Displaying items by tag: VICAT

France: Vicat says that it will commission its planned 100% carbon capture system at its Montalieu-Vercieu cement plant ‘before 2030,’ and possibly as soon as 2027. The Les Echos newspaper has reported that the system will have a capture capacity of 1Mt/yr of CO₂, although the plant’s emissions are currently 800,000t/yr. Captured CO₂ may then be transported by barge, train or pipeline to the port of Fos-sur-Mer.

When commissioned, the upcoming carbon capture system will reduce the CO₂ emissions of cement produced at the Montalieu-Vercieu plant by 94% to 40kg/t.

UK: Carbon8 has appointed Paul Drennan-Durose as its chief executive officer (CEO). He succeeds John Pilkington, who becomes the non-executive chair.
Drennan-Durose holds experience in the sustainable energy sector with both public and private companies, including private equity and venture capital. He previously worked as the CEO of Ineo Partners, Powerhouse Energy Group and Heliex Power. Before this he was the managing director of Poole Process Equipment for seven years in the 2010s. Other roles of note include that of Group Commercial Director - Europe, Africa, Middle East and Asia Pacific for SMP Europe and the managing director of PLW and Fiamm Energy Technology.

Carbon8 is a UK-based company that supplies carbon capture, utilisation and storage (CCUS) equipment. Its main investors include EDF Pulse Ventures and Vicat. Notable corporate achievements include deploying its technology at Vicat’s Montalieu-Vercieu cement plant in France, at an EFW plant in the Netherlands and establishing business partnerships with FLSmidth and Return Carbon.

Eagle Materials announced this week that it had completed the acquisition of Martin Marietta’s cement import business in the north of California. A key part of the deal includes the sale of a cement terminal at Stockton. No value for the transaction has been disclosed.

The agreement prompts discussion for two immediate reasons. Firstly, it continues the enlargement of Eagle Materials’ cement business with its second terminal in California. The company operates its cement business in a band running almost right across the US. It runs seven cement plants in seven different states and jointly operates, with Heidelberg Materials, a plant in Texas too. It also runs a network of 25 cement terminals, including the new acquisition, stretching from California in the west to Pennsylvania in the east.

Eagle Materials’ focus on the cement sector also harks back to its previous plans to separate its various businesses. In 2019 it approved a plan to split its heavy materials and light materials businesses into two publicly-traded entities. The decision was made in response to pressure by shareholder Sachem Head Capital Management to make the company, in its view, more valuable. A strategic portfolio review followed but the planned separation was subsequently delayed due to the Covid-19 pandemic and poor market conditions, amongst other reasons. The board of the company then cancelled the proposed separation in 2021 citing the financial benefits of a diversified business, opportunities for strategic growth and the divestment of its oil and gas proppants business.

The other talking point is that the Eagle Materials transaction follows a positive response by the Federal Trade Commission (FTC) in response to the abandonment of CalPortland’s attempt to buy the Tehachapi cement plant in southern California and two related terminals from Martin Marietta. CalPortland’s parent company Taiheiyo Cement said in late April 2023 that it had terminated the acquisition agreement originally announced in mid-2022 due to its inability to obtain approval from the FTC in a timely manner. Whilst the FTC did not say if it had directly tried to block the proposed deal it did say, “The abandonment is a victory for consumers and preserves competition for a key component of Southern California’s construction and infrastructure industries.”

The FTC argued that the transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market, and was “presumptively illegal.” It noted that the Tehachapi plant was only about 20km away from CalPortland’s Mojave cement plant. It went on to say that, if the deal had gone ahead, CalPortland was poised to own half of the cement plants serving the Southern California market. It added that it would have been well-placed to raise its prices and that, “the transaction would have also increased the likelihood for coordinated action between the remaining competitors in this concentrated market.”

The de-facto block by the FTC of the Tehachapi sale now opens up the question of who Martin Marietta might try to sell it to next. Cemex, Mitsubishi Cement and National Cement (Vicat) are the obvious contenders given that they each also run integrated plants in the state. Of course another company, especially one with some form of existing distribution network, may express interest. Given its enlarged presence in Northern California, Eagle Materials springs to mind. Other potential buyers are, of course, available.

France: Vicat's first-quarter sales were Euro899m in 2023, up by 14% year-on-year from US$789m during the first quarter of 2022. In France sales rose by 9.6% to Euro297m. In the Americas sales rose by 9% to Euro198m. In the Mediterranean region sales rose by 94% to Euro104m and in Africa sales rose by 21% to Euro108m. Meanwhile, sales remained roughly level year-on-year in Asia and Europe (excluding France), at Euro112m and Euro81m respectively.

Chair and CEO Guy Sidos said “Vicat’s first-quarter performance demonstrates the strong resilience of demand in its main markets, which translated into a sharp increase in its consolidated sales when compared to very good first-quarter 2022 figures. Amid changeable winter weather conditions, especially in California, the group has pushed ahead with the ramp-up in its new installation in Alabama and accelerated its strategy of improving its manufacturing performance and shifting away from fossil fuels to achieve its operational, environmental and social objectives.”

India: Adani Cement has appointed Praveen Garg appointed as its Chief Logistics Officer. He previously worked for Vicat for over a decade in a variety of logistics roles. Before this he worked for ACC in logistics and shipping positions. Garg is a graduate of the Indian Institute of Management in Calcutta and the Indian Institute of Technology in Kharagpur.

France: Vicat and Materrup have formed a joint venture to industrialise production and accelerate marketing of Materrup's Clay Cement 1 (MCC1) raw clay cement. The Le Moniteur newspaper has reported that the technology is based on a precursor and activator mixture which removes the need for calcination of the clay. Materrup said that this halves MCC1 cement's CO₂ emissions compared with ordinary Portland cement (OPC).

The partners say that clay has better long-term feasibility than other alternative raw materials for cement production, because global reserves are currently 2Tnt.

Senegal: The International Finance Corporation (ICF) has arranged a Euro242m finance package for SOCOCIM Industries to build a new production line at its Rufisque cement plant in Dakar Region. Euro214m of the loans will be used to decarbonise cement production at the site, including a contribution towards a larger Euro260m upgrade project. The new planned production line will have an alternative fuels substitution rate of 70%, increased energy efficiency and will reduce the plant’s CO₂ emissions.

The finance package organised by the IFC comprises a Euro120m loan from the IFC's own account and Euro122m equivalent in local currency parallel loans from Société Générale Sénégal, CBAO Groupe Attijariwafa Bank, Banque Internationale Pour Le Commerce et l'Industrie du Sénégal, and Ecobank Sénégal. Société Générale Sénégal has been appointed as the administrative agent to manage the local currency financing with the other lenders.

SOCOCIM is a subsidiary of France-based Vicat. Fives revealed in early 2022 that it would supply a 6500t/day kiln line for the Rufisque plant.

The key trends to note from the financial results of cement producers in 2022 released so far are that sales revenues are up, sales volumes of cement are mostly down and earnings have mostly dropped too. Readers are not going to be surprised that 2022 was a tough year for business as the raw materials and services inflation coming out of the coronavirus period was heightened by energy cost spikes caused by the Russian invasion of Ukraine. Producers put their prices up in response to deliver often record high annual revenues.

Graph 1: Sales revenue from selected cement producers in 2021 and 2022. Source: Company reports. Note: Figures calculated for UltraTech Cement.

What sticks out by looking at the sales volumes of cement figures in Graph 2 (below) is that Holcim’s cement sales volumes were about the same as Heidelberg Materials’ were in 2022, at around 120Mt. Remember, Holcim’s cement sales volumes were 200Mt in 2021 and 256Mt in 2015 at the time of the merger with Lafarge. Large divestments have followed with the sale to Adani Group of Holcim’s India-based companies in 2022 being one of the biggest. UltraTech Cement, meanwhile, has been steadily increasing its India-based cement production capacity.

Graph 2: Cement sales volumes from selected cement producers in 2021 and 2022. Source: Company reports. Note: Figures calculated for UltraTech Cement.

By company, Holcim’s diversification and regionalisation strategy appears to be paying off well. Reducing its exposure to the cement market is giving it a strong story to tell as it grows its light building materials division, frames this as a success in sustainability and moves out of developing markets. How well this will work if and when it ends the divestment and investment stage remains to be seen. One point to highlight is that its operating profit fell by 18% year-on-year on a like-for-like basis to US$3.43bn in 2022. As well as contending with high costs in 2022, a subsidiary connected to the group was fined US$778m by the US Department of Justice in late 2022.

Heidelberg Materials’ approach to the current economic conditions in 2022 seems to have been to keep its head down and push on for decarbonisation rather than diversifying its business. So it followed the ‘sales up, costs up but earnings down’ pattern of a few of the other cement companies covered here. Although, that said, it did diversify its name to ‘Materials’ from ‘Cement’ in September 2022.

Cemex experienced the same problems as the other companies for most of 2022 but conditions started to improve in the fourth quarter in most of its territories. In particular, it reported that earnings started to grow in Mexico towards the end of 2022 despite falling sales volumes of cement. It attributed this to its pricing strategy. Of note this week, the Mexican government is preparing to support higher levels of imports of cement into the country due to a shortage in the southeast of the country.

Buzzi Unicem, meanwhile, noticed a faster slowdown in cement deliveries in its key markets in Italy, the US and Eastern Europe in the last quarter of 2022 from a general trend that could also be seen earlier in the year. In its largest market, the US, it reported that investment in residential construction slowed. This was further affected by the growing cost of building materials and the rate of inflation, although increasing spending on infrastructure helped to keep domestic consumption stable. A favourable currency exchange rate between the US and the Euro also helped the company to report provisional earnings growth. Vicat’s US businesses in the US and Brazil helped cushion the group somewhat with a large rise in sales revenue. However, earnings in the US were hit by the costs related to the start up of the new kiln at the Ragland plant in Alabama, as well as general energy cost inflation. Its business in France fought against inflation with ‘significant’ price rises delivering a high increase in sales revenue but this was insufficient to prevent earnings from dropping.

The non-European based cement producers present a different picture. Despite the high energy costs, UltraTech Cement managed to increase its revenue and sales volumes of cement in 2022. Its net profit fell though year-on-year in the nine months to 31 December 2022. The company is targeting a cement production capacity of 159Mt/yr by around the 2025 financial year with the aim of becoming the largest cement producing company in the world outside of China. Dangote Cement managed to raise its prices at home in Nigeria to fight off inflation and hold revenue and earnings up. This was harder internationally though with supply chain disruption, high commodity prices, high freight rates and a plant shutdown in Congo blamed for holding earnings back.

Inflation and the energy markets will be clear concerns in 2023. If energy prices for industry stabilise globally then there is more of a chance for business as usual as markets cope better with higher costs. The continued dilemma for multinational cement companies remains whether to decarbonise through diversification or investment in new processes, and how far to go along either path. Meanwhile, the large regional producers are starting to show themselves outside of China, as UltraTech Cement’s growth trajectory testifies. One test for these companies is balancing the risk of expansion versus potential tighter local environmental regulations. The environmental rules of export markets are also a factor to consider here with the head of AdBri calling this week for an Australian equivalent to the European Union’s border adjustment mechanism to block so-called ‘dirty’ imports.

The next set of financial results from the cement sector in 2022 to look out for will be those from the large China-based cement producers. Once these are released we will examine them in more detail.

Congratulations to Lafarge France for launching the first calcined clay cement unit in Europe. The subsidiary of Holcim says that the unit, based at the integrated Saint-Pierre-la-Cour cement plant, is the first of its kind on the continent. It is using the company’s proprietary proximA Tech technology and will produce up to 500,000t/yr of cement in its ECOPlanet range. The operation is also powered with biomass alternative fuels and uses a waste recovery system to further drive down overall CO₂ emissions. Once production ramps-up the producer expects that 30% of cement from the Saint-Pierre-la-Cour plant will be from the ECOPlanet range by 2024.

The investment at Saint-Pierre-la-Cour was Euro40m. Holcim is also producing calcined clay cement at its La Malle plant in France. It received an investment of Euro6m in 2022 to produce low-carbon cements. Together, both plants are aiming to produce over 2Mt/yr of calcined clay cement by 2024. As is usual for these kinds of projects, the French government partly funded the clay calcination unit at Saint-Pierre-la-Cour as part of the ‘France Relance’ scheme investing in large-scale decarbonisation and energy efficiency initiatives.

Calcined clay cements in Europe aren’t exactly new, but Holcim’s new unit in France does appear to be the first full-scale line located at a cement plant. Research by OneStone Consulting, for example, reckons that the first flash activated clay unit expressly set up to supply the cement sector was commissioned in 1995 in Toulouse, France. More recently, Hoffmann Green Cement inaugurated its 50,000t/yr pilot plant at Bournezeau in France in 2018. This site produces cements made from flash calcined clay and blast furnace slag, although it is unclear how demand for the different products varies. A new 0.25Mt/yr plant in the Vendée department was scheduled for commissioning in the second half of 2022. Another 0.25Mt/yr plant in Dunkirk is expected to be commissioned in the second half of 2024.

Cementir Group launched its calcined clay cement product FUTURECEM in Denmark in 2021 with production via a pilot plant. It then extended this to the Benelux and French cement markets in 2022. As part of its industrial plan for 2021 - 2023 it was planning to build a clay calcination unit to support the growth of FutureCem. FLSmidth revealed in June 2021 that it had won a contract to build a 400t/day clay calcination unit for Vicat’s Xeuilley integrated cement plant. The deal was worth around Euro27m and commissioning is scheduled for 2023.

Firstly, it is interesting to see a focus on France for some of the projects above. The presence of Lafarge’s technical centre in Lyon may explain the interest for that company. However, Hoffmann Green Cement and Vicat are also active in the field. It is worth noting that France also holds a busy secondary cementitious material market with standalone operators including Ecocem, Cem’In’Eu and Hoffmann Green Cement. Secondly, despite the early start, clay calcination for cement is currently more active outside of Europe. In Africa, for example, there is at least one live full production line and a number of other projects on the way. Various other pilots and projects are also happening elsewhere around the world, often in conjunction with the limestone calcined clay cement (LC3) initiative. Where calcined clay cement production in Europe goes from here is uncertain at present as it is one solution among many for lower carbon cement products in the future. Yet, the projects that have made it so far to the commercial scale will be watched closely by the companies that have invested in them - and their competitors.

France: Vicat’s full year results for 2022 show a 16.6% year-on-year rise in consolidated sales, from Euro3.12bn to Euro3.12bn. Its earnings before interest, tax, depreciation and amortisation (EBIDTA) came to Euro570m, a 7.9% fall compared to Euro619m in 2021. Its net income for 2022 was Euro156m, a fall of 23.6% year-on-year from Euro204m in 2021.

Commenting on these figures, Guy Sidos, the Group’s chair and chief executive officer, said “In 2022, the Vicat Group demonstrated resilience amid tough conditions. Faced with an unfavourable basis of comparison as a result of the sharp post-Covid rebound in business trends during 2021, a very strong increase in energy costs and non-recurring industrial costs in the US, France and India, we responded rapidly, raising our selling prices significantly across almost all the markets in which we operate to offset the impact of inflation. We have made progress with our policy of lowering our greenhouse gas emissions by harnessing existing solutions and investing in technologies that will enable us to reach our new 2030 targets.”