Displaying items by tag: Cemex
European cement producers not joking about implications of climate change legislation
17 October 2018Well, it turns out that the European cement industry wasn’t kidding when it raised the risks of the climate mitigation on the sector. This week three (!) integrated plants have been earmarked for closure.
Cementa in Sweden said that it was considering closing its Degerhamn plant due to increased environmental regulations. Today, local press in Spain is reporting that Cemex España is planning to shut down two of its plants. These are plants in different parts of Europe with different local market dynamics but both are within the European Union (EU). That’s three plants closing out of 219 in the EU, or a loss of around 1% of production capacity.
Last week’s column on the United Nations’ (UN) Intergovernmental Panel on Climate Change (IPCC) report on Global Warming raised the way the cement sector is tackling climate change and the existing and impending legislation. President of the German Cement Works Association (VDZ) Christian Knell’s opening words at the VDZ Congress in September 2018 seem prescient. He said, “To be able to realise our efforts in terms of climate protection and at the same time not to lose competitiveness, we need research policy-related support for our investment in breakthrough technologies and the corresponding demonstration projects.” The add-on was that the industry needed to focus on how the development of carbon abatement technologies can meet the 2050 climate goals and, specifically, that suitable boundary conditions would have to be created. The press releases accompanying his speech emphasised that, “on-going trends in European emissions trading and the ‘rapidly increasing’ price of CO2 were already today leading to considerable costs for cement manufacturers.”
These words are similar to the comments Albert Scheuer, a board member of HeidelbergCement, made at the Innovation in Industrial Carbon Capture Conference early in 2018 about dividing the mounting environmental costs of cement and concrete between producers and society in general. Considering how much cementitious building materials most people use throughout their lives compared to the relative low price of cement, this argument carries some weight. In addition, the sustainability credentials of concrete buildings through longer lifespan and durability through extreme weather events is another argument that industry advocates such as the Portland Cement Association (PCA) in the US have been hawking in recent years.
Cementa, a subsidiary of HeidelbergCement, blamed anticipated tightening of environmental regulations for its decision. Although it said that the plant had made improvements over the years, the expected difficulty (read: cost) to make further improvements was becoming too hard. Shifting production to the company’s other two plants in the region, Slite on Gotland and Brevik in Norway, will reduce CO2 emissions by 260,000t/yr.
In Spain, the news from Cemex follows a half-year report from Oficemen, the local cement association, that predicted growth for the year but not as fast as previously expected. The problem was that continued declines in the export market, the 13th decline month-by-month in a row, offset the domestic growth. Oficement president Jesús Ortiz also took time to blame rising electricity costs, expected to rise by 20% year-on-year by the end of 2018.
Market issues in Spain aren’t in doubt, but the real question for both Sweden and Spain is whether EU CO2 legislation right now is causing cement producers to shut plants. The CO2 emissions allowance price hit a high of Euro22/t in September 2018, the highest price in a decade. Allowances have stayed below Euro10/t since 2011 and the price has more than doubled in 2018. Throw in the mood music of the IPCC and the trend seems irresistible. How many more plants in Europe are at risk to shut next? No doubt the European cement producers have charts marking the viability of their plants against the CO2 price. This would be a very interesting graph to get our hands on.
The 2nd FutureCem Conference on CO2 reduction strategies for the cement industry will take place in May 2019 in London, UK
Cemex to close two cement plants in Spain
17 October 2018Spain: Cemex España is preparing to close its cement plants at Gádor in Almería and Lloseta in Baleares. It has blamed reduced demand for cement and European regulations on CO2 emissions for the decision, according to the Cinco Días newspaper. The closures will affect 200 employees and the cement producer is has started to hold union discussions. Cemex will retain integrated plants at Morata de Jalón, Alicante, Alcanar, Castillejo Anover and Buñol.
Update on Mexico: free trade edition
03 October 2018Cementos Fortaleza started building its new grinding plant in Merida this week. The 0.25Mt/yr unit is expected to open in July 2019. It marks the first new plant in the country in a while and it will be only the second in the south-eastern state of Yucatan, joining Cemex’s integrated plant. It follows a number of upgrades at existing plants over the last two years, such as various mill orders by Cruz Azul from European suppliers (as part of an upgrade at two of its plants) and Elementia’s upgrade to its Tula plant.
Note that Cementos Fortaleza is a subsidiary of Elementia, the building materials company partly-owned by ‘Mexico’s richest man’ Carlos Slim. The group has steadily been expanding with its purchase of the remaining share in Cementos Fortaleza in 2015, acquiring a controlling stake in Giant Cement in the US in 2016 and a project to build a grinding plant in Costa Rica in early 2018.
The other big news story this week with implications for the cement sector was the arrangement of the US-Mexico-Canada Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA). Although the exact details of the deal are still emerging, the consensus is that the cement industry in Mexico is unlikely to be affected much. The two points that might have implications for the cement industry are changes to rules of origin regulations and tariffs on imports made by low-wage workers. Both clauses are targeted at the automotive sector to protect US industry so it is unlikely that cement will be affected. In addition it is worth remembering that Mexico was the fifth largest exporter of cement and clinker to the US in 2017 after Canada, Greece, China and Turkey. And, all the major Mexican cement producers operate plants in the US, further protecting them from any potential negative consequences of the USMCA.
Graph 1: Mexican cement production, 2009 – 2017. Source: Camara Nacional del Cemento (CANCEM).
Back in Mexico, the graph above shows that production has been growing in fits and starts over the last decade. The last growth trend started in 2013 but it stalled in 2017. However, the Camara Nacional del Cemento (CANCEM) was forecasting growth of 2.5% year-on-year for 2018 in April 2018. The last time this column covered Mexico, back in early 2017, we produced a breakdown of the industry by company and production capacity. This is worth looking at for an overview of the production base.
Cemex, the largest local producer, reported Ordinary Portland Cement sales volume growth of 3% year-on-year in the second quarter of 2018 but flat growth for the first half of the year. This growth was supported by good activity in the formal residential sector with support from the industrial and commercial sector. LafargeHolcim released less detailed figures for the first half of 2018 but it attributed its strong performance in Latin America to Mexico. Overall cement sales for the region grew by 12.1% to 12.6Mt, in part due to large infrastructure projects in Mexico, such as the new Mexico City International airport. The third biggest producer, Grupo Cementos de Chihuahua, said that its cement sales volumes rose by 2.5% in the first half of the year, supported by rising prices.
As reported in early 2017, the Mexican cement industry is moving ahead with confidence. A modest amount of production capacity is being built, the steady market growth since 2013 looks set to continue after a minor blip in 2017 and the main producers are all reporting good performance so far in 2018. Finally, the USMCA looks unlikely to trouble Mexican producers much and their diversified holdings will certainly help them if it does. For the moment - bravo!
Claudia Emmanuel appointed director of Trinidad Cement
03 October 2018Trinidad & Tobago: Trinidad Cement has appointed Claudia Emmanuel as a director of the company to fill a casual vacancy. Emmanuel will hold the position until the company’s next annual general meeting, whereupon she will be eligible for re-election.
Cemex Go launches in Dominican Republic
27 September 2018Dominican Republic: Mexico’s Cemex has launched its Cemex Go platform in the Dominican Republic. The product allows customers to place orders, make payments, manage invoices and track deliveries in one place online. Cemex hopes to have made the digital platform available in all of its territories by the end of 2019.
Minimising risk in the UK cement industry
26 September 2018More positive news emerged from the UK cement industry this week with the news that Cemex is planning to restart the second kiln at its South Ferriby plant later in 2018. This marks the full recovery of the plant after a disastrous flood in late 2013 and it is an all round good news story. Around the same time the local government in Scotland approved the planning application for an upgrade to Tarmac’s Dunbar cement plant. That project involves installing a new cement grinding mill, a new cement storage silo and a rail loading facility.
Graph 1: Domestic cement, imported cement and other cementitious sales in the UK, 2001 - 2017. Source: Mineral Products Association.
The timing is interesting given the general uncertainty in the UK economy ahead of the UK exit from the European Union (EU). However, data from the Mineral Products Association (MPA) shows that total cementitious material sales (cement plus products made from fly ash and ground granulated blast furnace slag (GGBS)) reached 15.3Mt in 2017 from a low of 10.3Mt in 2009 following the financial crash. This isn’t as high as the 15.8Mt figures recorded in 2007 but it does mark a recovery. This masks to an extent the change in the market since 2007. Cement sales in 2017 at 10.2Mt were still below a high of 11.9Mt in 2008. The recovery has been driven by higher imports, 1.9Mt in 2017, and higher use of fly ash and GGBS products, which reached 3.2Mt in 2017.
Cemex and Tarmac are not alone in announcing projects. HeidelbergCement’s local subsidiary Hanson is upgrading its Padeswood plant with a new Euro22m mill. Irish slag cement grinding company Ecocem opened its import terminal at Sheerness in mid-2017 and French grinding firm, Cem'In'Eu, has also expressed interest in building a plant, in this case in London.
As discussed earlier in the year, new upgrade projects in the UK appear to carry an element of risk given the unknown status of its departure from the EU. Supply chains may be affected, companies are delaying investment and the value of Pound Sterling is falling. The collapse of construction services company Carillion also had a knock-on effect in the industry and, with major work on the Crossrail infrastructure project finishing, the industry has no major infrastructure projects in support. A quarterly graph of UK construction industry output volume by Arcadis shows almost uniform growth since mid-2012 although this started to flatten in 2017. A badly-handled Brexit (UK exit from the EU) could undo this growth.
All of this presents a picture of risk-adverse capital projects in the UK. The MPA figures help to explain the focus on grinding at Padeswood and Dunbar. The market has changed since 2007, with a growing focus on imports and secondary cementitious materials. Hence spending money on equipment to process these inputs makes sense. The decision to increase production at South Ferriby meanwhile depends on reviving existing equipment. Regional cement sales figures to 2016 from the MPA appear to indicate static demand in counties close to the plant (Yorkshire and Humberside) but sales have increased in the East Midlands and the East of England.
Just compare the current UK approach to the situation in Egypt. This week the head of the cement division of the Chamber of Building Materials described the decision to build the Beni Suef cement plant to local media as “not based on precise information” and that it had harmed local production. In case you had forgotten, that plant is one of the biggest in the world with six lines. The commentator may well have been representing smaller local producers but opening a 12Mt/yr plant in Egypt in these turbulent economic times marks a different approach to risk than the modest plant upgrades in the UK. Let’s wait and see who has the best approach.
Cemex Balcones quarry celebrates 50th anniversary
21 September 2018US: Cemex has celebrated the 50th anniversary of its Balcones Quarry in New Braunfels, Texas with an event attended by Cemex USA Regional President - Texas and New Mexico Region Joel Galassini, and which included a planned quarry blast.
Balcones Quarry began operations in 1968. Cemex purchased the quarry along with the neighbouring cement plant in 1994. The quarry currently processes more than 10Mt/yr of crushed limestone annually and supports infrastructure, residential and commercial projects across Texas. The United States Geological Survey (USGS) recently ranked the quarry as the top crushed stone producer in the country in terms of volume.
In 2016 the site opened a water recycling plant at the quarry to cut reliance on local water sources. Recently, Cemex opened its Wildlife Habitat Centre adjacent to the quarry to promote conservation and sustainability. The centre includes about 17 acres of restored prairie, pollinator gardens and meadows planted with native plants. An education centre and wheelchair-accessible produce garden are also on the site.
Second kiln to be restarted at Cemex South Ferriby cement plant
19 September 2018UK: Cemex is planning to restart commercial production on the second kiln at its South Ferriby cement plant in November 2018. The company says that this investment highlights its confidence in the long-term potential of the UK building materials market.
The kiln has a capacity of 1000t/day and was originally installed in 1973. Since then the cement producer has conducted upgrade work on the production line to comply with environmental legislation and to install new electrical infrastructure, a control system and instrumentation. The second kiln was previously the first Cemex line in the world to achieve a 100% alternative fuel substitution rate in 2011. Once fully operational both kilns at the plant will give it a production capacity of 0.7Mt/yr.
Cemex on course to sell Vencemos do Amazonas stake
07 September 2018Brazil: Cemex Latam Holdings (CLH), the subsidiary of Mexican cement company Cemex in Central and South America and the Caribbean region, together with its subsidiary Corporacion Cementera Latinoamericana, expect to finalise the sale of Brazilian cement producer Cimento Vencemos Do Amazonas (CVDA) for around US$30m by the end of 2018. On 25 May 2018, the pair agreed to sell all of the shares they own in CVDA to Brazilian cement company Votorantim Cimentos.
Cemex Go launches in Costa Rica
16 August 2018Costa Rica: Mexico’s Cemex has introduced its Cemex Go platform to the Costa Rican market. The new platform will enable customers to place orders, make payments, manage invoices and track deliveries in one place online. The new platform is available for mobile phones, tablets and computers. It has already been launched in nine countries and has over 13,000 users worldwide.