Displaying items by tag: HeidelbergCement
LEILAC secures Euro12m from European Union to demonstrate Calix carbon capture technology
21 April 2016Europe: The Low Emissions Intensity Lime And Cement (LEILAC) consortium has secured Euro12m in funding over five years from the European Commission Horizon 2020 Grant programme to test Calix’s direct separation process to capture CO2 emissions from cement and lime production. The consortium comprises HeidelbergCement, Cemex, Tarmac, Lhoist, Amec Foster Wheeler, ECN, Imperial College, PSE, Quantis and the Carbon Trust. The consortium will also contribute a further Euro9m towards the project.
During the first three years, the project will focus on finalising the design of the demonstration plant, to be constructed at the HeidelbergCement plant in Lixhe, Belgium once the necessary permits have been secured. The high temperature Direct Separation Calciner pilot unit will then undergo two years of testing in a standard operational environment, at a feed rate capacity of 240t/day of cement raw meal and 200t/day ground limestone respectively, on a continuous basis for several weeks.
Fundamental research on the process demands and performance will be carried out to demonstrate that the technology works sufficiently and robustly enough to be scaled up to full operational use. The project results will be shared widely with industry at key intervals during the testing.
Calix’s direct separation technology is achieved by re-engineering the process flows used in the best available technology for lime and cement calcination. Carbonate calcination occurs by indirect counterflow heating, and consequentially the flue gases are not mixed with the CO2 emitted from the carbonate minerals. This technology is already operating at a commercial scale for magnesite calcination. It does not require any separation technologies, new materials or processes. The technology is complementary with other carbon capture methods already developed in the power and cement sector, such as oxyfuel, and can make use of alternative fuels.
IKN places order for A TEC GRECO kiln burner
14 April 2016Germany: IKN has placed an order for a A TEC GRECO kiln burner for the HeidelbergCement’s cement plant at Burglengenfeld. The project will be completed by the end of 2016. It is part of a general upgrade being conducted at the plant by IKN.
The scope of A TEC GRECO’s supply includes the engineering, design and manufacturing of a tailor-made combustion system including the required peripheral systems for operation. The burner thermal power will be 75MW. The burner is intended use with lignite, sewage sludge, refuse-derived fuel (RDF), diesel and solvents.
A TEC GRECO is a subsidiary of A TEC specialising in burners for kilns and calciners.
Update on HeidelbergCement acquisition of Italcementi
13 April 2016HeidelbergCement released more detail on its plans to buy Italcementi last week. The main points were that Italcementi’s operations in Belgium will be sold, the Italcementi brand will be retained, its research and development (R&D) centre will assume responsibilities for the entire group and up to 260 job losses are expected in Bergamo. The integration plan is expected to be complete by 2020.
Following an update in HeidelbergCement’s preliminary financial results for 2015 in February 2016, this was more focused on the practicalities of taking over a company. Sales of assets in Belgium were expected from the moment the deal was announced in July 2015. Between them the two companies operate three of the country’s four cement plants, holding 73% of the market by cement production capacity. Selling up Italcementi’s Belgian subsidiary Compagnie des Ciments Belges will maintain the existing market balance. Once this is done, from a cement sector perspective, interaction from the European Commission on the deal should merely be a formality.
Interestingly, no plans to sell assets in the US were announced. This is more ambitious on HeidelbergCement’s part because the acquisition has far bigger implications in that country. Merging Italcementi’s Essroc subsidiary and HeidelbergCement’s Lehigh Hanson subsidiary will see HeidelbergCement become the new second largest cement producer in the US with around 16.4Mt/yr. LafargeHolcim had a relatively easy ride from the Federal Trade Commission (FTC) having to sell two integrated cement plants, two slag grinding plants and a series of terminals. As HeidelbergCement will become the second largest cement producer it seems unlikely that the FTC will be too demanding. However, post-acquisition the cement producer will own cement plants within 75 miles of each other in Pennsylvania and in Maryland and West Virginia. The FTC may take exception to this but perhaps HeidelbergCement is trying their luck to see if it can get away with it.
The decision to retain Italcementi’s i.Lab R&D centre in Bergamo, Italy raises questions about what will happen to the Heidelberg Technology Centre (HTC) in Leimen, Germany. The focus here is on making Bergamo the ‘product’ R&D division for the entire group. i.Lab was opened in early 2012 to fanfare, based in a building designed by architect Richard Meier and it cost Euro40m to build. How this fits with HeidelbergCement’s existing Global R&D team at the HTC remains to be seen.
Job losses of up to 260 personnel at Bergamo are regrettable but hardly unexpected. It may not be much comfort for any staff members facing redundancy but this figure is well below the figures bandied about in the media in late 2015 of first around 1000 and then nearer 500. Another 170 personnel will also be offered relocation packages taking the impact of the reorganisation up to about 400 of Italcementi’s 2500 workforce in Italy.
Looking at the wider situation with the acquisition this week, HeidelbergCement announced a record contract for Norcem, its Norwegian subsidiary, to supply 280,000t of cement over three years for an infrastructure project. Then, Carlo Pesenti, the chief executive officer of Italcementi, was reported making comments about the business’ expansion plans in Thailand and the Association of Southeast Asian Nations (ASEAN). Projects in Myanmar and Cambodia look likely once the acquisition is complete. Finally, the ratings agency Moody’s was drumming up attention for a market report by pointing out the implications for the multinational cement producers in India if a proposed rise in infrastructure spending gets approved. In summary HeidelbergCement and Italcementi are unlikely to benefit due to their southern Indian spread of assets and local production overcapacity.
HeidelbergCement may not be getting it all its own way but the acquisition of Italcementi remains on track so far. All eyes will be on how the US FTC responds to the deal.
Nine companies bid for Lafarge India assets
13 April 2016India: LafargeHolcim has received nine non-binding offers for its subsidiary Lafarge India. The bidders include multinational cement producers CRH, HeidelbergCement and China Resources. Local companies which have made bids include JSW Infrastructure, Piramal Enterprises and Ramky Infrastructure, which have deals with private equity firms CVC Capital, Goldman Sachs Private Equity and Carlyle respectively. Blackstone, Baring Asia and CPPIB have also submitted a bid as part of a consortium. Bain Capital and Advent International have also submitted their bids individually, according to Business Standard.
Following a shortlisting and due diligence process a final bid will be selected. A final bidder is expected to be announced by the end of June 2016.
Ratings agency says LafargeHolcim to benefit from Indian infrastructure spending growth
12 April 2016India: Government plans to increase spending on infrastructure projects will benefit LafargeHolcim according to Moody's Investor Service. The second largest cement producer in India will gain from uneven regional demand, with a much larger scale and more prominent operations in northern India, where it sells almost 42% of its local cement volume.
LafargeHolcim and other European cement manufacturers with a presence in India are likely to benefit if the Indian government's plans to ramp up infrastructure spending happen in the next 12 to 18 months. The 2016 Union Budget contained plans to hike public infrastructure spending, especially on roads, which could revive stagnant cement demand in the country.
According to the government's 12th Five Year Plan (2012 - 17) investment in infrastructure should increase from 7.6% of gross domestic product (GDP) in 2014 to 9% in 2017. However, cement demand for government-funded projects has been weak in the last four years with many construction schemes delayed or put on hold. As a result, while infrastructure investment will be a key growth driver, the timing of such investment remains uncertain.
However, Moody’s also noted that European multinational cement producers based in the south of the country with limited geographical spread would be more exposed to local overcapacity in this region. This included HeidelbergCement, Italcementi and CRH.
Thailand: Thailand will continue to be Italcementi Group's production base in the Association of Southeast Asian Nations (ASEAN) and as its springboard for expanding into Myanmar after HeidelbergCement acquires a 45% stake in the company in July 2016. Carlo Pesenti, the chief executive officer of Italcementi, made the comments about the future direction of the business in an interview with the Nation newspaper.
"HeidelbergCement, which will be the major shareholder of Italcementi when the deal is complete this July, has a policy to maintain the business in Thailand and its business plan to expand into Myanmar, because HeidelbergCement does not have a presence in Thailand,” said Pesenti. “Thailand is our production hub and business arm for expanding in ASEAN."
Italcementi Group holds a 49% stake of Asia Cement in Thailand. Asia Cement and its subsidiary Jalaprathan Cement have cement production capacity of 5Mt/yr. Asia Cement has set aside an investment budget of up to US$14m to maintain its three clinker and cement plants in Thailand. However, the company it waiting for the acquisition of Italcementi by HeidelbergCement before it can decide about expansion plans in Cambodia and other territories.
Norcem signs record contract for 280,000t of cement
08 April 2016Norway: Norcem, the Norwegian subsidiary of HeidelbergCement, and Acciona Ghella JV have signed an agreement for the cement supplies to the Follo Line Project in Oslo. The supply of 280,000t of cement over a three-year period is Norcem’s largest contract ever.
“This is a milestone for HeidelbergCement in Norway and will put great demands on both production and logistics,” said Bernd Scheifele, chairman of the managing board of HeidelbergCement. “Our subsidiary Norcem made the best offer and it has the necessary production capacities and logistics to supply the required volumes to this outstanding project in Norway.” The cement supplies will start in mid to late April 2016.
The Follo Line Project is currently the largest transport project in Norway and includes the country’s longest double track railway tunnel at 20 km. The new railway track runs between Oslo Central Station and the new station in the municipality of Ski in the Follo district, south of Oslo. It will enable a 50% reduction in journey time between Oslo and Ski.The project is scheduled to be finalised at the end of 2021.
Germany/Italy: HeidelbergCement has released details on how it will integrate Italcementi into its business. Key details of the plan include the sale of Italcementi’s Belgium operations, the retention of the Italcementi brand and headquarters and the Italian cement producer’s i.Lab centre will assume research and development responsibilities for the entire group. However the acquisition is expected to result in up to 260 job losses at Italcementi’s base in Bergamo. The full integration plan is expected to be complete by 2020.
“Following our motto ‘all business is local’, it is important for us to preserve Italcementi's strengths and professional expertise, which have ensured its success in Italy and abroad. I am convinced that we will be able to achieve the planned Euro400m in synergies and bring Italcementi back to profits by operational improvements, streamlining the administration and leveraging the increased size of our combined business,” said Bernd Scheifele, chairman of the managing board of HeidelbergCement.
The acquisition still depends on approval from the European Commission and the Federal Trade Commission. On 1 April 2016, HeidelbergCement formally submitted the merger plan to the European Commission.
To this end, HeidelbergCement has decided to sell Italcementi’s entire Belgian operations, primarily consisting of Italcementi’s Belgian subsidiary Compagnie des Ciments Belges. The proposed divestment would remove all overlaps between the activities of HeidelbergCement and Italcementi in Belgium and the Netherlands. Preparations forthe divestment have already started and ‘significant’ interest has been noted. BNP Paribas will support the process.
The plan presented in Bergamo by Scheifele says it intends to keep the industrial network and plants in Italy as well as the Italcementi brand. In addition, HeidelbergCement builds on Italian management heading the Group's operations in Italy. i.Lab, based in Bergamo, where Italcementi will keep the headquarter of Italian country organisation, will become the home of the product research and development division of the whole group.
In order to streamline the overall group organisation some staff and administrative functions will be centralised in Heidelberg. According to the integration plan around 170 people will receive relocation offers to other offices within the group. Any redundancies in Bergamo, which could potentially affect between 230 and 260 people, will be handled using Italy's temporary layoff scheme. In addition, severence packages will be negotiated with the unions. At the end of the transition period in 2020, about 210 to 250 professionals will remain in Bergamo.
HeidelbergCement expects the closing of the acquisition of the 45% stake to be finalised in early July 2016 depending on the decision of the cartel authorities in Europe and the USA. Implementation of the integration plan will start after the closing.
Indocement acquires marine transport firm for US$2.1m
05 April 2016Indonesia: Indocement Tunggal Prakarsa has purchased stakes in marine transport services firm Lintas Bahana Abadi through the company's subsidiaries, Bahana Indonor and Indomix Perkasa. The acquisition is expected to support Indocement's business activities, particularly in the marine transport segment, according to Indonesia Finance Daily.
“Bangun Sukses Niagatama Nusantara will divest its shares in Lintas Bahana Abadi to Bahana Indonor and Indomix Perkasa for US$2.1m. The acquisition is fully funded from the two subsidiaries' internal cash,” said Christian Kartawijaya, President Director of Indocement Tunggal Prakarsa. Lintas Bahana will become a subsidiary that is indirectly owned by Indocement.
Roundup of non-Chinese cement producers in 2015
30 March 2016LafargeHolcim was the last of the major non-Chinese cement producers to report its annual financial results when it did so on 17 March 2016. With the full set in, as it were, Global Cement will compare the progress of the world’s largest multinational cement companies in 2015.
The first thing to note is that whilst cement production growth rates have hardly been inspiring in 2015, growth or holding the status quo is occurring. The emerging markets have faced challenges in 2015 following the prolonged depression in the construction sector in Europe since 2008. As Wolfgang Reitzle and Eric Olsen put it in the forward of the 2015 LafargeHolcim annual report, “…our share price has been significantly affected, mainly by the volatility associated with emerging markets.”
Figure 1: Cement & clinker sales volumes from five major cement producers, 2011 – 2015. Source: Annual reports. Note: Sales volumes are calculated for LafargeHolcim for 2011 – 2013.
Figure 1 shows cement and clinker sales volumes for the major cement producers from 2011 to 2015. This graph isn’t quite as depressing as it looks because it shows a drop in cement production for the major producers and it has started to show remedial action being taken. Where growth isn’t happening in a market, pressure builds to find it through mergers and acquisitions.
So, Lafarge and Holcim merged and the decision may be now starting to show promise with its sales volumes remaining static year-on-year in 2015 rather than falling. It should be noted here that the drop from 2013 to 2014 is due to the divestments Lafarge and Holcim both made before the merger to satisfy competition bodies and because the sales volumes were calculated here from the separate Lafarge and Holcim annual reports.
Even more so, HeidelbergCement’s plan to buy Italcementi may be a good idea here. Already it has been growing its cement production each year since 2013. The acquisition could potentially speed up the growth considerably. Elsewhere, both Cemex and Buzzi Unicem are showing signs of picking up cement production since 2013.
Figure 2: Earnings before interest and taxation (EBIT) for five major cement producers, 2011 – 2015. Source: Annual reports. Note: Cemex and LafargeHolcim figures have been converted from US Dollars and Swiss Francs respectively at current exchange rates.
Figure 2 shows one indicator of profitability for the major cement producers by comparing their earnings before interest and taxation (EBIT). This is less useful than cement sales volumes because it covers the producers’ entire businesses including aggregate and concrete sectors. However, it does show the problems Italcementi has faced and it offers one reason why the company might have allowed itself to be taken over. Note also how Cemex has continued to increase its EBIT despite its high levels of debts.
Returning to the LafargeHolcim comments about volatile emerging markets, most of the producers reported tough trading in their Asian territories in 2015. The exceptions were Cemex with its reliance on the Philippines booming market and Buzzi with its limited assets in the region. However, Cemex suffered in its own major emerging market in South and Central America. Despite these setbacks though all of the producers featured here benefitted from growing sales volumes in North America, particularly in the US.
Both LafargeHolcim and Cemex announced divestments promptly following their results announcements suggesting that they feel they need to do more to regain the profitability they once had. LafargeHolcim plans to sell assets in South Korea and Saudi Arabia. Cemex has agreed to sell cement plants in Bangladesh and Thailand and a minority stake in its business in the Philippines. This last decision may suggest how serious Cemex is about tackling its debts considering the strong market in that country at present. HeidelbergCement is due to complete its acquisition of Italcementi in the second half of 2016.
Finally, the major changes to the multinational cement producers will continue in 2016 as CRH asserts itself following its major acquisitions from Lafarge and Holcim in 2015. Already its Europe Heavyside Divison reported sales revenue of Euro3.61bn in 2015 surpassing that of Buzzi Unicem. Other international producers such as Eurocement, InterCement and Votorantim were also poised for continuing growing but poor domestic markets (Russia and Brazil) may cripple their ambitions in the short term.