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Holcim agreed to sell its Indian assets to Adani Group this week for US$6.37bn. These include Holcim’s stakes in its local subsidiaries Ambuja Cement and ACC. The deal, if approved by the local competition body, should complete in the second half of 2022. This is one of the larger sales of cement company assets over the last decade. Adani Group, an Indian-based conglomerate with businesses across energy, transport and more, is now poised to become the second largest cement producer in India.

Global Cement Weekly previously covered a potential sale of Ambuja Cement and ACC in April 2022 when the story that Holcim was looking for a buyer first emerged in the Indian press. At the time local press speculated that the sale could generate as much as US$15bn for Holcim. So it is interesting to see that a figure of US$6.37bn has been agreed upon instead, less than half of the speculative figure. Roughly, as ever, this places a value of a little below US$100/t of cement production capacity. This seems like a relatively low pricing for these plants by international standards over the last decade. However, this doesn’t take into account many factors such as, for example, the condition of the plants, Holcim’s desire to change its business, the ease of selling up in India all in one go, other non-cement assets and so on. For Adani Group though, buying into heavy building materials production in a large market like India clearly seemed attractive. It is also worth noting that, similar to other cement sector acquisitions recently, here again is a buyer with a background in another carbon-heavy industry buying into another heavy emitter.

Table 1: Selected large scale acquisitions of controlling shares in non-Chinese cement production assets since 2012. Source: Global Cement news and company releases. Italcementi acquisition value reported by Reuters.

Table 1 above provides some historical context to Adani Group’s agreed acquisition by comparing it to other large completed deals in the cement sector over the last decade. Don’t forget that it is only looking at this from the cement sector. This list excludes changes in ownership in the Chinese cement companies in this period because, generally, there has been a government-driven consolidation in the industry through mergers rather than large-scale acquisitions. So, for example, the world’s current biggest cement producer CNBM had a reported production capacity of 350Mt/yr in 2012 and this rose to 514Mt/yr in 2020 as it absorbed other state-owned companies. The big merger it underwent during this time was with China National Materials (Sinoma) in 2018, primarily an engineering company that also produced cement.

The most obvious trend in Table 1 is the journey of Lafarge and Holcim from their merger in 2015 and the gradual realignment of the business subsequently. During this time the company has sold up in large markets outside of its core regions in Europe and North America. Latterly, it has also started to diversify away from heavy into lightweight building materials. One notable ‘nearly happened’ was LafargeHolcim’s attempt to sell its business in the Philippines to San Miguel Corporation for US$2.15bn in 2019. That deal collapsed when the Philippines Competition Authority failed to approve it within a year of its proposal. CRH enlarged itself from assets sold during the creation of LafargeHolcim and then picked up Ash Grove in the US in 2018. CRH’s head Albert Manifold memorably said in 2018 that his company was focusing on markets in developed countries and CRH’s large-scale acquisitions have largely followed this.

As for the others, HeidelbergCement’s purchase of Italcementi in 2016 almost appeared as a riposte to the formation of LafargeHolcim, albeit on a slightly smaller scale. It confirmed HeidelbergCement’s place as the world’s second largest non-Chinese cement producer. It is also one of the minority of truly multinational acquisitions on this list. Unlike LafargeHolcim and now Holcim though, HeidelbergCement hasn’t exhibited a desire to downsize or diversify at quite the same speed. UltraTech Cement’s acquisition of Jaiprakash Associates in 2017 confirmed its place as the largest Indian producer. That deal was publicly one of the longer lasting one as it originally started out in at least 2014 on a smaller scale and was later slowed down by the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act. Smikon’s purchase of Eurocement in 2021 almost looks like part of the isolation of the Russian economy, especially with the benefit of hindsight given by the invasion of the Ukraine in early 2022.

Mega-deals have lots of moving parts but two of the most tangible to broader audiences are the price and the timing. Cemex infamously got both of these wrong with its acquisition of Rinker in 2007 as it paid high just as the US subprime mortgage crisis started a wider global financial one. This was despite Cemex’s emergence over the previous 15 years as a multinational force to be reckoned with due in part to the so-called ‘Cemex Way’ approach to management, acquisitions and integration. Clear winners from the big acquisitions over the last decade are harder to spot but CRH and UltraTech Cement look strong so far. Adani Group has certainly picked a lively time to make a purchase on this scale following a global pandemic with ongoing global supply chain issues and disruptions to energy and food markets.

China: Wang Cheng has resigned as the chair and as an executive director of Anhui Conch Cement due to his “pursuit of other work commitments.” The company’s vice chair Wang Jianchao will work as acting chair until a successor is found. Wang Cheng took up the post in 2021 when the previous chair Gao Dengbang resigned. He joined Conch Holdings in 2021 after a career in government.

India: Star Cement's full-year 2022 financial year sales were US$286m, up by 29% year-on-year from US$222m. Its net profit rose to US$31.8m, up by 32% from US$24.2m. The producer recorded total costs of US$259m, up by 36% year-on-year from US$191m. Raw materials costs rose by 45%, power and fuel expenses rose by 23% and transport costs rose by 34%.

During the year, the company bought back 2% of its shares, at a total cost of US$16m.

Australia: Boral and carbon capture specialist Calix have received US$21m in government funding for the launch of carbon capture and storage (CCS) feasibility study at the producer's Berrima cement plant in New South Wales. Local press has reported that Boral aims to establish a 100,000t/yr-capacity capture facility at the plant. Initially, the project will involve commercial model and pilot design to assess the engineering and commercial viability of the project. This phase is scheduled for completion in June 2023.

Chief operating officer Darren Schulz said "This is game changing technology for our industry and will play a critical role in supporting customers' sustainability targets. Together, Boral and Calix have access to the required infrastructure, technology and operational expertise required to deliver this project and lead the way in reducing emissions across the industry." Schulz concluded "If successful, we believe this project will enable the national rollout of carbon capture technology to Australia's cement and lime industry creating smarter and more sustainable solutions for our customers."

Malaysia: Investment holding company Borneo Oil has concluded a deal with MT 23 Resources for the acquisition of a 22% stake in Makin Teguh.The deal will bring Borneo Oil's total holding in the cement company to 38%. Makin Teguh is in the process of establishing an integrated cement plant in the state of Sabah.

Borneo Oil said “There is synergy between the group's existing limestone quarrying business operations and Makin Teguh's clinker and cement plant. The outlook for Sabah's clinker and cement industry is favourable, given the high cement prices in Sabah compared with the rest of Malaysia and its proximity to the East ASEAN Growth Area." It added “The Covid-19 shutdowns in 2020 and 2021 created an unprecedented urgency for Sabah to become more self-reliant in various sectors of economic importance. Sabah can no longer afford to rely on 100% imported clinker and cement, and, therefore, the setting up of a clinker and cement plant in Sabah is timely.”

India: Cement Corporation of India has called for e-tenders for its mothballed Adilabad cement plant's equipment for a sale of the plant's assets prior to its permanent closure and decommissioning. The state-owned company will receive offers until 23 May 2022 and will open bids after 120 days. The New Indian Express newspaper has reported that a planned airport will take up some of the land currently occupied by the plant in Telangana.

The US$7.73m Adilabad cement plant was operational between 1982 and 1998. It reportedly has sufficient limestone reserves to continue cement production until 2122.

Mexico: Cemex and Coolbrook have signed a memorandum of understanding to test technology to electrify the cement kiln heating process. Coolbrook says that its Roto Dynamic Heater (RDH) technology can heat a cement kiln to 1700°C using electrical power. If generated from renewable sources this could potentially remove around 45% of the carbon emissions in cement production that normally arise from the use of fossil fuels. The companies expect the technology to be ready for commercial use at an industrial scale in 2024. They will jointly evaluate the best production site to test and develop this technology.

Ilpo Kuokkanen, the executive chair of Coolbrook, said "Coolbrook has set a target to build a comprehensive ecosystem around its revolutionary technology and to test its use in as many industrial processes as fast as possible. Together with Cemex, we can bring the technology to cement production and achieve significant emission reductions in one of the most energy and CO₂-intensive industrial processes.”

Finland-based Coolbrook is a technology and engineering company that is developing processes to replace the burning of fossil fuels in major industrial sectors. Its RDH has potential applications in cement, steel and chemical production process. Its Roto Dynamic Reactor (RDR) is intended to eliminate CO₂ emissions from the steam cracking process used in the production of plastic.

Austria: The Austrian Cement Industry Association (VÖZ) has launched a roadmap for carbon neutrality by 2050. The initiative follows the 5C approach of Clinker, Cement, Concrete, Construction and Carbonation as prompted by the European Cement Association, Cembureau. Selected targets from the document include reducing the sector’s average clinker factor to 52% by 2040 from 70% in 2020, using carbon-neutral electricity from 2030 and meeting a recycling rate for concrete and demolition waste of 25% in 2050 from 10% in 2022. Sebastian Spaun, the managing director of VÖZ, highlighted the ‘Carbon2ProductAustria’ (C₂PAT) initiative as a key project where capture CO₂ from Lafarge Zementwerke’s Mannersdorf cement plant will be used with hydrogen to produce synthetic fuels, plastics or other chemicals.

UK: A team of researchers from six UK universities has filed a patent for a clinkerless cement product called Cambridge Electric Cement. Local press has reported that the project, called UK Fires, saw researchers successfully produce the cement using renewable power from recycled cement powder and ground granulated blast furnace slag (GGBFS). Following its successes, UK Fires has obtained a further Euro2m in funding from the UK Engineering and Physical Sciences Research Council (EPSRC) to continue its work into the range of concrete wastes suitable for use in Cambridge Electric Cement production.

Australia: James Hardie recorded sales of US$3.61bn in its 2022 financial year, up by 24% year-on-year from US$2.91bn in its 2021 financial year. The group’s North American fibre cement sales rose by 25% to US$2.55bn from US$2.04bn. Its Asia Pacific fibre cement sales rose by 22% to US$545m from US$446m, while its Europe building products sales rose by 20% to US$421m from US$351m.

Interim chief executive officer Harold Wiens said, “I am delighted to report that the James Hardie team has continued to deliver strong execution of our global strategy. This is reflected in strong price/mix growth in all three regions, including North America price/mix growth of 12%, Asia Pacific price/mix growth of 11% and Europe price/mix growth of 14%. The global team’s success in delivering high value products is the result of: one - enabling our customers to make more money by selling more James Hardie products; and two - marketing directly to the homeowners to create demand for our high value products through our customers.”

The group reaffirmed its 2023 financial year adjusted net income guidance range of US$740 - 820m.