Analysis

Holcim Schweiz hit a milestone recently with the aerial drone programme at its Siggenthal cement plant. The project with Voliro, a Switzerland-based technology start-up, has started to use multi-rotor drones to conduct official measurement flights. They used them to take measurements to determine the steel wall thicknesses of the cement kiln and the cyclone preheater. The work has been part of Holcim’s ‘Plants of Tomorrow’ industrial automation plan with unmanned aerial vehicles (UAV). Key features of the particular drones being used are that they can be rotated around all axes by a special rotor system and can even fly upside down.

Holcim has been using drones in and around cement plants for a few years now. When it launched the Plants of Tomorrow plan in 2019, Switzerland-based drone supplier Flyability said that the cement company had chosen its Elios 2 model to perform confined space inspection. Earlier in 2017 another supplier, SenseFly, said that LafargeHolcim Tanzania had been using its fixed-wing products. Holcim is also far from alone in its use of drones. A few examples among many include Cemex USA’s work with Kespry earlier in 2021, HeidelbergCement’s work in North America and Germany in 2020 and 2021 and Votorantim’s testing at its Córdoba and Niebla plants in Spain back in late 2015. 

UAV usage by armed forces dates back to examples like unmanned incendiary balloons being deployed in the 19^th century to Azerbaijan’s reported decisive use of drones in its war against Armenia in late 2020. The current era of industrial UAVs began after 2000 when governments starting issuing civilian permits, miniaturisation occurred and improvements in cameras, sensors and computing power followed. For the mineral processing sector the trend started with drones being used for stockpile management and quarry surveying. At present this is the main area that UAVs are used for by the sector, often coupled with photogrammetry techniques. CalPortland’s Adam Chapman’s paper at the 2021 IEEE-IAS/PCA Virtual Cement Conference described one company’s use of UAVs in the cement industry since 2016, looking at licensing, cost, quality of data, drone technology, fleet management and field experiences.

More recently though, tests of drones used to survey cement plant buildings and structures have started being publicised such as Holcim’s work at Siggenthal. A presentation by consultant John Kline and Chris Place of Exelon Clearsight summarised the use of drones for structural inspection at cement plants at the Global CemProducer 3 webinar in January 2021. The key benefits they promoted of using an UAV in this way were: improved safety because workers have reduced risk from climbing, working at height or in confined spaces; less time to conduct a survey; higher resolution photographs and video; better coverage through grid method surveying; and an overall lower cost. However, on that last point, other commentators have noted that market-leading drones for surveying are relatively expensive and easy to damage. Drones have since been used to start going inside structures at cement plants with Kline demonstrating their use to inspect the condition of refractory within the cooler, kiln, pre-heater and cyclone of a production line at the Global CemProducer 2 webinar in July 2020. HeidelbergCement has also been doing similar things, with an inspection trial using a drone of the kiln at the Schelklingen plant in Germany during the 2021 maintenance shutdown period at the site.

So far the use of drones by the cement industry has mostly been in a surveying or inspection capacity. Given the short time that UAVs have been used like this there is likely to be scope for lots more development both within existing fields and new ones as the sector works out how best the technology can be used. One application we couldn’t find in the research for this short article was the use of drones for security and surveillance tasks at cement plants and quarries although this may be happening already. However, there could be a more active role for drones if or when a company finds a way for them to start making basic repairs or carrying out simple maintenance in those hard to reach areas that drones excel at accessing. Research examples exist of UAVs being used to spray concrete or repair materials onto minor defects in concrete structures. Yet considerable challenges face these kinds of applications such as the weight of a loaded multi-rotor drone or damage from rebound. Before we all get too worried about drones replacing our jobs though it is worth considering that Amazon’s plan to deliver packages by UAV was first announced in 2013 and it still hasn’t happened yet. It may yet, but for now in most situations humans remain cheaper and more practical than robots or drones.

Our latest look at South America starts by posing the question: how far can the market in Brazil keep growing? As Graph 1 shows below, cement sales skyrocketed through the coronavirus pandemic, due to a general recovery locally that started in 2018 and relatively weak lockdown measures compared to other countries. Rolling annual totals on a monthly basis from the National Cement Industry Association (SNIC) suggest that this growth period tailed off from May 2021. SNIC was also keen to point out that, despite nearly hitting nearly a 20% growth rate at one point, the sector was still 11% behind where it was before the lull that lasted from 2015 to 2018. As ever the association has an eye on potential risks. At present these include legislative reforms, price inflation and carbon pricing. It noted that Mexico, Colombia, Chile and Argentina all price carbon already but said that the country ‘has a great ally in the Brazilian cement industry’ on the issue.

Elsewhere the big story in Brazil has been the ongoing sale of Holcim’s local assets. The latest news at the start of August 2021 was that the bidders included CSN Cimentos, Cimentos Mizu, Cimento Apodi, InterCement and Votorantim. The first three companies were reportedly working in a consortium in an attempt to buy 10 production plants while InterCement and Votorantim were focusing on smaller bids to avoid the ire of the competition regulators. Aside from this, CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021 and Companhia Nacional de Cimento (CNC), part of Italy-based Buzzi Unicem’s 50% subsidiary BCPAR, acquired CRH Brasil following approval by the regulators. Of note on the production side, Votorantim Cimentos started operation of a new production line at its Pecém grinding plant in Ceará in July 2021.

Graph 1: Cement sales in selected South American countries in first half of year, 2019 – 2021. Source: Local cement associations and national statistics offices.

Over in Peru the now familiar gap-tooth pattern of stunted growth in 2020 can be seen in the sector’s cement sales, but sales rebounded far stronger than comparable sized markets in Argentina and Colombia. Sales nearly doubled to 6.42Mt in the first half of 2021 from 3.33Mt in the same period in 2020 and were significantly higher than the 4.94Mt recorded in the first half of 2020. Imports are also worth watching. Combined cement and clinker importers nearly doubled from 0.76Mt in the first half of 2019 to 1.4Mt in the first half of 2021. Clinker imports made up about two thirds of this figure and the Association of Cement Producers (ASOCEM) noted in June 2021 that 88% of the imported cement came from Vietnam while about two thirds of the clinker came from Japan and Indonesia.

Away from the market data, both Cementos Pacasmayo’s and Unión Andina de Cementos’ (UNACEM) financial results bounced back in the first half of 2021. Cementos Pacasmayo attributed the rebound to sales of bagged cement to the self-construction sector and public sector reconstruction demand. UNACEM also noted the effect of the self-construction sector and said it expected its ‘solid’ cement despatches to continue for the rest of the year despite the risk of a third wave of coronavirus in the country and the messy presidential elections. Other stories of note so far in 2021 include new developments in Cementos Interoceanicos long-held plans to build a 1.0Mt/yr cement plant in Puno and a major upgrade planned to Yura’s integrated plant in Arequipa.

In Colombia local cement despatches grew by 34% year-on-year to 6.20Mt in the first half of 2021 from 4.61Mt in the same period in 2020. Cementos Argos reported major improvements in sales, sales volumes of cement and earnings due to the lockdown in 2020. However, a national wave of protests calling for social reform that started in the spring of 2012 forced the company to shut down its integrated Yumbo plant for over a month. This represented 18% of its national sales. The output of other plants in the country was also negatively affected by roadblocks created by the unrest. Cemex reported the same problems in the country.

Finally, Argentina’s cement despatches rose by 44% to 5.52Mt in the first half of 2021 from 3.83Mt in the same period in 2020. Loma Negra reported that its sales, sales volumes and earnings were all up by a similar rate. The subsidiary of Brazil-based InterCement started up the kiln on its new 2.7Mt/yr production line at the L’Amalí cement plant in Olavarría in June 2021 and commissioning of the new mill and despatch centre on the line were reportedly coming soon in early August 2021. Earlier in the year, in May 2021, Holcim Argentina inaugurated a new 0.5Mt/yr clinker production line at its Malagueño cement plant in Cordoba. These expansion projects were ordered long before coronavirus appeared so it will take a while to see their effects upon the local market. However, the government intervened in June 2021 when it persuaded some building materials producers to agree to reference prices in a bid to curb mounting inflation.

This is what recovery looks like so far in 2021 in the larger cement producing countries in South America. The Brazilian market’s growth phase may be waning after a furious period that even coronavirus wasn’t allowed to slow. Peru’s potential seems set to take off, Colombia’s rebound should have been greater (but it was dented by social unrest) and Argentina seems to be resetting to its usual level. Whatever else happens in the coming months the story to watch going forward will be which company picks up Holcim’s assets in Brazil.

Dalmia Bharat managing director Puneet Dalmia characterised India’s cement industry as one of ‘many regions and many players’ in an interview on 10 August 2021. It is equally an industry of many plants – which are seemingly larger and more numerous by the week.

On 9 August 2021, Orient Cement announced an investment of US$215m to increase its Devapur, Telangana, cement plant’s capacity by 53% to 11.5Mt/yr from 7.5Mt/yr. Another Southeast Indian producer, Ramco Cements, plans to invest a total of US$135m in upgrades in the 2022 financial year; it completed US$53.9m (40%) of the planned investments in the first quarter alone. NCL Industries is planning a US$13.5m expansion of its 2.7Mt/yr Mattapalli, Telangana, cement plant by 33% to 3.6Mt/yr and the establishment of a new 0.66Mt/yr grinding plant at nearby Anakapalle for US$26.9m by 2022. Thus, a single state has at least 5.56Mt/yr-worth of new capacity in the pipeline with US$337m-worth of pending investments. If the central government grants the Telangana government’s 6 August 2021 request to reopen Cement Corporation of India’s Adilabad cement plant in the state, this will be joined by a further 4.0Mt/yr of ‘old’ capacity.

Nationally, investments in on-going cement plant projects total US$1.81bn. What is remarkable here is the continued drive to expand despite existing overcapacity. Puneet Dalmia estimates that Indian capacity utilisation will be 70% in 2021. Despite this, his company plans to increase its installed capacity by 17% to 36.0Mt/yr in the (current) 2022 financial year and by 57% to 48.5Mt/yr with the realisation of all on-going projects by the 2024 financial year, from 30.8Mt in August 2021. By 2030, the group aims to more than triple its installed capacity to over 110Mt/yr. Dalmia says that, if it is to achieve this, it will be not as another South and East Indian regional company, but a ‘pan-India, pure play cement producer.’

Dalmia’s confidence is founded on the belief that overcapacity will abate. His assurance is more than just that of an investor: when, in July 2021, the Department for Promotion of Industry and Internal Trade established an advisory body, the Cement Industry Development Council (CIDC), to help tackle the oversupply issue, it appointed him as chair. Puneet Dalmia predicts that capacity utilisation will rise to 85% ‘within a few years’. Consolidation is key: over the same hazily defined time period, the top five producers’ 57% share of the cement market will rise to 65%, he believes. Rising fuel costs and restrictive limestone mining licencing will deter would-be cement plant start-ups; anticipated carbon costs should clear away a lot of old wood.

Demand is the other half of the coin in India’s attempt to pitch market forces against overcapacity. In the first quarter of the 2022 financial year, cement demand fell by an estimated 20% amid the Covid-19-led collapse of rural housing’s bagged cement uptake. This type of sales roughly accounts for a third of Indian cement consumption. Other construction segments have proved more resilient. Prime Minister Narendra Modi’s government, never infrastructure-shy, chose to resume national projects after India’s Covid-19 lockdown ended on 10 May 2020, keeping them running through subsequent waves of the pandemic. The National Highways Authority of India (NHAI) continued with 480 projects covering 25,000km of road. In Andhra Pradesh, the state government is building 122,000 new homes. Cement producers have been able to corner pent-up demand to shift their stock at a generous margin.

The Confederation of Real Estate Developers' Associations of India (CREDAI) claimed on 9 August 2021 that the price of cement is hampering the realisation of affordable housing targets, and lobbied the government to reduce the goods and services tax on cement to 18% from 28%. In parts of the country, state governments have taken the matter into their own hands. The Kerala government set out to take over 25% of the Keralan cement industry on 5 July 2021. Its plan: increasing cement production, a policy which it is already implementing via state-owned Malabar Cements and Travancore Cements.

Puneet Dalmia claimed on 10 August 2021 that India’s per-capita cement demand is 200kg/yr, corresponding to a total national demand of 276Mt/yr and 60% below the purported global average of 500kg/yr. Given India’s development trajectory, growth is nearly inevitable. Puneet Dalmia is unequivocal in his medium-term prediction: Indian cement revenues will rise at a rate of 9–10% per annum, outstripping forecast gross domestic product (GDP) growth by 2%.

Indian cement’s tale of rebound and growth is borne out in the latest financial reports. UltraTech Cement’s first-quarter sales in the 2021 financial year were US$1.59bn, up by 54% year-on-year from US$1.03bn in the first quarter of the 2020 financial year. Its cement sales rose by 47% in the period to 21.5Mt from 14.6Mt. In its 2021 first-half report, Ambuja Cements recorded year-on-year sales growth of 41%, to US$930m from US$659m, and cement sales growth of 36% to 13.5Mt from 9.95Mt. This is echoed both in the other Indian producers’ reports and internationally: France-based Vicat named India alongside its home country as an area of particular sales growth in the first half of 2021, especially in the second quarter.

The UN Intergovernmental Panel on Climate Change’s demonstration of the impacts of human activity on the climate in a report published on 9 August 2021 might lead an observer to ask “What’s the good?” in all this growth. In the face of the immense benefits cement offers to the lives of Indians, a more pertinent question would be “How best can growth happen?” Ambuja Cement’s aforementioned plan to grind clinker with fly ash is a step in the right direction. Another is Vedanta Aluminium’s proposed fly ash and bauxite residue supply deal, for which it is seeking a cement industry partner. The new Cement Industry Development Council’s remit extends to the coordination of the sector’s efforts towards maximising efficiency and eliminating waste. ACC and Ambuja Cements are participating in parent company Holcim’s Plants of Tomorrow programme, which aims to increase the efficiency of cement production through better plant optimisation, higher plant availability and a safer working environment. Dalmia Bharat has a goal of net zero CO2 cement production by 2040, and a plan for getting there.

Pan-Indian producers are on the rise. Big companies desperate to modernise and implement their models of sustainable growth are blazing a trail. The size gains will be a national marvel - if the promises of sustainability are realised. What will be lost is the Indian cement industry’s festival of local and regional producers. Though still an industry of many regions and many players, its regions are increasingly close together, its players increasingly few.

The story so far for the first half of 2021 has been one of recovery following the coronavirus-related lockdowns in the same period in 2020. Market restrictions ended, production curbs were rescinded and revenue and sales volumes grew.

Many of the larger multinational cement producers have released their financial results and sales revenues show a gap-tooth pattern for the first halves of 2019, 2020 and 2021. Sales for LafargeHolcim, HeidelbergCement and Cemex all took a knock of around 10% from 2019 to 2020. Generally, sales have increased from 2019 to 2021 for the more regional-based companies such as Cemex or Buzzi Unicem. The larger multinational producers like Holcim and HeidelbergCement bounced back from the dip in 2020 but comparisons with the first half of 2019 are less favourable. Like-for-like comparisons between 2019 and 2021 are not available but both companies have been refocusing their portfolios in recent years making it hard to gain a sense of exactly what’s going on. These trends are still ongoing with more speculation in the press this week about which companies are bidding for LafargeHolcim Brasil for example. However, both Holcim and HeidelbergCement did report record earnings or operating incomes in the first half of 2021 suggesting that all the cost cutting in 2020 has paid off. The general market picture was continuing demand in North America, recovery in Europe and Latin America, growth in Africa and the Middle East and growth in Asia despite renewed coronavirus-related uncertainty.

Figure 1: Sales of selected major multinational cement producers in first half of 2021. Source: Company financial reports.

Figure 2: Cement sales volumes of selected major multinational cement producers in first half of 2021. Source: Company financial reports.

Cemex and Buzzi Unicem benefitted from their strong market presences in the Americas and Europe. Cemex was also helped by a particular recovery in Mexico and Latin America. The latter region benefited from the relaxation of strong lockdown measures in many countries implemented in the first half of 2020. Cemex’s investors update event at the end of June 2021 summed up its situation with earnings growth and leverage levels about to hit desired targets, selective investments and divestments on the way, new production capacity round the corner and sustainability goals turning up earlier than expected.

In Africa, Dangote Cement witnessed a switch from growth outside of Nigeria to a spurt of domestic demand for cement from mid-2020 onwards. This temporarily caused the company problems earlier in 2021 when it was forced to suspend its newly started export operations to Cameroon from its Onne and Apapa terminals. The reactivation of its previously mothballed 4.5Mt/yr Gboko plant in Benue State and an upcoming 3Mt/yr plant at Okpella in Edo state seem to have soothed the demand rush for now. Clinker exports have been resumed.

India meanwhile faced a second wave of its coronavirus epidemic in the spring of 2021. UltraTech Cement acknowledged this in its latest financial results, for the quarter to 30 June 2021. It reported that this had ‘marginally’ impacted cement demand but that the company was still monitoring the impact of the health situation upon its operations. Despite this, revenue and sales volumes of cement still grew significantly year-on-year in both the quarter and the first half of 2021. UltraTech Cement’s wariness about the health situation chimed with recent comments by Roongrote Rangsiyopash, the head of Siam Cement Group (SCG), who told local press in Thailand that current coronavirus restrictions in the country had reduced cement demand by 20%.

Finally, Semen Indonesia reported growing revenue, sales volumes of cement and earnings in the first half of 2021. Its financial results had little to say about the local coronavirus situation other than that it had reduced domestic demand growth and worsened production overcapacity. National cement production reached 115Mt in 2020 but local demand was only 62.7Mt. Unsurprisingly, exports reached their highest level ever, at 9.3Mt, in 2020.

As ever this is a very selective view of cement producer financial results. Larger multinationals like CRH or Votorantim are yet to release their results and likewise for the big Chinese producers. Recovery and growth seems to be the likely outcome for most of them though. However, the effects of recent coronavirus outbreaks in Asia have shown up in some of the results covered above. This suggests that the second half of 2021 for building materials manufacturers may be characterised by which countries are better able to suppress coronavirus either through mass vaccination or other public health measures. Buzzi Unicem summed it up it in its half year results: “The rapid progress of vaccination campaigns was matched by a clear recovery in economic activity.”

Holcim has started to unify its low carbon cement product range this week with the launch of its ECOPlanet label globally. The products are already available in Germany, Romania, Canada, Switzerland, Spain, France and Italy. The plan is to extend this to 15 countries by the end of 2021 and then to double its ‘market presence’ by the end of 2022.

The headline news is that the range will include what Holcim says is the world’s first cement product with 20% recycled construction and demolition waste. This appears to be an improvement on the group’s Susteno cement products that use fine fractions from concrete and demolition waste. This product is currently sold in Switzerland where it is advertised as saving 10% of CO₂ emissions compared to a standard cement product. Both Holcim and HeidelbergCement already sell concrete products that use the coarse waste from building demolition. Other than this, Holcim says that the range will also include cements that contain calcined clay. In June 2021 subsidiary Lafarge France announced that it would produce a cement product under the ECOPlanet banner using kaolin clay with its proprietary ProximA Tech process at its integrated La Malle cement plant in Bouc-Bel-Air.

We will have to wait and see how far Holcim goes in standardisng the range between different countries. Yet, judging from what the countries that are already selling ECOPlanet are doing, it looks like it will be a variety of blended cements. At present, for example, Holcim Germany offers four products in the ECOPlanet range. These are all slag cements, with three having effective CO₂ reductions of up to 70% and the fourth, ECOPlanet Zero, reaching 100% through a carbon offsetting scheme in conjunction with MoorFutures. Holcim Italy also launched a product in the range called ECOPlanet Prime using calcined clay in June 2021.

Incidentally, LafargeHolcim US announced a research project this week with the US Army about using demolition waste. It’s going to start working with the US Army Corps of Engineers’ Engineer Research and Development Center and Geocycle to look at how construction and demolition materials from military installations can be used for energy recovery and mineral recycling. Group resources at Geocycle’s Holly Hill Research Center in South Carolina, US and Holcim’s Global Innovation Center in Lyon, France will be used in the scheme.

Other low carbon cement products are available of course. Holcim is far from alone in launching low CO₂ cement and concrete products. Yet the use of worldwide brand names is different. Cemex is doing something similar with the global rollout of its Vertua concrete products. It first launched Vertua in France in 2018 before going global in 2020. Holcim started to launch ECOPact Concrete in 2019. Now, Holcim has gone further by doing the same thing with cement. Given how localised cement and concrete products are, it will be instructive to see how global branding for low carbon cementitious products helps these companies. For instance, who is the target audience? It could be eco-minded self-build customers or project specifiers or government departments or industry lobbyists. Or perhaps it is simply another marketing channel to reinforce the sector’s sustainable offerings.

The other point worth considering is when will the multinational cement producers start selling sustainable cements and concretes in less rich parts of the world? While Holcim was playing with blended cements and marketing this week, Dangote Cement said that it was ready to start commissioning its new 6Mt/yr integrated plant at Okpella, Edo State in Nigeria. Another 5Mt/yr plant is also on the way in the country from Madugu Cement. It has just signed a contract for China-based Sinoma International Engineering Company to build it. When Holcim and the other cement companies start selling low carbon cements in places like Nigeria then the rise of these products will be complete.

For more information on low CO₂ cement production read our feature in the February 2021 issue of Global Cement Magazine