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Displaying items by tag: Russia
Russia: Eurocement has revealed how it reorganised its business in 2022 in response to foreign equipment suppliers leaving the country and disruptions to domestic supplies of raw materials. The cement producer was forced to take this action in response to the effects of European and US economic sanctions imposed upon Russia following its invasion of Ukraine in February 2022. The cement producer started logging all purchases as prices escalated, special procedures were developed for critical materials and services, a compliance department was created, its network of suppliers in Russia and from countries not part of the sanctions was expanded and the company set up its own repair units at its plants.
2022 in cement news
21 December 2022Taking a look at the most read news stories on the Global Cement website in 2022 reveals what readers have been interested in. The usual bias applies due to the prominence of countries where English is prevalent and there is a concentration on stories from earlier in the year. Yet, even with these constraints, key trends identified elsewhere emerge. Read the December 2022 issue of Global Cement Magazine for a roundup of what we think has been noteworthy.
Top 10 news stories on Global Cement website in 2022
1. Holcim receives bids for Ambuja Cements
2. JK Lakshmi Cement and TARA to launch limestone calcined clay cement production
3. Ramco Cements to commission new plant at Kurnool in February 2022
4. CalPortland to buy Redding cement plant from Martin Marietta
5. ACC launches Houses of Tomorrow in India
6. CRH exits Russian market
7. HeidelbergCement freezes investments in Russian operations
8. US facing cement shortage
9. HeidelbergCement, Holcim and Sabancı Holding are potential buyers for Sika’s US assets
10. Jaiprakash Associates seeking to sell all assets
The two large India-based acquisition and merger (M&A) stories are both present at early stages of their development. Firstly, Adani Group went on to buy Holcim’s two subsidiaries, Ambuja Cements and ACC, becoming the second largest cement producer in the country. Secondly, Jaiprakash Associates was reported to be in dire financial straits in the autumn and looking to sell off more assets. This came to pass in mid-December 2022 when Dalmia Cement (Bharat) reached a deal to buy Jaiprakash Associates’ cement assets for US$684m. Incidentally, Adani Group made the news this week when it published plans to suspend production at two of its newly acquired cement plants in Himachal Pradesh due to high freight rates. The state government responded with a court order requiring the cement producer to justify its actions that, in its view, would detrimentally affect the lives of many. While it seems unlikely that the plants will close permanently, this incident does demonstrate that Adani Group is starting to take action with its new cement business.
The other M&A story concerns cement companies buying assets outside of the standard cement, concrete and aggregates triad. Global Cement has covered this business shift increasingly since Holcim acquired Firestone Building Products in 2021. The story in 2022 that readers were interested in concerned potential buyers for Sika US, an admixture manufacturer. This one also has a sustainability angle because admixtures can be used to make cement and concrete more efficient in different ways. A more obvious example of cement production becoming more environmentally friendly was that of an India-based cement producer preparing to start production of limestone calcined clay cement (LC3). The increased production of blended cements around the world has been a big story in 2022, particularly in the US.
Cement shortages in parts of the US were a theme we picked up on a few times in 2022. Nationally it followed supply issues in the southwest in early 2021 that led Cemex to restart a mothballed kiln at a plant in Mexico with the express aim of serving the export market.
In April 2022 shortages were being reported on the other side of the country in Alabama and South Carolina. Ultimately this was blamed on labour and supply chain issues in the aftermath of the coronavirus shutdowns. The other big US story in 2022 was back in California where CalPortland agreed to buy the Redding cement plant from Martin Marietta. The subsidiary of Japan-based Taiheiyo Cement later struck a further deal to buy the Tehachapi plant, also from Martin Marietta, in August 2022. Both of these integrated plants were previously sold by Lehigh Hanson to Martin Marietta in 2021. In November 2022 Lehigh Hanson announced that its remaining integrated unit in California, the Permanente plant near Cupertino, was going to be transitioned to a distribution and quarry site.
Finally, the top news stories in 2022 where not immune to the effects of the Russian invasion of Ukraine. The big underlying narrative has been a jolt to global energy prices. What could be seen here though were the efforts of the multinational cement producers to limit their exposure to the market in Russia and any potential legal action. CRH led the exodus, although it had a relatively small business to offload. Heidelberg Materials froze its investments in its Russia-based subsidiary in March 2022. Holcim completed the divestment of its business to local management in mid-December 2022. Buzzi Unicem withdrew from any operational involvement with its subsidiary SLK Cement in May 2022.
That’s it from Global Cement Weekly for 2022. Enjoy the seasonal and New Year break if you have one.
Global Cement Weekly will return on 4 January 2023
Holcim divests Holcim Russia to local management
14 December 2022Russia: Holcim has agreed to sell its Russian business to its local management. When the transaction is completed, the business will continue to operate under different branding. Holcim says that it remains committed to supporting Holcim Russia’s employees and ensuring an orderly transfer for its customers. DGAP Corporate News has reported that Holcim deconsolidated the subsidiary in March 2022, following Russia’s invasion of Ukraine.
Holcim said “Holcim’s Board of Directors expresses its heartfelt concern about the tragic human suffering in the region, and is fully committed to supporting affected people, families and communities. The Board of Directors thanks all Holcim colleagues who are mobilising around the world alongside local NGOs to provide shelter, essential goods and medical supplies, as well as volunteering their time.”
Energy for the European cement sector, November 2022
30 November 2022This week’s Virtual Global CemPower Seminar included an assessment on how interventions in European power markets might affect efforts to decarbonise industry. The presentation by Thekla von Bülow of Aurora Energy Research outlined how different countries in the European Union (EU) were implementing the forthcoming electricity price cap on ‘inframarginal’ producers to 180Euro/MWh. Each of these different proposals will entail differing levels of structural change to the wholesale energy market. For example, the Agency for the Cooperation of Energy Regulators (ACER) has recommended establishing a series of frameworks including a stronger focus on Contracts for Difference (CfD) schemes to promote renewable energy sources.
These changes are a consequence of the EU’s response to the Russian invasion of Ukraine. Gas prices surged and then pushed up other energy prices in turn to record levels. As this column covered in September 2022, the price of electricity shot up in the summer of 2022 whilst at the same time Russian gas imports ceased. Cembureau, the European Cement Association, called for urgent action to be taken to support cement production due to large increases in the cost of electricity. For example, in its latest overview of the German cement industry, the German Cement Works Association (VDZ) said that the sector has an electrical consumption of 30TWh/yr. Clearly energy policy is of great interest to the industry.
Since then, in late September 2022, Heidelberg Materials’ chief executive officer Dominik von Achten told Reuters that his company was preparing to shift production at its Germany-based plants to times and days when power prices are lower including at the weekend. However, this was dependent on negotiations with the unions. Von Achten also warned of plant closures being a possibility. Then, in November 2022, it emerged that Zementwerk Lübeck’s grinding plant in northern Germany had reportedly been only operating its grinding plant at night and at the weekend due to high electricity prices. Also in November 2022 European energy news provider Energate Messenger reported that Heidelberg Materials was preparing its cement plants in Germany with emergency backup power to keep critical services running in the case of electricity power cuts. One view from the outside came from equipment supplier FLSmidth’s third quarter results where it noted it had, “...started to see the first cases of budget constraints imposed by customers to counter the increasing energy cost. A high utilisation is still driving service activity in Europe, but some customers have put large capital investments on stand-by and we have experienced a slowdown in decision-making processes.” On the other hand it also pointed out that this trend is driving sales of products that helped reduce energy usage and/or switch to alternative fuels.
On the financial side, Holcim reiterated in its half-year report that, on the country, level the group uses a mixture of fixed price contracts, long-term power purchase agreements, on-site power generation projects and increased consumption of renewable energy at competitive prices to reduce the volatility from its energy bills. Both Cemex and Heidelberg Materials said similar things in their third quarter results conference calls. Cemex said that nearly 70% of its electricity requirements in Europe were fixed in 2022 with nearly 30% fixed for 2023. It went on to reveal that around 20% of its total costs for cement production in Europe derived from its electricity bill. Interestingly, it added that a higher proportion of its electricity costs in Germany were fixed than elsewhere in Europe, due to the use of a waste-to-electricity system owned by a third party that is fed with refuse-derived fuel (RDF), but that it was more exposed to floating fuel rates in Spain. Heidelberg Materials added that it supported energy price caps in both Germany and the EU whether they affected it directly or not.
So far it has been a mild start to winter in Europe. This may be about to change with colder weather forecast for December 2022. This will stress test the EU’s energy saving preparations and in turn it could force the plans of industrial users, such as the cement sector, to change. Some of the cement producers have commented on the financial implications of rising fuel costs but they have been quieter publicly about how they might react if domestic consumers are prioritised. Plant shutdowns throughout cold snaps are the obvious concern but it is unclear how likely this is yet. The variety of energy policies between fellow member states, their own supply situations and the differences between cement plants even in the same country suggest considerable variation in what might happen. If large numbers of cement plants do end shutting throughout any colder periods, then one observation is that it will look similar to winter peak shifting (i.e. closure) of plants in China. The more immediate worry in this scenario though is whether these plants actually reopen again.
The proceedings pack from the Virtual Global CemPower Seminar is available to buy now
Belarus cement exports to Russia on the rise
16 November 2022Belarus/Russia: Exports of cement from Belarus to Russia increased by 61% to 0.43Mt in September and October 2022 compared to the same period in 2021. Eurocement has also warned that Russia’s total imports could rise to 2.2Mt in 2022, comprising 1.5Mt from Belarus, according to RIA. The Russia-based cement producer forecast that total imports could rise to 5Mt in 2023, split mainly between imports from Belarus and Iran. Eurocement noted that it had encountered problems with rising imports already in 2022.
South Korea's nine-month Russian coal imports rise in 2022
25 October 2022South Korea: Russia exported 14.9Mt of cement in the first nine months of 2022, up by 31% year-on-year from 11.4Mt in the corresponding period of 2021. Tex Energy Report News has reported that this occurred due to sharp price rises in imported coal from Australia, Canada and Indonesia. Cement producers increased their reliance on these alternative sources of coal after the South Korean government placed sanctions on Russia in March 2022.
Meanwhile in India, Russian coal imports are expected to decline for a second consecutive month in October 2022, by 51% month-on-month to 730,000t. Russian media attributed this to stockpiling by cement market leader UltraTech Cement and others earlier in 2022.
West China Cement considering building cement plant in Russia
12 October 2022Russia: China-based West China Cement has been presented as a new partner in the Alabuga special economic zone (SEZ) in Tatarstan. The cement producer plans to invest around US$260m towards building a 1.2Mt/yr plant at the site. The project was revealed as part of an event presenting the progress of the development for the SEZ.
Russian government foresees building materials shortages from 2024
29 September 2022Russia: The Ministry of Industry and Trade of the Russian government says that building materials are in high supply, but projected possible future shortages, beginning in 2024. The ministry named white cement as one product which it has adequately secured through new import sources. Russian construction remains dependent on imports, and the government says that it will look to further develop domestic production capacities of non-metallic materials from 2024.
Eurocement to upgrade mill at Lipetskcement
21 September 2022Russia: Eurocement is investing over Euro3m towards upgrading a mill at its integrated Lipetskcement plant. The main work will add a separator to the mill. The addition will allow the unit to produce finer grades of cement and increase output by 20%. Work on the project started in September 2022 and is expected to be completed in early 2023.
Armenia to reduce cement and clinker tariffs
12 September 2022Armenia: The tariff on cement imports has been reduced by 35% to US$22/t, from US$34/t previously, following changes to import rules by the government. Imports of clinker will be subject to no tariffs.
News.am has reported that seven-month cement imports to Armenia rose by 1.7% year-on-year in the period up to 31 August 2022, to 84.7Mt from 83Mt. The cause of the growth is variously the cancellation of an income tax refund on mortgages from 1 July 2022, the increased immigration of Russian citizens into Armenia and the growth of tourism.