Displaying items by tag: Tax

UK: The Mineral Products Association (MPA) has welcomed government plans for the implementation of a UK carbon border adjustment mechanism for cement by 2027. The association urged the government to develop policy and business models for carbon capture, use and storage, including supporting a domestic carbon neutral and negative products sector.

MPA executive director for energy and climate change Diana Casey said “We cannot take our supply of cement for granted and neither can we put ourselves at risk of unstable international trading markets. That is why today’s commitment to a UK CBAM is so important. Levelling the carbon cost between domestic production and imports will help the UK attract the investment required to decarbonise and ensure our long-term security of supply. The Government’s commitment to bring in the UK CBAM by 2027 is very welcome, and ideally it should be introduced in 2026 to align with the EU scheme. This is the only way to prevent any detrimental impact of the EU CBAM on UK industry.” She added “As well as a CBAM on cement, the MPA would be interested in exploring a CBAM on lime. However, the challenge for the lime sector is ensuring that lime exports can compete in international markets.”

Canada: The Cement Association of Canada (CAC) says that provisions for investments and supportive measures in the government’s Fall Economic Statement 2023 will help to ensure the successful roll-out of carbon capture, utilisation and storage (CCUS) for industrial decarbonisation. The statement commits the government to advancing a CCUS Investment Tax Credits (ITC) scheme.

CAC president and CEO Adam Auer said “We commend the government’s recognition of the importance of CCUS in achieving our climate objectives. The cement industry is committed to reducing its carbon footprint, and these investments will facilitate the deployment of innovative technologies that are essential for achieving our Concrete Zero sustainability action plan objectives.”

Australia: The government has begun consultations with affected parties over the possible implementation of a carbon border tax on imports of goods from heavy industries, including cement production. The Herald Sun newspaper has reported that manufacturers’ associations in Australia have welcomed the possible change to emissions laws.

Albania: The government will raise the tax on coal by a factor of five, to Euro0.15/kg. EmergingMarketWatch News has reported that the measure will bring Albania’s industrial products into line with the International Monetary Fund (IMF)’s recommended minimum emissions tax of Euro55.8/t CO2. Without this, exporters to the EU would have to settle the difference.

Cementos Molins has been celebrating the first anniversary this week of its alternative raw materials unit at its Sant Vicenç dels Horts plant near Barcelona. It has processed 75,000t of waste since September 2022 when the site started up. More is yet to come as the unit has a production capacity of up to 200,000t/yr. The facility receives waste in coarse, granular, powder and sludge formats. Waste from concrete plants is crushed and screened to produce recycled aggregate. Industrial and construction waste is dosed and homogenised to produce alternative raw materials for cement production.

Global Cement Weekly has covered construction and demolition waste (CDW) a couple of times already so far in 2023. A number of cement producers are investing in the sector - including Holcim, Heidelberg Materials, CRH, Cemex – by developing technology, buying up other companies, setting up internal CDW divisions and so on. Holcim and Heidelberg Materials have been the more obviously active participants over the past six months based on media coverage. In September 2023 Holcim France commissioned the Saint-Laurent-de-Mûre alternative raw materials plant and Holcim Group invested in Neustark, a company promoting technology to sequester CO₂ in CDW. In August 2023 Lafarge Canada also completed the first stage of a pilot project to use CDW in cement production at its St. Constant plant in Quebec. Heidelberg Materials meanwhile announced in October 2023 that a forthcoming upgrade to its Górażdże cement plant in Poland would include a new CDW recycling unit and in September 2023 it launched a CDW division for its subsidiary Hanson UK.

Previously we have described how the European Union (EU) has set recovery targets for CDW. However, McKinsey & Company published research in March 2023 setting out the economic case for cement and concrete companies looking at CDW. It estimated that “an increased adoption of circular technologies could be linked to the emergence of new financial net-value pools worth up to roughly Euro110bn by 2050.” It is not a certainty and there is risk involved, but adopting circular practices is one way to reduce this risk. It then went on to predict that recirculating materials and minerals could generate nearly Euro80bn/yr in earnings before interest, taxation, depreciation and amortisation (EBITDA) for the cement and concrete sectors by 2050. The biggest portion of this could come from using CDW in various ways such as a clinker replacement or as an aggregate in concrete production, or the use of unhydrated cement ‘fines.’ Capturing and using CO₂ and increasing alternative fuels (AF) substitution rates would have a financial impact but not to the same scale.

Graph 1: CO₂ abatement cost via circular technologies for cement and concrete sectors. Source: McKinsey & Company.

Graph 1 above puts all of the McKinsey circular technology suggestions in one place with the prediction that all of these methods could reduce CO₂ emissions from cement and concrete production by 80% in 2050 based on an estimated demand of 4Bnt/yr. The first main point they made was that technologies using CO₂, such as curing ready-mix or precast concrete, can create positive economic value at carbon prices of approximately Euro80/t of CO₂. Readers should note that the EU emissions Trading Scheme CO₂ price has generally been above Euro80t/yr since the start of 2022. The second point to note is that using CDW could potentially save money by offering CO₂ abatement at a negative cost through avoiding landfill gate fees and reducing the amount of raw materials required. This is dependent though on government regulation on CO₂ prices, landfill costs and so on.

Cement producers have been clearly aware of the potential of CDW for a while now, based on the actions described above and elsewhere, and they are jockeying for advantage. These companies are familiar with the economic rationale for AF and secondary cementitious materials (SCM) in different countries and locations. CDW usage is similar but with, in McKinsey’s view, existing CO₂ prices, landfill costs, and regulatory frameworks all playing a part in the calculations. Graph 1 is a prediction but it is also another way of showing the path of least resistance to decarbonisation. It is cheaper to start with AF, SCMs and CDW rather than barrelling straight into carbon capture. The beauty here is that cement and concrete sold, say, 50 years ago is now heading back to the producers in the form of CDW and it still has value.

Ghana: Wan Heng Ghana has issued a statement clarifying its position after the Ghana Revenue Authority (GRA) found that it had failed to pay US$60.6m in taxes. The company markets cement from its Tema grinding plant as Sol Cement.

The producer said “We acknowledge that we are indebted to the GRA for unpaid taxes. We are fully committed to resolving this matter in a responsible and timely manner. We want to reassure our valued customers, stakeholders and the public that we are taking immediate and proactive steps to address this issue. We are in discussions with relevant tax authorities to develop a structured repayment plan that aligns with our financial capabilities and ensures that our tax obligations are met.”

It continued “Sol Cement remains dedicated to its mission of contributing to the growth and development of Ghana. We understand that paying our taxes is an essential part of fulfilling this commitment. We apologise for any concerns or inconveniences this situation may have caused, and we promise to keep all our stakeholders informed throughout this process. We appreciate the trust and support that our customers and partners have placed in us over the years, and we are determined to rectify this situation while continuing to provide top-quality cement products and services. We thank you for your understanding and patience during this challenging period. Sol Cement remains committed to being a responsible corporate citizen and a reliable contributor to the Ghanaian economy.

Ghana: The Ghana Revenue Authority (GRA) has shut down Wan Heng Ghana’s 0.5Mt/yr grinding plant in Tema after the company failed to pay US$60.6m in taxes. GhanaWeb reports that the GRA gave the China-based company 10 days in which to pay its taxes, otherwise the closure will continue. Wan Heng Ghana operates in the country using the Sol Cement brand.

Pakistan: The Ministry of Energy (Petroleum Division) is preparing a proposal for a ‘significant’ rise in gas tariffs in Pakistan. The Energy Update newspaper has reported that the rise will affect gas prices in the cement sector, besides other industries. The government aims to reduce the natural gas sector’s debts from US$10.5bn as part of a deal with the International Monetary Fund.

Moldova: The Ministry of Economic Development and Digitalisation has announced that Ukraine will cancel an existing anti-dumping duty on imports of Moldovan cement until 31 December 2023. Ukraine announced the move following constructive discussions held during a meeting of the co-chairs of the Moldovan-Ukrainian intergovernmental commission on trade and economic cooperation held in Odesa, according to Interfax-Ukraine.

Moldovan Minister of Economic Development and Digitalisation Vadim Humene insisted that Ukraine cancel the anti-dumping duty so that Moldova did not have to ‘initiate trade defence processes’ regarding products that Moldova imports from Ukraine.

In addition to the temporary removal of the anti-dumping duty, the two countries expressed their readiness to help remove barriers to trade and simplify border controls to optimise the flow of goods, review environmental duties and ensure transparent, uniform application of legislation by both countries.

EU: The EU launched the transitional phase of its carbon border adjustment mechanism (CBAM) on 1 October 2023. Parties that import cement - and five other commodities - into the EU must now show the embodied CO₂ emissions of their products.

The transition comes ahead of the full implementation of the CBAM in January 2026. At this point, those importing cement into the region will have to pay for the embodied CO₂ of their products in order for them to enter the EU Common Market. Producers within the EU already pay for a proportion of emissions under the auspices of the EU Emissions Trading Scheme (ETS).

The intention of the CBAM is to reduce the risk of 'carbon leakage' as the costs of making cement rise in the EU due to changes in the ETS. While cement producers, as heavy CO₂ emitters, are currently shielded from the full cost of their emissions, the number of free allowances they receive is set to fall substantially by 2026. At the same time, the cost of emitting a tonne of CO₂ under the ETS, currently Euro80-90/t on the open market, is widely expected to rise.