Displaying items by tag: Coal

Indonesia: Semen Indonesia has blamed falling earnings in 2021 on increased competition, production overcapacity and mounting coal prices. Its revenue fell slightly to US$2.43bn. However, its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 9.3% year-on-year to US$572m in 2021 from US$630m in 2020. Its sales volumes were driven by international sales, with domestic sales remaining stable at 32.2Mt. Foreign sales grew by 7.7% to 8.3Mt. Overall sales volumes increased by 1.6% to 40.5Mt from 39.8Mt.

In order to tackle its fuel costs the company says it has increased its use of alternative fuels, both biomass and non-biomass, and is optimising its coal consumption index by maintaining stable coal quality. It has also integrated coal procurement into the group to help better secure competitive pricing, supply and quality.

Pakistan: Cement producers have reported a rise in operating costs. The News International newspaper has reported that costs have risen due to a hike in the price of imported Afghan coal. The price of the coal rose by 13% to US$170/t from US$150/t in the week leading up to 10 February. The rise brings it to just 23% below the price of imported coal from South Africa, which is currently US$236/t.

The Pakistani cement industry depends on imports of coal, of which 30 – 40% came from Afghanistan in Northern Pakistani cement production in 2021.

The cement output data for December 2021 is out for China and we’re starting to see the effects of a rather tough autumn. Lower coal supplies, consumer prioritisation for energy supplies, higher input costs and a slowing real estate market all contributed to a reduction in output.

Graph 1: Cement output by quarter in China, 2019 –2021. Source: National Bureau of Statistics of China.

As can be seen in Graph 1 above, output took off after the shock of the coronavirus outbreak receded at the start of 2020. This then continued until mid-2021 when things changed. Overall cement out was 2.36Bnt in 2021, an annual drop of nearly 1.2% compared to 2.39Bnt in 2020. Note that the 2021 output figure is about average for China’s annual output since it hit a high of nearly 2.5Bnt in 2014. However, the months from September 2021 onwards have seen output drops of above 10% year-on-year. It’s been from a high base but if it were to continue it could signal a more ominous trend. As the China Cement Association (CCA) describes it, cement output started to slow from May to August 2021, in part due to seasonal factors and repeated local outbreaks of Covid-19 around the country. This trend then started to accelerate for the reasons mentioned above.

Looking at energy first, coal future prices in China hit a near-decade high in October 2021 due to a variety of market disruptions. This looked set to worsen at the start of January 2022 when the country’s biggest overseas supplier, Indonesia, banned exports for a month due domestic shortages. However, data has since emerged this week from the National Bureau of Statistics showing that Chinese coal production grew by 4% year-on-year to 4.07Bnt in 2021, with faster monthly growth, as the industry ramped up output to meet demand.

On the real estate market, the CCA views it as having run ‘hot’ and then ‘cold’ in 2021. At the start of the year the government introduced new government regulations (its so-called three red lines of policy) to reduce borrowing in the sector. The real estate market subsequently declined, not withstanding certain hot-spots. In the western press this process has been symbolised by the fortunes of Evergrande and its debts of over US$300bn. It started missing bond payments in September 2021 before formally defaulting in December 2021. As the Financial Times newspaper reported in a summary on the situation, in late December 2021, Evergrande said that work at 92% of its projects, which number in the hundreds across China, had resumed. Separate data though showed that its housing sales had slumped by 99% year-on-year in the same month. The newspaper has compared the Chinese government’s approach to Evergrande to its handling of conglomerate HNA Group, which was eventually declared bankrupt in 2021 after a slow disintegration. In its opinion the government may try to control the collapse of Evergrande through a series of quiet interventions over a long period. However, Evergrande’s debts appear to be double those of HNA Group’s and there may be further risks from other companies in the real estate sector. All of this presents risks to local cement output.

To round up, Chinese cement output in the second quarter of 2022 is the figure to watch to assess how well the industry is coping with its current issues. Production is likely to slow in the first quarter due to seasonal factors such as the New Year holidays, winter shutdowns and the hangover from the problems in the autumn. Once the spring arrives then we may have a glimpse of how cement companies are coping with coal supplies, the real estate market and all the rest.

And finally... Global Cement Weekly invites readers to explore Austria-based W&P’s virtual tours of three of its plants. The presentation is a fancier version of the panorama photo applications one can find on most smartphones but with some added mapping and visualisation settings. It’s a fantastic addition to the set of community outreach tools a cement company can use. Check it out here: https://alpacem.com/360/

Montenegro: State-owned energy supplier Elektroprivreda Crne Gore (EPCG) has proposed the gradual shutdown of its Pljevlja coal-fired plant and its replacement with a new cement plant. The company said that such a plant would eliminate Montenegro’s 750,000 – 800,000t/yr of cement imports.

The first stage of the Pljevlja power plant’s shutdown will only commence once a replacement power facility is online. Currently, the plant supplies 40% of the country’s energy. Its closure is part of Montenegro’s plan to accede to the EU as soon as 2025.

Taiwan: Zhang Anping, the chair of Taiwan Cement, has expressed doubts about the strength of the Chinese market in the short term. Whilst being interviewed by the state-owned Central News Agency at a community event, he said that increased raw material and energy prices looked set to remain high until at least mid-2022. The price of coal in China had more than tripled in 2021 before easing somewhat. He also raised the risks of growing global market uncertainty from an anticipated rise in interest rates in the US by the Federal Reserve and the spread of the Omicron variant of Covid-19.

India: Finance company ICRA reported all-India cement sales in the first half of the 2022 financial year of 124Mt, up by 22% year-on-year. Mint News has reported that the total value of cement sales rose by 5% in the period compared to the first half of the 2021 financial year. Producers’ raw materials costs rose by 16%, while power, coal and petcoke costs rose by 26% and freight costs rose by 7%. Granulated blast furnace slag (GBFS) and gypsum prices also rose.

ICRA corporate ratings assistant vice president and sector head Anupama Reddy said "Despite some easing in the cost-side pressures, the input costs are likely to remain elevated in the near term, and are expected to exert pressure on operating margins, which are likely to decline by 200 to 230 basis points (BPS) in the 2022 financial year as a whole. While the capacity additions are expected to increase year-on-year in the 2022 financial year, the reliance on debt is likely to be lower owing to the healthy cash generation and strong liquidity of the cement companies. The debt coverage metrics are expected to remain strong in the 2022 financial year."

Thailand: Siam Cement Group (SCG) plans to spend US$2bn towards meeting its CO₂ reduction target by 2030. The industrial group and cement producer intends to reduce its emissions by 20% by the end of the decade, according to the Bangkok Post newspaper. Chief executive officer Roongrote Rangsiyopash, said that the investment will be made from 2022 to 2030 and that it follows the United Nation’s Sustainable Development Goals (SDG), the Thai government's bio, circular and green (BCG) economic model and environmental, social and governance standards (ESG). After 2030 the group has a net zero goal for 2050.

In cement production the SCG wants to increase its rate of alternative fuels such as biomass and refuse-derived fuel. It also wants to invest in carbon capture utilisation and storage, use electric vehicles and use artificial intelligence systems in energy management. The group plans to reduce coal usage at its cement plants in Thailand, Vietnam, Laos, Cambodia and Indonesia by 50% in 2022. It also plans to use more electricity generated by renewable energy for its factories.

India: Ratings agency Crisil has forecast 11 – 13% year-on-year growth of cement sales volumes in the 2021 financial year. The Press Trust of India has reported that the agency predicted that high demand and increased fuel costs would precipitate a rise in cement prices to record levels before April 2022.

In December 2021, petcoke prices rose by 80% year-on-year, while the price of imported coal had more than doubled. This has increased cement producers’ costs by 40%.

US: The Portland Cement Association (PCA) has announced the winners of its Energy and Environment Awards 2021. The awards recognise cement plants’ outstanding environmental and social efforts beyond what is required.

CalPortland’s Mojave plant in California won the Energy Efficiency award for an efficiency-increasing upgrade to its vertical roller mill, which included the introduction of a bottom hopper cone on each of its cyclones and a replacement of its mill fan housing. Argos USA’s Calera plant in Alabama won the Land Stewardship award for its conversion an 8.5ha lime kiln dust stockpile into grassland. The area now forms a vibrant ecosystem including wetland habitats. The producer also installed ponds with the additional purpose of stormwater management. Titan America’s Pennsuco plant in Florida won the Overall Environmental Excellence award for its conversion of the plant’s kiln to natural gas from coal use. The upgrade has also enabled the plant to begin to substitute alternative fuel (AF) in the kiln. The Pennsuco plant plans to produce 100% Portland limestone cement (PLC) by ‘as early as 2023.’

Other awards went to Roanoke Cement’s Troutville, Virginia, plant in the Environmental Performance category and to Cemex USA’s Victorville, California, plant in the Outreach category.

PCA President and CEO Michael Ireland said “The US’s cement manufacturers continue to focus on researching and developing new and innovative ways to reduce their environmental footprint. These accomplishments and industry commitment to carbon neutrality across the entire value chain demonstrate PCA members’ dedication to energy efficiency and a more sustainable future.”

India: UltraTech Cement has begun mining coal at its Bicharpur coal mine in Madhya Pradesh. The producer will use the coal in its cement production. UltraTech Cement acquired the 29Mt Bicharpur coal mine at auction in 2015.