Displaying items by tag: Plant
The India Cements to commission upgraded grinding unit at Sankar Nagar cement plant imminently
22 September 2023India: The India Cements expects to commission the upgraded grinding unit at its Sankar Nagar cement plant in Tamil Nadu later in September 2023. Hindu BusinessLine News has reported that the producer is undertaking the upgrade in order to increase efficiency and lower the plant’s operating costs. The producer has hired US-based Boston Consulting Group to ascertain other possible improvements to three of its plants in Andhra Pradesh and Telangana. At its Chilamkur cement plant in Andhra Pradesh, it is installing a waste heat recovery (WHR) system, scheduled for delivery in early 2024. FLSmidth and ThyssenKrupp Industrial Solutions are both reportedly conducting ‘detailed studies’ for possible future projects for The India Cements.
ACC fires kiln at new Ametha cement plant
14 September 2023India: Adani Group subsidiary ACC has started commercial clinker production from the kiln of its new Ametha cement plant in Madhya Pradesh’s Katni District. BQ Prime News has reported that the kiln line has a clinker capacity of 3.3Mt/yr. It is capable of co-processing up to 15% alternative fuel (AF). The plant is also equipped with a 1Mt/yr grinding unit and a 16.3MW waste heat recovery (WHR) plant.
The Ametha cement plant raises ACC’s installed cement and clinker capacity by 9.8% to 37Mt/yr.
Reconfiguration in the US cement market
13 September 2023The big US news this week has been that Summit Materials and Argos USA are planning to merge their operations. The new organisation will operate six integrated cement plants with a production capacity of 8.4Mt/yr, based on Global Cement Directory 2023 data. The companies say that this will make them the fourth biggest cement producer in the country, at 11.8Mt/yr, based on grinding capacity, and the largest domestically-owned operator. Additionally, the combined entity will also hold just under 5Bnt of aggregate reserves, 224 ready-mixed concrete (RMX) plants and 32 asphalt plants.
The deal is expected to close in the first half of 2024 subject to the usual regulatory clearances and shareholder approval. At this point Argos should own approximately 31% of the new company and Summit Materials’ shareholders will be the majority owner. Although, if we remember anything from the Lafarge-Holcim merger from nearly a decade ago, it is that if the share prices between the two companies diverge too much in the next six months then that proportion may change. In simple terms that split for Argos USA is in the region of where one might expect it to be given that Argos USA made 39% of the combined revenue for both itself and Summit Materials in 2022 and 28% of the combined earnings.
The two companies complement each other well for the purposes of forming a new heavy building materials concern. Summit Materials reported revenue of US$2.41bn in 2022, with 30% deriving from its aggregates businesses, another 30% coming from RMX and about 20% from paving. Cement generated US$341m, or 14%, of total revenue. By contrast Argos USA reported revenue of US$1.57bn in 2022 from a business just concerning cement and concrete. Geographically, Summit Materials’ integrated plants are in the Midwest, in Iowa and Missouri respectively, and its cement terminals follow the Mississippi River from Minneapolis to New Orleans. Notably, it made the point in the merger announcement that the deal would reduce the seasonality of its cement business. Argos USA’s plants and terminals are mostly spaced out in the Southern states with its plants in Alabama, Florida, South Carolina and West Virginia.
It goes against recent trends for a US-based company to be increasing its share in the domestic cement market, although it has resorted to teaming up with a Colombia-based one to do so. Usually it is foreign-headquarted companies making moves in the US. For example, Ireland-based CRH is in the final stages of switching its primary listing to the New York Stock Exchange. Its head Albert Manifold described the US construction market as going through a “golden age” earlier in the year whilst trying to sell the stock market move at the company’s annual general meeting. Meanwhile, there have been various smaller acquisitions such as Peru-based UNACEMs’ agreement to buy the Tehachapi cement plant in California from Martin Marietta Materials in August 2023.
Given the ongoing importance of the North American market for the international cement producers it is not surprising that merger and acquisition activity has been taking place. Each of the four largest US-based cement producers performed well in the first six months of 2023, increasing both revenue and earnings significantly. However, the picture is mixed. The Portland Cement Association (PCA) forecast at the start of 2023 that cement consumption would decline in the second half of 2023 due to a worsening general economic outlook. The downturn was estimated to be brief though as interest rates were expected to dip and infrastructure spending to rise in 2024. Half-year data from the United States Geological Survey (USGS) supported this view as shipments reached an estimated 51.0Mt, a slight decrease from the same period in 2022. The cement companies have made money so far in 2023 partly by raising their prices. Yet, some segments of the residential homebuilding market have also driven demand despite the general economic picture.
One last thing to consider is how much thought was given to the carbon risk of forming a new heavy building materials company in a developed economy in the 2020s. Sustainability receives a mention in Summit Materials’ investor presentation in the form of current achievements such as switching to blended cements or reducing fossil fuel usage but there is no suggestion that any serious investment to curtail process emissions is expected any time soon. However, one could make the case that the enlarged company might benefit from synergistic effects if it were forced to spend more on CO2 emission reduction. This proposed merger concerns two existing organisations teaming up rather than new equity entering the arena. In this context it will be worth noting whether the next cement industry merger or acquisition in the US or Europe will involve existing companies or new entrants.
US: Terra CO2 plans to build its first commercial-scale supplementary cementitious materials (SCM) plant in Texas. The plant will have a production capacity of 240,000t/yr. Asher Materials secured an exclusive market license to operate the plant. Terra CO2’s SCM can replace up to 40% of cement content in concrete. Asher Materials will produce the materials from silicate rock from existing local aggregates operations.
Terra CO2 chief science officer DJ Lake said "From start to finish, we've designed a system to create large-scale impact in the real world. Our game-changing production process converts affordable, abundant and local raw materials to cementitious material that meets rigorous performance standards.” Lake continued “True sustainability will come from deep innovations in materials and technology and not from incremental improvements to the existing cement supply chain."
Dangote Cement to raise alternative fuel substitution rate to 25%
13 September 2023Nigeria: Dangote Cement plans to raise its alternative fuel (AF) substitution rate across its Nigerian operations to 25%. The Punch newspaper has reported that the producer consumed 34,800t of AF during the first half of 2023.
Obajana cement plant head of sustainability Eseosa Ighile said “We are working towards installing AF feeding systems in all our operation lines by 2024.”
Belarusian Cement Plant raises cement production in first half 2023
13 September 2023Belarus: Belarusian Cement Plant produced 940,000t of cement during the first half of 2023. The figure corresponds to a year-on-year rise of 3.1%. The Respublika newspaper has reported that the company more than doubled its exports of cement to 719,000t – 76% of its production. Russia was the main destination for the producer’s cement exports. Belarusian Cement Plant recorded a capacity utilisation rate of 94% throughout the six-month period.
Sunbird Quarry Moroto and West International Holding Cement break ground on US$1.2bn Moroto cement plant
12 September 2023Uganda: A joint venture of Sunbird Quarry Moroto and China-based West International Holding Cement has begun building its upcoming Moroto cement plant. New Vision News has reported that the plant will cost US$1.2bn and produce cement from locally sourced limestone. The Uganda government said that the plant will generate jobs and help to lower the local price of cement.
Update on Nigeria, September 2023
06 September 2023Dangote Cement felt compelled to issue a statement clarifying its prices at the end of August 2023. In the release it stated what its ex-factory price was in Nigeria and added that transport costs and the location of a delivery could add additional expense. It made the declaration in response to alleged “misinformation” on social media channels that the company had been selling its cement more cheaply in the neighbouring country of Benin. A subsequent investigation by the This Day newspaper reported that Dangote Cement does not officially export cement to Benin and that the average price in the country was actually slightly higher than the end prices Dangote Cement provided. Competitor BUA Cement wasted no time though in saying at its annual general meeting that it would ‘crash the price of cement.’
All of this may sound familiar because a similar argument broke out in early 2021. At that time prices were rising following the outbreak of Covid-19, although other factors were at play. Then as now, Dangote Cement, the largest domestic producer, defended itself by publishing its prices and BUA Cement made another showy claim saying that it had no plans to raise the ex-factory price of its cement at the present time or in the future, “…barring any material, unforeseen circumstances.” The government also became involved with the Senate of Nigeria discussing the matter in relation to potential legislation at the time. Part of the problem here has been that Dangote Cement is the biggest producer and it has gradually started exporting cement from Nigeria in recent years and, regardless of any effects to the domestic market, it leaves it exposed to the kind of unsubstantiated scuttlebutt it has faced recently. Back in 2021 it briefly stopped exporting cement for a while before resuming it again in May 2021.
Graph 1: Half-year sales revenue from selected large cement producers in Nigeria. Source: Company reports.
Graph 1 shows how some of the large cement producers in Nigeria did in the first half of 2023. Dangote Cement is the market leader by a considerable margin and the figures here do not even include its sales elsewhere in Sub-Saharan Africa. Despite its market dominance its sales revenue has fallen so far in 2023 and the company blamed election uncertainty, a “cash crunch”, negative currency exchange issues and the weather. That said though it did manage to increase its earnings through initiatives such as using alternative fuels, making efficiencies at its plants and utilised compressed natural gas in its truck fleet.
BUA Cement and Lafarge Africa provided less descriptive context in their release. Both BUA Cement’s revenue and profit after tax rose year-on-year but Lafarge Africa’s profit after tax fell. This may have been due to a rise in fixed production costs such as staffing, by-products costs and electricity, although depreciation was also an issue.
For all of BUA Cement’s talk of “crashing the cement price” it is preparing to commission two new 3Mt/yr production lines at its Obu and Sokoto plants respectively in the first quarter of 2024. Given everything else that is going on in the Nigerian economy, such as inflation, and the large size of the country it seems unlikely to lower the price although it might slow down the rate by which the price continues to rise. In its 2022 annual report BUA Cement’s managing director Yusuf Haliru Binji said that the new production lines would enable it to potentially increase its exports. This is the logical next step for a local sector outgrowing its domestic bounds and this is exactly what Dangote Cement has done. Yet, as the recent price debacle has shown, the price of cement matters to Nigerians. If the price keeps going up all of the local producers may end up facing negative attention whether warranted or not.
Birla Corporation targets cement capacity of 25Mt/yr
06 September 2023India: Birla Corporation plans to increase its cement production capacity to 25Mt/yr by the end of the 2026 financial year from 20Mt/yr at present. It intends to do this by upgrading its 3.9Mt/yr Mukutban plant in Maharashtra, installing a second grinding unit at Maihar in Madhya Pradesh as well as building new grinding plants, according to the Times of India newspaper.
Birla Corporation chair Harsh V Lodha said "With the commissioning of Mukutban, we have virtually ring-fenced our core market of Central India, which we can service seamlessly from our six plants, namely Maihar, Satna, Kundangunj, Raebareli, Chanderia and now, Mukutban. The strategic location of these plants and standardisation of product quality allows us to interchange source of supplies to maximise realisation and serviceability for our customers." He made the comments at the company’s annual general meeting.
Hoffmann Green Cement Technologies confirms deal with Shurfah Group
05 September 2023Saudi Arabia: Hoffmann Green Cement Technologies (HGCT) has signed a deal with Shurfah Group to build several Hoffman plants under a 22-year exclusive licensing agreement. A first ‘clinker-free’ cement plant will be built in 2024. It will be a copy of HGCT’s H2 plant in France, which uses a combination of activated clay, ground granulated blast furnace slag (GGBFS) and gypsum to manufacture its products.
The engineering and production process will be carried out by Germany-based IBAU Hamburg. HGCT signed an exclusive partnership agreement with IBAU Hamburg in June 2022 to support the construction of Hoffmann units worldwide. In return for the industrial and technological transfer and this exclusivity, Hoffmann Green will receive an entry fee and fixed and variable annual royalties from Shurfah Group based on sales generated by the marketing of Hoffmann cements in Saudi Arabia.
Julien Blanchard and David Hoffman, the co-founders of HGCT, said "Just few weeks after signing a pre-agreement, we have given concrete expression to our commitment by signing this licensing contract with Shurfah, a major player in the Saudi Arabian construction industry. After Switzerland and the UK, we are continuing our international deployment with the aim of supporting, through this new contract, the kingdom's ambitious ‘Vision 2030’ project and participating in the decarbonisation of their construction industry through the construction of several of our units on their territory and the marketing of our 0% cement clinker."
Shurfah Group is a real estate investment conglomerate with interests in other sectors including petrochemicals, food and beverages.