Displaying items by tag: lime

Denmark: Lime and chalk producer Dankalk has ordered a three-tube dryer type TRT 3150/5,0 from Germany-based Gebr. Pfeiffer. The order replaces a previous dryer also supplied by Gebr. Pfeiffer. Dankalk manufactures lime products for agricultural purposes, products for waste incineration plants and chemical auxiliaries and polymers for industrial wastewater treatment and environmental processes.

UK: US-based Mississippi Lime Company (MLC) has completed its acquisition of Singleton Birch, a supplier of lime products. The move is part of MLC’s strategy to expand both geographically and with new products and technologies. No value for the transaction has been disclosed.

Singleton Birch is based in North Lincolnshire, where it employs more than 150 staff. It will continue to operate under its existing brand and the management team, led by chief executive officer Richard Stansfield, who will remain in place. Singleton Birch has a number of business lines, including a chemicals division, which provides specialty calcium products to the rubber and plastics markets. It also provides services and solutions to the renewable energy, water treatment and waste management industries.

UK: Tarmac has successfully produced lime at its Tunstead, Derbyshire, plant using net zero hydrogen to fuel its kiln. The achievement was the culmination of a series of trials substituting various proportions of hydrogen for natural gas.

Tarmac’s lime director Graham Cooper said “Lime has been manufactured in the Peak District for centuries and this forward-thinking project aims to ensure the future of this nationally significant industry as the UK transitions to net zero.”

Boral admitted this week that high energy costs in Australia had forced it to reduce production levels. Chief executive officer Zlatko Todorcevski revealed to Reuters that the company was temporarily cutting back some unspecified areas of its operations. He also said that it was going to have to pass on growing energy prices directly on its customers.

This has followed mounting alarm at fuel prices in successive financial reports by the building materials company leading to revised earnings guidance being issued in May 2022. Bad weather was responsible for the larger share of the expected additional adverse impact to underlying earnings in its 2022 financial year but around US$10m was anticipated from rising fuel prices. Growing coal and electricity prices were said to be impacting its production and logistics costs, with price rises in January and February 2022 having proved insufficient to keep up with inflation. In a trading update in March 2022 the company said that its exposure to coal prices was unhedged for the second half of its 2022 financial year, to June 2022.

An energy crisis in Australia may seem hard to understand given that the country is one of the world’s biggest exporters of coal and gas. Yet, the country has faced a number of problems with its electricity generation sector in 2022 with disruptions to coal supplies to power stations, outages, ongoing maintenance and a cold winter that adversely affected the market. This led the Australian Energy Market Operator to suspend the country’s main wholesale market on 15 June 2022 in an attempt to stabilise the supply of electricity. New South Wales has also reportedly forced coal mines to prioritise the local market over exports. Energy minister Chris Bowen even asked the residents of New South Wales to try and reduce electricity use in the evenings in an attempt to prevent blackouts. However, with the consumer electricity market now looking more stable, attention has turned to industrial users such as Boral.

Global Cement Weekly has covered energy costs for cement producers a couple of times in the last year. There has been plenty of angst about growing energy costs on cement company balance sheets since mid-2021 as the logistics problems following the lifting of the coronavirus-lockdowns became clear. The biggest story at this time was an energy crisis in China that caused supplies to be rationed to industrial users. This then intensified with the start of the war in Ukraine in February 2022 and energy prices went up everywhere as economic sanctions were imposed upon Russia. One standout was Turkey where cement producers publicly raised the alarm about jumps in coal prices.

Recently, some North American lime producers such as Lhoist North America and the Mississippi Lime Company have been notably bold in announcing price rises due to energy costs and other factors. This week, for example, Lhoist North America said it had raised the price of its lime products by up to 45%. It cited the ‘challenging circumstance’ for all parties at an ‘unprecedented’ time. One alternative to the direct approach of simply putting up prices has been the use of energy surcharges. Japan-based Taiheiyo Cement announced earlier in June 2022 that it was going to introduce a coal surcharge for its cementitious products in September 2022 due to rising energy prices. Its system is based on the coal price with revisions planned every two months. The scheme will run for one year in the first instance. How customers will react to this remains to be seen.

We have looked above at a few disparate examples of the problems that energy costs have been causing cement and lime producers over the last month. These issues look set to continue in an acute phase while the war in Ukraine rages on, but the longer term trends from the economic recovery from coronavirus will undoubtedly last for longer. As examples in Australia and China have shown, local energy crises can easily spill over into the industrial sector as domestic users are prioritised. So, even if cement companies source their supplies carefully, they may face issues if the wider market struggles. Meanwhile, cement producers face the dilemma of justifying price rises to customers adapting to mounting inflation. Taiheiyo Cement has shown one way of doing this. The problems caused by surging energy prices to other cement companies look set to become more apparent in the next few months as reporting of the first half of the year emerges.

Canada/US: Lime company Lhoist North America raised the price of its lime products by up to 45% from 13 June 2022. The producer acknowledged the ‘challenging circumstance’ for all parties at an ‘unprecedented’ time. It said “We look forward to continuing to deliver the expected value to our customers.”

Libya: The state-owned Ahlia Cement Company has launched a tender for the upgrade and restart of its lime plant at Souq Al-Khamis. It wants to run the restart as a joint-venture, according to the Libya Herald newspaper. The tender is for the renovation, operation and the marketing of the lime factory output for a renewable 10-year period. Al-Ahlia has invited interested parties to arrange for a site visit and collect the specifications sheet. The deadline for receiving tenders is 14 July 2022.

UK: The Mineral Products Association (MPA) says it is disappointed that UK-based cement and lime producers have been excluded from the government’s compensation scheme for climate change costs. The association says that the government has, “missed an opportunity to support two essential industries during the current energy crisis, despite other industry sectors - which directly compete with cement and lime - receiving the compensation.”

Under the Department for Business, Energy & Industrial Strategy (BEIS) scheme, some energy intensive industries can apply for compensation from the indirect costs of the UK Emissions Trading Scheme (UK ETS) and Carbon Price Support (CPS) if they meet certain criteria. In the government’s 2021 consultation on the compensation mechanism, energy intensive industries needed to meet at least one of three tests to qualify. However, the MPA says that BEIS later changed this so that they had to pass all three tests and modified the targets.

Diana Casey, Director for Energy and Climate Change at the MPA, said “It is extremely disappointing that having met the criteria set out in the consultation, BEIS has decided to move the goalposts and exclude cement and lime from the scheme. UK manufacturers of all products face higher electricity and gas costs than European competitors, and this decision misses an opportunity to support the competitiveness of the UK cement and lime sectors, both essential foundation industries, especially during the current energy crisis and rapidly rising costs. Reaching net zero and delivering our economic potential requires huge investment from global businesses and it becomes harder to make the case for the UK as a location for such investment if policy costs make operating in the UK uncompetitive.”

US: Lhoist North America and Mississippi Lime Company have announced price increases for their products subject to existing contractual obligations.

Lhoist North America increased its prices by 10% for lime, limestone and clay products from the start of April 2022. It blamed this on inflation upon the cost of chemical additives, electricity, explosives, diesel, mining equipment, spare parts, inbound transportation, mining services and other inputs.

Mississippi Lime Company has announced that it will increase its prices by 7% from the start of May 2022. It cited a combination of market demand, inflation and supply chain issues.

Türkçimento’s Volkan Bozay took to the airwaves last week to raise the issues that the war in Ukraine is causing for Turkey-based cement producers. The head of the Turkish Cement Manufacturers’ Association explained, to the local Bloomberg HT channel, that the dramatic jump in the price of Newcastle Coal posed a serious threat to the sector. The price jumped nearly US$100/t in a single day in early March 2022. Bozay said that the cost of cement from a plant using imported coal would consequently rise by around US$15/t. He added that the association’s members had an average of 15 – 20 days of coal stocks.

Graph 1: Price of coal, March 2020 – March 2021. Source: Trading Economics.

In a separate press release Türkçimento revealed that Turkey, as a whole, imported approximately US$1.5bn of coal from Russia in 2021. The cement industry imported about 5Mt of coal in 2021, from all sources, although the majority of this came from Russia. Coal shipments from Russia since the start of the war were reported as ‘very limited or even not possible.’ It was further explained that each US$10/t increase in the price of coal put up plant production costs by US$1.5/t of cement.

Naturally Bozay’s appearance on a television news show carried a lobbying aspect. He called for government import standards – such as the sulphur ratio, lower heating values and volatile matter limits - to be relaxed to allow coal to be imported more freely from sources such as Colombia, Indonesia and South Africa. There was also a push to let in more alternative fuels such as tyres and waste-derived fuels. The bit that Bozay didn’t mention though was how many of his members had long term coal supply contracts in place to cushion them, from short term price inflation at least. Yet, if coal shipments from Russia have simply stopped, then the price is irrelevant. A cement kiln configured to run on coal stops when it uses up its stocks.

Turkey was the world’s fifth largest cement producer in 2021 according to the United States Geological Survey (USGS). Türkçimento data shows that in 2020 it exported 145,000t of cement to Russia by sea. Overall it exported 16.3Mt of cement and 13.5Mt of clinker. The US, Israel, Syria, Haiti and Libya were the top destinations for cement. Notably, Ukraine was the sixth largest recipients of cement, with 752,000t imported, although anti-dumping legislation introduced in mid-2021 looked set to reduce it until the war started. Ghana, Ivory Coast, Guinea, Cameroon and Belgium were the principal recipients of clinker. Cumulative cement exports for the year to October 2021 were up by 3% year-on-year compared to the first 10 months of 2020. Clinker exports were down by 27% though. Overall domestic production and sales in Turkey rose by 9.5%, suggested an estimated production figure of 79Mt for 2021.

Other fallout in the cement sector from the war in Ukraine this week included Ireland-based CRH’s decision to quit the Russian market. It entered the region in 1998 through a subsidiary based in Finland and was operating seven ready-mixed concrete plants via its LujaBetomix joint venture. CRH says that all operations in Russia have now stopped. In 2021 it sold its lime business in Russia, Fels Izvest, to Russia-based Bonolit. Although selling concrete plants is not trivial, these are far cheaper assets than clinker production lines. Germany-based HeidelbergCement, Italy-based Buzzi Unicem and Switzerland-based Holcim each operate at least one integrated cement plant in Russia. So far these companies have publicly expressed dismay at the humanitarian crisis unfolding in Ukraine and made donations to the Red Cross.

Graph 2: European Union Emission Trading Scheme price, 2020 – March 2022. Source: Sandbag.

Finally, one more surprise this week has been a crash in the European Union (EU) Emission Trading Scheme (ETS) carbon price from a high of Euro96/t in early February 2022 to Euro58/t on 7 March 2022. As other commentators have stated, normally the carbon price would be expected to follow the energy market, but this hasn’t happened. Instead investors have pulled out, possibly to maintain liquidity for other markets.

With the US set to ban Russian oil, gas and coal imports and phase-outs to varying degrees promised by the UK and the EU in 2022, we can expect more turbulence from energy markets in the coming days. As the Turkish example above shows, all of this can... and will... have effects on cement production.

Australia: Aluminium company Alcoa of Australia has extended its contract for the supply of lime from AdBri subsidiary Cockburn Cement until January 2023. Business News Western Australia has reported the value of the extension as US$18m – 25.3m. Alcoa of Australia switched to using imported lime at its Kwinana, Pinjarra and Wagerup refineries in Western Australia in June 2020. Prior to this, it had bought a total of US$50.5m-worth of lime from Cockburn Cement.

Adbri’s managing director Nick Miller said "The extension reinforces our position as a reliable and high quality supplier of lime through our local manufacturing and distribution network across Western Australia, supporting local manufacturing jobs, the resources sector and the broader Western Australia economy."