Global Cement caught up with Micheál McKittrick, Ecocem’s recently-appointed Managing Director for Northern Europe, to talk about the company’s development, current trends and future plans.
Global Cement (GC): Please could you introduce Ecocem and its activities?
Micheál McKittrick (MM): Ecocem is an Irish-owned and headquartered company. It was established in 2000 by Donal O’Riain who remains as Managing Director of Ecocem Group. He identified the opportunities to use ground granulated blast furnace slag (GGBS) as a low-CO2 alternative to traditional cement. Ecocem’s GGBS has an embodied CO2 output as low as 12kg/t. That compares to CEM I, at around 850kg/t or CEM II at 750kg/t.
Over the first decade of the 21st Century, Ecocem opened GGBS grinding plants in Moerdijk (Netherlands, 2002), Dublin (Ireland, 2003) and Fos sur Mer (France 2009). Following growth in Ireland in the early 2000s, Ecocem weathered the subsequent economic rollercoaster in 2008 - 2010 by diversifying into other products such as CEM III-A and CEM III C cement. We also formally started on a path of innovation and a range of solutions have been developed over the past few years. These are now coming to fruition with their launch into the marketplace.
Since 2016 Ecocem has been able to use its consolidated position to expand once more, in a kind of ‘second wave.’ We have opened import terminals at Runcorn and Sheerness in England in 2016 and 2017 respectively, a terminal in Gälve, Sweden in 2016 and a second grinding plant at Dunkirk in France in April 2018, a facility that serves both France and the UK. 2018 was also the year that we completed a series of significant investment in our Moerdijk plant. That facility has now doubled in terms of raw material storage, production capacity and product storage. This involved the installation of a new KHD roller press for grinding. We’ve also built export terminal facilities at the Moerdijk plant.
The company is at a point now where the distribution network is becoming fairly well developed. Each of the plants and terminals, while focused on its individual territory, is increasingly in a position to help other facilities out, for example, if there is a spike in demand or technical difficulty in one of the other markets.
GC: You were recently promoted within the group. What does your new role entail?
MM: In my new role as Managing Director for Northern Europe I manage the businesses in Ireland, the UK, the Netherlands (for Benelux) and Sweden. This adds Benelux and Sweden to my previous responsibilities prior to May 2019, when I was head of Ecocem Ireland & UK.
Day-to-day, my new role is to ensure that we are strong from a development standpoint, are strong operationally and strong from a production, logistics and sales perspective, both in relation to the product we’re selling and the team itself. In a more pan-optic sense, my role is to continue to grow and develop the business from the perspective of production / sales and the products we offer. This involves developing quality long-term relationships with various stakeholders and experts in the industries we’re involved in. For example, as we roll out our shotcrete solution (above), we will work with the companies that are specialised in that rather than try to do everything ourselves. We want to facilitate low-CO2 alternatives not only for cement and concrete, but for a wide range of products. It’s about implementing low-CO2 solutions across the sector and doing what we can to encourage the transition to a lower-CO2 construction sector and the economy as a whole.
GC: What can you tell us about production in 2018?
MM: Our GGBS production capacity across the four sites reached 2.4Mt/yr in 2018. I expect we will see little change from that figure in 2019 in terms of production. Demand is high for our product, although some of our markets differ in terms of growth rate. We’ve seen a great response from the UK market, northern France and Sweden on the back of the opening of the Dunkirk facility.
GC: Do conditions in the steel sector cause you concern regarding slag supplies going forward?
MM: Our supply contracts are long-term agreements with some of the largest steel producers in Europe. We do not have significant concerns regarding the supply of slag due to the strength of these relationships and contracts. Of course, some steel plants may close due to competition from outside the EU, environmental pressures, historical lack of investment or a host of other reasons. For example, there’s a lot of pressure in the UK at the moment, where British Steel was placed in compulsory liquidation in May 2019. Brexit uncertainty is not helping in that market.
To reiterate, we are confident of our supply chain going forward. Ecocem is on a strong footing because its supply chain is strong, the product offering is strong and demand for such products is increasing.
GC: You just brought up Brexit. How has Ecocem been affected so far?
MM: Brexit is something that’s been hanging over the UK and Ireland for more than three years now. There’s been one major effect of this to date for Ecocem, the fluctuation in the Euro/Pound exchange rate. Prior to the UK decision to leave the EU on 23 June 2016, £1.00 would buy you Euro1.29. Now you might get Euro1.10 for the same £1.00. That’s had a negative, albeit managable, impact on our business importing into the UK. All our material comes from the Eurozone and we sell an appreciable portion, more than 10%, into the UK.
The second impact, which I hope we don’t have to deal with, is the potential to be trading under World Trade Organisation (WTO) tariffs. If there is a disorderly exit, which looks increasingly likely, there will be WTO rules. The rate is actually 0% on GGBS, so that won’t actually affect us. There might, however, be disruption at ports and extra bureaucratic hoops to manage.
It would be great to have a clearer picture on how the future will pan out with respect to Brexit but it seems that we’re even further away from knowing what’s going on at the moment than we were at the start of 2019.
GC: The EU Emissions Trading Scheme Allowance (EUA) price has increased dramatically over the past 24 months. Do you think this has driven demand for low CO2 cements such as Ecocem’s?
MM: I think the EU ETS is having an effect, but it’s hard to put a finger on how significant it is at the moment. Remember that Ecocem is opening up the taps on a lot of new capacity at the moment, making it hard to compare different time periods.
Going forward, EUA prices will become increasingly important to traditional cement producers in the EU over the next 12 - 24 months. I cannot see a situation in which EUA prices don’t continue to rise! A lot of national EU governments, including Ireland’s, are not leaving it to the market to decide how expensive CO2 is to emit. Ireland has introduced its own CO2 pricing target that will see the price increase in a linear fashion to Euro80/t by 2030. That will translate to higher cement prices and higher GGBS prices. This will force the sector to lower its CO2 by a whole number of methods, including more alternative fuels, lower clinker factors, including GGBS, carbon capture and storage (CCS) and leaner construction. We have to be more intelligent with the materials that we already use. The traditional cement industry is changing and the pace will pick up. Some older EU plants will probably close. There’s going to be a huge change over the 2020 to 2030 period.
GC: Looking outside of the EU, Ecocem was recently forced to abandon plans to build a GGBS plan in Vallejo, California, US. Can you comment on that decision?
MM: Our subsidiary Orcem Americas had majority support from the city council to construct a GGBS grinding plant at that location. However, the main site owner withdrew its own permit application, so we were left with nowhere to go. It’s bad news for Vallejo, as it really needs development. There would have been ~25 quality jobs directly from Orcem, with many more in transportation and the wider construction sector. California is primed for low-CO2 cement alternatives and I feel it’s a real missed opportunity.
GC: Is Ecocem a member of the Global Cement & Concrete Association / World Cement Association or does it have plans to join either?
MM: Ecocem is not a member of either association at present, although we recognise the efforts being made towards sustainability. We are a fairly lean organisation that has been through a rapid expansion process, so projects like these may not have received sufficient attention in the past. It’s something we could look at in the future.
GC: Does Ecocem use renewable electricity?
MM: Ecocem uses 100% renewable energy tariffs at all of its plants. We have a green product and we make efforts, like I said above, to extend our ethos across the industries we deal with. For example, in some instances we re-use blast furnace gas (>100°C) to dry the material before it is ground.
GC: What are Ecocem’s expansion plans?
MM: We have a set of plans but I’m not able to be specific at this time. They are fairly ambitious and I would say that the right conditions for our business model and products could be applied in several markets, both within Europe and further afield. We have to tread carefully, of course. The investment in a new plant is not trivial. We have to be sure that the market is ready and that long-term supplies can be secured.
GC: What is the largest threat to Ecocem in the next 1 - 5 years?
MM: I would say that the biggest potential threat is the economic stability of the markets that we work in. Take the UK, for example, where construction is actually fairly weak due to Brexit uncertainty. Ecocem is slightly shielded from that at the moment, because we are still a relatively new entrant in that market. The continued tariff situation between China and the US is upsetting stability across the EU and elsewhere in the world.
GC: What about the largest opportunity over the same time-frame?
MM: Ecocem has been ahead of the sustainability / low-CO2 curve for more than 15 years in some respects. The market is now catching up with the need to be green. The demand is not from the construction sector itself but from the public at large, with relation to many products: Solar and wind power, electric cars, steps to tackle single-use plastic, a rapidly growing list. Construction, as a large CO2 emitter, must be a big part of that. Ecocem is well positioned to continue to grow on the strength of this trend.
GC: Micheál McKittrick, thank you for your time.
MM: You are most welcome!
From by-product to eco-products
Ecocem sources granulated blast furnace slag (GBFS) from a range of different providers, including ArcelorMittal and TATA. The company reports that its long-term contracts will ensure stability of supply for many years to come, even in the face of reduced slag supplies in Europe.
The company converts GBFS into GGBS and also makes CEM III-A and CEM III C, plus two admixtures for early strength development in pre-cast concrete products. Products are sold in bulk and in bags.
In addition, Ecocem has recently launched Ecoshot, a GGBS shotcrete solution, and Eco2Floor, which is a self-leveling floor screed.