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Another week and it’s another commodity story related to the effects of coronavirus. This time the Indian press and financial analysts have started to notice a shift in the fuel mix of some of the major producers from petcoke to coal. UltraTech Cement moved to 30% petcoke and 60% imported coal in the fourth quarter of its 2021 financial year that ended on 31 March 2021. This compares to a reported mix of 77% and 10% in the previous year according to Mint. Dalmia Bharat reduced its share of petcoke to 52% in the fourth quarter from 70% in the third quarter, while its coal mix was 35 - 40% in the fourth quarter.

Price is the driver here. UltraTech Cement’s chief financial officer Atul Daga summed the situation up in an earnings call in late January 2021. Essentially, he said that fuel represented about 13% of total costs for cement producers in India and that both the cost of coal and petcoke nearly doubled from June 2020 to January 2021. However, coal is seen as the cheaper option, hence the move towards it in the fuels mix ratio. The petcoke market meanwhile has suffered due to reduced oil refinery output due to, you guessed it, the effect of coronavirus on global markets in 2020. Scarcity in the US market has particularly affected the decisions on buyers for Indian cement companies since this is the key source of their imports. Demand for petcoke from Latin America and the Mediterranean hasn’t helped either. Both petcoke and coal markets are expected to stabilise in the second half of 2021. Diesel prices have also risen recently causing UltraTech Cement’s power and fuel costs to increase by 28% year-on-year to US$356m and logistics costs, including freight expenses, to rise by 25% to US$449m in the fourth quarter of its 2021 financial year.

With this in mind it’s interesting then, that for some analysts at least, fuel prices have been seen as more worrying for cement producer profits than the latest round of coronavirus-related lockdowns from India’s second wave of infection. Fitch Ratings for example, warned that the impact of mounting fuel costs would continue to be seen in the quarter to June 2021 but that it would subside due to the switch in fuel mix and price rises passed to end consumers. On the lockdowns, it forecast that localised restrictions, with cement plants being allowed to continue operating in most states, would cause a far less pronounced drop in cement demand than during the first national lockdown.

Graph 1: Monthly cement production in India, January 2019 – April 2021. Source: Office of the Economic Adviser.

Graph 1 above shows that the crisis the Indian cement sector faced during the first lockdown, when production crumbled by 85% year-on-year to 4.3Mt in April 2020. The following recovery saw production reach its second highest ever figure at 32.9Mt in March 2021. It’s too soon to tell what’s happening from the national figure but that dip in April 2021 is not looking good so far.

One benefit from unstable fuel prices is that it builds the economic case for cement producers to raise their alternative fuels substitution rates. UltraTech Cement, for example, reported that its ‘green’ energy rate grew to 13% in its 2021 financial year from 11% in 2020. With a target of 34% by its 2024 financial year, this is an ideal opportunity for a change for both UltraTech Cement and other producers.

Germany: HeidelbergCement has appointed René Aldach as its group chief financial officer (CFO) and it has created two new positions on its managing board. Nicola Kimm will become the new board member for sustainability and Dennis Lentz will become the new board member for digitalisation. All changes will become effective from the start of September 2021.

Aldach, aged 42 years, will succeed Lorenz Näger in the post of CFO following Näger’s retirement at the end of August 2021. Näger has been HeidelbergCement’s CFO since 2004. Aldach currently works as Director Group Reporting, Controlling & Consolidation for HeidelbergCement. He joined the company in 2004 and has worked in Germany, Africa and Australia, including holding the position of CFO for Hanson Australia.

Kimm, aged 51 years, will become the group’s Chief Sustainability Officer responsible for environment social governance, global research & development and new technologies. She currently works as an executive committee member and chief sustainability officer for Signify, the lighting business that was formerly part of Philips. As a trained ecologist and chemical engineer, and with a PhD in business engineering, she holds almost 25 years of international professional experience. Kimm has also held sustainability roles with BASF, Corbion/CSM and Philips and worked in Europe, Asia and the Americas.

Lentz, aged 39 years, will become the group’s Chief Digital Officer. Since 2010, he has held management positions as Head of Group Energy Purchasing, Director Logistics and Group CIO at HeidelbergCement. Before joining the company, he worked as a management consultant in the building materials and mining industry with a strong focus on process optimisation.

US: LafargeHolcim US has appointed Toufic Tabbara as the chief executive officer (CEO) of US cement operations. He succeeds Jamie Gentoso, who was appointed by Switzerland-based LafargeHolcim as Global Head, Solutions & Products Business Unit and a Group Executive Committee Member in March 2021.

Tabbara joined Lafarge in 1998, beginning his career in the gypsum division, followed by roles in ready mix concrete, asphalt and construction operations in the US and Canada. In 2012, he was named Country CEO for Jordan, responsible for ready mix operations, two cement plants and one grinding plant. Later, following the merger of Lafarge and Holcim, he became the Country CEO for Algeria, where he oversaw ready mix, aggregates, gypsum and cement operations, in addition to a central research lab.

He received his Master of Business Administration from the Thunderbird School of Global Management in Arizona and holds a Bachelor of Business Administration from the American University of Beirut, Lebanon.

Sweden: Germany-based HeidelbergCement subsidiary Cementa plans to upgrade its Slite unit in Gotland to become the world’s first carbon-neutral cement plant. This will be achieved through modification of the plant’s fuel system to ‘significantly raise’ biobased fuel substitution, as well as 100% carbon capture and storage (CCS) via a 1.8Mt/yr CCS installation. Full-scale capturing of the plant’s CO₂ emissions is scheduled by 2030.

Chair Dominik von Achten said, “HeidelbergCement will be the leader in the global cement industry on its transformation path towards climate neutrality. The key for decarbonising our industry is to find, apply and scale technical solutions for carbon capture and utilisation or storage (CCU/S). After having gained valuable experience with CCU/S technologies in Norway and other countries, we are now excited to make the next step with a completely carbon-neutral cement plant in Sweden.”

Iran: Abyek Cement Complex has relaunched a 8500t/day production line at its plant in Abyek, Qazvin province following repairs. Alireza Razm Hosseini, head of the Ministry of Industry, Mine and Trade, attended the event. The production line is the largest in the country, according to the ministry. Cement produced at the plant will be exported.

The Tehran Times newspaper has reported that the relaunch brings the total national capacity to 80Mt/yr across 74 plants. Domestic demand was 70Mt in the 2021 financial year, which ended on 21 March 2021.

Iran: Hashem Nezamabadi, the managing director of Kaveh Pars Mining Industries Development Company, says that the Mostazafan Foundation and its subsidiaries have started production of oil well cement. Subsequently the country will no longer need to import this type of cement, according to the Trend News Agency. The specialist cement will be used to support the country’s oil industry.

Canada: The Cement Association of Canada (CAC) and the government have published a joint statement detailing their plant to develop a roadmap to net-zero carbon concrete. When launched in December 2021, the roadmap will provide Canadian cement producers with the policies, tools and technologies to contribute to the achievement of net-zero concrete by 2050. The plans will cover areas including: supporting the low-emissions building materials supply chain, building an innovative opportunities framework and engaging stakeholders. According to the statement, the roadmap will offer total potential CO₂ reduction of 15Mt by 2030, and 4.0Mt/yr thereafter.

The partnership will establish a CAC-led Industry-Government Working Group in collaboration with the National Research Council the Standards Council of Canada and Innovation, Science and Economic Development. Among its tasks will be the publication of updated environmental product declarations.

Puerto Rico: Colombia-based Grupo Argos subsidiary Cementos Argos has combined the distribution capacities of its Dorado and San Juan cement terminals at the Dorado site. It recently upgraded the terminal with a new mixing system and 3000 bags/hr packaging system, up by 100% from 1500 bags/hr previously. New sensors have improved safety, while efficiency and reliability have both also increased. The company said that the consolidation has enabled it to expand its portfolio of products on offer at the major Caribbean hub.

Caribbean and Central America regional vice president Camilo Restrepo said, “At Argos, we ensure the high reputation Argos Colombia is maintained wherever we go. We are convinced that this transformation in Puerto Rico will only serve to benefit our clients. We have the assets, the capabilities, the talent and all the passion to satisfy the island's needs, all while strengthening our export vocation in the Caribbean, making this operation an important commercial maritime hub.”

Brazil/Turkey: Brazil-based Votorantim Cimentos has implemented artificial intelligence techniques for cement strength testing across 27 of its laboratories in Brazil and Turkey. The producer says that the technology gives precise cement strength readings after just three days, compared to 28 days without the technology. It also uses a new metric, technical efficiency, to measure cement’s performance in concrete from the customer’s point of view. The implementation has increased available test results by 200% and eliminated 119 hours of testing time in Brazil alone for the company. It says that this has increased its agility in dealing with quality control and customer satisfaction.

The company said, “We at Votorantim Cimentos want to pave the way for the future of civil construction in a simple, agile and sustainable way, strengthening our role at the construction site, working to be the first choice of retailers and consolidating ourselves as a reference in sustainability in the value chain. Therefore, we look at our research and development projects as short, medium and long-term initiatives to leverage innovations in the sector. Many initiatives are aimed at optimising internal processes that impact the performance of our products, such as those involving the use of artificial intelligence to develop applications and predictive models. In addition, based on models for predicting the properties of cements, we have already created others for use in our mortars and concretes."

Colombia: Grupo Argos has formed an alliance with five other Colombian companies to boost the number of women and young people in work. The alliance will focus on creating sustainable and competitive job opportunities. The participants say that they will jointly offer 6000 mentorship places. Youth and female unemployment respectively rose to 25% and 31% nationally during the on-going Covid-19 outbreak. Grupo Argos said that it is part of its corporate social responsibility to take action to create quality work.