Displaying items by tag: OYAK

The Ministry of Trade in Türkiye said this week that it was monitoring developments in the construction industry. Specifically, the ministry is reacting to complaints it has received about the high price of cement and supply issues. It has been looking at exports of clinker and cement. The statement noted that prices had risen particularly in the last one to two months and that the government was prepared to take unspecified action to alleviate the situation.

The comments hark back to the autumn of 2021 when members of the Construction Contractors Confederation (IMKON) stopped working for two weeks in response to high prices including cement. At the time the ministry tightened its rules on exporting cement and clinker. This followed the start of an investigation into alleged anti-competitive behaviour by the regulator Rekabat Kurumu into nine cement producers in the first half of that year. Around the same time Türk Çimento, the Turkish Cement Manufacturers' Association, had also been warning about growing raw material and energy costs. It noted that declining domestic sales between 2017 and 2019 had encouraged its members to focus on export markets more. All of this was overshadowed in February 2022 when Russia invaded Ukraine and global energy prices spiked. Türk Çimento then warned of the trouble that high coal prices were causing the sector.

Graph 1: Domestic and export cement sales in Türkiye, January – September, 2017 – 2022. Source: Türk Çimento.

Graph 1 above shows that the trend towards exports that Türk Çimento pointed out in mid-2021 has continued. Domestic sales fell to a low of 33.2Mt in 2019, recovered to 2021 and dropped somewhat so far in 2022. As an aside, that decline in domestic sales from 2017 to 2019 was the first the local cement industry had experienced a fall in sales since at least 2002. Exports fell year-on-year in 2018 but have increased steadily since then to 14.6Mt in the first nine months of 2022. Exports represented 10% of total sales in 2017. So far in 2022 they have accounted for 27% of total sales. Türk Çimento’s take on the picture so far in 2022 is that it expects the domestic market to decline by 10% in 2022 in all regions of the country principally due to high commodity prices. Cement exports are expected to increase but clinker exports to decrease.

Commercially, Türkiye-based cement producers have reacted to high energy prices by upping their own product prices in turn. OYAK Çimento, for example, reported significant rises year-on-year in sales revenue and earnings in the first nine months of 2022. Net sales grew by 160% year-on-year to Euro403m and earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 202% to Euro106m. Akçansa and Çimsa reported a similar situation.

Despite the high energy costs, both investment and merger and acquisition activity has continued in the cement sector in 2022. In August 2022 Fernas Group completed its purchase of two integrated cement plants, a grinding plant and associated ready-mix concrete assets from Çimsa Çimento for US$110m. Later in the year, in November 2022, Safi Çimento acquired Sancim Bilecik Çimento’s integrated plant from Aşkale Çimento. Various upgrade projects to cement plants were also reported including projects at KÇS Kipaş Çimento’s Kahramanmaraş plant, Nuh Çimento’s Hereke cement plant, MEDCEM’s Silifke plant and OYAK Çimento’s Ünye plant.

Recent reporting by the Economist newspaper suggests that the government is targeting the domestic housing sector in response to higher than inflation price rises even compared to Türkiye’s high consumer price inflation rate. The next general election in June 2023 may also be encouraging legislators to look at the accommodation needs of their constituents. Whether this is connected to the Ministry of Trade’s recent decision is unknown. Cement producers have followed the money to lucrative export markets in recent years. How far the government is willing to intervene in this strategy could mark a change in direction for the sector.

Türkiye: OYAK Cement has ordered a 5000t/day Pendulum Cooler from Germany-based IKN for its integrated plant at Ünye. The contract was signed at the 16th TurkÇimento Technical Seminar that was held in Antalya in late October 2022. No price for the order has been disclosed.

Turkey: OYAK Cement has detailed its progress towards net zero CO₂ cement production in its Integrated Report 2021. The report's focus is sustainability and digitalisation. Under itsCement 4.0 CO₂ emissions reduction initiative, OYAK Cement has proceeded with efficiency improvements at its cement plants.

OYAK Cement is committed to net zero CO₂ cement production by 2050 and reductions in line with the Paris Agreement to limit global climate change to 1.5°C by 2030.The producer is collaborating withthe Science-Based Targets Initiative (SBTi) to realise its emission reduction goals.

African cement producers have confirmed their interest in calcined clay over the last month with two new projects. The big one was announced last week when FLSmidth revealed that it had received an order from CBI Ghana. This follows the launch of a Limestone Calcined Clay (LC3) project in Malawi in mid-March 2022 in conjunction with Lafarge Cement Malawi.

FLSmidth says that its order includes the world’s largest gas suspension calciner system and a complete grinding station. The kit will be installed at CBI Ghana’s plant near Accra in the south of the country. The new clay calciner system is expected to substitute 30 - 40% of the clinker in the final product, resulting in a reduction of up to 40% CO₂/t of blended cement compared to Ordinary Portland Cement (OPC). Overall the equipment manufacturers reckon that the grinding plant will reduce its CO₂ emissions by 20% compared to its current output. There has been no indication of how much the order costs but CBI Ghana expects energy and fuel savings, as well as lower overheads from clinker imports.

The public announcement of the Ghana project was also foreshadowed by the visit of Professor Karen Scrivener to the Ghana Standards Authority in February 2022. This was significant because Scrivener is the head of the Laboratory of Construction Materials at the Ecole Polytechnique Fédérale de Lausanne (EPFL) and has been one of the key instigators of the LC3 initiative since the early 2000s. Other calcined clay cements are available such as Futurecem or polysius activated clay (see below) but LC3 is arguably the most famous given its promotion in developing countries.

The Malawi project is at a much earlier stage. The government launched the public private partnership LC3 project in mid-March 2022 in conjunction with Lafarge Cement Malawi and Terrastone, a brick manufacturer. The Ministry of Mining is currently developing a memorandum of understanding with the Gesellschaft für Internationale Zusammenarbeit (GIZ), a Germany-based development agency. India-based Tara Engineering has also been linked to the scheme.

One thing to note about the Malawi project is that it is the first calcined clay project in the cement industry based in East Africa. All the other African ones are based in West Africa. The other two projects in this region are run by Turkey-based Oyak Çimento and its subsidiary Cimpor. The first of these is a 0.3Mt/yr calcined clay and a 2400t/day cement grinding production line that was commissioned in mid-2020. This plant is based at Abidjan in Ivory Coast. The second is a new plant that Germany-based ThyssenKrupp Industrial Solutions is building for Oyak Çimento at Kribi in Cameroon. This unit has a 720t/day calcined clay and a 2400t/day cement production capacity and it will use the supplier’s ‘polysius activated clay’ technology. ThyssenKrupp’s involvement came to light in early 2020 and commissioning was scheduled for late 2021. However, no update on the state of the project has been issued so far in 2022.

As the above examples show, Sub-Saharan Africa has at least one live calcined clay plant, two plants are being built and there’s one more at the development stage. This puts the region neck-and-neck with Europe, which has a similar mixture of current and developing projects. This column has been covering the wider trend of the growing usage of various types of blended cements recently, particularly in Europe and the US, with slag cements, Portland Limestone Cement (PLC) and more. With PLC, for example, note the transition of another two North American cement plants to PLC this week alone. As for calcined clay cement, it is fascinating to see the focus move to a different part of the world. Several commentators have predicted that the future looks set to be dominated by blended cements using whichever supplementary cementitious material (SCM) is most available for each plant. The growth in calcined clay confirms this view.

Global Cement is researching clay calcination use in the cement industry for the next edition of the Global Cement Directory. Email This email address is being protected from spambots. You need JavaScript enabled to view it. with any information on new industrial and research installations.

Turkey: OYAK Cement says that it eliminated 200,000t of CO₂ emissions during 2021 through its use of US-based DataRobot’s AI software. The producer said that the technology enabled it to multiply its alternative fuel (AF) substitution rate by seven an reduce its mechanical failure prediction time by 75%. It added that the software contributed to a US$39m/yr drop in costs.

Turkey: Steel company Erdmir has received the Turkish Competition Board (TCB)'s approval for its acquisition of a 100% stake in refractory and magnesia producer Kümaş Manyezit Sanayi. Erdemir's parent company is OYAK Group, an industrial conglomerate with interests in cement alongside other industries. Thus, the TCB considered the deal's competition impacts on the cement industry. The board ruled that the vertical merger would not have a negative effect on competition because it does not give rise to horizontally affected markets, hence neither creating nor strengthening any dominant market position.

There have been a couple of news stories worth noting in the Turkish market this week. First, it was revealed that Medcem had chosen Sintek Group to build a new production line at its integrated plant in Mersin. Second, Çimko Çimento agreed to buy two integrated plants and a grinding plant from Çimsa.

The Medcem upgrade project will see the subsidiary of Eren Holding add a second production line, with a clinker capacity of 9000t/day. Sintek Group reportedly has agreed to do this for US$128m. This follows an announcement from Medcem in late May 2021 that it was intending to invest over US$200m towards increasing its plant’s overall production capacity to 6.5Mt/yr from 3.5Mt/yr. The plan at this point was to start construction work in August 2021 with eventual commissioning of the second line in the first quarter of 2023. In addition the cement producer said at the time that it was going to open a new terminal in the US shortly. This was intended to join the company’s existing grinding plants in Cameroon and Tunisia and terminals in Russia and Northern Cyprus. On a side note, Medcem likes to point out that the 11,500t/day clinker production capacity on its existing line at its plant is the biggest in Turkey and Europe.

The Çimko Çimento deal with Çimsa was for US$127m. It includes the Nigde Kayseri integrated plants, the Ankara grinding plant and seven ready-mix concrete plants. As would be expected, the transaction is subject to the approval of the local competition authority.

Graph 1: Domestic and export cement sales in Turkey, January – June 2017 – 2021. Source: Türk Çimento.

Graph 1 above gives an idea why some cement producers might have decided that it’s time to expand either through upgrades or acquisitions. The general Turkish economy suffered a jolt in mid-2018 when the value of the Turkish Lira dropped and interest rates rose. The coronavirus pandemic hit in 2020 but after a slowdown at the start of that year the economy managed to grow. The growth has continued so far in 2021 but inflation rates have also soared. In the cement sector, annual domestic sales fell consecutively from 2017 to 2019. They started to recover in 2020 and so far in 2021 it looks like they are continuing to grow. As domestic sales fell the sector focused on exports and they have grown steadily on an annual and half-year basis since 2018. Annual exports hit a high of 16Mt in 2020 or 23% of total sales.

Despite this, in June 2021 the Turkish Cement Manufacturers' Association, Türk Çimento, was warning that input costs were mounting, particularly in the last year. It reported that the price of petcoke had nearly tripled in this period. It also warned of mounting production overcapacity, estimated at over 20Mt/yr in 2019 although down to 7Mt/yr in 2020. Coupled with a fall in annual domestic sales from 2017 to 2019, in its words, “The contraction in domestic consumption during that period steered our companies toward exports.” Some of the larger cement producers, including Oyak, Akçansa and Çimsa all reported healthy rises year-on-year in revenue and operating profit in the first half of 2021. They also reported mounting costs which have risen by 35 – 80%.

The other recent stories from Turkey to note are a two week strike organised by the Building Contractors Confederation (IMKON) in September 2021 due to high costs, particularly cement. The confederation claimed that the price of cement had tripled over the last year. Earlier, in late April 2021, the Turkish competition authority Rekabat Kurumu launched a probe into alleged collusion by nine cement producers including Oyak, Çimsa and Limak. We are not saying these two stories are connected. The current state of the Turkish economy is more than enough to cause input costs for cement producers to spike. Yet headlines like this cannot be reassuring to builders wondering why the cost of cement is going up.

In summary, it’s an uncertain time for the Turkish cement industry. Sales are recovering but this has been achieved by pushing exports more than a rally at home. Alongside this, currency instability and high inflation rates are raising costs for cement producers and end-users. This hasn’t been enough though to stop growth activity from a couple of producers in the last week.

For more on the Turkish cement sector read ‘Cement in Turkey’ in the October 2021 issue of Global Cement Magazine

Turkey: Batıçim has appointed Akif Geçer as its general manager and as a member of its executive board. Arif Alp Dündar has also been appointed as chief financial officer and as a member of the executive board.

Geçer was the general manager of construction company Türkerler Holding from 2011 to 2015. Prior to this he held management positions at Çimko Cemento and Şanlıurfa Çimento and production roles at OYAK and Denizli Cement dating back to the early 1990s. He is a graduate in chemical engineering from the Middle East Technical University in Ankara.

The latest piece of China-based Huaxin Cement’s global ambitions slotted into place this week with the news that it is preparing to buy plants in Zambia and Malawi. Its board of directors has approved plans to spend US$150m towards acquiring a 75% stake in Lafarge Zambia and US$10m on a 100% stake in Lafarge Cement Malawi. The move will gain it two integrated plants with a combined production capacity of 1.5Mt/yr in Zambia, and a 0.25Mt/yr grinding plant in Malawi.

This latest proposed acquisition represents the next step for Huaxin Cement in Africa following its purchase of African Tanzanian Maweni Limestone from ARM Cement in mid-2020. The company has also been busy along the more traditional Belt and Road Initiative land routes in Asia. It started up the kiln at its new 2Mt/yr Jizzakh cement plant in mid-2020. Elsewhere in Central Asia it runs two plants in Tajikistan and one plant in Kyrgyzstan via various indirectly-owned subsidiaries. While in South Asia it runs a plant in Nepal and in South-East Asia it runs one in Cambodia. If the plans in Zambia and Malawi pay off then it will give the Chinese producer a growing presence in East Africa, with plants in three countries.

The China Cement Association ranked Huaxin Cement as the country’s fifth largest clinker producer in 2021 with an integrated capacity base of just under 63Mt/yr. Domestically, the company operates 57 cement plants and most of these are based in the Yangtze River Economic Belt region. In 2020 it reported cement and clinker sales of 76Mt, a small decrease from 2019. Its operating income fell by 6.6% year-on-year to US$4.58bn and profit dropped by 12% to US$1.2bn. This performance was blamed on the emergence of Covid-19 at the start of 2020 and then floods later in the year.

Compared to the other larger Chinese cement producers, Huaxin Cement roughly appears to be holding rank with its overseas expansions. The leaders, CNBM and Anhui Conch, hold subsidiaries with plants in South-East and Central Asia and CNBM’s engineering wing, Sinoma, has a far bigger reach, building plants all over the place. Information has been scarce since mid-2020 on the long heralded 7Mt/yr plant in Tanzania due to be built by Sinoma and local subsidiary Hengya Cement. At that time local residents in Mtimbwani, Mkinga District were reportedly being compensated for their land. Other than this, one of the other big players internationally is Taiwan Cement. In 2018 it invested around US$1.1bn for a 40% stake in Turkey-based Oyak Cement. As well as a presence in Turkey this also gave it a share of plants in Portugal in 2019 when Oyak completed its acquisition of Cimpor.

Elsewhere this week, carrying some of the themes above with expansion in Central Asia, two new integrated cement plant projects were announced in Kyrgyzstan and Turkmenistan respectively. Meanwhile, Italcementi said it will invest Euro5.0m to restart clinker production at its Trentino cement plant in Sarche di Madruzzo, Italy. The unit has been operating as a grinding plant since 2015. This might be viewed as an unexpected decision considering the high local CO2 price but it shows some level of confidence in the local market by Italcementi and its parent company, HeidelbergCement. The next step will be when or if a European producer decides to build a brand new integrated plant in Italy or elsewhere.

Turkey: The Turkish competition authority Rekabat Kurumu has launched a probe into alleged collusion by nine cement producers. The authority said that it is investigating AS Çimento, Bastas Baskent Çimento, Çimsa, Golas Goller Bolgesi Çimento, Konya Çimento, Kupeliler Endustri, Limak Çimento, Oyak Çimento and Brazil-based Votorantim Cimentos.