Displaying items by tag: China

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

China: Ji Youhong has retired as the chair of China Resources Cement as he has reached retirement age. He has also stepped down as an executive director, the chair of the company’s strategy and investment committee and the chair of its nomination committee. CEO Jing Shiqin will chair the board on an interim basis until a successor is appointment.

Ji was appointed as the chair of the board of China Resources Cement in 2022 and an executive director in 2016. He originally joined the group in 2003 and has worked in various positions including the general manager of various cement and concrete subsidiaries, the marketing controller from 2008 to 2012, the Regional General Manager (Guangxi) from 2012 to 2016, and the CEO from 2016 to 2023. JI holds a bachelor’s degree in engineering and a master’s degree in inorganic and non-metallic materials. He is currently the vice chair of the China Building Materials Federation and the executive vice chair of the China Cement Association. Previously he was the Vice President of the Eighth Council of the China Concrete and Cement-Based Products Association.

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.

Uzbekistan: Customs authorities have raised the clearance fee for cement imported from Tajikistan by seven-fold. In early November 2024 the fee was increased by US$300/t from US$35/t previously, according to the Asia Plus news agency. A source quoted by the news agency speculated that the move follows a strategy meeting by local cement manufacturers in October 2024. Tajikistan has previously been the main supplier of cement to Uzbekistan. However, as the country has built new cement plants, often supported by investors in China, domestic production capacity is growing. The Uzbek government previously banned cement imports for a short period in mid-2020.

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.

China: Shandong Province will curb cement production from 15 November 2024 to 15 March 2025 to reduce air pollution. The measure, similar to last winter's, was announced by the Province's industry and environment ministries. Shandong's reliance on inefficient captive coal-fired power plants means the measure could reduce coal demand significantly.

Starlinger revealed this week that it had taken on copycats in China and won. The packaging machine manufacturer said that it had sued a number of China-based machine manufacturers and their customers, packaging producers, based on infringement of several of its patents. An out-of-court settlement was eventually reached with the case going before both a civil court and a Chinese court specialised in intellectual property. Naturally, Austria-based Starlinger did not say what the settlement involved other than stating that the proceedings had been “...settled with strict obligations for the machine manufacturers.”

It’s unclear how directly the case affected the cement sector. Starlinger did say that the case involved a replica of a proprietary sack conversion line for producing woven plastic sacks. Packaging producers, often in Asia, use Starlinger’s conversion lines to manufacture proprietary block bottom valve sacks made of polypropylene tape fabric for the cement and construction industries, although they are also used for other dry bulk goods such as rice, flour or chemical granulates.

Starlinger’s reasons for going public are interesting given that most companies steer well clear of discussing legal matters openly. In the accompanying press statement Harald Neumüller, the chief strategy officer of Starlinger, used the disclosure to promote his products by saying “Only the best are copied, as the saying goes.” He then went on to underline the company’s strengths in research and development. Yet he also admitted that this was “...little consolation if it has economic consequences for innovative machine manufacturers like us.”

Firstly it should be noted that battles over patents and ideas happen everywhere from time to time. Discussing international copyright theft has become politicised because it plays into the geopolitical rivalry between the US, Europe and China. One US-government commissioned estimate in 2017 reckoned that the US economy was losing US$225 - 600bn/yr due to counterfeit goods, pirated software and theft of trade secrets. This report has been criticised but it gives one an idea of the scale of the concern. However, there are also plenty of prognosticators in the western media who have spent the last two decades warning of a hard landing in the Chinese economy that hasn’t happened.

Bringing this discussion back to cement, following the collapse of the real estate market since 2021, cement output has fallen. Data from the National Bureau of Statistics of China shows that output decreased by 11% year-on-year to 1.33Bnt in the nine months from January to September 2024. This appears to be following a similar decline in local real estate investment. The market is still correcting itself and the government is making gradual changes but there has been no apparent cataclysm so far. China-based equipment suppliers don’t appear to have suffered to the same degree due to their foreign orders.

The standard western narrative is that when European or American companies sold their equipment in China from the 1990s onwards they contended with a rocketing economy and lax intellectual property (IP) enforcement. Such an environment reputedly made it easy for some local companies to copy machinery and sell it more cheaply. At the same time China’s industries legitimately surpassed their competitors leading to criticism about how they did it. Publicly available evidence of this behaviour in the cement sector is limited. One of the few includes action by Haver & Boecker, another packaging machine manufacturer, in the late 2010s. However, anecdotally, the view that IP was stolen in China is prevalent in the west whether it is true or false. No doubt readers will have their own experiences and opinions. None of which would be publishable. The issue has been superseded though as China’s cement sector has become the largest in the world by a considerable margin. The biggest manufacturers of cement plants in the world are now Chinese companies too. They either use their own equipment or buy in western kit depending on what the customer wants. They also own a number of their overseas competitors and more potential acquisitions look likely.

All of this is what makes Starlinger’s admission unusual. It has taken a stand and it may have paid off. At the very least the equipment supplier is wringing publicity out of the affair regardless of how big - or small - the settlement may have been. Others may follow.

China: Asia Cement (China)’s nine-month profit of US$16.3m in 2023 turned to a loss of US$64.6m in 2024, Dow Jones Institutional News has reported. The group attributed the reversal to a drop in its selling prices.

China: Anhui Conch Cement (Conch Group) and AVIC International Beijing have entered a strategic agreement to combine their expertise and promote technological solutions for decarbonising cement production. The partnership will leverage Conch Group's experience in cement production and equipment manufacturing with AVIC International Beijing subsidiary KHD Humboldt Wedag International (KHD)'s expertise in equipment and engineering. The collaboration aims to expand their cooperation to include building AI-powered, smart and ‘green’ research and development platforms overseas. This will involve modernising traditional cement plants and enhancing operation and maintenance services.

Additionally, the Conch Technology and Industry Research Institute will work with AVIC International Beijing and KHD to apply cement decarbonisation technologies, such as calcined clay, oxyfuel clinker lines and electro-calcining, on an industrial scale at selected Conch production lines.

South Korea: Due to high prices of cement, the government has announced plans to import Chinese cement, which is reportedly about 15% cheaper than domestically produced cement. The preparations to import it, including certification and the construction of storage warehouses, will take about two years.