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One of the last news stories we covered before the Christmas break was that Lafarge Poland had selected China-based Nanjing Kisen International Engineering as the general contractor for a Euro100m-plus upgrade to its Małogoszcz cement plant. This appears to be the first major European cement plant upgrade project to be publicly run by a Chinese contractor. There may be other European projects in the sector run by Chinese companies ‘on the down-low.’

If it is the first then this is a significant milestone for the growth of the Chinese industry. It is a noteworthy first for Nanjing Kisen in the European Union. Europe is the home, after all, of a number of locally-based contractors and companies that can build or upgrade cement plants including FLSmidth, Fives, ThyssenKrupp, IKN and others. Indeed, all of the work on this project might actually be conducted by local companies, selected by the general contractor. For example, Lafarge Poland says that the general contractor will select a subcontractor on the Polish market.

It’s easy to fall into jingoistic nostalgia but should we really be surprised that China can competitively build cement plants given the ferocious growth of its own industry over the last few decades? Arguments by Western critics against growing Chinese dominance in industry have tended to home in on excuses why they might be ‘cheating’ such as intellectual property theft, unfair state aid or the use of low-cost infrastructure loans to countries along its Belt and Road Initiative. That last one carries some irony given that not so long ago discussions about developing world debt were framed in the context of the Cold War and the oil crisis in the 1970s. Western countries were seen as the bogeymen depending on one’s political outlook. With this in mind, the Financial Times recently reported on data released in December 2020 that suggested that China might be heading into its own overseas debt crisis. The takeaway message here is that attempting to apply China’s whopping infrastructure boom elsewhere might not work so well without the same level of control. Exporting production overcapacity abroad may simply turn out to be something like a giant Ponzi scheme! For the cement industry this may mean a pause or wind-down in the number of new plants backed by Chinese money, often with Chinese contractors tied in, and that the rise of Chinese engineering firms might not seem as unassailable as all that after all.

This leads into another noteworthy story that we also published before Christmas on China’s latest proposal to further reduce production capacity at home. The Ministry of Industry and Information Technology (MIIT) wants to tighten the ratio of production capacity that has to be closed before new capacity can be built from 1.25:1 to 1.5:1. The kicker is that the new rules also include a clause intended to restrict the use of so-called ‘zombie’ capacity in the swapping process by limiting eligibility to productions lines that have been operated for two or more consecutive years since 2013. These rules seem targeted at the present day but they could potentially push Chinese cement production capacity per capita to rates more similar to those found in developed economies elsewhere (i.e. halve existing Chinese production capacity). Many of the country’s kilns were built in the early 2000s and the average lifespan of a clinker kiln is 50 years. This suggests that the ministry is thinking seriously about culling capacity by the administration’s carbon neutrality target of 2060.

Chinese penetration in the European cement plant market is more of an after-thought given the pace of projects in Asia and Africa over the last decade and the maturity of the sector. It can also be misleading given that some very-European-sounding engineering companies are actually owned by Chinese concerns. Yet no doubt local contractors and suppliers would like to keep any business they can. On the other hand, more market share may be found in Europe over the coming decades from retrofitting CO₂ mitigating equipment or building the anticipated hydrogen revolution once the regulatory and financial framework starts to favour it. Or maybe shifts to service and/or machine intelligence-style packages are the way forward. Nanjing Kisen may be the first Chinese company to upgrade a European cement plant but the market focus may quickly move on. Time will tell.

Answers by email for when readers think the first cement plant or production line in the US will be built by a Chinese company.

Happy New Year from Global Cement

Egypt: Cement Engineering and consultancy company ASEC has appointed Ashraf El-Kahky as its managing director. It follows the retirement of Khaled El-Sebaie, who has been in post for eight years. El-Sebaie will continue to work for the company as a technical consultant.

El-Kahky joined ASEC Group as the Group Chief Financial Officer in September 2019. He brings over 30 years of experience from roles in financial management, risk management, strategic planning and restructuring, having previously held leading roles in several national and multinational organisations.

UK: The World Cement Association has appointed Roland van Wijnen, the chief executive officer (CEO) of PPC, and Mahendra Singhi, the managing director and CEO of Dalmia Cement, as directors. The appointments were agreed in a vote at the WCA General Assembly Meeting in December 2020.

Singhi has worked in India’s cement sector for over 40 years. He leads Dalmia Cement (Bharat), a large Indian cement producer recognised as having one of the lowest carbon footprints in the world.
Van Wijnen brings more than 20 years of international CEO and consulting experience encompassing operations management, strategy planning and execution, business process re-engineering and people management and development. Prior to his role as CEO at PPC, a large African cement producer, he worked at LafargeHolcim for 17 years, during which time he held various senior leadership roles across the group.

Nepal: Udayapur Cement has appointed Gopi Neupane as its director general. He holds experience in the hydro-electric, health and education sectors, according to Khabarhub. The state-owned cement producer markets the ‘Gaida Cement’ brand.

India: LafargeHolcim subsidiary ACC has commissioned a new 1.4Mt/yr unit at its Sindri cement grinding plant in Jharkhand. The plant now commands a total grinding capacity of 4.4Mt/yr. The company began work on the expansion in December 2019 in order to strengthen its presence in the Eastern region. It said that the state government and local authorities aided smooth commissioning.

LafargeHolcim India chief executive officer (CEO) and non-executive director ACC Limited Neeraj Akhoury said, "Strong ambition aimed at deliverance of high performance is what guided ACC to establish the commissioning of the Sindri GU-Phase-II within a record period.” He added, “I am proud of the flexibility and agility demonstrated by the team."

ACC managing director and chief executive officer (CEO) Sridhar Balakrishnan said, “The commitment, meticulous planning and collaborative approach by the Project Sindri team in these unprecedented times and commencing the cement production in a record time have set a new benchmark for ACC.”

US: A US court has fined Argos USA US$20m for violations of antitrust rules between 2011 and 2016 with regards to the ready-mixed concrete market. The subsidiary of Columbia-based Cementos Argos subsidiary has admitted to collusion with another ready-mix producer. The US Department of Justice says that the companies coordinated price rises, submitted collusive non-competitive bids to customers, allocated markets in Southern Georgia and elsewhere and charged fuel surcharges and environmental fees.

Argos says the conspiracy was committed by, “a small number of former employees of a small, local sales office” that joined Argos when it acquired another company, according to Reuters. It added that its management “did not participate in or condone the conduct, which was undertaken in contravention of company compliance policies.”

Morocco: Bab Sahara Company is building a new cement plant in Guelmim, Guelmim-Oued Noun. Le Desk has reported that the company is a joint venture between three private investors, including Tarfaya City Council Chair Abdelhay Hartoun. An environmental impact study for the project was started in late December 2020 by the Ministry of the Interior.

Paraguay: Cementos Concepción (Cecon) says that its new 1Mt/yr integrated Concepción cement plant in San Lazaro will start commissioning in June 2022. Regular production is expected to start in August 2022. The Hoy newspaper reports that the project recently secured the last phase of its funding. It has a total investment of US$240m.

Argentina: Holcim Argentina has confirmed that it will stop milling activity at its Yocsina cement grinding plant in Córdoba province at the end of March 2021. The decision is part of a move to unify all cement grinding in the region at its integrated Malagueño plant, according to Agência CMA. The latter unit is currently being upgraded with start-up scheduled for the first quarter of 2021.

Trinidad & Tobago: Rock Hard Cement says it will close during January 2021 in Trinidad due to alleged changes in government tariffs on imported cement. It hopes to reopen In February 2021, according to the Trinidad & Tobago Guardian newspaper. The company has published advertisements in local media warning of potential price rises of up to 80% in 2021. As well as changes to import costs the cement importer claims that the quantity of imported cement will be restricted to 75,000t/yr. The Ministry of Trade and Industry said it couldn’t comment on the matter as it is currently undergoing legal proceedings.