Displaying items by tag: Tax

President Trump said he was going to do it… and he did. The US announced tariffs on most imports on 2 April 2025 that took effect from 5 April 2025. So, once again, we ask what the consequences of this might be upon the cement sector.

Table 1: Estimated burden of US tariffs on selected countries importing cement based on 2024 data. Source: Based on USGS data.

Global Cement Magazine Editorial Director Robert McCaffrey posted a similar table to the one above on LinkedIn on 4 April 2025. It applies the new import tariffs to the value of imported hydraulic cement and clinker to the US in 2024 as reported by the United States Geological Survey (USGS). As such it gives us a starting idea of how the new tariffs might change what happens in 2025. For an idea of the volumes of cement imported to the US in recent years refer to the graph in GCW695.

However, a couple of key caveats were pointed out by commentators to that LinkedIn post. Marty Ozinga noted that the values from the USGS are customs values. Crucially, he said that the tariffs will be charged upon the FOB value of cement at the point of origin and not on the transport costs. This is significant because the cost of moving the cement can sometimes be more than half the total values reported in the table for certain countries. Another commentator wanted to make it clear that tariffs on imports are imposed upon the supply chain and are paid somewhere along it, typically by end users, rather than the originating country. Elsewhere, the feeling was very much one of waiting to see what would happen next and how markets would reorder.

Taken at face value, the first takeaway from Table 1 is that the variable tariffs disrupt the competitiveness of the importers. Any importer from a country with the lowest rate, 10%, now has an advantage over those with higher ones. Türkiye seems to be the obvious winner here as it was both the largest importer of cement in 2024 and it has the lowest rate. Vietnam appears to be a loser with a massive 46% rate. Canada and Mexico may have problems with a 25% tariff but how their cement gets to the US market may make a big difference as Ozinga mentions above. And so it goes down the list. What may be significant is how the order of the importers further down the list changes. For example, Algeria has a 30% rate compared to Egypt’s 10%. Both nations exported a similar volume of cement to the US in 2024.

The first casualty of the last week has been market certainty. The US announced the tariffs and stock markets slumped around the world. They started to revive on 8 April 2025 as the US government made more reassuring noises about trade talks but this was dampened by renewed fears of a US - China trade war. The orthodox economic view is that the US tariffs are increasingly likely to cause a recession in the US in the short term regardless of whether they have a more positive effect on the longer one. This view can be detected in former PCA economist Ed Sullivan’s latest independent report on the US economy. He acknowledged the fairness argument the US government has made, but warned of stagflation.

On the US construction market, prices look set to rise in areas that previously relied on imports or are near to them. Cement companies in the US should be able to sell higher volumes as some level of domestic production outcompetes imports. The sector produced 86Mt in 2024 and has a capacity of 120Mt/yr giving it a utilisation rate of 72%. It imported 20 - 25Mt of cement in 2024. One sign of this happening might be renewed investment in local capacity through upgrades, new lines and even new plants. However, a recession would reduce overall consumption. On the equipment side, there is likely to be a similar readjustment between local and foreign suppliers. Certainly, if the tariffs stick around then more non-US companies may be tempted to set up local subsidiaries and /or manufacturing bases if conditions permit. For example, note JCB’s doubling in size this week of a plant it is building in Texas. One interesting situation might occur if a US cement company wants to build a new production line. All the likely suppliers, at present at least, appear to be based outside of the US.

Finally, despite everything, Holcim declared this week that it had completed a $3.4bn bond offering ahead of the impending spin-off of Amrize in the US noting “strong investor interest in the future company.” It wants to shore-up confidence ahead of the creation of the new company at some point in the first half of the year. Holcim’s CEO said previously that he didn’t expect any blowback from tariffs as the company was a local business in the US. What may be worth watching for is whether the current disruption to stock markets causes any delays to the creation of Amrize.

The current situation with the tariffs is prompting a rapid-revaluation of the US construction market and the wider economy. US-based building materials companies look set to benefit but there may be disruption along the way. Foreign companies supplying the sector may well experience sharp changes in circumstances depending on how tariffs reorder supply chains. Prices for end-users look set to rise. We live in interesting times.

For Ed Sullivan’s take on the US cement sector read his article in the May 2025 issue of Global Cement Magazine

Boral announced this week that it had secured around US$15m from the Australian government towards decarbonisation upgrades at its Berrima cement plant in New South Wales. The funding will go towards the company’s own investment in a kiln feed optimisation project. A new specialised grinding circuit and supporting infrastructure at the site is intended to increase the proportion of alternative raw materials (ARM) from 9% to 23% to decrease the amount of limestone the kiln uses. The use of more ARMs should also enable the unit to reduce its energy intensity. Boral plans to use ARMs including granulated blast furnace slag, steel slag, cement fibre board, fly ash and fine aggregates from recycled concrete. Commissioning and full operation of the changes are scheduled for 2028.

The Berrima plant officially opened its last set of changes, including a chlorine bypass unit, in December 2024. This was done to allow the plant to reach a thermal substitution rate (TSR) of 60% by the end of 2027. At the end of 2024 the company said it had a TSR of 30% having risen by 20% from 2023. Another similar decarbonisation project at the plant is a carbon capture and storage demonstration pilot trial involving the recarbonation of construction and demolition waste.

Parent company SGH said in its annual report for 2024 that Boral was continuing to advocate for a carbon border adjustment mechanism (CBAM) to prevent carbon leakage and that it had taken part in the ongoing government review on the issue. This lobbying was visible earlier in March 2025 when the Cement Industry Federation (CIF) publicly addressed the government on the issue ahead of its next budget. It asked that carbon leakage be addressed in the form of an import tax to protect the local cement and lime sector. Cement and lime imports from Thailand, Malaysia, Indonesia, Vietnam and Japan are particularly seen as an issue. The government review into carbon leakage started in 2023 and is due to report back at some point in 2025, most likely after the parliamentary election in May 2025.

Another big sector news story to note is the ongoing acquisition of the cementitious division of the Buckeridge Group of Companies (BGC) by Cement Australia that was revealed in December 2024. Unsurprisingly, the European Commission (EC) approved the deal in late March 2025. Cement Australia’s parent companies Holcim and Heidelberg Materials are headquartered in Europe, but the EC concluded that the planned transaction was unlikely to dampen competition in Europe. The verdict of the Australian Competition and Consumer Commission (ACCC) is likely to be far more telling. It closed taking submissions on the proposed deal in late February 2025 and plans to release an update in May 2025.

The ACCC’s market inquiries letter reported that Cement Australia wants to run BCG Cement. However, under the acquisition proposal, BGC Quarries and BGC Asphalt will be acquired and operated by a new 50:50 joint venture between Holcim and Heidelberg Materials, which will operate as a production joint venture in respect of aggregates. Holcim and Heidelberg Materials have suggested taking four ready-mixed concrete (RMC) plants each in the greater Perth area. Finally, one RMC plant at Wangara could be divested due to the close proximity of existing plants run by Holcim and Heidelberg Materials. Whether this is what actually happens remains to be seen.

Finally, Holcim flagged-up Australia this week as one of the regions it intends to derive ‘profitable growth’ from after the planned spin-off of the US business. This approach is in line with the hunt by the big building materials companies for new growth markets as the cost of merger and acquisition activity in the US has risen. CRH, for example, bought a majority stake in AdBri in mid-2024. Further merger and acquisition activity in the cement sector in Australia seems less likely given its relative small size. Yet the higher economic growth forecast for the country compared to Europe is likely to keep multinationals interested.

Australia: The Australian government’s ‘unwillingness’ to impose a carbon levy on imported cement, lime and clinker is threatening decarbonisation efforts and could cost up to 1400 jobs, according to the Financial Review.

The Cement Industry Federation, which represents local producers Adbri, Boral and Cement Australia, has said that the absence of a carbon levy on imports from countries with less robust climate commitments paved the way for the offshoring of local manufacturing, a process known as ‘carbon leakage’.

It said “Not addressing the issue of carbon leakage in a timely manner will be detrimental to Australian cement and lime manufacturing and could lead to the unnecessary loss of key Australian cement and lime facilities."

Imports currently account for over 40% of domestic clinker consumption and originate largely from southeast Asia. In 2023, an energy expert was appointed by the government to assess the feasibility of an Australian carbon border adjustment mechanism, with a final recommendation expected to be delivered in 2024. However, only an interim report was released in November 2024, with the final advice now reportedly due after the election in May 2025.

The Pacific Cement Corporation (PACEMCO) held a groundbreaking ceremony this week officially ‘reopening’ its cement plant in Surigao City. The revival of the plant has been supported by investments by San Miguel Corporation (SMC). Various dignitaries attended the event including John Paul Ang, the chief operating officer of SMC, the mayor of Surigao City mayor and the governor of Surigao del Norte.

The plant has been closed since 2014 due to financial problems. At the time, Global Cement reported that the cement plant stopped operations in May 2014 after the Surigao del Norte Electric Cooperative cut its power supply for unsettled debts worth at least US$0.5m. PACEMCO was originally set up in 1967 and the plant had a production capacity of 0.22Mt/yr via one production line in 2014.

Earlier in March 2025 the Department of Trade and Industry (DTI) was keen to highlight the efforts that Taiheiyo Cement Philippines (TCP) is making towards supporting the country's infrastructure capacity. Company executives met with the DTI and revealed plans including building a distribution terminal in Calaca, Batangas with the aim of targeting the Luzon market. This follows the construction of a new US$220m production line at TCP’s San Fernando plant in Cebu in July 2024.

Both announcements follow the implementation in late February 2025 of a provisional tariff on cement imports. The DTI started investigating imports in the autumn of 2024 and later decided to initiate a ‘preliminary safeguard measure’ following the discovery of a “causal link between the increased imports of the products under consideration and serious injury to the domestic industry.” The tariff takes the form of a cash bond of US$6.95/t or US$0.28/40kg bag of cement. It will be in place for 200 days, to mid-September 2025, while the Philippine Tariff Commission conducts a final investigation. The two main countries that will be affected are Vietnam and Japan. A large number of countries are exempt from the tariff including, notably, China and Indonesia. Both of these two countries were larger sources of imports to the Philippines during the five-year period the DTI is investigating. However, imports from these places have declined since 2021 and 2023 respectively.

Graph 1: Import of cement to the Philippines, 2019 - 2024. Source: Department of Trade and Industry.

A preliminary report by the DTI published in late February 2025 outlines the reasons for the provisional tariff. In summary it found that imports rose from 2019 and 2024 and the share of imports increased also pushing down the domestic share of sales. In the view of the report, the domestic cement sector experienced declining sales, production, capacity utilisation, profitability and employment for each year apart from 2021. One point to note is that the imports were split roughly 50:50 between local and foreign companies. Local company Philcement, for example, was the largest importer for cement to the Philippines from 2019 to 2024. In its statement to the DTI it said that it had invested in manufacturing the processing sites in the country. It argued that overprotection of the market discouraged competition and might not be aligned with the economic goals of the country.

Last time Global Cement Weekly covered the Philippines (GCW669) in July 2024 it looked likely that the government would take further action on imports. This has now happened on a temporary basis but it looks likely that it will become permanent. Recent investment announcements from local producers such as PACEMCO and TCP may be coincidental but they suggest a tentative confidence in the local sector.

Bangladesh: The Bangladesh Cement Manufacturers Association (BCMA) has requested that the National Board of Revenue (NBR) lower an import tax on clinker to US$1.7/t. The lobbying is taking place ahead of the upcoming budget for the 2025 – 2026 financial year, according to the Financial Express newspaper. The association also expressed concern that a 10% duty was levied on limestone imports, but it expects this to be relaxed in the upcoming budget. The BCMA has urged the NBR to simplify customs regulations and impose a tariff system on value-added tax (VAT) calculations.

India: The Tamil Nadu government will impose a mineral-bearing land tax of US$1.82/t on limestone under the Tamil Nadu Mineral Bearing Land Tax Act 2024. This tax, payable in advance on mineral dispatch, is in addition to existing royalty charges. The announcement follows Karnataka’s recent decision to levy US$0.29/t on limestone mined.

The tax will raise production costs for cement producers in the region, particularly affecting Ramco Cements, which has 52% of its clinker capacity in Tamil Nadu, and Dalmia Bharat, which has 23%. Other Indian cement producers are less affected, with UltraTech Cement only holding 4% capacity in the area, and ACC 2%. This could mean that the cost increase is passed on to consumers, raising the price of cement.

Cement producers based in North America and Europe reported stable revenues and growing earnings in 2024. Revenue growth at scale could be found in India and Sub-Saharan Africa. Notably, India-based UltraTech Cement’s sales volumes of cement surpassed those of Holcim’s. Yet, the European-headquartered multinationals were mostly happy due to increased earnings. Holcim lauded record performance in 2024, for example, and Heidelberg Materials reflected upon “a very good financial year.” This review of financial results looks at selected large heavy building materials companies, outside of China, that have released financial results so far.

Graph 1: Sales revenue from selected cement producers in 2023 and 2024. Source: Company reports. Note: Figures calculated for UltraTech Cement, consolidated data from Ambuja Cement used for Adani Cement.

Holcim’s net sales may have dropped on a direct basis from 2023 to 2024 but its focus is on earnings. Its recurring earnings before interest and taxation (EBIT) rose by 4% year-on-year to US$1.31bn in 2024 from US$1.26bn in 2023. And the changing nature of where its earnings come from in recent years has led to the impending spin-off of the US business, scheduled to occur by the end of the first half of 2025. The company will be called Amrize and will be listed on the New York Stock Exchange, with an additional listing on the SIX Swiss Exchange. By product line, sales were down for cement, ready-mixed concrete (RMX) and aggregates, but they were up for the group’s Solutions & Products division. Despite this earnings were up for all four product lines. By region sales fell in North America, Europe and Asia, Middle East & Africa. They rose in Latin America. For reference, North America and Europe are the group’s two biggest segments.

Heidelberg Materials’ sales revenue remained stable in 2024 on a direct basis, although it dipped slightly on a like-for-like comparison. Its result from current operations before depreciation and amortisation (RCOBD) grew by 6% to US$3.4bn. Geographically, revenue in Europe and Asia Pacific fell. RCOBD increased, notably, by 19% to US$4.80bn in North America. It grew everywhere else apart from Africa-Mediterranean-Western Asia. As is becoming customary for Heidelberg Materials, it made a point of highlighting its sustainability progress. This includes demonstrating progress towards its sustainable revenue target and reminding markets that the delivery of its first carbon captured net-zero cement evoZero product is planned during 2025. The group plans to release its 2024 full annual report at the end of March 2025.

Graph 2: Cement sales volumes from selected cement producers in 2023 and 2024. Source: Company reports. Note: Annualised sales volumes provided for CRH, figures calculated for UltraTech Cement.

CRH’s strength in North America gave it both rising revenues and earnings. Sales revenue from its Americas Materials Solutions division reported 5% growth to US$16.2bn in 2024. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) sprung up by 22% to US$3.75bn. Revenue growth was attributed to price increases and acquisitions. Earnings growth was pinned on growth across all regions, pricing, cost management, operational efficiency and gains on land asset sales. Despite this, reported volumes in the division were down in 2024. The group’s International Solutions division performed more in line with its competitors, with revenue down slightly but earnings up. Lastly, CRH’s annualised sales volumes of cement grew in 2024. This is likely primarily due to the group’s acquisition of assets in Australia.

Cemex had a tougher time of it in 2024, compared to the previous three companies, with both sales revenues and earnings down. Sales and earnings were down on a direct basis for each of its three main regions – Mexico, the US, and Europe, Middle East, and Africa - although the picture was better in Mexico on a like-for-like basis. Sales volumes of cement, RMX and aggregates were either static or down in each of these areas. In the US the group may have been unlucky as it took an earnings hit from four hurricanes and a deep freeze in Texas. Group earnings improved in the fourth quarter of 2024. In spite of this it introduced ‘Project Cutting Edge’ in February 2025, a three-year, US$350m cost saving exercise.

The first takeaway from UltraTech Cement’s performance in 2024 is that a second (mainly) national producer has overtaken the multinationals. This happened with several China-based cement producers over the last decade. Now it has occurred in India with Ultratech Cement. It reported sales volumes of 120Mt in the 2024 calendar year. Shifting to the Indian financial calendar, Ultratech Cement ‘s revenue rose slightly in the nine months to 31 December 2024 but its new profit fell by 19% year-on-year to US$458m. Local press has blamed this on weak price realisations despite sales volumes growing. At the same time its energy costs have fallen so far in its 2025 financial year. Adani Cement, meanwhile, reported strong growth in both revenue and earnings in the 12 months to 31 December 2024. It too is likely to become one of the world’s largest cement producers by sales volumes by 2030, outside of China, if it follows-through on its expansion targets.

Finally, Dangote Cement reminded us all what growth really looks like as the Nigerian market started to rebound. Sales revenue increased by 62% to US$2.39bn and EBITDA by 56% to US$591m. Despite high domestic interest rates in Nigeria the group managed to grow its sales volumes of cement. Elsewhere in Sub-Saharan Africa sales volumes declined a little due to bad weather conditions in Tanzania and election uncertainties in Senegal and South Africa.

The importance of the US market for many multinational cement producers continued in 2024. However, this reliance on one place can carry risks, as Cemex’s results seem to suggest. Another reminder of this occurred this week when the US government imposed 25% tariffs on Canada and Mexico. The Portland Cement Association said in a statement, “The US cement industry would like to work with the administration to address federal laws and regulations that prevent American cement companies from increasing production, making it necessary for the US to import some 20% of its total cement consumption annually - including from Canada and Mexico.” Elsewhere, markets are changing as mega-markets such as India and Sub-Saharan Africa unleash their potential. China-based Huaxin Cement, for example, may start to gain a place on international round-ups like this one in 2025 when it completes its acquisition of Lafarge Africa.

Tajikistan: The Ministry of Industry and New Technologies has blamed falling cement production in Tajikistan on growth in production in neighbouring Uzbekistan. It also noted rising output in Afghanistan, according to Asia-Plus. Local production fell by 2% year-on-year to 4.35Mt in 2024 from 4.46Mt in 2023. Ministry data shows that exports of cement from Tajikistan dropped by 30% to 0.29Mt from 0.66Mt. In November 2024 Uzbekistan sharply increased customs clearance fees on Tajik cement to US$300/t from US$35/t.

US President Donald Trump threatened tariffs on imports from Canada, China, Mexico and the European Union this week. Tariffs to Canada and Mexico were announced on 1 February 2025 and then paused for a month to allow for negotiations. Ones to China have been implemented. Tariffs to the European Union have been proposed but nothing has happened yet. What does this mean for the cement sector?

Graph 1: Imports of cement and clinker to the US. Source: USGS. Estimated data for 2024.

The data suggests that whacking 25% tariffs on cement imports from Canada and Mexico would have an impact. The US imported 26.5Mt of cement and clinker in 2023. Based on United States Geological Survey (USGS) data from January to October 2024, imports in 2024 have fallen by 8% year-on-year but they still represent a large chunk of consumption. Türkiye has been the biggest source of imports over the last five years but Canada has been the second biggest supplier. Together with Mexico, it provided over a quarter of imports in 2023. A similar share is expected in 2024. Greece, a country in the EU, has also been present in the top five importing countries to the US during this time.

The Portland Cement Association (PCA) reinforced this view. In a carefully worded statement it took pains to point out alignment with the intentions behind the tariffs, such as appreciating that the administration was open to negotiation and appeared to be flexible. However, it warned that the moves could adversely affect energy and national security, delay infrastructure projects and raise costs. It pointed out the import share from Canada and Mexico, adding that this represented nearly 7% of the US’ cement consumption. It noted which states were the main entry points for cement imports from the two countries. Finally, it highlighted the high level of consumption (36%) that imports from Canada might account for in northern states such as New York, Washington and so on. Meanwhile, Mexico’s National Chamber of Cement (CANACEM) warned that the proposed actions might trigger a ‘competitiveness crisis’ in the US.

Holcim’s CEO, by contrast, nonchalantly told Reuters that he didn’t expect any impact by tariffs on his business. Miljan Gutovic described the group’s US operations as a local business with production happening in the country and equipment and spare parts all being sourced locally. This optimistic view is likely to be influenced by the company’s impending spin-off of its US business. The listing in the US remains scheduled for the first half of 2025 with no complications expected from tariffs.

Clearly, implementing tariffs on imports of cement and clinker from Canada and Mexico could cause a shortage in the US in the short term. This, in turn, could lead to higher prices for consumers in the US. This potential effect would be pronounced in border regions that are reliant on imports. It is worth noting that a number of production lines in both Mexico and Canada have previously been mobilised to meet the export market to the US. These lines would likely be mothballed if tariffs were to be implemented, unless they could find other markets. In the medium term though, as the World Cement Association (WCA) pointed out this week, the world produces too much cement. So it looks likely that the US cement market would adjust to a new equilibrium. Taxing imports from the EU would have a similar effect. Although it seems like it would be less pronounced for the US cement market unless it was in conjunction with tariffs to Canada and Mexico. It would certainly be bad news for cement producers in Greece.

Cement producers in the US look set to benefit from tariffs as demand for their products and prices could increase. There is a risk that too sudden a change to the import market could cause adverse market effects through shortages. Many of these companies are multinational groups with headquarters in foreign countries. However, the strength of the US market compared to elsewhere has prompted some of these businesses to become more ‘American’ through listing in the US or focusing merger and acquisition activity in North America.

At this point we’re stuck in a half-way house place where import tariffs have been threatened and negotiations are pending. The relatively muted stock market reaction to the tariffs and Trump’s swiftness in enacting pauses suggest that it is brinkmanship by the US administration. If this situation continues for any length of time then it will likely have an effect all of its own. In which case don’t expect any export-focused investment by cement companies in Canada and Mexico any time soon.

US: The Portland Cement Association (PCA) has issued a statement following the US government’s announcement of proposed 25% tariffs on imports of cement from Canada and Mexico. The association lauded President Donald Trump’s stated goal of protecting the US cement industry, while also calling for careful consideration of measures to be taken.

President and CEO Mike Ireland said “While the US cement industry agrees with the President’s objectives of bolstering American manufacturing, increasing border security, and advancing the country’s energy independence, the industry believes 25% tariffs on cement imported from Canada and Mexico could adversely affect energy and national security while delaying infrastructure projects and raising their costs.” Ireland continued “The availability of affordable cement and concrete is vital to meet our country’s infrastructure needs and for the oil and gas sector’s expansion. Mexico and Canada play a crucial role in stabilizing US supply, so we appreciate that the administration is open to negotiations and taking a flexible approach to implementing trade policy.”