Displaying items by tag: lobbying

Tanzania: Tanzania Portland Cement has announced plans to invest a total of US$15.0m in modernising its 2.0Mt/yr-capacity Tanzania Portland Cement plant in 2021. The Tanzania Daily News newspaper has reported that the producer says its main challenge is cargo delays at the port of Dar es Salaam. This has caused concern for potential investors, according to the company. Senior commercial manager Danford Semwenda lobbied the government to help solve the problem.

Kenya: Bamburi Cement, Savannah Cement, Ndovu Cement and Rai Cement have written to the National Treasury opposing a proposal by the Kenya Association of Manufacturers (KAM) to raise tariffs on clinker imports to 25% from 10% at present or to implement at outright ban on imports. The cement producers say that increasing the tariffs would lead to unfair competition and destroy investments, according to the Kenyan Star newspaper. However, the KAA argues that the move will promote the manufacturing sector and create jobs.

Seddiq Hassani, the managing director of Bamburi Cement, said in a letter from the cement producers to the government, that they opposed the review at the current time but that they conceded that it was the right direction for the industry in the longer term to safeguard local manufacturing. He added that the four companies should be given a window of between four and five years to set up their own integrated plants to provide a predictable policy framework for investors.

Ukraine: Ukrcement, the Ukrainian cement association, has lobbied for cement to be excluded from a free trade agreement being arranged between Ukraine and Turkey. Pavel Kachur, the head of Ukrcement, said that he had informed the Ministry of Economy and the trade representative of Ukraine about the association’s view, according to Interfax-Ukraine. He said that the local cement sector was able to fully provide consumers with cement. He also noted the significantly higher cement production capacity in Turkey compared to Ukraine. In mid-2020 the Interdepartmental Commission for International Trade explored a complaint by local cement producers including Buzzi-Unicem subsidiary Dyckerhoff, HeidelbergCement subsidiary Kryvyi Rih Cement and CRH subsidiary Podilsky Cement into imports of cement from Turkey.

Several of South Africa’s cement and concrete producers joined up in early March 2021 to form an industry association called Cement & Concrete SA (CCSA). The Concrete Institute, Concrete Society of Southern Africa and the Association of Cementitious Material Producers established the organisation to, “take the lead on all matters relating to cement and concrete in South Africa.” Setting up an organisation like this takes time and it fits with the move in recent years of thinking about the whole building materials chain rather than just focusing on one part. The country is also in the first phase of its carbon tax and no doubt producers feel they need to make a renewed effort to fight their corner. Other aspects such as promoting the ‘value creation story’ of the cement and concrete industry in South Africa, research and training also makes sense.

The timing here is compelling due to the ongoing review of anti-dumping measures that were levied by the International Trade Administration Commission of South Africa (ITAC) upon imports by Pakistan-based cement producers. Local media in South Africa reported that ITAC started reviewing the tariffs in December 2020 in a process expected to take up to 18 months in duration. As reported in January 2021 (GCW 489), imports to the country fell after ITAC introduced tariffs in 2015 but they have started to edge up since then, particularly from producers in other countries such as Vietnam and China. Separately, the CCSA may have scored an early victory with the news that its application that government-based infrastructure projects should only use locally-produced cement was working its way through the government.

Looking at the general market, PPC reported ‘muted’ sales of cement in April and May 2020 due to the country’s first coronavirus-related lockdown from late March 2020. Similar to some other countries, construction projects halted and cement plants stopped producing. However, the market bounced back as the restrictions were relaxed with strong sales from June 2020 to September 2020 for the leading producer. It noted that the increase in volumes was mainly due to consumer retail although it noted that government infrastructure cement demand was also starting to be felt. PPC’s cement sales volumes fell by 5 – 10% in South Africa and Botswana from April to June 2020 but then rose by 20 – 25% from July to September 2020. The continuation of this sales momentum was also noted in October and November 2020. Dangote Cement’s operations in the country reported a similar situation, with sales up by 7% year-on-year in the first nine months of 2020 due to a surge in home improvement related demand after the first lockdown ended. Similar to PPC, it reckoned that demand increased by 25 - 30% year-on-year in the third quarter of 2020 as limitations in travel and entertainment led to some people saving money instead.

After the summer sales bounce, producers were soon complaining about rising import levels in the autumn of 2020 with volumes catching up with the amounts recorded in 2019. Hence the ITAC review is a timely reminder of the perils facing local producers.

South Africa’s general coronavirus experience has been an outlier compared to the rest of Africa with higher cases and deaths reported. Yet, it’s still reported lower per capita rates than many comparable countries in Europe and the Americas. Like the UK and Brazil, the country also holds the dubious distinction of having a coronavirus variant named after it. Its cement market appeared to snap back with pent up demand following the lifting of restrictions in common with other countries that implemented tougher public health rules. At which point the importers caught up again a few months later. The effects of South Africa’s second wave of coronavirus led to a lockdown in late December 2020. The effects upon building materials sales are likely to be less drastic than previously because this lockdown has had lighter restrictions compared to March 2020. Surrounded by all of this, the CCSA has sure picked a busy time to start work.

Pakistan: The Punjab provincial minister for industries and trade Mian Aslam Iqbal says that the government will soon issue new no objection certificates (NOC) to Bestway Cement for three of its new plant projects in the region. The Nation newspaper has reported that a delegation from the cement producer met the minister in late February 2021 to discuss its plans to establish new plants in Attock, Khushab and Mainwali. The company does not currently have NOCs for the planned projects.

The European Union (EU) Emissions Trading Scheme (ETS) looked like it might be about to hit Euro40/t this week. It still might. You can blame it on the current cold front bringing snow to much of Northern Europe and the bedding into of the fourth phase of the ETS that started in January 2021. In early 2020 analysts were generally predicting an average price of around Euro30/t by 2030 bolstered by volatility in the price due to the start of the coronavirus pandemic. Yet the price recovered and so did the European Commission’s resolve to push through its European Green Deal. By mid-December 2020 the price had shot past Euro30/t and analysts were forecasting average prices of well over Euro50/t by 2030. Depending on one’s disposition this is the rate at which either serious decarbonisation attempts will begin to be viable for commercial companies, or the point at which more plants simply close.

Figure 1: European Union Emissions Trading System carbon market price in Euros (European Union Allowance), February 2020 – February 2021. Source: Sandbag.

One group which is well aware of the EU ETS and its consequences upon the cement industry is Cembureau, the European cement association. Some of its current lobbying efforts have been directed at trying to shape how the Carbon Border Adjustment Mechanisms (CBAM) will appear in legislation proposals in June 2021. Its argument boils down to protecting its members from carbon leakage both in and out of the EU’s borders and maintaining free allocation until 2030 to ease the transition to a lower carbon economy. The former should find common ground. However, calls for a CO₂ charge exemption for EU exporters may perplex environmentalists, who might wonder how this could possibly encourage third party countries to introduce their own carbon pricing schemes. The latter is clearly pragmatism for an industry saying that it is facing change at a pace that may be too rapid for it to cope with. Concrete products do carry sustainability advantages over other building materials. Wiping out swathes of the region’s production base, simply because one knows exactly how much CO₂ they emit compared to rival building materials that one doesn’t, may not help the EU reach its climate commitments by 2050. As if to underline this fear, another European clinker line was earmarked for closure this week when Lafarge France announced the planned conversion of the Contes cement plant into a terminal.

Figure 2: Estimate of global cement production in 2018 by region. Source: Cembureau.

Figure 2 above puts the situation into a global perspective, showing that Cembureau’s members were responsible for below 7% of cement production in 2018. China produced an estimated 55% of global cement production in the same year. In terms of overall CO₂ emissions across all sources, the International Energy Agency (IEA) estimated that China produced 30% of CO₂ emissions in 2018.

It seems odd then that the introduction of an interim ETS in China at the start of February 2021 didn’t receive more global news coverage. The new scheme covers 2225 power companies across the country. It follows pilot regional schemes that have run since 2011, covering seven provinces and cities including Beijing, Shanghai and Guangdong. Previously, the country’s largest local carbon market, the China Emissions Exchange (Guangzhou), was based in Guangdong province and it included power generation, cement, steel, and petrochemical sectors. State news agency Xinhua reports that this scheme reduced carbon emissions from these industries by 12% from 2013 to 2019. The new national ETS is expected to include cement and other industries at a later stage.

Commentators in the European press have pointed out that the Chinese national ETS is actually planning to make an effort on transparency and to force companies to publish their pollution data publicly. Yet, they’ve also said that the data may be inaccurate anyway, echoing the usual Western fears about Chinese figures. Other concerns include the method of giving out pollution permits rather than allocating them by auction as in other cap and trade systems, which could reduce the incentive to reduce emissions. It’s also worth pointing out that carbon was priced at US$6/t under the Chinese system compared to around US$35/t in the EU and US$17/t in California, US at the end of 2020. At this price it seems unlikely that the Chinese national ETS will encourage much change without other measures.

The EU and Chinese ETS are at different stages but the differences in scale are stark. When or if the Chinese one goes national across those eight core industries it will likely leapfrog over the EU ETS and become the world’s largest with an estimated 13,235MtCO₂e under its purview. By contrast, the EU ETS manages 1816MtC0₂e according to World Bank data. The kind of dilemmas Cembureau and others are tackling with the EU ETS such as carbon leakage and how fast to tighten the system against heavy emitters are illustrative to other schemes in China and elsewhere.

Belgium: The European cement association Cembureau has called for the European Union (EU) to continue to permit the free allocation of carbon credits under the EU Emissions Trading System (ETS) until it completes the roll-out of Carbon Border Adjustment Mechanisms (CBAM) in 2030 at the earliest. It said that this would provide indirect cost compensation and mitigate the risk of the relocation of industries. It would additionally incentivise emissions reduction by EU suppliers, ensure a smooth implementation of CBAM in the event of challenge to CBAM by the World Trade Organisation (WTO) and mitigate distortions on the EU internal market, according to the association. It gave the example of cement producers competing with other building materials producers as a way in which an overlap period can limit the disruptive impact of CBAM on European value chains.

Chief executive officer Koen Coppenholle said, “A pragmatic approach is needed regarding the interaction of CBAM with the existing carbon leakage measures. A full co-existence of CBAM and free allocation is essential to minimise risks for the industry, avoid distortions on the internal market, safeguard the competitiveness of exports and provide certainty for investors. Such full co-existence, which can be done without any risk of ‘double protection,’ should last at least until the end of Phase IV of the EU ETS in 2030, following which the CBAM will hopefully be mature and expanded to cover most sectors of the economy.” He added, “CBAM is a useful tool to address the imports of products not subject to similar carbon constraints in the EU and therewith mitigates the carbon leakage risk allowing the European cement industry to deliver low-carbon investments. The Environment Committee’s report highlights some key points in this respect, notably that a CBAM should result in EU and non-EU suppliers competing on the same CO₂ costs basis, that the scope of CBAM should be wide to avoid market distortions and that both direct and indirect emissions should be included.”

Spain: Oficemen, the Spanish cement association, reports that domestic cement consumption fell by 10% year-on-year to 13.3Mt in 2020 from 14.7Mt in 2019. Consumption at this level was last reported in 1967. The 12-month accumulated consumption figure began to fall in April 2020 due to Covid-19 restrictions and the association does not expect growth in 2021 despite an improvement in December 2020. Cement and clinker exports fell by 3.4% to 5.99Mt from 6.20Mt. It has forecast anything between a 3% rise and a 3% fall in consumption in 2021, due to coronavirus-related uncertainty.

The figures suggest that capacity utilisation in the cement industry is at roughly 60% nationally, according to the El Economista newspaper. Oficemen president Víctor García Brosa said that this level ‘cannot be indefinitely maintained.’ The association called for a recovery plan committed to infrastructure development, residential construction and rehabilitation and energy efficient transport.

India: Cement producers in southern India have joined together to form the South Indian Cement Manufacturers’ Association (SICMA). United News of India has reported that the association aims to serve as an intermediary between producers and federal and state governments. In this, it says that it will help to realise Prime Minister Narendra Modi’s vision of ‘affordable housing for all’ and ‘infrastructure for future.’ The India Cements vice-chair and managing director Narayanaswami Srinivasan will head the new organisation, supported by Barathi Cement’s director Ravinder Reddy as vice-president and Penna Cement’s director Krishna Srivastava as secretary.

SICMA alleges that the construction industry has exaggerated the effects of rising cement prices on its costs. In so doing, the association says, it has deprived the public of the housing the government had planned. It added that, with around 30% of India’s limestone reserves situated in Andhra Pradesh, Karnataka and Telangana alone, the South has the potential to become a cement hub for development across India, as well as for export.

Nigeria: The National Association of Block Moulders of Nigeria (NABMON) has warned that its members are struggling to continue their trade due to the high price of cement. The Daily Independent newspaper has attributed the price rise to post-coronavirus shutdown maintenance challenges in the cement industry, increased exports, logistical disruptions and an unseasonably high demand for cement. The association is lobbying government to put in place and enforce competition laws to help return the price to a more ‘stable’ level.