Displaying items by tag: Government

Brazil: CSN Cimentos is planning to spend around US$390m on building a new 3Mt/yr cement plant in Paraná. Eduardo Bekin, president of the Paraná State Development Agency, said that the company already had the authorisation to conduct economic viability studies and should confirm the plant by late August 2019, according to the Valor Econômico newspaper. CSN is also considering building the plant in Sergipe state, where it operates a limestone mine. The final decision will depend on the best tax environment for the cement producer.

There was a glimmer of good news visible through the Delhi smog this week with the launch of a market-based emissions trading scheme (ETS) for particulate matter (PM). A pilot has started at Surat in Gujarat. The scheme will apply to 350 industries in the locality and it will be scrutinised for wider rollout in the country.

China robustly started to tackle its industrial PM emitters a few years ago although the work remains on-going. In its wake India has increasingly made the wrong sort of headlines with horrifically high dust emissions. Delhi, for example, reportedly had PM2.5 emissions of over 440µg/m³ in January 2019. To give this some context, the World Health Organisation’s (WHO) annual upper guideline figure for safe human exposure is 10µg/m³. Research by the Financial Times newspaper suggested that more than 40% of the Indian population is subject to annual PM2.5 emissions of over 50µg/m³.

Air Quality Life Index (AQLI) research reckons that if India were able to meet its national PM2.5 standard of 40µg/m³ then its population would live 1.8 years longer or 4.3 years longer if it met the WHO guideline level. The current situation is an unnecessary tragedy. In strictly structural terms the country’s productivity is being thrown away by damaging the health of its workforce. For comparison amongst other major cement producing countries, AQLI data placed China’s PM2.5 emissions at 39µg/m³, Indonesia at 22µg/m³, Vietnam at 20µg/m³ the US at 9µg/m³. These figures cover all industries in different conditions and climates. If the US can do it, why not the others?

Back on trading schemes, the famous ETS at the moment is the European one for CO₂ emissions. Similar schemes are slowly appearing around the world as governments look at what the European Union (EU) did right and wrong. For example, South Africa started up a carbon tax in early June 2019. Yet as the supporting documents by the Gujarat Pollution Control Board (GPCB) point out there have been a variety of ETS systems’ over the years. The US’s Acid Rain Program is generally seen to have achieved significant reductions in SO2 and NOx emissions although the National Emission Standards for Hazardous Air Pollutants (NESHAP) has continued this work. Chile even ran its own PM ETS in the 1990s although the outcomes have been disputed.

One problem with a CO₂ ETS, and anthropomorphic or man-made climate change in general, is that it is intangible. Even if sea levels deluge major coastal cities, rising mean temperatures reduce agricultural yields and human populations contract sharply, people will still be arguing over the research and the causes. The beauty of a PM ETS is that if it works you can literally see and feel the results. A famous example here is the UK’s Clean Air Act in the 1950s that banished the fog/smog that London used to be famous for.

The Gujarat PM ETS is a pilot, the results of which will be considered by researchers from a number of US-based universities and the Abdul Latif Jameel Poverty Action Lab. Explicitly, the study plans to use a randomised control trial to compares its results against the command and control style approach used in the rest of the country. On the cement-side various Indian news stories have emerged as state pollution boards have increasingly started fining producers for emission limit breaches. Clearly the government is taking dust emissions seriously. Reduction is long overdue.

France: The government is preparing to approve an extension to the quarry at Ciments Calcia’s Gargenville plant. The extension will cover an area of 74 hectares near the communes of Guitrancourt and Brueil-en-Vexin, according to the Le Parisien newspaper. Local environmental activists are preparing to contest the decision.

India: The state of Gujarat has launched a market-based cap-and-trade system in particulate matter to reduce air pollution. It says it is the first such initiative in the world. The project is being piloted in Surat with the aim to expanding it nationally subsequently.

“With this program, we are kicking off a new era of cleaner production, while lowering industry compliance costs and rewarding plants that cut pollution in low-cost ways,” said Rajiv Kumar Gupta IAS, chairman of the Gujarat Pollution Control Board (GPCB). The GPCB is carrying out the emissions trading program with the help of a team of researchers from the Energy Policy Institute at the University of Chicago (EPIC), the Evidence for Policy Design at Harvard Kennedy School, the Economic Growth Center at Yale University and the Abdul Latif Jameel Poverty Action Lab. The researchers are evaluating the program’s benefits and costs, relative to the status quo, using a randomised controlled trial.

The emissions trading program builds on work by the GPCB in using continuous emissions monitoring systems to track industry emissions in real time. About 350 industries around Surat have installed continuous emissions monitoring systems and now transmit real-time emissions data. The new scheme takes advantage of this technology for its monitoring.

India: Transport and Small, and Medium Enterprises (MSME) minister Nitin Gadkari says that cement producers have raised their prices without justification. He alleged that input prices for the industry had not increased and speculated that the companies acted ‘like a cartel’, according to the Times of India newspaper. He added that the higher cost of cement was negatively affecting road and affordable housing construction.

Gadkari said he has asked his officials to intervene in an on-going case in the Supreme Court and also explore the option of approaching the Competition Commission of India. The National Highway Builders Federation has also sought government intervention over the issue.

Talk of US tariffs on imports from Mexico was not troubling the National Chamber of Cement (CANACEM) this week. Director general Yanina Navarro pointed out to local media that Mexico only exports 1.42Mt or 3.4% of its total production of 44Mt/yr to its northern neighbour. This is a little higher than the 1.04Mt reported by the United States Geological Survey (USGS) in 2018, although that figure is believed to have underestimated imports to El Paso district in Texas. Mexico was the fifth largest exporter of hydraulic cement and clinker to the US behind Canada, Turkey, China and Greece.

Commentators pointed out that Grupo Cementos de Chihuahua (GCC) might be affected more that other Mexican producers as two of its plants are close to the border at Samalayuca and Juárez in Chihuahua. However, GCC operates five plants in the US. Cemex also has a plant near the US border at Ensenada in Baja California. Yet it’s the fourth largest producer in the US by integrated production capacity. If either company had its export markets seriously disrupted by any border duties they could likely focus on production in the US to compensate.

Once again this is similar to the situation with the proposed border wall where, although President Donald Trump wanted Mexico to pay, it would have been Mexican companies benefiting the most from any construction boom. This was also the case with the US-Mexico-Canada Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA). The international structure of many of the larger Mexican cement producers insulates them from these kinds of political and trade disputes.

Mexican producers shouldn’t be too complacent though. Tariffs are likely to play havoc with integrated supply chains as in the car industry. Building materials will probably be affected less so but that 1.42Mt export figure is more than the production capacity of many individual Mexican cement plants. Taking away this export market will drag on the industry’s utilisation rate and alternate destinations may be hard to find. Note the trouble Mexico has had distributing its products in Peru. The Supreme Court there upheld a fine this week on UNACEM for trying to block the distribution of Cemex’s brand of cement in 2014. Also, although Trump’s tariffs on Chinese products may not have much of an impact on building materials, USGS data shows that Chinese imports of cement to the US fell by 27% year-on-year to 0.76Mt in the six months to the end of February 2019. Similar reductions could await Mexico’s exporters.

The general consensus from the free market press is that tariffs will ultimately hurt both economies. In agreement the Portland Cement Association (PCA) published a market report in April 2018 on the effects of tariffs on US cement consumption in the wake of tariffs on steel and aluminium imports from the European Union (EU), Canada and Mexico. The summary was that all forms of tariff – from minor to a global trade war – would likely result in reduced US cement consumption to varying degrees due to slower economic growth. A full-scale set of tariffs on Mexican imports is likely to induce similar consequences.

Dominican Republic: Alexander Medina Herasme, the director of the General Directorate of Mining, says that the country exported grey cement worth US$72.3m in 2018, according to the El Caribe newspaper. The nation has five integrated cement plants and two grinding plants.

Armenia/Iran: The Armenian parliament has approved a tariff of US$29/t on imported cement from Iran. A previous attempt to pass the bill was blocked in April 2019, according to the Armenpress News Agency. During the recent vote construction workers demonstrated outside the parliament building warning that prices could price as a result of the new duty.

South Africa: The government has introduced a carbon tax of around US$8/t for carbon dioxide-equivalent (CO₂e) emissions. The carbon tax will initially only apply to scope 1 emitters in the first phase. The first phase will be from 1 June 2019 to 31 December 2022, and the second phase from 2023 to 2030. Large-scale tax-free emission allowances from 60 – 95% will be provided in the first phase. Industries such as cement or iron production will benefit from a basic threshold of 70%.

A review will be held before the second phase starts to measure progress. The treasury reinforced that the introduction of the carbon tax would not raise electricity prices due to tax breaks for renewable energy sources and credits for existing generation capacity.

Mexico/US: Yanina Navarro, the general director of the National Chamber of Cement (CANACEM), says that Mexican cement producers are not worried by US tariffs on imports. Mexico exports 1.42Mt or 3.4% of its total production of 44Mt/yr to its neighbour, according to the EL Financiero newspaper. Data from the United States Geological Survey (USGS) placed Mexico at the fifth largest exporter of cement to the US after Canada, Turkey, China and Greece.

Grupo Cementos de Chihuahua (GCC) could be affected more than other Mexican producers by any tariffs as 17% of its production is exported to the US. Mainly this covers production from plants at Samalayuca and Juárez in Chihuahua. Hoevever, GCC operates five plants in the US, which would enable it to reduce the potential negative affects of tariffs.