Displaying items by tag: CalPortland

HeidelbergCement confirmed the rumours this week with the announcement that it was selling assets in the western US to Martin Marietta for US$2.3bn. The deal covers subsidiary Lehigh Hanson’s US West region cement, aggregates, ready-mixed concrete and asphalt businesses in California, Arizona, Oregon and Nevada. This includes two of its cement plants, with the exception of the 1.5Mt/yr Permanente cement plant in California, related distribution terminals, 17 active aggregates sites and several downstream operations. The companies expect to conclude the deal by 2022 but naturally it is subject to approval by competition bodies.

Well, this is a big one considering that one of the catalysts for the group’s divestment plan was the reduction of the value of its total assets by Euro3.4bn in July 2020 following a review. Depending on the exchange rate, the value of the divestment to Martin Marietta covers half to two thirds of that amount. Group chairman Dominik von Achten later told the media in February 2021 that the company was planning to sell the first of the five assets in early-to-mid 2021. However, cement isn’t the full story here since Lehigh Hanson operates three integrated plants in California and seven terminals. So, by elimination, the Tehachapi and Redding plants are the ones that are being sold along with some combinations of the terminals. Both of those plant have production capacities of around 0.8Mt/yr. Unless the terminals being sold have been valued highly, then the majority of the deal appears to encompass some or all of the 25-odd aggregate sites, 15 asphalt sites and 30 ready-mix concrete sites the company operates in the four states.

On the cement side it doesn’t seem unreasonable at face value for the authorities to allow Martin Marietta to take over most of Lehigh Hanson’s business in the region since it should broaden competition from a production angle. Instead of five companies in California with integrated plants, there will be six. For Martin Marietta, the deal also carries the feel of unfinished business in the region since it briefly held a cement business there for around a year in the mid-2010s. It acquired Texas Industries (TXI) in July 2014 and then sold the cement business in California to CalPortland in September 2015.

Both companies are pursuing different strategies. HeidelbergCement says it is hunkering down on its other four North American regions – the US Midwest, Northeast and South, plus Canada - through selected ‘bolt-on’ acquisitions and plant upgrades. Martin Marietta says it wants to take advantage of long term demand trends such as increased state infrastructure investment in California and Arizona and private-sector growth. It also reassured shareholders with its version of the acquisition/divestment story by saying it was going to generate value the same way it did previously with TXI. It’s a small thing but the acquisition also sees the US’ largest domestic cement producer increase its production base. The top five North American cement producers will remain controlled by companies headquartered in Europe but it is a step towards regionalism.

As for who’s right, in the short term, the west coast region looks good. The area included some of the best performing states in 2020 in terms of growth in cement consumption year-on-year in 2020 with the exception of Oregon. In its winter forecast the Portland Cement Association (PCA) attributed growth in the Mountain region of the US (including Nevada) to underlying economic fundamentals and favourable demographic trends, although it expected this to slow down in 2021. In the Pacific region it forecast consumption to grow modestly in 2021 due to residential construction. As if to underline the current situation, Cemex decided to recommission a kiln in Mexico in February 2021 to cope with cement shortages and project delays in California, Arizona and Nevada.

In the face of these figures HeidelbergCement’s decision to sell suggests either it dangled a juicy proposition with good short term prospects in front of the buyers or its long term projections are pointing elsewhere. Selling up, yet holding onto its largest cement plant in the region, also smacks of hedging its bets. No doubt it will be holding on to a few terminals too. On the other hand, it would be very interesting indeed to know what part, if any, HeidelbergCement’s internal carbon price played in its decision to divest in the western US. California has the country’s biggest carbon emissions trading scheme (ETS). If say, legislators suddenly decided to follow the price trend of the European Union’s ETS then things might look different.

US: The Portland Cement Association (PCA) has received the 2021 Energy Star Partner of the Year award from the US Environmental Protection Agency and the US Department of Energy. It is the second year in a row the association has been recognised in this way. Each year, the Energy Star program recognises a group of businesses and organisations that have made outstanding contributions to protecting the environment through superior energy achievements.

“The PCA and its members are proud to be recognised for continuously improving energy efficiency to reduce emissions,” said PCA President and chief executive officer Michael Ireland. “The cement and concrete industry is leading the way towards a more sustainable future as PCA and its members are developing an industry roadmap across the entire value chain to reach carbon neutrality by 2050."

In addition to PCA’s Partner of the Year recognition, two PCA member companies, CalPortland and Cemex USA, earned corporate Partner of the Year awards and 13 US cement plants earned Energy Star certification for superior energy performance in 2020.

US: Phoenix Industrial will install the raw mill for Denmark-based FLSmidth’s raw mill upgrade of CalPortland’s integrated Mojave cement plant in California. The company said that it will conduct civil, concrete, structural steel, mechanical and electrical work on the project. Mobilisation of crews to the site is due to begin in March 2021 with commissioning scheduled for December 2021. Saxum Engineering is also working on the upgrade.

One news story to note recently has been Cemex’s decision to recommission a kiln in Mexico to address cement shortages in the southwest US. In early February 2021 the Mexico-based producer said it was spending US$15m to restart a 1Mt/yr kiln at its CPN cement plant in Hermosillo, Sonora. The unit is over 250km from the US border but Cemex said it was making the investment to cope with cement shortages and project delays in California, Arizona and Nevada. At present it supplies over 3Mt/yr to California, Arizona, and Nevada from its integrated plant in Victorville, California and via sea-borne imports. Efficiency improvements at Victorville and other unspecified supply chain changes are also planned.

Cemex isn’t the only company with an eye on the south-west US. Around the same time Japan-based Taiheiyo Cement concluded its deal with Semen Indonesia to buy a 15% stake in its subsidiary Solusi Bangun Indonesia (SBI) for around US$220m. It’s a long way from Arizona but the related statement mentioned plans to make SBI’s integrated Tuban plant in East Java more export focused, with the construction of a new jetty and silos. It intends to export 0.5Mt/yr of cement to Taiheiyo Cement’s business in the US. Its local subsidiary, CalPortland, runs two integrated plants in California and one in Arizona.

Chart 1: Annual change in US cement consumption by state, December 2019 – November 2020. Source: PCA & USGS.

In its recent winter forecasts the Portland Cement Association (PCA) reported that the Mountain region of the US recorded the highest growth in cement consumption in 2020, at 10%, due to underlying economic fundamentals and favourable demographic trends. Data from the United States Geological Survey (USGS) supports Cemex’s view too. Ordinary Portland Cement and blended cement shipments rose by 21% year-on-year to 2.74Mt in Arizona and New Mexico in the first 11 months of 2020 from 2.28Mt in the same period in 2019. This doesn’t quite tally in California where shipments fell slightly, by 0.8%, to 9.42Mt. However, it reported 12% growth to 2.38Mt in the first quarter of 2020, suggesting that the market could return sharply once the coronavirus epidemic is better under control. Overall, shipments in the US grew by 1.03% to 82.3Mt in the first 11 months of 2020, driven by growth in central regions. The PCA expects national cement consumption to grow by about 1% in 2021 with a ‘robust’ recovery driven by residential housing but slowed by uncertain coronavirus vaccination supplies and general market volatility.

In a world with too much clinker production capacity, it stands out to see two established producers so visibly chasing market share in a mature market. Rather than building new plants, both Cemex and Taiheiyo Cement are using or reviving existing production lines in other countries, and building import strategies as well as optimising their existing facilities in the regions. With the western building material multinationals now often looking to focus on ‘safe’ markets in Europe or North America the fight to grow market share in these regions is likely to become more intense. It also complicates decisions about when or if an existing plant should be mothballed or shut. After all, Cemex’s old production line in Hermosillo is about to become very useful indeed.

US: The Environmental Protection Agency (EPA) has awarded CalPortland’s Rillito cement plant in Arizona with its ninth consecutive Energy Star. Efforts towards energy intensity reduction at the plant included: replacing two preheater tower cyclones, installing 11km of new belting to a quarry belt conveyor, replacing the kiln baghouse fan and dust collector bags, increasing the plant’s focus on energy efficiency by expanding its energy team, conducting more frequent energy meetings and communicating energy efficiency best practices throughout the plant.

President and chief executive officer (CEO) Allen Hamblen said “CalPortland is pleased to accept the EPA’s Energy Star 2020 certification in recognition of our energy efficiency efforts at the Rillito plant. We continue to demonstrate our commitment to environmental stewardship and Energy Star while also reducing our energy costs through the hard work of our employees and our corporate energy management culture.”

US: CalPortland has launched a new fleet of 24 compressed natural gas (CNG)-fuelled bulk hauler trucks. The company has also commissioned a CNG fuelling hub at its Oro Grande cement plant in California. Ozinga Energy installed the hub, which uses biogenic Redeem methane from organic and agricultural waste at its fast-fill station and 24 slow-fill stations. The producer says that Redeem will reduce CO₂ emissions per tonne of fuel burned by at least 70%. It predicted a total greenhouse gas emissions reduction of 10,000t/yr.

President and chief executive officer (CEO) Allen Hamblen said, “By adding 24 cement bulk hauler trucks and a fuelling centre at our Oro Grande cement plant, CalPortland continues to demonstrate our on-going commitment to achieving zero emissions through environmental stewardship and lowering our carbon footprint within the communities where we operate.”

US: CalPortland has announced the launch of Advancement, a product line of cements containing sustainable materials and produced using renewable processes. These include the replacement of 15% of the Ordinary Portland Cement (OPC) clinker with blended limestone. The company currently offers Advancement Light for aesthetic design and Advancement High Sulphate for general use concrete applications and when high sulphate resistance is required, both of which have 10% lower embodied carbon than OPC. More products are planned to follow.

CalPortland president and chief executive officer (CEO) Allen Hamblen said, “Advancement is a line of products that can be combined with other concrete carbon reduction technologies to further enhance performance and increasingly reduce the embodied carbon of concrete.”

US: CalPortland has awarded a supply contract to FLSmidth for a new raw mill at its integrated Mojave plant in California. The scope of supply includes engineering, equipment and installation of a new OK 48-4 Raw Mill with a Condition Monitoring System and an ECS/ProcessExpert system. The mill is scheduled to be in operation in late 2021. No value for the current order has been disclosed.

“The new OK Raw Mill from FLSmidth will increase reliability and efficiency at our Mojave plant," said Bruce E Shafer, Senior Vice President for Cement Operations at CalPortland. It follows the purchase of a FLSmidth OK Cement Mill at the same plant in 2004. FLSmidth added that as both OK mills at the plant will share the same gearbox design, the unit will be able to streamline maintenance and manage inventory costs by sharing the one spare FLSmidth MAAG WPU-200 assembly.

US: The Environmental Protection Agency (EPA) has awarded Energy Star certification to Japan-based Taiheiyo Cement subsidiary CalPortland’s 1.3Mt/yr integrated Rillito plant for the eighth consecutive year for its superior energy performance compared with other plants of comparable capacity in the country. CalPortland president and CEO Allen Hamblen said, “We continue to demonstrate our commitment to environmental stewardship and ENERGY STAR while also reducing our energy costs through the hard work of our employees and our corporate energy management culture.”

US: CalPortland has been awarded a US$175,000 grant from the Mojave Desert Air Quality Management District (MDAQMD) to replace a 1999 Terex Bore/Drill rig with a 2019 Caterpillar MD2650 drill. The new drill expects to see a 76% reduction on average in nitrogen oxides (NO_x), reactive organic gases (ROG) and particulate matter (PM) combined. The grant comes from the Carl Moyer Program, which provides monetary grants to private companies and public agencies to clean up their heavy-duty engines beyond legal requirements through retrofitting, repowering or replacing their engines with newer and cleaner ones.