Displaying items by tag: Cemex

Jamaica: Cemex subsidiary Caribbean Cement has co-processed 1t of waste at its Rockfort cement plant under the National Environment and Planning Agency's Adopt-a-Beach programme. Since July 2022, the producer has also recovered 500kg of recyclable materials for processing by its partners. The Our Today newspaper has reported that the cement company has carried out three cleans of its adopted beach, Sirgany Beach, to date.

US: The Environmental Protection Agency (EPA) has announced that 10 cements plants have received its Energy Star certification in 2022 from a total of 86 manufacturing plants across all industries. The certification is awarded to the top 25% performers in energy efficiency in each sector. The EPA cited examples of how Titan America’s Troutville plant in Virginia and its Medley plant in Florida had converted production to Portland Limestone Cement (PLC), and achieved a 12% reduction in electricity use and an 18% reduction in CO2 emissions, respectively, thanks to improved energy management. It also mentioned Cemex’s Miami plant in Florida, which increased its energy performance in 2022 by modifying a finish mill, optimising the ball charge on the largest mill and identifying and correcting potential energy losses while also increasing the production of PLC.

Cement plants awarded the Energy Star certification in 2022 include: Drake Cement’s Paulden plant and Salt River Materials Group’ Clarkdale plant in Arizona; GCC’s Pueblo plant in Colorado, Cemex’s Miami plant and Titan America’s Medley plant in Florida; Argos USA’s Harleyville plant in South Carolina; GCC’s Rapid City plant in South Dakota; Buzzi Unicem USA’s Chattanooga plant in Tennessee; Titan America’s Troutville plant in Virginia; and Ash Grove Cement’s Seattle plant in Washington.

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.

Spain: Cemex España will install a carbon capture system at its Alicante cement plant in Valencia, as part of its efforts to make the unit a 'benchmark pioneer low-CO₂' cement plant. The producer holds a contract with ET Fuels for the supply of 45,000t/yr of CO₂ captured at the facility for methanol production.

Chief executive officer Fernando González said “Our goal of reaching net-zero CO₂ emissions is achievable and will be driven by collaboration and innovation. Our decarbonisation roadmap includes reducing emissions to the lowest possible level through proven levers such as clinker substitution and alternative fuels. New levers, such as rapidly developing CCUS initiatives, must effectively tackle the remaining CO₂ emissions to hit our ambitious 2050 objectives.”

Europe: Cemex’s annual CO₂ emissions from its European operations fell by 41% in 2022 compared to 1990. It added that it had cut its emissions in the region by 12% between 2020 and 2022. The group attributed the decline to the success of its climate action strategy to date, including a large investment in a new alternative fuels facility in the UK, investments in solar power plants in Germany and Poland and the roll-out of its Vertua reduced-CO₂ products across the region.

Regional president Sergio Menendez said "As we begin to implement the next stages in our climate action strategy, we now expect to exceed our 2030 aspiration of hitting a 55% CO₂ reduction in our European operations. While we are progressing important carbon capture projects and policy advocacy for our ultimate net zero target, these 2030 interim aspirations are not reliant on this technology.” he continued, “This is certainly a challenging target, but I am confident that with innovative thinking, close collaboration between our different business areas and further development of our regulatory framework, it is both feasible and profitable. This sustained effort is vital if we are to meet our global, primary objective of becoming a net-zero CO₂ company by 2050. We will continue to provide regular updates on our progress.”

US: The US Department of Energy (DOE) has awarded US$3.2m to Solar MEAD, a project that aims to replace fossil fuels with concentrated solar thermal (CST) energy in clinker production. Solar MEAD is jointly led by Cemex, Swiss solar fuels innovator Synhelion and Sandia National Laboratories, a research and development laboratory run by the DOE.

Synhelion’s CST technology generates hot gas at 1500°C, high enough to produce clinker without any thermal fuels. Cemex and Synhelion produced a batch of clinker with CST in a research setting in Spain in 2022. In the Solar MEAD project, Sandia National Laboratories will contribute its research facilities in New Mexico and subject expertise to help accelerate the adaptation of the technology for use in cement manufacturing. The projects aims are to increase the efficiency of CST technology by improving heat transfer from the hot gas to the cement raw mix and further reduce the CO₂ emissions of the process.

UK: Neville Roberts, a former Technical Director of Cemex UK, has died on 10 February 2023, at the age of 66. He was a notable figure in the alternative fuels sector for the cement industry.

Neville attended Holyhead County School 1969 - 1975, taking Maths, Physics and Chemistry 'A' Levels, as well as representing the school in rugby, football and athletics. Roberts trained as a chemical engineer at Loughborough University and had worked in the cement industry for over 35 years. During his career he started as a process engineer, became a plant manager at a number of cement plants around the world including Chelm, Poland, and was appointed to five director roles for three cement companies. The companies he worked for included Rugby Cement, Castle Cement, RMC, Cemex and Saudi Cement Company. His later roles for Cemex included UK Technical Director (2004 - 12) and Energy Business Development Director (2012 - 13). He worked in the UK, Poland and Saudi Arabia. After leaving Cemex, Roberts set up his own consultancy and later became the managing director for the UK of Netherlands-based N+P Alternative Fuels.

He was a passionate supporter of all things Welsh, especially rugby, and was awarded the Global CemFuels ‘Personality of the Year’ award in 2013. Neville was husband to Patricia, father to Katie and Holly and grandad to Martha, Edie and Albee. He was known to his grandkids as 'Wowo.' Neville Roberts was great company, mentored and influenced many colleagues around the world and will be sorely missed.

Mexico: Cemex’s net sales grew by 8% year-on-year to US$15.6bn in 2022 from US$14.4bn in 2021. Its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 6% to US$2.68bn from US$2.84bn. Cement sales volumes decreased by 5% to 63.4Mt and ready-mix concrete sales rose by 2% to 50.1Mm3. However, the building materials producer reported a loss of US$99m in the fourth quarter of 2022 compared to a profit of US$195m in the same period in 2021. It attributed this to an impairment for goodwill and fixed assets.

Fernando A González, the chief executive officer of Cemex, said “2022 was a year of unique challenges as inflation spiked to 40-year highs, but I am pleased by how we responded and expect to continue to see the benefits of our strategy play out in 2023.” He added, “Importantly, after several quarters in which we have been able to offset inflation in dollar terms, I am seeing growing evidence that actual margin recovery is underway.”

By region, net sales increased in Mexico but operating EBITDA fell. In the US sales grew but earnings were flat. In Europe, Middle East, Africa and Asia sales rose and earnings increased on a like-for-like basis. In South, Central American and the Caribbean sales grew but earnings fell.

Colombia: Spain-based Cemex España is offering to acquire non-Cemex-owned shares in Cemex Latam Holdings. Sentido Común News has reported that the move prefigures Cemex Latam Holdings' planned delisting from the Colombian stock exchange to become an independent company. Mexico-based Cemex will consider its divestment under the group's asset optimisation strategy. The company said that the current offer gives investors the chance to exit. It expects to conclude all transactions by 1 May 2023.

Philippines: Cemex Philippines has secured a contract with Manila Water Company for the supply of biosolids from sewage processing for use as alternative fuel (AF). Cemex Philippines has already taken receipt of 10t of biosolids at its Antipolo cement plant in Luzon's Calabarzon Region.

Cemex Philippines’ sustainability and public affairs director Christer Gaudiano said “As pioneers of the use of biosolids as AF in the country, we have just signed what will now create the series of significant steps towards making circular economy a reality."

Sustainability initiatives form one arm of Asian Development Bank (ADB) and the ASEAN Capital Markets Forum's Golden Arrow award for good management, which Cemex Philippines won for the second time on 9 February 2023.