Displaying items by tag: ThyssenKrupp Industrial Solutions

There have been two major announcements in the cement sector this week. The first was that Holcim is preparing to divest its business in the US via a spin-off and full capital market separation. The second was that FLSmidth is thinking about selling its cement equipment business. Both stories are huge so we will cover them both. This week we will focus on FLSmidth and Holcim will follow next time.

Both news stories came as something of a shock. Yet FLSmidth’s plans were not surprising given the divestment of MAAG gears and drives business earlier in January 2024 and several years of tough trading conditions in the sector generally. Yet, as one commentator on the Global Cement LinkedIn Group put it, it feels like “the end of an era.”

First a little history. FLSmidth has been in business for over 140 years and has been indelibly linked to the cement market throughout this time. Its first big cement order was in 1887, it built its own plant in Aalborg in 1889 and it started selling rotary kilns in 1899. By 1957, at the time of its 75th anniversary, it was estimated that 40% of the world’s cement was manufactured in equipment supplied by FLSmidth. Many other advancements and milestones followed but signs of the modern business’ focus on mining can be detected in the acquisition of US-based Fuller Company in 1990, the sale of Aalborg Portland in 2002 and the purchase of ThyssenKrupp Industrial Solutions’ mining business in 2021.

FLSmidth described its reasoning for a potential divestment of its cement business and focusing on mining as follows: “our industries, and in turn, the appropriate operating models which best serve them, have diverged. Consequently, combining our two organisations under one ownership is now forcing more operational friction than benefit.” It took pains to state that it hopes to sell its cement business in one piece whereupon it can continue to grow under new ownership and “maximise its full potential.”

FLSmidth’s strategy for selling its cement equipment business appears to have taken the form of separating out the cement business, making it look as strong as possible and then publicly announcing that it is “exploring divestment options.” This is different from many other corporate divestments that only become public once a deal with a prospective buyer has been secured. FLSmidth has been preparing for a potential divestment of the division internally through its ‘pure play’ strategies and focusing more recently on product, services and technology rather than project risks. It said that the MAAG sale had shown it that there was interest in buying the cement business. However, no potential buyers have been disclosed at this time. In a conference call the company said that it was hoping for five to 10 interested parties and it would expect these to be either industrial buyers or financial entities.

One of the callers homed in on the attempts by ThyssenKrupp to sell the cement division of its subsidiary ThyssenKrupp Industrial Solutions (TKIS) in 2020 following a restructuring drive. It changed its mind in 2021 and ended up selling its mining division to FLSmidth instead. In response to any comparison, FLSmidth asserted that it was preparing to sell a significantly different asset to TKIS, not least due to its careful steering away from project-based risk.

The wider business backdrop to this decision has been the rise of the Chinese cement sector since the late 1990s, persistent global production overcapacity, the setting of net zero CO₂ emission targets globally and, more recently, logistic and economic shocks arising from the Covid-19 pandemic and geopolitical events. New cement production line projects are now frequently managed by China-based equipment suppliers in many territories, with the exception of North America. It is worth noting here that some of the largest China-based cement equipment suppliers are subsidiaries of the government. The Chinese government has also supported the construction of new plants outside its borders through its Belt and Road initiative. Protectionist investment policies implemented by western governments to support industry transitioning to net zero is in part a response to this in the general economy. Cement equipment suppliers from outside of China can and do build lines on a regular basis but they tend to concentrate on parts of plants, such as mills, or specific technologies and services. FLSmidth is a good example of this transition with its renewed focus on the green transition.

The decision by FLSmidth to consider selling its cement business marks another sign that the cement industry is changing. The transition to net zero puts Europe-based suppliers in a good position given that the region is currently leading with carbon capture projects. A retrofit boom for cement plants (and customers) being made to pay for CO₂ emissions could change the dynamic for the cement equipment sector as the focus shifts from building kilns to capturing CO₂. And companies like FLSmidth are well placed to benefit from this. Then again it may just end up being business as usual. Either way, any eventual change in the ownership of FLSmidth’s cement division does indeed mark the end of an era.

Next week: Holcim’s plans in the US

Germany: ThyssenKrupp has reorganised its cement engineering subsidiary ThyssenKrupp Polysius from the start of October 2023 as part of its new Decarbon Technologies segment. The new division also includes bearings and drive company Rothe Erde, chemical plant supplier Uhde and electrochemical plant supplier ThyssenKrupp Nucera. In its annual report for 2022 – 2023 the group said it had formed the new segment because “we want to systematically access the enormous potential of the green transformation and translate it into value-creating growth.”

The group’s Multi Tracks segment, which ThyssenKrupp Polysius was part of previously, reported growth of 16% on a comparable basis to Euro3.17bn in the year to the end of September 2023 compared to Euro4.10bn in the same period ending in 2022. However its order intake fell by 16% to Euro3.74bn and it reported a negative adjusted earnings before interest and taxation (EBIT) of Euro132m. Overall the group’s order intake, sales and EBIT all fell in the reporting period.

Miguel López, the chief executive officer of ThyssenKrupp said “The figures show that we have made progress with the transformation of ThyssenKrupp, despite the difficult environment, but also that we must continue to work hard at raising the performance of our businesses. We have therefore launched our ‘APEX’ program to speed up improvements to our businesses’ performance. At the same time, we are systematically focusing our businesses on future areas in order to leverage our full potential there, especially in connection with the enormous opportunities that the decarbonisation of industry offers us. We are positioning ThyssenKrupp as an enabler of the green transformation, thereby supporting the transformation of many industries worldwide.”

India: The India Cements expects to commission the upgraded grinding unit at its Sankar Nagar cement plant in Tamil Nadu later in September 2023. Hindu BusinessLine News has reported that the producer is undertaking the upgrade in order to increase efficiency and lower the plant’s operating costs. The producer has hired US-based Boston Consulting Group to ascertain other possible improvements to three of its plants in Andhra Pradesh and Telangana. At its Chilamkur cement plant in Andhra Pradesh, it is installing a waste heat recovery (WHR) system, scheduled for delivery in early 2024. FLSmidth and ThyssenKrupp Industrial Solutions are both reportedly conducting ‘detailed studies’ for possible future projects for The India Cements.

Turkmenistan: State-owned Turkmencement has successfully carried out an upgrade to its 1Mt/yr Lebap cement plant at Koytendag. The upgrade involves the installation of a new 3000t/day kiln line, supplied by Germany-based thyssenkrupp Industrial Solutions. The producer first announced the project in mid-2020, and ordered the new line in mid-2021.

In 2022, the Lebap cement plant produced 1.1Mt of cement, up by 11% year-on-year from 991,000t in 2021.

Portugal: The first batch of clinker has been manufactured on the new upgraded production line at Secil’s Outão plant. Construction and start-up teams from ThyssenKrupp Polysius reached the milestone in mid-April 2023 after a heating period of 72 hours. Germany-based ThyssenKrupp Industrial Solutions was appointed by Secil to work on the Clean Cement Line project in 2020. It said it was going to modify the existing rotary kiln and preheater tower, install a new calciner and add a new grate cooler. Once finished it will produce Portland limestone cement (PLC). It is scheduled for commissioning in mid-2023.

Italy-based CTP Team was contracted in mid-2020 to supply and install a 29MW waste heat recovery (WHR) unit for the project. It planned to use an organic rankine cycle (ORC) unit using a 7.2MW turbine supplied by Turboden.

Italy-based Bedeschi also revealed in early April 2023 that it was in the cold commissioning phase for a new pipe conveyor at the plant to handle different kinds of alternative fuels. The conveyor has a diameter of 250mm and conveying length of 350m and will transport alternative fuels at a rate of 300m³/hr.

Burkina Faso: Ciments de l'Afrique (CIMAF) has ordered a Polysius booster mill from Germany-based ThyssenKrupp Industrial Solutions (TKIS) for its grinding plant at Ouagadougou. This is the first industrial reference of the product that promises to allow a greater substitution of clinker with local filler by boosting the fineness and reactivity of the clinker. It will also maintain both cement quality to local standards and production capacity of the exiting ball mill at the unit.

Mohamed Naciri, the Regional General Manager for CIMAF, commented “Burkina Faso is a landlocked country where clinker has to travel at least 1200km to reach Ouagadougou, every technology aiming to decrease the cement clinker factor is welcome, this project is also an important milestone in our decarbonation road map, TKIS is a key partner for CIMAF to decrease our group CO₂ footprint.”

CIMAF owns and operates 13 grinding plants in Africa. It runs plants in Burkina Faso, Cameroon, Chad, Ivory Coast, Gabon, Ghana, Guinea Bissau, Guinea, Mali, and Mauritania. CIMAF's parent company, Omnium des Industries et de la Promotion (OIP), is a cement supplier across north, west, and central Africa, producing about 12Mt/yr. It is the third largest cement producer in Morocco with two integrated plants.

Vietnam: ThyssenKrupp Polysius’ Asia Pacific division has secured an order for two Polflame-type main burners for an unnamed cement plant. The equipment supplier has highlighted the ability of its burner product to cope with low-grade coal and support high alternative fuel substitution rates as key selling factors. The order follows the purchase of an Impact Crusher by the same customer previously.

Lukas Schoeneck, the chief executive officer of Polysius Asia Pacific, said "We are very proud to add burners number 17 and 18 to our installed base in Vietnam which ensures our market leader position. Now we have to put our focus on the delivery and installation of the burner - in time and quality.”

India: ThyssenKrupp Industries India has reported information on recent orders with UltraTech Cement, Shree Cement and Hills Cement.

Its Polysius division has secured an order from UltraTech Cement for the design, engineering and supply of two 10,000t/day pyro processing lines with Polycom rolls for raw materials grinding.

Shree Cement has ordered pyro processing equipment including a Polytrack clinker cooler for a new cement plant at Guntur in Andhra Pradesh. ThyssenKrupp Industries India noted that it was the “maiden plant order” from Shree Cement and of “great strategic importance to us.”

Hills Cement has also made a first order with ThyssenKrupp. In this case it has requested pyro processing equipment including a clinker cooler for the second production line at its plant in Meghalaya.

Congratulations are due to the National Cement Company of Alabama and Vicat for the inauguration of the new production line at the Ragland cement plant in Alabama. The event took place on 21 July 2022.

The US$300m project was originally announced in late 2019. It then took two years to build with construction starting in January 2020. Key features include a raw vertical grinding mill, a new roller mill, a five stage preheater tower, an automatic clay storage system, a 78m tall homogenisation silo, an alternative fuels storage area for tyre-derived fuel, sawdust and wood chips, a laboratory and a new control room. The new kiln was previously reported to have a clinker production capacity of 5000t/day and it will add up to 2Mt/yr of cement production capacity to the plant. ThyssenKrupp signed up as the principal equipment supplier in 2019 and H&M was the main contractor. The production line is expected to reduce energy consumption by one third. Further change is scheduled with a switch to production of Portland limestone cement (PLC) from Ordinary Portland cement (OPC) by the start of 2023.

Vicat has repeatedly noted its affection for the plant as it was the first cement plant the group purchased outside of France, back in 1974. Indeed, Vicat’s group chair and chief executive officer Guy Sidos personally managed the Ragland plant in 2001. However, rather more prosaic reasons may also have been behind the decision to expand Ragland. According to United States Geological Survey (USGS) data, Alabama, Kentucky and Tennessee’s cement shipments grew by nearly 5% year-on-year to 7.1Mt in 2019 from 6.8Mt in 2018. Shipments are up by 3% year-on-year to 2.5Mt in the first four months of 2022 and the three states were the fifth largest region in the US for cement shipments in April 2022. A shortage of cement was also reported in Alabama in April 2022.

The other big US-based cement plant expansion is Lehigh Hanson’s US$600m upgrade to its Mitchell plant in Indiana. It also celebrated a milestone this week with a ‘topping out’ ceremony to mark the placement of the final section of steel for the stack. Another recent achievement here was the completion of a 169,000t storage dome supplied by Dome Technologies. The supplier says that the 67m diameter and 48m tall dome is the second largest clinker storage facility in Europe and North America, after one it previous built in Romania in 2008.

The Mitchell K4 project was announced in mid-2018 and then ground breaking began in late 2019. However, the start of the coronavirus pandemic delayed construction in early 2020 before it restarted in September 2020. The revised commissioning date was then moved back about half a year to early 2023. The key part of this project is that it will replace the plant’s three current kilns with just one. The new production line will increase the site’s production capacity, reduce energy usage and decrease CO₂ emissions per tonne of cement. It was reported by local press back in 2018 that the project would increase the plant’s cement production capacity to 2.8Mt/yr. The project has been linked to supplier KHD with CCC Group as the contractor.

It’s fascinating to see two major new upgrades to cement plants emerging in a mature market like the US and during an unprecedented event like the emergence of coronavirus. No doubt compelling tales will emerge of how both teams coped with managing nine-figure capital expansion projects as a global public health emergency unfolded. The US market has been on a roll in recent years, despite all the uncertainty in the world, and so far it doesn’t seem to be slowing down. With luck both of the projects feature above have timed their opening right.

Germany: ThyssenKrupp Industrial Solutions’ Polysius division says that it has been commissioned by Buzzi Unicem, HeidelbergCement, Schwenk Zement and Vicat to build a pure oxyfuel kiln system at the Mergelstetten cement plant as part of the Cement Innovation for Climate (CI4C) project. No dates of the start of construction or final project commissioning of the industrial trial have been disclosed. CI4C was originally formed in 2019.

The Polysius pure oxyfuel process is a new type of clinker production process in which the otherwise normal ambient air is replaced by pure oxygen in the kiln combustion process. One advantage of the technology is that atmospheric nitrogen is eliminated from the clinker burning process leading to much higher concentrations of CO₂ in the exhaust gas compared to a conventional kiln. As such the process aims to concentrate, capture and reuse almost 100% of the CO₂ produced in a cost-effective manner. The medium-term goal is to further process the captured CO₂ with the help of renewable energy into products such as kerosene for air traffic.