subsidise, whether to allow exports and where to invest in infrastructure projects. One variation on this theme may be local decarbonisation targets. At the end of March 2022 the Global Cement and Concrete Association (GCCA) launched a series of Net Zero Accelerator initiatives, including one in Egypt. How a country that produces more cement than it needs reduces its CO2 emissions presents another challenge for manufacturers and the government to grapple with.
Margins being eroded for cement producers in Mexico
13 April 2022Mexico: Increases in raw material prices and energy costs, as a result of high inflation levels, will affect the operating margins of cement companies listed on the Mexican Stock Exchange in the first quarter of 2022, according to analysts quoted by CE NoticiasFinancieras.
Jacobo Rodríguez, director of Economic Analysis at Black Wallstreet Capital, explained that, "Despite the fact that companies are slow to pass on the increase in their costs to their final products, we will see pressure on their margins in their results in the first quarter of the year and from now on.”
Heriberto Sandoval, investment advisor at Increase Kapital, said “The cement industry is strongly affected by the increase in energy costs and, considering that the high cost pressures worldwide will be longer lasting than originally thought, this will lead to a decrease in earnings before interest, tax, depreciation and amortisation (EBITDA) this year.”
Mexican cement companies recorded a decline in the price of their shares between January and March 2022. Market leader Cemex led the way, with a 23.59% drop in the value of its shares. The second largest drop was seen by GCC, which lost 9.5% of its value. Cementos Moctezuma’s shares also lost 3.05% of their value in the first quarter of 2022.
Germany: Mexico-based Cemex has joined a consortium with Sasol EcoFT and Enertrag that plans to use CO2 and hydrogen to produce aviation fuel. The project is part of Cemex’s Future in Action program and is part of its plan to develop a carbon neutral operation at its Rüdersdorf cement plant by 2030. The consortium will source green hydrogen generated from wind and solar energy from Enertrag. The CO2 will come from the Rüdersdorf cement plant, which will provide 100t/day CO2 in the project’s initial stages. Sasol will then contribute its technology to produce e-kerosene, which, once certified, can be blended to constitute up to 50% of jet fuel.
The Rüdersdorf carbon neutral alliance includes over 20 start-ups, universities, companies from other industries and authorities working to develop industrial-scale solutions achieve the first carbon-neutral cement plant in the world.
Enertrag is a renewable-energy company based in Brandenburg. It operates utility-scale integrated energy plants in 10 countries. Its plants produce electricity and green hydrogen from wind and solar sources.
Sasol EcoFT is part of Sasol Group. It uses its technology to produce sustainable fuels and chemicals from green hydrogen and sustainable carbon sources, via the Power-to-Liquids process.
Panama: Cemex exported 3000t of bagged Ordinary Portland Cement to Jamaica from the Bahía Las Minas Grain Terminal in Colón. Data from the Ministry of Commerce and Industries shows that the company started exporting cement in January 2021 and recorded sales of over US$17m in 2021. In the first two months of 2022 Panama exported OPC to countries including Jamaica, the Bahamas, Guyana, Bonaire, Cuba and Curaçao.