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The Hunter cement plant in Texas looks set to become one of the most expensive integrated units in the world following the announcement this week that CRH is preparing to buy it for US$2.1bn. The Ireland-headquartered company said that it has agreed to acquire the plant at New Braunfels near San Antonio from Martin Marietta Material. The deal also includes four cement terminals around and near to Houston and 20 ready-mixed concrete (RMX) plants near to San Antonio and Austin. It is expected to complete in the first half of 2024 subject to regulatory approval.

Assessing the value of this deal is tricky given the various RMX plants and terminals in strategic locations. However, solely based on integrated cement production capacity, this one works out at US$1000/t given that the Hunter plant has a production capacity of 2.1Mt/yr. The value of terminals and RMX plants in the right locations cannot be overstated, but it still appears to price the cement plant dearly. CRH bought Ash Grove in 2018 for US$350/t. Five years later and the price it is paying for cement production capacity in the US has nearly tripled.

Other more recent purchases in the US include US$395/t for UNACEM’s acquisition of the Redding cement plant in California earlier in November 2023, around US$525/t for the valuation of Argos North America’s four integrated plants in September 2023, or just over US$310/t for the proposed purchase of the Redding cement plant by CalPortland from Martin Marietta Materials in March 2022. The Argos North America valuation is another awkward one given that it is part of the proposed merger between it and Summit Materials and it also includes two grinding plants, 140 ready-mix concrete plants, and a distribution network of eight maritime ports and 10 inland terminals.

Figure 1: Map of CRH production assets in Texas. Source: CRH earnings presentation.

In a statement, CRH’s chief executive officer Albert Manifold highlighted the usual synergy benefits but he also mentioned the expected “self-supply opportunities.” He added that the company believed that there was “significant potential to unlock additional growth opportunities across an expanded footprint in this attractive growth market.” If the acquisition completes, the company will become the largest cement producer in the state, based on integrated production capacity, at around 3.2Mt/yr. Plus, as the company pointed out in its third quarter earnings update, it also operates the Foreman cement plant in Arkansas, just across the state border to the north-east. This then gives CRH and its subsidiary Ash Grove a cement plant and/or terminals in the main population areas in Texas, namely: Houston; San Antonio and Austin; and Dallas and Fort Worth.

One reason why CRH may have gone all out for a cement plant in Texas is because it is one of the few states in the US where cement shipments have actually increased so far in 2023. Data from the United States Geological Survey (USGS) shows that shipments of Portland and blended cement fell by 2% year-on-year to just under 71Mt in January to August 2023. Yet Texas comprehensively bucked this trend with shipments rising by 10% to 8.04Mt. The only other states with this kind of growth were Maine and New York. At the start of 2023 the Portland Cement Association (PCA) predicted a 3.5% decline in cement consumption in 2023 and based on the January to August 2023 data from the USGS it isn’t far off at present.

Meanwhile, selling its cement assets in Houston and San Antonio nearly brings Martin Marietta Materials’ decade-long excursion into the sector to an end. It purchased its cement plants in Texas in 2014 when it acquired Texas Industries (TXI). Plants in California were soon sold to CalPortland but Martin Marietta Materials later picked up two more cement plants in the state when it bought the US West Region of Lehigh Hanson from Heidelberg Materials in 2021. Then, once again, the plants were sold, this time to CalPortland and UNACEM, respectively. This now leaves Martin Marietta Materials with one integrated cement plant, Midlothian, and two terminals. The size of the Midlothian plant, at 2.4Mt/yr, still gives the company a decent presence in the state.

With US cement consumption expected to bounce back to growth in 2024 and the Texas market ahead of this, CRH’s decision to buy big from Martin Marietta Materials seems like a logical move given its focus on North America. The price may seem high, but the investment seems as close to a steady bet as it gets. The day after the Texas announcement CRH revealed that it was selling its lime business in Europe to SigmaRoc for US$1.1bn. The key bit though was that these assets generated earnings of around US$137m in 2022 but, by comparison, the new units in Texas are expected to earn US$170m in 2023. This suddenly makes the price agreed for Hunter seem more reasonable. Let’s check back in a couple of years to see how well CRH’s acquisition in Texas works out. In the meantime all eyes are likely to be on what Martin Marietta Materials does next with the Midlothian plant.

Uzbekistan: The State Statistics Committee has reported that cement plants produced 9.2Mt of cement during the first nine months of 2023, up by 5.9% year-on-year from the corresponding period of 2022. The Uzbek Building Materials Producers’ Association says that the new 1.4Mt/yr Karakalpak cement plant will further add to full-year production volumes in 2023 when it comes online later in the year.

Spain: Cementos Molins has processed 75,000t of waste into alternative raw materials for use in its cement production since opening its Barcelona alternative raw materials plant in September 2022. The plant has a production capacity of 200,000t/yr. It produces the materials from construction and demolition waste and various industrial by-products.

Cementos Molins’ director of corporate development and sustainability, Carlos Martínez, said “Our commitment to the environment is intrinsically linked to our business model, which is based on the development of sustainable and innovative materials.” He continued “We provide a second life to industrial and construction waste that would otherwise end up in landfills, generating high-quality sustainable products from them. The plant has enabled all our cements to incorporate alternative raw materials in their production process. Furthermore, we are working to reduce the carbon footprint of all our concretes, ensuring that, in the short term, all of them include recycled aggregates in their manufacture."

EU/UK: EUROSLAG says that the use of ground granulated blast furnace slag (GGBFS) in cement production in the EU and UK between 2000 and 2022 has generated a cumulative reduction in CO₂ emissions of 408Mt. GGBFS replaced 716Mt-worth of raw materials over the period.

EUROSLAG Chair Thomas Reiche said "Resource conservation through secondary raw materials, especially in the construction sector, and lower emissions of climate-damaging CO₂, are of outstanding ecological and economic importance. The use of ferrous slags makes an important contribution to this. EUROSLAG is working multilaterally to master the enormous challenges in the coming years, above all the transformation of the steel industry, through research and adjustments to national and European regulations.”

Pakistan: Cement producers increased their sales volumes by 23% year-on-year during the first quarter of the 2024 financial year, which began on 1 July 2023. They recorded despatches of 11.9Mt during the quarter, compared to 9.62Mt during the first quarter of the previous financial year. The Express Tribune newspaper has reported that exports grew by 72% year-on-year to 1.75Mt from 1.02Mt.

India: UltraTech Cement sold 26.7Mt of cement during the second quarter of the 2024 financial year (1 July – 30 September 2023). This corresponds to year-on-year growth of 16% from 23.1Mt in the second quarter of the previous financial year. Sales in India accounted for 25.7Mt (96%) of total volumes, while overseas sales accounted for 1.18Mt (4%).

UltraTech Cement has a cement capacity of 138Mt/yr across its 23 cement plants and 29 grinding units.

Colombia: Data from DANE, the Colombian national statistics authority, shows that the country produced 1.22Mt of grey cement in July 2023, a 1.7% increase compared to July 2022. Of this, 1.05Mt was consumed domestically, a 6.5% fall year-on-year, with exports increasing to compensate. The July 2023 production figure is 9.2% higher than for the July 2019, the year before the onset of the Covid-19 pandemic. DANE also recorded that Colombia produced 557,900m3 of ready-mix concrete in July 2023, a 3.1% decline compared to July 2022, when 575,800m3 was produced.

Spain: Cement consumption in Catalonia fell by 11% in August 2023, while production fell by 2.7%, and exports by 32.7%, according to regional cement association Ciment Català. During the 12 months, to 31 August 2023 consumption decreased by 2.9% to 2.24Mt, while production fell by 4.4% to 3.15Mt and exports fell by 3.7% to 1.74Mt. Ciment Català’s president, Salvador Fernández, attributed these declines to the poor economic situation in the autonomous region, a lack of investment and ‘the challenges of the decarbonisation process,’ according to Europa Press.

Ukraine: Cement companies produced 4.75Mt of cement during the first eight months of 2023, up by 30% year-on-year from eight-month 2022 levels. Interfax-Ukraine News has reported that producers are operating at 60% production capacity.

Liudmyla Kripka, executive director of the Ukrainian cement association, Ukrcement, said “If we compare it with last year, when the country’s economy was in shock from Russia’s treacherous attack on Ukraine and the start of the full-scale war, the situation has improved somewhat. Cement production in the first half of 2023 grew by 26%, and in the first eight months by 30%, compared to last year.” Kripka added “We are still far from the indicators of 2021, but the dynamics are encouraging. Once there was a prospect, work for the future began. Cement producers, even in war conditions, are investing in Ukraine and the economic restoration of the regions. This expands the production capacity of the industry as a whole and contributes to the creation of new jobs.”

Germany: Engineering company GEA has installed a carbon capture pilot plant at the Phoenix Zementwerke cement plant in Beckum, North Rhine-Westphalia. The supplier will now conduct testing over ‘several’ months, but said that it is confident that the cement plant is suitable for an installation to capture over 90% of its CO₂ emissions. GEA’s carbon capture systems run on energy from waste heat recovery, with minimal to zero extra electrical input.

Phoenix Zementwerke managing director Marcel Gustav Krogbeumker said “We consider carbon capture a very exciting technology. Thanks to GEA's decades of experience in emissions control, I am very positive that together we can develop and implement a solution."