The key trends to note from the financial results of cement producers in 2022 released so far are that sales revenues are up, sales volumes of cement are mostly down and earnings have mostly dropped too. Readers are not going to be surprised that 2022 was a tough year for business as the raw materials and services inflation coming out of the coronavirus period was heightened by energy cost spikes caused by the Russian invasion of Ukraine. Producers put their prices up in response to deliver often record high annual revenues.

Graph 1: Sales revenue from selected cement producers in 2021 and 2022. Source: Company reports. Note: Figures calculated for UltraTech Cement.

What sticks out by looking at the sales volumes of cement figures in Graph 2 (below) is that Holcim’s cement sales volumes were about the same as Heidelberg Materials’ were in 2022, at around 120Mt. Remember, Holcim’s cement sales volumes were 200Mt in 2021 and 256Mt in 2015 at the time of the merger with Lafarge. Large divestments have followed with the sale to Adani Group of Holcim’s India-based companies in 2022 being one of the biggest. UltraTech Cement, meanwhile, has been steadily increasing its India-based cement production capacity.

Graph 2: Cement sales volumes from selected cement producers in 2021 and 2022. Source: Company reports. Note: Figures calculated for UltraTech Cement.

By company, Holcim’s diversification and regionalisation strategy appears to be paying off well. Reducing its exposure to the cement market is giving it a strong story to tell as it grows its light building materials division, frames this as a success in sustainability and moves out of developing markets. How well this will work if and when it ends the divestment and investment stage remains to be seen. One point to highlight is that its operating profit fell by 18% year-on-year on a like-for-like basis to US$3.43bn in 2022. As well as contending with high costs in 2022, a subsidiary connected to the group was fined US$778m by the US Department of Justice in late 2022.

Heidelberg Materials’ approach to the current economic conditions in 2022 seems to have been to keep its head down and push on for decarbonisation rather than diversifying its business. So it followed the ‘sales up, costs up but earnings down’ pattern of a few of the other cement companies covered here. Although, that said, it did diversify its name to ‘Materials’ from ‘Cement’ in September 2022.

Cemex experienced the same problems as the other companies for most of 2022 but conditions started to improve in the fourth quarter in most of its territories. In particular, it reported that earnings started to grow in Mexico towards the end of 2022 despite falling sales volumes of cement. It attributed this to its pricing strategy. Of note this week, the Mexican government is preparing to support higher levels of imports of cement into the country due to a shortage in the southeast of the country.

Buzzi Unicem, meanwhile, noticed a faster slowdown in cement deliveries in its key markets in Italy, the US and Eastern Europe in the last quarter of 2022 from a general trend that could also be seen earlier in the year. In its largest market, the US, it reported that investment in residential construction slowed. This was further affected by the growing cost of building materials and the rate of inflation, although increasing spending on infrastructure helped to keep domestic consumption stable. A favourable currency exchange rate between the US and the Euro also helped the company to report provisional earnings growth. Vicat’s US businesses in the US and Brazil helped cushion the group somewhat with a large rise in sales revenue. However, earnings in the US were hit by the costs related to the start up of the new kiln at the Ragland plant in Alabama, as well as general energy cost inflation. Its business in France fought against inflation with ‘significant’ price rises delivering a high increase in sales revenue but this was insufficient to prevent earnings from dropping.

The non-European based cement producers present a different picture. Despite the high energy costs, UltraTech Cement managed to increase its revenue and sales volumes of cement in 2022. Its net profit fell though year-on-year in the nine months to 31 December 2022. The company is targeting a cement production capacity of 159Mt/yr by around the 2025 financial year with the aim of becoming the largest cement producing company in the world outside of China. Dangote Cement managed to raise its prices at home in Nigeria to fight off inflation and hold revenue and earnings up. This was harder internationally though with supply chain disruption, high commodity prices, high freight rates and a plant shutdown in Congo blamed for holding earnings back.

Inflation and the energy markets will be clear concerns in 2023. If energy prices for industry stabilise globally then there is more of a chance for business as usual as markets cope better with higher costs. The continued dilemma for multinational cement companies remains whether to decarbonise through diversification or investment in new processes, and how far to go along either path. Meanwhile, the large regional producers are starting to show themselves outside of China, as UltraTech Cement’s growth trajectory testifies. One test for these companies is balancing the risk of expansion versus potential tighter local environmental regulations. The environmental rules of export markets are also a factor to consider here with the head of AdBri calling this week for an Australian equivalent to the European Union’s border adjustment mechanism to block so-called ‘dirty’ imports.

The next set of financial results from the cement sector in 2022 to look out for will be those from the large China-based cement producers. Once these are released we will examine them in more detail.

Congratulations to Lafarge France for launching the first calcined clay cement unit in Europe. The subsidiary of Holcim says that the unit, based at the integrated Saint-Pierre-la-Cour cement plant, is the first of its kind on the continent. It is using the company’s proprietary proximA Tech technology and will produce up to 500,000t/yr of cement in its ECOPlanet range. The operation is also powered with biomass alternative fuels and uses a waste recovery system to further drive down overall CO₂ emissions. Once production ramps-up the producer expects that 30% of cement from the Saint-Pierre-la-Cour plant will be from the ECOPlanet range by 2024.

The investment at Saint-Pierre-la-Cour was Euro40m. Holcim is also producing calcined clay cement at its La Malle plant in France. It received an investment of Euro6m in 2022 to produce low-carbon cements. Together, both plants are aiming to produce over 2Mt/yr of calcined clay cement by 2024. As is usual for these kinds of projects, the French government partly funded the clay calcination unit at Saint-Pierre-la-Cour as part of the ‘France Relance’ scheme investing in large-scale decarbonisation and energy efficiency initiatives.

Calcined clay cements in Europe aren’t exactly new, but Holcim’s new unit in France does appear to be the first full-scale line located at a cement plant. Research by OneStone Consulting, for example, reckons that the first flash activated clay unit expressly set up to supply the cement sector was commissioned in 1995 in Toulouse, France. More recently, Hoffmann Green Cement inaugurated its 50,000t/yr pilot plant at Bournezeau in France in 2018. This site produces cements made from flash calcined clay and blast furnace slag, although it is unclear how demand for the different products varies. A new 0.25Mt/yr plant in the Vendée department was scheduled for commissioning in the second half of 2022. Another 0.25Mt/yr plant in Dunkirk is expected to be commissioned in the second half of 2024.

Cementir Group launched its calcined clay cement product FUTURECEM in Denmark in 2021 with production via a pilot plant. It then extended this to the Benelux and French cement markets in 2022. As part of its industrial plan for 2021 - 2023 it was planning to build a clay calcination unit to support the growth of FutureCem. FLSmidth revealed in June 2021 that it had won a contract to build a 400t/day clay calcination unit for Vicat’s Xeuilley integrated cement plant. The deal was worth around Euro27m and commissioning is scheduled for 2023.

Firstly, it is interesting to see a focus on France for some of the projects above. The presence of Lafarge’s technical centre in Lyon may explain the interest for that company. However, Hoffmann Green Cement and Vicat are also active in the field. It is worth noting that France also holds a busy secondary cementitious material market with standalone operators including Ecocem, Cem’In’Eu and Hoffmann Green Cement. Secondly, despite the early start, clay calcination for cement is currently more active outside of Europe. In Africa, for example, there is at least one live full production line and a number of other projects on the way. Various other pilots and projects are also happening elsewhere around the world, often in conjunction with the limestone calcined clay cement (LC3) initiative. Where calcined clay cement production in Europe goes from here is uncertain at present as it is one solution among many for lower carbon cement products in the future. Yet, the projects that have made it so far to the commercial scale will be watched closely by the companies that have invested in them - and their competitors.

The Portland Cement Association (PCA) has launched a new website to promote the US cement industry’s progress towards net zero. It’s always interesting to see the different approaches the various associations around the world take in promoting the sector especially in response to mainstream media coverage that has often taken a negative view of cement and concrete. As sustainability thinking has permeated into society the stereotype that cement production releases vast amounts of CO₂ for little gain has been a hard one to shake off. Readers can draw their own conclusions on how well the PCA site works by looking at cementprogress.com.

Make no mistake, the PCA’s new website is a marketing tool designed to bring out some of the points of its carbon zero roadmap to a wider audience. Yet it is refreshing to see a national association website attempting to tell the general public what progress the cement industry is making towards reducing its CO₂ emissions. Unfortunately, it then avoids giving out any data that presents an overview of how it’s all actually going. This may come with time though as the roadmap was only released in late 2021. One number that does stick out on the site is that the PCA uses the Environmental Protection Agency’s (EPA) carbon emissions data to calculate that the manufacture of cement accounts for 1.25% of total CO₂ emissions in the US. This is lower than the global figure of 7% that is often used from the Center for International Climate and Environmental Research - Oslo’s (CICERO) research. Both figures appear to be broadly correct based on the available data.

The real story here is to showcase the wide range of actions the PCA is taking as part of its roadmap. In the cement section, for example, the PCA is rightly able to demonstrate its recent work driving the transition to Portland Limestone Cement (PLC) production in the US. This then leads on to the usual beats of resilient construction, carbonation and a ’whole society’ approach to tackling the decarbonisation of the cement industry with suggestions that everybody from citizens to contractors to policy makers can do.

The wider context is that the big challenge facing cement advocacy groups today is that sustainability is a global issue but that such groups have generally been national or regional for most of their history. The national or regional cement associations have existed for decades serving the local needs of their members. This started to change in 1999 when the Cement Sustainability Initiative (CSI) was created with its global approach to sustainability for the sector with its data gathering and technology roadmaps. In the 2010s global media attention started to focus on the large share of CO₂ emissions the cement industry was emitting as, coincidentally, China became the world’s largest cement producer. Then in the late 2010s the two global cement associations - the Global Cement and Concrete Association (GCCA) and the World Cement Association (WCA) - emerged with the GCCA taking over what the CSI did previously.

One problem that the PCA and the other associations face is that decarbonising the cement and concrete sectors is hard to do, expensive and will take decades. Until, or if, carbon capture is suddenly conjured up at scale, all of this work is inherently seen as boring by much of the media compared to, say. young photogenic environmental activists supergluing themselves to roads. One way to fight back against this is to show progress font-and-centre and to try and take back control of the narrative. This appears to be what the PCA is trying out in a more direct fashion than usual. The risk though is that any action by an industry-backed lobbying group to show off the work it is doing will simply be labelled as greenwashing, whether it’s fair or not. Of course, some environmentalists indulge in their own reverse version of this (industry staining?) to make the powerful but simple argument about the necessity of cutting CO₂ emissions but without taking fully into account or underplaying the scale of the societal changes necessary to do so. Either way, the cement industry and its advocates have an uphill struggle on their hands in the years ahead. This may require fresh thinking about how to win over hearts and minds.

The March 2023 issue of Global Cement Magazine includes an interview with Claude Lorea from the Global Cement & Concrete Association (GCCA)

Cement 2 Zero (C2Z) has officially launched in the UK this week. The project is an industrial scale pilot of the Cambridge Electric Cement (CEC) process. The Materials Processing Institute will lead on this stage with two-year funding of around Euro7m provided by UK Research and Innovation (UKRI). Partners include the University of Cambridge, Atkins, Balfour Beatty, Brewster Brothers, Celsa Group, Day Aggregates and Tarmac.

CEC’s method uses recycled concrete paste in place of lime-flux in steel recycling. Slag is formed as the steel melts and this is then used in place of clinker to make more cement. This way of making cement cuts out the decarbonisation of limestone step from conventional clinker production. If renewably-sourced electricity is used to power the heating and grinding parts of manufacture, then cement production in this way could potentially cut out most of its CO₂ emissions. The first phase of trial melts by C2Z will be conducted by the Materials Processing Institute using a 250kg induction furnace and this will be scaled up to 6t in an electric arc furnace (EAF). Later, industrial scale melts will be tested in Celsa Steel's EAF in Cardiff, Wales.

CEC is taking a similar approach to HeidelbergCement with its research into using recycled concrete paste. However, HeidelbergCement says it is using the paste to help capture CO₂ in an enforced carbonation step it is testing at cement plants. It too though wants to create a secondary cementitious material (SCM) afterwards. There are also links here to construction and demolition waste and electric cement kilns as covered by Global Cement Weekly previously. The latter is different with regards to what CEC is doing because it is recycling concrete waste to produce an SCM (slag) rather than using an electrically powered kiln to make clinker from limestone. Coolbrook, VTT and the like have had to build electric kilns effectively from scratch or adapt technology from elsewhere for their approaches whilst CEC appears to be about to use existing EAFs in its industrial scale pilot.

Figure 1: Projection of how the Cambridge Electric Cement production process could be used at scale in the UK. Source: UK FIRES. Click to view larger version.

CEC’s forecast of how its process could be used at scale in the UK can be seen above in Figure 1. If the majority of the country’s steel scrap was recycled in this fashion each year then 2.4Mt/yr of CEC cement could be produced. This would represent a quarter of the c10Mt of cement sales reported by the MPA in 2021. Assuming the EAFs were powered by renewables then this could reduce the cement sector’s CO₂ emissions significantly. Although it would still leave the industry looking for other decarbonisation routes for the other three-quarters of cement demand.

C2Z and CEC offer a novel spin on cement production by recycling concrete waste, using an electrical heating step and dodging the process emissions associated with normal ordinary Portland cement (OPC) clinker production. If it did progress to a commercial stage then it would see a continued relationship between steel and cement producers. Currently this is mainly centered around iron and steel slag usage as a SCM. One point of interest here would be how much higher levels of steel recycling and a process like CEC being used regularly would affect existing slag usage as an SCM. It doesn’t look like CEC could solve the cement sector’s CO₂ emission problem all on its own but it could certainly make a difference if it progressed to a commercial stage. As ever with cement sector decarbonisation there appear to be a range of options available to producers.