Displaying items by tag: concrete

Mexico: Holcim Mexico says that its supply of cement to the government’s Tren Maya railway project is 170,000t/month. This corresponds to 50 – 60% of its total production volumes. Local press has reported that construction of the 1500km-long Tren Maya railway will consume 1Mm³ of concrete. Holcim supplied its cement for Sections 1 – 3 of the line between 2020 and 2022. It is currently supplying Section 5, which is 50% complete. The cement comes from the company’s Orizaba, Veracruz, plant; its Macuspana, Tabasco, plant and its Mérida, Yucatán, plant.

Holcim Mexico’s infrastructure development manager Fernando Roldan said "Our participation has been a challenge, but the relationship we have with the suppliers and with the construction companies in charge of the railway has allowed us to meet the requirements."

The big US news this week has been that Summit Materials and Argos USA are planning to merge their operations. The new organisation will operate six integrated cement plants with a production capacity of 8.4Mt/yr, based on Global Cement Directory 2023 data. The companies say that this will make them the fourth biggest cement producer in the country, at 11.8Mt/yr, based on grinding capacity, and the largest domestically-owned operator. Additionally, the combined entity will also hold just under 5Bnt of aggregate reserves, 224 ready-mixed concrete (RMX) plants and 32 asphalt plants.

The deal is expected to close in the first half of 2024 subject to the usual regulatory clearances and shareholder approval. At this point Argos should own approximately 31% of the new company and Summit Materials’ shareholders will be the majority owner. Although, if we remember anything from the Lafarge-Holcim merger from nearly a decade ago, it is that if the share prices between the two companies diverge too much in the next six months then that proportion may change. In simple terms that split for Argos USA is in the region of where one might expect it to be given that Argos USA made 39% of the combined revenue for both itself and Summit Materials in 2022 and 28% of the combined earnings.

The two companies complement each other well for the purposes of forming a new heavy building materials concern. Summit Materials reported revenue of US$2.41bn in 2022, with 30% deriving from its aggregates businesses, another 30% coming from RMX and about 20% from paving. Cement generated US$341m, or 14%, of total revenue. By contrast Argos USA reported revenue of US$1.57bn in 2022 from a business just concerning cement and concrete. Geographically, Summit Materials’ integrated plants are in the Midwest, in Iowa and Missouri respectively, and its cement terminals follow the Mississippi River from Minneapolis to New Orleans. Notably, it made the point in the merger announcement that the deal would reduce the seasonality of its cement business. Argos USA’s plants and terminals are mostly spaced out in the Southern states with its plants in Alabama, Florida, South Carolina and West Virginia.

It goes against recent trends for a US-based company to be increasing its share in the domestic cement market, although it has resorted to teaming up with a Colombia-based one to do so. Usually it is foreign-headquarted companies making moves in the US. For example, Ireland-based CRH is in the final stages of switching its primary listing to the New York Stock Exchange. Its head Albert Manifold described the US construction market as going through a “golden age” earlier in the year whilst trying to sell the stock market move at the company’s annual general meeting. Meanwhile, there have been various smaller acquisitions such as Peru-based UNACEMs’ agreement to buy the Tehachapi cement plant in California from Martin Marietta Materials in August 2023.

Given the ongoing importance of the North American market for the international cement producers it is not surprising that merger and acquisition activity has been taking place. Each of the four largest US-based cement producers performed well in the first six months of 2023, increasing both revenue and earnings significantly. However, the picture is mixed. The Portland Cement Association (PCA) forecast at the start of 2023 that cement consumption would decline in the second half of 2023 due to a worsening general economic outlook. The downturn was estimated to be brief though as interest rates were expected to dip and infrastructure spending to rise in 2024. Half-year data from the United States Geological Survey (USGS) supported this view as shipments reached an estimated 51.0Mt, a slight decrease from the same period in 2022. The cement companies have made money so far in 2023 partly by raising their prices. Yet, some segments of the residential homebuilding market have also driven demand despite the general economic picture.

One last thing to consider is how much thought was given to the carbon risk of forming a new heavy building materials company in a developed economy in the 2020s. Sustainability receives a mention in Summit Materials’ investor presentation in the form of current achievements such as switching to blended cements or reducing fossil fuel usage but there is no suggestion that any serious investment to curtail process emissions is expected any time soon. However, one could make the case that the enlarged company might benefit from synergistic effects if it were forced to spend more on CO₂ emission reduction. This proposed merger concerns two existing organisations teaming up rather than new equity entering the arena. In this context it will be worth noting whether the next cement industry merger or acquisition in the US or Europe will involve existing companies or new entrants.

Saudi Arabia: Meyar Company has bought the Malham cement products plant in Riyadh for US$880,000. Local press has reported that the company will use the facility to target the cement products market in the city of Riyadh. A ready-mix concrete batching plant is also located at the site.

China: Anhui Conch grew its concrete and aggregate sales in the first half of 2023 to increase overall sales. Its revenue grew by 16% year-on-year to US$8.99bn in the first half of 2023 from US$7.73bn in the same period in 2022. However, its cement and clinker sales fell by 7% to US$6bn from US$6.46bn. Sales revenue fell in all of its domestic sales regions, although they rose overseas. By contrast, sales and trading of other products more than doubled to US$2.7bn. The group’s sales volumes of cement and clinker increased by 3% to 134Mt. Its total profit fell by 32% to US$928m from US$1.37bn.

In its interim results the company said that it had “actively responded to the complicated and difficult industry situation and strived to overcome the impact of unfavourable factors such as declining real estate investment, sluggish market demand and intensified industry competition.”

US: Block-Lite plans to install a system to cure concrete blocks using direct air capture (DAC)-sourced CO₂ at its Flagstaff, Arizona, concrete block plant. The upgrade will implement CarbonBuilt’s low-CO₂ concrete production technology and AirCapture’s modular DAC technology, across five or six capture units. Direct air capture will thus remove 500 – 600t/yr of CO₂ from the atmosphere, while process changes will reduce CO₂ emissions from the Flagstaff plant by over 2000t/yr. The project has attracted fundraising from the 4 Corners Carbon Coalition (4CCC), with a goal of US$50,000. The Arizon Daily Sun newspaper has reported that Block-Lite plans to supply its first shipment of low-CO₂ blocks to a 50-home development by Habitat for Humanity in Flagstaff.

Canada: Lafarge Canada says that it successfully integrated 10,000t of recycled concrete waste in cement production at its St. Constant cement plant in Quebec using its ECOCycle Technology process. The year-long production trial constituted the first phase of Lafarge Canada’s pilot of ECOCycle Technology. The producer says that the achievement solidifies its leading position in North American circular construction innovation. Waste360 News has reported that concrete constitutes 4Mt (40%) of Canada’s 10Mt annual generation of construction and demolition waste.

President and CEO David Redfern said “By reusing construction and demolition wastes in the production of new building materials, we are reducing waste sent to landfill. Across Lafarge Canada, we’re evaluating any opportunity to decarbonise our operations, and circularity is part of this effort. This pilot is critical to demonstrate that we can effectively repurpose concrete waste, which goes a long way to conserve our naturally occurring resources and loops in construction sustainability - building new from old.”

Australia: Alternative cement and concrete producers have welcomed a new Australian civil engineering standard that allows builders to use reduced-CO₂ geopolymer concrete in infrastructure projects. Wagners, which produces Earth Friendly Concrete (EFC), said that the revision has removed on if its key barriers to wider market acceptance. EFC replaces 100% of cement with supplementary cementitious materials, including ground granulated blast furnace slag (GGBFS) and pulverised fly ash, by virtue of its binder technology. Wagners previously supplied EFC for the London Power Tunnels project in the UK, based on local technical approval-based building codes. The producer now expects a new standard like the Australian one to follow in the EU.

New Zealand: Neocrete has launched an investment round to raise over US$1.86m in funding. The start-up will use the funds to build an industrial-scale plant for its Neocrete activator for pozzolan-based concrete. The use of Neocrete's activator can eliminate up to 50% of cement in concrete. Neocrete aims to ultimately displace 100% of concrete's cement content. The Hawke's Bay Today newspaper has reported that pozzolan-based concrete made using Neocrete's additive offers resilience benefits compared to conventional ordinary Portland cement (OPC)-based concrete. It is especially suited construction in seawater-exposed settings.

Peru: Cementos Pacasmayo's consolidated sales declined by 12% year-on-year in the first half of 2023. The company recorded a general decline in its cement and concrete volumes of 18%. It said that its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 5.9% to US$64.8m.

China: China National Building Material expects its net profit to drop by 80% year-on-year during the first half of 2023. AAStocks Financial News has reported that the group partly attributed the anticipated drop to a fall in its cement prices, as well as its commercial concrete prices.