Displaying items by tag: Summit Materials

US: Summit Materials has appointed John Terembula as Senior Director, Grinding Technology. He previously worked for FLSmidth from 1994 to early 2024 in a variety of engineering and then product manager roles for grinding applications. His final position at FLSmidth was as Global Product Line Manager, Vertical Roller Mills. Terembula holds a degree in chemical engineering and materials from Lafayette College and an MBA from Temple University.

US: The US Department of Energy has selected four cement producers to receive funding under the Bipartisan Infrastructure Law and the Inflation Reduction Act.

Heidelberg Materials US secured up to US$500m for its planned 2Mt/yr carbon capture project at the Mitchell cement plant in Indiana. National Cement also received up to US$500m, for its Lebec Net Zero limestone calcined clay cement (LC3) project in California. Summit Materials received up to US$216m for a series of clay calcination projects in Georgia, Maryland and Texas. Lastly, Roanoke Cement will receive up to US$61.7m for an LC3 project at its Troutville cement plant in Virginia.  These projects also involve developing a training, education and certification consortium in the cement sector.

Portland Cement Association (PCA) president and CEO Mike Ireland said "This funding is a welcome acknowledgement from the government that America's cement manufacturers are taking ambitious and significant steps toward reaching carbon neutrality. This will move the needle closer to achieving what industry considers the 'heavyweight' of carbon solutions: carbon capture utilisation and storage (CCUS). Once established nationwide, CCUS will greatly accelerate cement manufacturers' charge toward net zero."

Senior vice president of government affairs Sean O'Neill added “From passage of the Bipartisan Energy Act of 2020 to securing funding through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, today's announcement is another major milestone in the cement industry's decarbonisation efforts. The PCA is committed to continuing to work with policymakers to ensure the regulatory environment facilitates rather than impedes these and future investments.

US: Summit Materials has published its financial results for 2023, its last full year prior to its merger with Argos North America on 15 January 2024. The building materials producer’s sales rose by 10% year-on-year to US$2.4bn, while its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 18% to US$578m. Cement contributed 16% of sales revenue, at US$383m, up by 7%. This was despite a 7% decline in sales volumes.

President and chief executive officer Anne Noonan said "Summit is at an exciting and pivotal point in our company’s history. Our team has effectively capitalised on dynamic yet constructive market conditions to drive record revenue and profitability.” She continued “We're building on our record-setting performance by swiftly and safely advancing our Argos integration – a move that we expect will only strengthen our materials-led business. For 2024, with an improved footprint and increased scale, we anticipate delivering another year of strong growth and returns. Our positive outlook is supported by robust commercial conditions, an improving demand backdrop and a full set of growth opportunities that are unique to Summit Materials. Crucially, our high-quality execution, financial performance and strategic focus has afforded us the balance sheet flexibility to continue our pursuit of value-accretive capital allocation priorities. Today and moving forward, we firmly believe Summit is very well-positioned to generate superior value creation for our shareholders."

US: Summit Materials and Cementos Argos have successfully combined their operations in the US under a single entity. Summit Materials acquired Argos North America Corp. for US$1.2bn, and conversely issued 31% of its shares to Cementos Argos. Summit Materials expects to derive US$100m in additional earnings before interest, taxation, depreciation and amortisation (EBITDA) through the deal. Three representatives of Colombia-based Grupo Argos will sit on the board of up to 11 directors of the new combined entity.

Cementos Argos CEO Juan Esteban Calle said "The combination with Summit Materials, which had the resounding support of its shareholders, allows us to begin a new chapter in the successful history of our presence in the US, and is built on shared values, strategic vision and complementary capabilities.” He added “This new milestone consolidates our objective of continuing to expand our presence in the most attractive construction materials industry in the world for the benefit of our shareholders and all interest groups."

US: Summit Materials has announced that its shareholders voted in favour of its proposed merger with Cementos Argos subsidiary Argos USA. Dow Jones Institutional News has reported that the parties expect the deal to conclude on 12 January 2024.

US: Summit Materials has entered into a memorandum of understanding (MOU) with hydrogen producer PCC Hydrogen (PCCH2). The MOU establishes an alliance to develop a fuel replacement strategy for Summit Materials’ cement production. PCCH2 will build a hydrogen plant to supply green hydrogen at a cement plant belonging to Summit Materials subsidiary Continental Cement.

Continental Cement president David Loomes said "Continental Cement has a longstanding commitment to environmental stewardship, seeking out opportunities to develop innovative practices and differentiated solutions to build a better tomorrow. Our company has signed on to the Portland Cement Association (PCA)'s Roadmap to Carbon Neutrality, with a goal of achieving carbon neutrality across the value chain by 2050. By coupling PCCH2's hydrogen production process with our cement manufacturing know-how, we are taking a bold stride towards achieving that goal, while continuing the push to cost-effective decarbonisation of cement manufacturing."

US: Heidelberg Materials is rumoured to have hired advisors for a possible attempt to acquire Summit Materials. Bloomberg has reported that the company made two approaches to Summit Materials ‘in recent weeks.’ Meanwhile, the Colorado-based producer revealed in a statement that it has rejected two takeover bids from an unnamed party, the more recent on 18 October 2023.

Summit Materials previously agreed to merge with Cementos Argos subsidiary Argos USA in early September 2023.

The 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: Cementos Argos, the cement company controlled by Colombia-based Grupo Argos, has entered into a definitive agreement with Summit Materials, under which they will combine their operations in the US. The platform will have a diversified portfolio and a nationwide geographic presence in complementary markets and high-growth urban areas. It will be present in 30 states.

Summit Materials currently operates across aggregate, cement, concrete, and other businesses in the building materials industry, with assets that include 217 aggregate mines, two cement plants along the Mississippi River and approximately 84 concrete plants.

Argos North America has four integrated cement plants, two grinding stations, 140 ready-mix concrete plants, and a distribution network of eight maritime ports and 10 inland terminals.

The agreement will see Cementos Argos receive approximately US$1.2bn and 54.7 million common shares in Summit Materials. This will make it the largest shareholder in Summit Materials, with a 31% stake. The combination will create a company with combined revenues in excess of US$4bn with approximately US$1bn in earnings before interest, tax, depreciation and amortisation (EBITDA). It will be the fourth-largest cement making portfolio in the US, with a capacity of 11.6Mt/yr. It will also be among the largest aggregates and concrete producers. The two companies expect the combination to unlock estimated annual synergies of at least US$100m, with significant realisation within two years.

Juan Esteban Calle, the chief executive officer (CEO) of Cementos Argos, stated, "This combination reaffirms our commitment to growth in the US market while realising and optimising our intention to list the US business on the New York Stock Exchange as the most efficient way to unlock the fundamental value of Cementos Argos' assets and businesses in that country. Being an active player in a publicly-traded leading building materials platform, with a significant component of aggregates and cement on the world's most attractive market, is a pivotal step in the value generation strategy we launched months ago with the SPRINT program for the benefit of all our shareholders. Cementos Argos' participation in Summit Materials will continue to provide our shareholders with significant exposure to the US market."

Anne Noonan, President and CEO of Summit Materials, said, “Our combination with Argos USA marks a significant milestone as we execute against and accelerate our materials-led portfolio strategy. The transaction will extend our geographic reach into high growth markets, creating a leading cement position nationwide, and bring together two talent-rich organisations to innovate and deliver value-added solutions for our customers."

The transaction is expected to close in the first half of 2024, subject to required regulatory approvals and customary closing conditions.

US: Continental Cement has ordered a Fuelflex Pyrolyzer alternative fuels combustion system from Denmark-based FLSmidth for installation at its Davenport plant in Buffalo, Iowa. The supplier says that its product offers a lower capital expenditure compared to competing systems, can control NO_x emissions without the need for ammonia water and can be installed without a long shutdown period. This is the first commercial installation of the Fuelflex Pyrolyzer system following a pre-commercial installation at the Mannok cement plant in Northern Ireland, UK, in 2022.

David Loomes, the president of Continental Cement, said “We’re very excited about what the Fuelflex Pyrolyzer will do for our process.” He added, “We’re planning to achieve 55% fossil fuel replacement across the plant, utilising non-hazardous waste that would otherwise go to landfill or incinerators. The economic and environmental benefits of this technology are very significant and a key element of executing our carbon reduction commitment.” Continental Cement, a subsidiary of Summit Materials, has been incorporating waste materials as fuels for more than 30 years.

Jens Jonas Skov Larsen, Head of Capital Sales at FLSmidth, said “Mannok has called the Fuelflex Pyrolyzer a game-changer for the cement industry.” He continued, “This system effectively rearranges the order of the combustion process to make use of hot preheater meal, which is the heat source for the waste fuel pyrolysis. It’s a more efficient way of burning alternative fuels and it comes with a host of benefits, including reduced emissions and a more stable process.”

The installation at Davenport cement plant is expected to start operation in 2024. The full commercial launch for the system is scheduled by 2025. No value for the order has been disclosed.