Analysis

Typical! We published a cement sector news review for 2024 in the December 2024 issue of Global Cement Magazine and a load of big important events happened afterwards. So, here is a roundup of some of the major stories that have taken place in the last two months of the year.

The TL:DR (too long; didn't read) version of ‘Global Cement News in 2024’ was: focus on the US market by the multinationals; cement joining the emissions trading scheme in China as the world’s largest market stagnates; continued rivalry between UltraTech Cement and Adani Group in India as that sector grows; markets in the Middle East and North Africa adjusting to higher exports; the drawn out divestment of InterCement in Brazil; lots of new plants in Sub-Saharan Africa reflecting demographic trends; and an emphasis on construction and demolition materials in Europe but one on aggregates in North America.

However, from November 2024 onwards… Donald Trump was re-elected as President in the US, Quikrete put in an US$11.5bn deal to buy Summit Materials, the United Nations Climate Change Conference (COP29) in Azerbaijan ended in acrimony, Gautam Adani was accused of fraud by a US court and Huaxin Cement said it was buying Holcim’s majority stake in Lafarge Africa for US$1bn. These have all been covered in previous editions of Global Cement Weekly. Check them out for more information. One can tell it’s been a busy tail-end to the year though when a US$600m agreement by Heidelberg Materials North America to buy Giant Cement Holding did not make the top five, admittedly selective, noteworthy news stories of the last two months of 2024. These stories also, roughly, followed the trends highlighted in the ‘Global Cement News in 2024’ article.

To reflect on the Adani story a few weeks later, nothing much seems to have occurred. Yet. The share price of various Adani Group companies fell when the US authorities made the announcement in late November 2024 but they have mostly regained much of their value since then. The consensus by Reuters, this week, was that the US prosecutors have a strong case backed up by documentation but extradition seems unlikely. Adani himself has made public appearances in India since the allegations surfaced. One minor consequence has been that Gautam Adani exited the US$100bn Bloomberg Billionaires Index in 2024. This is likely to have been caused, in part at least, by the allegations from Hindenburg Research in 2023 and the current legal problems from the US bringing down share prices. On the cement side of Adani Group it appears to have been business as usual so far. A large-scale investment in Rajasthan was announced in December 2024 and, this week, plans to merge subsidiaries Sanghi Industries and Penna Cement with Ambuja Cements were disclosed.

Another general trend that we haven’t covered much online have been changes in the Australian market. Last week, Cement Australia, a joint venture between Heidelberg Materials Australia and Holcim Australia, said it was acquiring the cementitious division of the Buckeridge Group of Companies (BGC) for US$800m. This follows CRH’s purchase of a majority stake in AdBri that was approved by the latter’s shareholders over the summer. Around the same time, Seven Group Holdings completed its acquisition of the remaining 28% stake in Boral that it did not already own. For more on the situation in Australia and New Zealand read the article in the January 2025 issue of Global Cement Magazine.

That’s it for 2024. Unless another massive news story in the cement sector gets announced in the next week-and-a-half.

Global Cement Weekly will return on Wednesday 8 January 2025

Suvo Strategic Minerals said this week that it had made moves towards establishing a joint-venture between a subsidiary and the Huadi Bantaeng Industry Park (HBIP). The plan is to manufacture and sell low-carbon cement and concrete products that contain nickel slag and other byproducts. This news story is noteworthy because of the location of HBIP in South Sulawesi, Indonesia.

In a release to the Australian Securities Exchange Suvo explained that HBIP is the managing company of the Bantaeng Industrial Park, where ‘significant’ quantities of nickel slag are stockpiled as part of the local nickel pig iron operations. HBIP will supply the nickel slag to the joint-venture. It will also give it access to infrastructure such as land, port facilities and utilities. Suvo subsidiary Climate Tech Cement, for its part, will supply the low carbon cement and or concrete mixtures and/or formulations. This follows the signing of a memorandum of understanding in September 2024, in which the companies agreed to process the nickel slag into geopolymer cement and precast concrete materials.

At first glance Indonesia seems like an unlikely place to market a low-carbon cement or concrete product, given the large cement production overcapacity in the country. The Indonesian Cement Association (ASI) reported a production capacity of just under 120Mt/yr in 2024 and forecast a utilisation rate of 57% in November 2024. However, the government seems serious about reaching net zero by 2060 as the country’s economy develops. The ASI updated its decarbonisation roadmap in 2024 and the draft is currently under review with the Ministry of Industry and consultants from the Bandung Institute of Technology (ITB).

In the latest roadmap, carbon capture is at least a decade away, with the first large-scale capture tentatively anticipated from 2035 onwards. Although Indonesia launched its carbon trading scheme in 2023, it is not expected to start affecting the industrial sector until the late 2020s. Instead, the short-to-medium term Scope 1 reduction methods include increasing the use of alternative fuels, reducing the clinker factor of cement and reducing and/or optimising the specific thermal energy consumption of clinker. Initiatives such as Suvo’s joint-venture in South Sulawesi tie into that middle strand. Separately, over the summer of 2024 the government and producers said that they were working together to introduce and promote the use of Portland composite cement (PCC) and Portland pozzolana cement (PPC). At this time the ASI reckoned that a complete change could cut cement sector emissions by just over a quarter. In June 2024 local media also reported that ASI members were planning to supply low-carbon cement for the Nusantara capital city project to help it realise its aims as a ‘green city.’

Semen Indonesia, the country’s largest producer, reported a clinker factor of 69% in 2023 for all of its cement products, down from 71% in 2021. Limestone was the biggest substitute followed by trass and gypsum. It is currently aiming for a clinker factor of 61% by 2030. In its Sustainability Report for 2023 it said that it was promoting the use of non-OPC (Ordinary Portland Cement) cement “...according to the needs of construction applications.” It added that non-OPC products also had a “...5 - 15% more economical price.” However, the company has not said how its current sales are split between OPC and other products.

One of the surprises at the 26th Technical Symposium & Exhibition of the ASEAN Federation of Cement Manufacturers (AFCM), that took place in Kuala Lumpur in November 2024, was the sheer amount of work that has been going on outside of Europe and North America towards decarbonising building materials. The cement associations of Indonesia, Malaysia and Thailand all presented progress and targets towards this aim at the event. Suvo Strategic Minerals’ joint-venture plans in South Sulawesi are another example of this trend.

Closing points to note about the Suvo project are firstly that it is away from Indonesia’s main cement production area in Java. Secondly, the presumption is that the low-carbon cement and concrete products manufactured by the project will either be cheaper than the competition or benefit from green procurement rules. Finally, nickel slag reserves seem insufficient to reshape the entire national cement market. Yet a general move towards using more supplementary cementitious materials could. Watch this space for more developments.

Read a review of the 26th Technical Symposium & Exhibition of the ASEAN Federation of Cement Manufacturers (AFCM) in the forthcoming January 2024 issue of Global Cement Magazine

Huaxin Cement revealed this week that it is buying Holcim’s majority stake in Lafarge Africa for US$1bn. The moment marks a big step in the China-based cement producer’s international ambitions. It has been linked in the financial media to many divestments around the world in recent years. Yet this appears to be its largest acquisition so far and it adds to what is becoming a serious sized multinational business in Sub-Saharan Africa.

The details of the deal are that Holcim has agreed to sell its 83% share of Lafarge Africa to Huaxin Cement. Lafarge Africa operates four integrated cement plants in Nigeria at Sagamu and Ewekoro in Ogun State, at Mfamosing in Cross River State and the Ashaka Cement plant in Gombe State. It has a combined production capacity of 10.5Mt/yr. The transaction is expected to close in 2025 subject to regulatory approvals.

Holcim holds a relationship with Huaxin Cement that dates back to the late 1990s when it first bought a stake in the company. Following the formation of LafargeHolcim in the mid-2010s, Lafarge’s subsidiary Lafarge China Cement was sold to Huaxin Cement. At the end of 2023 Holcim reported that it owned just under a 42% share in the company. Huaxin Cement has also bought assets from Holcim as the latter company has divested subsidiaries over the last decade. In 2021 it bought Lafarge Zambia and Pan African Cement in Malawi from Holcim. This adds to other acquisitions in the region. In 2020 it purchased African Tanzanian Maweni Limestone from ARM Cement. Later in 2023 it picked up InterCement’s subsidiaries in Mozambique and South Africa. In addition, in October 2024 local media in Zimbabwe reported that the company was planning to build a grinding plant. Now, throw in the plants in Nigeria and Huaxin Cement is the second biggest cement producer in Sub-Saharan Africa after Dangote Cement.

Huaxin Cement said it had an overseas cement grinding capacity of just under 21Mt/yr at the end of 2023. However, this figure included plants in Cambodia, Kyrgyzstan, Nepal, Oman, Tajikistan and Uzbekistan. Data from the Global Cement Directory 2024 suggests that the company now has 10 integrated cement plants in Sub-Saharan Africa with a cement capacity of around 18Mt/yr. It also operates a number of grinding plants in these countries.

The Lafarge Africa deal is significant because a mainland China-based cement producer has finally hit the US$1bn window in merger and acquisition (M&A) activity overseas. Many potential acquisitions in the sector are linked by the press to Chinese companies these days. However, most of the activity to date has been of a plant-by-plant or piecemeal nature. Alternatively, these companies have been building their own plants around the world as part of the Belt and Road Initiative. Taiwan Cement Corporation (TCC) has spent more buying itself into Türkiye-based OYAK Cement since 2018 but it is headquartered in Taipei.

The question from here is how much further does Huaxin Cement plan to expand both in Africa and beyond? The obvious answer is that it will keep going given the state of the cement sector back home in China, the retreat of the western multinationals and the demographic trends in the region. World population growth is predicted to be fastest in Africa in the coming decades and demand for cement should follow. Outside of Africa, the ‘big’ one recently has been InterCement in Brazil. Unfortunately for Huaxin Cement though, InterCement extended its exclusivity deal with Companhia Siderúrgica Nacional (CSN) in November 2024. If the Lafarge Africa transaction completes then it will be the biggest deal yet and it will welcome a China-based cement company to the big league of international M&A. It may just be the start.

Many readers will be aware that Gautam Adani was accused of fraud by a US court this week. In a brief statement, Adani Group said that the allegations were “baseless and denied.” The indictment relates to a solar power project, but what does this mean for Adani Group’s cement businesses?

The charges by the US Department of Justice allege, following an investigation, that Gautam Adani, Sagar Adani and Vneet Jaain, executives of India-based renewable-energy company Indian Energy Company, committed “...securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from US investors and global financial institutions on the basis of false and misleading statements.” A number of other individuals have also been accused, along with the two Adanis and Jaain, of participating in a US$250m bribery scheme to Indian government officials connected to a large-scale solar energy project. The indictment related to the period 2020 - 2024 and further alleges on several occasions that “Gautam Adani personally met with an Indian government official to advance the bribery scheme.” The Securities and Exchange Commission (SEC) has also started a connected civil case.

The problem here is that the indictment has rocked the value of Adani Group’s subsidiaries and reduced the credit ratings of some of them. This in turn will make it harder for these companies to raise money in the future for expansion. Various reports in the media said that the group’s companies had lost something in the region of US$30bn as stock prices fell by around 20%. They have since rallied somewhat. And lest we forget, Adani Group has some serious expansion plans. In the cement sector, it is targeting a production capacity of 140Mt/ yr by 2028. Recent transactions include Ambuja Cement’s purchase of Penna Cement for US$1.25bn in August 2024 and a planned acquisition announced in October 2024 of a 47% stake in Orient Cement for US$451m. The group was also linked in the local media to a bid to buy Heidelberg Materials’ India-based business in October 2024.

All of this comes with a price. International credit ratings agency S&P put Adani Ports, Adani Green Energy and Adani Electricity on a downgrade warning. Then, Fitch Ratings and Moody’s followed. Moody’s, for example, downgraded its outlook for seven Adani Group companies to ‘negative’ from ‘stable’ but it affirmed ratings on them. It commented that the allegations “could have a broader credit impact on all rated Adani group issuers” and that they would “likely weaken the Adani group’s access to funding and increase its capital costs.” It added that its actions recognised “...the possibility of broader weaknesses in the governance structure across the rated Adani group entities as well as potential operational disruptions, including on their capital-spending plans, while legal proceedings are going.” The decision by the ratings agencies does not appear to have directly affected Adani Group’s cement companies, Ambuja Cements or ACC, so far. The group may get lucky here given that these companies focus on the domestic market. Thus their credit ratings may remain more buoyant, regardless of what happens next.

As with a number of other global issues at the moment, the outcome of the recent US presidential election may also play into this case. Attorney Ravi Batra told the Press Trust of India that the incoming Trump administration might view the Adani charges as so-called ‘lawfare.’ This is where legal processes are used to target a nation’s economic or other opponents. In addition the current chair of the SEC, Gary Gensler, announced his intention to step down from the role in January 2025. It seems unlikely that the Trump administration might intervene in a legal case involving a foreign company accused defrauding US citizens but the possibility of realpolitik playing a role shouldn’t be totally discounted.

This is the second major international scandal overhanging Adani Group since the disclosures by Hindenburg Research back in early 2023. Those allegations were relatively easy to shrug off given that its accuser was an investment research firm with a reputation for using its findings for short selling shares. Hindenburg Research was not a neutral bystander. This time round, the US judicial system has become involved and the consequences are bigger both reputationally and from any potential legal outcome. In the short term, the credit implications for Adani Group as a whole are becoming apparent. Various companies and countries have stalled or cancelled planned investments. However, the cement business is smaller than the group’s power and transport concerns. It also operates domestically. We’ll have to wait and see what the wider implications for Adani Group are. The first thing to watch for the cement business will be any effect on its expansion plans.

The mood music for this year’s United Nations Climate Change Conference (COP29) in Azerbaijan has been poor. Despite this though the decarbonisation prospects for the cement sector are looking rosier than other industries.

First, the negatives. People are starting to question whether the COPs are fit for purpose. Donald Trump’s election as President-Elect in the US before the event started pretty much set the tone given that he intends to withdraw from the Paris climate agreement. Again. Azerbaijan's President Ilham Aliyev described his country’s natural gas resources as a “gift from God” following reports that, once again, COP national delegates had been caught promoting fossil fuel deals. France and Argentina also withdrew their lead negotiators for differing political reasons. Meanwhile, there has been increasing lobbying against carbon capture from the environmental sector. In short the view is growing that carbon capture is a delaying tactic by fossil fuel companies rather than a viable solution. This poses a threat to the cement sector because its current net zero roadmaps require carbon capture.

The World Cement Association’s CEO Ian Riley asked in a statement whether there might be “...a shift toward negotiations driven by the major emitters - China, the US, India, Russia, and Saudi Arabia.” However he observed that none of these countries yet seem ready to lead on the climate agenda globally.

Now, the positives. Cement CO₂ sector emissions may have continued to fall in 2023. The Global Carbon Project published its Global Carbon Budget 2024 in mid-November 2024. It predicts that global fossil CO₂ emissions will rise by 0.8% year-on-year in 2024 with emissions from coal, oil and gas still mounting. However, emissions from cement producers are expected to fall by 0.8%. This trend started in 2022. It appears to be due to declines in China, the US and the EU but, notably, not in India. It’s worth commenting here that this decline may be principally down to the parlous state of the real estate market in China, but there is also a lot of decarbonisation work happening. We’ll take a win where we can.

Next, the Global Cement and Concrete Association’s two big announcements at COP29 have been the publication of its Cement Industry Net Zero Progress Report 2024/25 and the launch of international definitions for low carbon cement and concrete. The progress report proffers a nifty update on how well it’s going. Short version: 23% reduction in emissions intensity since 1990; lots going on; plenty more to do.

One of those issues that require attention is low-carbon procurement. Hence those international definitions. This may seem like an abjectly boring topic but never underestimate the power of standards upon building materials. This should help support governments, policy makers and the private sector to set low carbon procurement rules. Since governments are among the biggest buyers of building materials worldwide, both directly and indirectly, this is intended to start speeding up decarbonisation by driving demand for existing lower carbon cement and concrete products. Whether this is the tool that cracks the global adoption of low carbon building materials remains to be seen. Yet the long lead time it took the Portland Cement Association (PCA) in the US, for example, to promote the use of Portland Limestone Cement is both instructive and inspirational. It can be done and it can deliver results.

COP29 has been described as the ‘finance COP’ because the representatives are hoping to set a new global climate finance target. This target, or new collective quantified goal (NCQG), is seen as one of the summit's main outcomes. It is intended to replace the existing US$100bn goal that is due to expire in 2025. However, the question of how much each country pays has predictably caused disagreements between developed, developing and those countries in between. All of this is well above the ‘paygrade’ of the cement sector but is crucial to what happens next, because it’s going to get expensive. Establishing regional carbon capture infrastructure requires serious funding. Time will tell whether COP29 can actually further this aim. The arguing continues.