Displaying items by tag: Taiwan Cement Corporation

Taiwan: Taiwan Cement has reassured the public about the quality and safety standards of its cement and other products. It follows fraud charges being issued to a former government official for supplying raw materials mixed with industrial waste to the cement producer, according to the Taipei Times. Taiwan Cement says it is conducting inspections on all raw materials, including taking random samples of the top and bottom layers of delivery trucks from suppliers.

Lai Chin-kun, a former Hualien County Council speaker, secured local government contracts for his family’s companies to dispose of industrial waste, including industrial byproducts and inorganic debris from electroplating, optoelectronics and display panel manufacturers and pulp paper processing companies. Another family company won a contract with Taiwan Cement in 2010 to supply limestone, clay, sand and other raw materials required for cement production.

Prosecutors allege that when supplying raw materials to Taiwan Cement, Lai instructed company drivers to fill the bottom half of the trucks with industrial waste and place natural materials, such as clay, sand and limestone, on the top half to fool inspectors. Lai reportedly made US$14.1m from the scheme from 2010 to 2015.

The long expected move by a Chinese cement producer outside of East Asia took a step closer this week with the news that Taiwan Cement is negotiating with OYAK Cement over a joint venture in Turkey. Taiwan Cement says it is prepared to invest up to US$1.1bn in the subsidiary that will operate OYAK Cement’s business in Turkey. In its press release Taiwan Cement said, bluntly, that government peak production limits and market saturation in China had forced it to expand internationally.

This isn’t Taiwan Cement’s first flirtation with a Turkish cement producer. Back in June 2018 local press reported that it had signed a memorandum of understanding and a confidentiality clause with Sanko Holding about potential investment. However, the timing is curious this time because almost simultaneously Brazil’s InterCement announced that it was selling its operations in Portugal and Cape Verde to OYAK Cement. This sale alone deserves more attention given that it is the third by a Brazilian producer since September 2018 but that’s a discussion for another week. Back on OYAK Cement, whilst nothing is certain at this stage, a pledge of US$1.1bn from a foreign investor would certainly come in handy helping to raise the money at the Turkish company.

Whoever, if anybody, Taiwan Cement ends up pairing up with, the level of the investment suggests a multi-plant move. Indeed, the suggested OYAK Cement deal involves a 40% share in 13 integrated cement plants in Turkey with a production capacity of around 12Mt/yr or a 16% local market share. This isn’t far off the regular international price of US$200/t for integrated production capacity.

For a Chinese company to choose Turkey is resonant historically because it is towards the western end of the Silk Road. Marco Polo, for example, travelled from Venice to China via the territory of modern-day Turkey. The modern day version, the Belt and Road Initiative, seeks to evoke this trade route as China attempts to expand internationally.

Pertinent to the cement industry, both China and Turkey are both major exporters. Turkey is the bigger exporter by proportion of production, at 10% in 2017. Both countries were in the top five exporters to the US in 2017 with 2Mt from China and 1.4Mt from Turkey. The commonly accepted wisdom is that the Chinese industry faces major hurdles to exporting its overcapacity. Yet its production base is so large, 15 times larger than Turkey’s, that the little clinker and cement it has the infrastructure to export is still significant. It’s interesting that a major Chinese producer seeking to overcome structural and market obstacles to its expansion at home is targeting a major exporting nation. Typically, when a foreign cement producer buys local companies, one strategy is to use the new assets to ‘naturalise’ its clinker imports as ‘local’ product. Given Turkey’s already large export market this seems unlikely in this case.

The highly public nature of Taiwan Cement’s latest attempt to strike it lucky in Turkey smacks of bolstering investor confidence as much as closing the deal. Normally, this kind of thing gets announced once everything has been agreed, possibly bar the regulatory approval. Putting some money up front may make Taiwan Cement seem serious but OYAK Cement also stands to benefit from its acquisition of the former-Cimpor assets in Portugal and Cape Verde, since it gives it a toehold within the European Union (EU). This one could go either way.

Taiwan/Turkey: Taiwan Cement plans to spend up to US$1.1bn on setting up a new joint venture with Turkey’s OYAK Cement. Through a new subsidiary, Dutch TCC Holdings, it intends to create a new business that will be 60% owned by OYAK Cement and 40% by Taiwan Cement. It will hold talks with OYAK Cement and if an agreement is reached the new company will operate OYAK Cement’s business in Turkey giving Taiwan Cement its first presence outside of Asia.

OYAK Cement is owned by Ordu Yardimlasma Kurumu (OYAK), the pension fund of the Turkish Armed Forces. It operates 13 integrated cement plants in Turkey with a production capacity of around 12Mt/yr. It holds a 16% market share. The plans with Taiwan Cement follow OYAK Cement’s purchase of InterCement’s operations in Portugal and Cape Verde.

Taiwan Cement hopes to gain access to the local market and the wider Mediterranean region. It said that, although it holds a production capacity of 75Mt/yr in the Greater China Region, government peak production limits and market saturation had forced it to expand internationally.

UK: Cement companies from Asia and North America are the latest to join the Global Cement and Concrete Association (GCCA), bringing the total number of member companies to 20. News members include Mexico’s Grupo Cementos de Chihuahua (GCC), Israel’s Nesher Israel Cement, India’s Shree Cement and Taiwan’s Taiwan Cement Corporation. The number of GCCA affiliates is also growing with the addition of the Cámara Nacional del Cemento in Mexico the Federación Interamericana del Cemento (FICEM) in Colombia and the Union of Cement Producers – Soyuzcement in Russia.

GCCA members now include: Buzzi Unicem, Cementos Argos, Cementos Pacasmayo, Cemex, Çimsa Çimento, CNBM, CRH, Dangote Cement, Eurocement, GCC, HeidelbergCement, LafargeHolcim, Nesher Israel Cement, SCG Cement, Shree Cement Ltd, Taiheiyo Cement, Taiwan Cement Corporation, Titan Cement, UltraTech Cement and Votorantim.

The association added that further applications for membership and affiliate status have been received and are being processed.

Taiwan/Turkey: Taiwan Cement and Turkey’s Sanko Holding have signed a memorandum of understanding and a confidentiality clause about the company’s plan to invest in Sanko’s cement business. Taiwan Cement said it would continue talks with the Turkish business group about a strategic partnership and would make details public once the parties sign a definitive contract, according to the Taipei Times newspaper. The cooperation agreement was first announced in June 2018.

Taiwan/Turkey: Taiwan Cement has arranged a market strategy cooperation and development deal with Turkey’s Sanko Group, according to Reuters. No other details on the arrangement have been released do far. Following the growth of clinker exports to Africa and Europe the cement producer is hoping to sign a contract to export 0.25Mt of clinker in 2018 – 2019. The deal is expected to generate up to US$8.5m for the company.

There is plenty to mull over on the Chinese cement market at the moment as the half-year reports for the major cement producers are being published. Anhui Conch revealed this week a glowing balance sheet with a 33% jump in its sales revenue to US$4.79bn. It attributed the boost to a ‘significant’ increase in prices and continued discipline with production and operation costs. Although CNBM is scheduled to release its results at the end of August 2017, Anhui Conch appear to be well ahead of its next largest rivals locally as can be seen in Graph 1.

Graph 1: Sales revenue of major selected Chinese cement producers. Sources: Company financial results.

Beyond the headline figures it is interesting to pinpoint the areas in China where Anhui Conch says it isn’t doing as well. Its South China region, comprising Guangdong and Guangxi provinces, suffered from competition in the form of new production capacity, which also in turn dented prices. Despite this ‘black spot’ in the company’s regional revenue still grew its sales in double-digits by 14%.

The other point to note is the growing number of overseas projects with the completion of a cement grinding plant in Indonesia, new plants being built in Indonesia, Cambodia and Laos, and projects being actively planned in Russia, Laos and Myanmar. The cement producer also opened seven grinding plants at home in China during the reporting period. It’s not there yet but it will mark a serious tipping point when the company starts to open more plants outside of China than within it. With the government still pushing for production capacity reduction it can only be a matter of time. On that last point China Resources Cement (CRC) reckoned in its half-year results that only four new clinker production lines, with a production capacity of 5.1Mt/yr, were opened in China in the first half of 2017.

After a testing year in 2016 CRC’s turnover has picked up so far in the first-half of 2017 as its sales revenue for the period rose by 17% to US$1.67bn. Despite its cement sales volumes falling by 9% to 33.6Mt, its price increased. Given that over two thirds of its cement sales arose from Guangdong and Guangxi it seems likely that CRC suffered from the same competition issues that Anhui Conch complained about.

Graph 2: Chinese cement production by half year, 2014 – 2017. Source: National Bureau of Statistics of China.

Graph 2 adds to the picture of a resurgent local cement industry suggesting that the Chinese government’s response to the overcapacity crisis may be starting to deliver growth again. After cement production hit a high in 2014 in fell in 2015 and started to revive in 2016. So far 2017 seems to be following this trend.

Returning to the foreign ambitions of China’s cement producers brings up another story from this week with news about the Nepalese government’s decision to delay signed an investment agreement with a Chinese joint venture that is currently building a cement plant in the country. With the prime minister visiting India the local press is painting it as a face-saving move by the Nepalese to avoid antagonising either of the country’s main infrastructure partners. This is relevant because the cement industries of both China and India are starting look abroad as they consolidate and rationalise. Once China’s cement producer start building more capacity overseas than at home, conflicts with Indian producers are likely to grow and present more awkward situations for states caught in the middle.

Taiwan: Leslie Koo, the chairman of Taiwan Cement, has died from injuries sustained from a fall. Koo, aged 62 years, died on 23 January 2017 following suffering head injuries from falling down stairs at a hotel in Taipei whilst attending a wedding, according to the Tapei Times newspaper. He had led Taiwan Cement since 2003.

Nelson Chang has been appointed as the acting chairman of Taiwan Cement. Chang is Koo’s brother-in-law. He has also been appointed temporary chairman of two subsidiaries: China Synthetic Rubber and Taiwan Prosperity Chemical.

One highlight from the cement industry news over the last month was Skyonic's announcement that it has opened a commercial-scale carbon capture unit at the Capitol Aggregates cement plant in Texas, US. Details were light, but the press release promised that the unit was expected to generate US$48m/yr in revenue for an outlay of US$125m. Potentially, the implications for the process are profound, so it is worth considering some of the issues here.

Firstly, it is unclear from the public information released whether the process will actually make a profit. The revenue figures for the Skyonic unit are predictions and are dependent on the markets that the products (sodium biocarbonate, hydrogen and chlorine) will be sold into. Skyonic CEO and founder, Joe Jones, has said in interview that the sodium-based product market by itself could only support 200 - 250 plants worldwide using this process. Worldwide there are over 2000 integrated cement plants. Since Jones is selling his technology his market prediction might well be optimistic. It is also uncertain how existing sodium biocarbonate producers will react to this new source of competition.

Secondly, Skyonic is hoping to push the cost of carbon capture down to US$20/t. Carbon dioxide (CO₂) capture and transportation varies between industries depending on the purity and concentration of the by-product. For example, in 2011 the US Energy Information Administration estimated the cost for CO₂ capture to range from US$36.10/t for coal and biomass-to-liquids conversion up to US$81.08/t for cement plants. The difference being that capturing CO₂ from cement plant flue gas emissions requires more cleaning or scrubbing of other unwanted chemicals such as mercury.

With these limitations in mind, Skyonic is placing itself in competition with the existing flue gas scrubbing market rather than the carbon capture market, since the level of CO₂ removal can be scaled to local legislation. Plus, SO_x, NO₂, mercury and other heavy metals can be removed in the process.

Back on carbon capture, Skyonic is securing finance for a process it calls Skycycle, which will produce calcium-based products from CO₂, with a pilot plant planned at Capitol Aggregates for late 2015. This puts Skyonic back amongst several other pilot projects that are running around the world.

Taiwan Cement and the Industrial Technology Research Institute inaugurated their calcium looping project pilot in mid-2013. It was last reported to have a CO₂ capture rate of 1t/hr.

The Norcem cement plant in Brevik, Norway started in early 2014 to test and compare four different types of post-combustion carbon capture technologies at its pilot unit. These are Aker Solutions Amine Technology, RTI Solid Sorbent Technology, DNV GL/ NTNU/ Yodfat Engineers Membrane Technology and Alstom Power Regenerative Calcium Cycle. The project in conjunction with HeidelbergCement and the European Cement Research Academy (ECRA) is scheduled to run until 2017.

St Marys Cement in St Marys, Canada started its bioreactor pilot project in July 2014. This process uses flue gas to grow algae that can then be used for bio-oil, food, fertiliser and sewage treatment.

If Skyonic is correct then its sodium biocarbonate process in Texas is a strong step towards cutting CO₂ emissions in the cement industry. Unfortunately, it looks like it can only be a step since the market won't support large-scale adoption of this technology. Other pilots are in progress but they are unlikely to gather momentum until legislation forces cement producers to adopt these technologies or someone devises a method that pays for the capture cost.