Displaying items by tag: railway

Adani Group’s subsidiary Ambuja Cements signed a deal this week to buy Penna Cement for US$1.25bn. The agreement adds 14Mt/yr of cement production capacity to the group with a focus in the south of India. The acquisition is a big step towards the group’s target of reaching a capacity of 140Mt/yr by 2028. Ajay Kapur, the head of Ambuja Cements, also singled out the advantage the company hopes to gain from taking control of Penna Cement’s terminals saying that they would “prove to be a gamechanger by giving access to the eastern and southern parts of peninsular India.” The move is expected to increase the group’s market share in India by 2%, and by 8% in South India.

Penna Cement operates four integrated plants in Andhra Pradesh and Telangana with a capacity of 7Mt/yr. Two of these units also include waste heat recovery installations and one has a captive power plant. It runs two grinding plants in Andhra Pradesh and Maharashtra with a capacity of 3Mt/yr. Another integrated plant is being built at Jodhpur in Rajasthan and a grinding plant at Krishnapatnam in Andhra Pradesh. Finally, the company owns four bulk cement terminals at Kolkata, Gopalpur, Karaikal and Kochi in India, one at Colombo in Sri Lanka and it also owns a 25,000t cement carrier.

Adani Group’s march towards that target of 140Mt/yr by 2028 started off in mid-2022 when it purchased Ambuja Cements and ACC from Holcim. This gave it a starting capacity of 68Mt/yr in the cement sector. Various smaller additions followed including new plants at Ametha and Dahej and the acquisitions of Asian Cement and Concrete, MyHome Industries and Sanghi Industries. The latter company was the biggest of these purchases. Once the in-progress projects from Penna Cement are built, Adani Group should have a capacity of 93Mt/yr. Another 20Mt/yr is reportedly at various stages of execution. The remaining 27Mt/yr is described as being ‘blueprint ready.’

Generally, the local financial press has been in favour of the transaction agreeing with the geographic advantages of Adani Group increasing its presence in the southern states. The benefits of the high number of railway sidings at Penna Cement’s plants were also commented upon as a means for Ambuja Cements to reduce its costs per tonne of cement. The logistics benefit from the port terminals is also expected by Adani Group’s chief financial officer to reduce the group’s logistics costs with an impact expected within the next year. However, it has been reported that Penna Cement’s operating performance had been weaker in the last financial year due to low sales volumes, poor operational efficiency and high coal costs. A takeover by Adani Group could certainly fix the latter two issues. Yet, it has also been reported that competition in the cement markets in Andhra Pradesh and Telangana is up, due to a mismatch between supply and demand. So, improving Penna Cement’s capacity utilisation in these regions might be harder to solve than simply being absorbed into Adani Group.

India’s two largest cement producers both have plans in motion to mount up production capacity by the end of the decade in what has been dubbed ‘the battle of the billionaires.’ The market leader is UltraTech Cement and it has shown reluctance to cede ground to the cement newcomer Adani Group. The former company’s current target is to make it to just under 190Mt/yr by 2027. It said it had a capacity of 152Mt/yr in May 2024. It is ahead of Adani Group by this measure but there is still plenty of scope for surprises. Given the rivalry between the companies there is a regular stream of speculation about which of the smaller cement producers they might be about to buy at any given time. For example, in October 2023 HeidelbergCement India was rumoured to be courting offers from UltraTech Cement, Adani Group and JSW Cement. Last week, Adani Group was reportedly interested in buying either Saurashtra Cement, the cement business of Jaiprakash Associates, Vadraj Cement or… Penna Cement. Occasionally the rumours are true after all. UltraTech Cement remains in first place for now but the situation may change.

India: Ramco Cements has inaugurated the Gati Shakti cargo terminal at Jayanthipuram in Andhra Pradesh’s NTR District. The company will use the terminal for rail transport of raw materials over 8.3km from the Budawada limestone mines to its Jayanthipuram cement plant. The route will use electric trains.

The company said “Ramco Cements is glad to be a part of the Dedicated Freight Corridor under the Gati Shakti Mission.”

Russia: Mikhail Polyanichko, the finance director of Cemros, has warned that growing gas prices, logistic costs and the interest rate set by the Central Bank of the Russian Federation will “significantly” increase input costs for cement producers in 2024. Tariffs on gas and railway transport both rose by around 10% in December 2023, with a further gas rate rise scheduled for July 2024. Polyanichko noted that the price of gas is particularly sensitive for cement plants given that it represents, on average, about 30% of the energy mix. He described the impending situation as a “stress scenario” and forecast that investment projects were likely to be reduced.

Australia: Cement Australia has signed a new three-year rail haulage agreement with Pacific National to transport shipping containers of cement, sand, fly ash, slag and lime. This will also includes the interstate and inter-city transport of cement and supplementary cementitious materials between large cities and throughout North Queensland. Cement Australia and Pacific National have a partnership that dates back over five years.

Pacific National is Australia’s largest private rail freight operator.

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."

South Korea: The Korean Railway Workers’ Union called a four-day strike of its 13,000 members across South Korea on 14 September 2023. Reuters has reported that the union is seeking higher pay, improved working conditions and the expansion of bullet train services into South Seoul. The Ministry of Transport predicts that total cargo haulage will drop by 53 - 79%. The Korean Cement Association (KCA) said that a protracted strike would disrupt cement production. The industry is 40% reliant on rail transport.

A representative from a KCA member said “We have secured some inventory in preparation for the strike, but it's not a lot. If the strike lengthens, we will have to convert to land transport, which will drive up costs and hit profitability."

Austria: Rohrdorfer has bought 20 new railcars equipped with ÖBB Rail Cargo’s RockTainer SAND containers. The cars will transport limestone between the producer’s Ebensee quarry and its Gmunden cement plant. Each railcar consists of two RockTainer SAND containers mounted on an InnoWaggon carriage, with a maximum load of 134t. The new cars will increase the volume of despatches from the Ebensee quarry by 28% to 804t of limestone per train from 630t/train, enabling Rohrdorfer to transport 450,000t of limestone per operating season.

UK: Cemex UK has completed upgrades of its Dove Holes, Selby and Bletchley depots in partnership with MLP Railway Maintenance. As a result of the upgrade, the Selby depot in North Yorkshire can now receive an increased number of wagons per train, and complete turnarounds more quickly. Meanwhile, the producer relayed two reception lines at the Dove Holes depot in Derbyshire and installed new walkways, CCTV and a waterproof display screen for offloading at the Bletchley depot in Buckinghamshire.

Cemex UK’s rail and sea manager Mark Grimshaw-Smith said “It’s important that we continue to invest in our railheads across the UK. This not only ensures that the safety and wellbeing of those who work on our sites is enhanced on an ongoing basis, but it also provides further resilience in the operation, transporting more materials by train and thus taking more trucks off the road.”

India: The government has published plans for a new broad-gauge double railway line in Rajasthan. The planned line will connect Jaipur and Sawai Madhopur, and will facilitate the transport of coal to businesses including cement plants. Maritime Gateway News has reported that the new line will increase carrying capacity in the local railway maintenance block by 80%. It is scheduled for commissioning in the 2027 financial year.

It’s been a good week for carbon capture projects in Europe with the announcement of who the European Union (EU) has selected for a grant from its Innovation Fund. 17 large-scale projects have been pre-selected for the Euro1.8bn being doled out in the second round of awards. On the cement and lime sector side there are four projects. These include projects at Holcim’s Lägerdorf cement plant in Germany, HeidelbergCement’s Devnya Cement plant in Bulgaria, Holcim’s Kujawy plant in Poland and Lhoist’s Chaux et Dolomites du Boulonnais lime plant in France. Large-scale in this instance means projects with capital costs over Euro7.5m. To give readers some sense of the scale of the projects that the EU has agreed to pay for, if the funding was shared out equally between the current bunch, it would be a little over Euro100m per project. This is serious money.

Devnya Cement’s ANRAV carbon capture, utilisation and storage (CCUS) project in Bulgaria has received little public attention so far so we’ll look a little more closely at this one first. No obvious information is available on what capture technology might be in consideration at the plant. HeidelbergCement’s leading experience in carbon capture technology at cement plants gives it a variety of methods it could use from a solvent scrubbing route to something less common. What the company has said is that, subject to regulatory approval and permitting, the project could start to capture 0.8Mt/yr of CO₂ from 2028.

What has also been revealed is that the project is linking up via pipelines to a depleted part of the Galata gas field site in the Black Sea. Oil and gas company Petroceltic Bulgaria is a partner and the aim of the project is to start a CCUS cluster in Eastern Europe. with the potential for other capture sites in Romania and Egypt to join in. This is noteworthy because much of the focus for the burgeoning cement sector CCUS in Europe so far has been on usage on local industrial clusters or storage in the North Sea.

The other new one is the Go4ECOPlanet project at Holcim’s Kujawy plant in Poland. Lafarge Cement is working with Air Liquide on the project. The latter will be providing its Cryocap FG adsorption and cryogenics technology for direct capture of flue gas at the plant. The transportation of the CO₂ is also interesting here as it will be by train not pipeline. Liquid CO₂ will be despatched to a terminal in Gdańsk, then transferred to ships before being pumped down into a storage field under the North Sea.

Turning to the other two grant recipients, the Carbon2Business project plans to capture over 1Mt/yr of CO₂ using a second generation oxyfuel process at Holcim Deutschland’s Lägerdorf cement plant. This project is part of a larger regional hydrogen usage cluster so the captured CO₂ will be used to manufacture methanol in combination with the hydrogen. Finally, Lhoist’s project at a lime plant in France is another team-up with Air Liquide, again using the latter’s Cryocap technology. The capture CO₂ will be transported by shared pipeline to a hub near Dunkirk and then stored beneath the North Sea as part of the D'Artagnan initiative. Around 0.61Mt/yr of CO₂ is expected to be sequestered.

The key point to consider from all of the above is that all of these projects are clear about what is happening to the CO₂ after capture. The days of ‘carbon capture and something’ have thankfully been left behind. CO₂ transportation infrastructure is either being used or built and these cement plants will be feeding into it. This will inevitably lead to questions about whether all these new CO₂ networks can support themselves with or without EU funding but that is an argument for another day.

Finally, in other news, four residents from the Indonesian island of Pulau Pari started legal proceedings against Holcim last week for alleged damages caused by climate change. Industrial CO₂ emissions are unquestionably a cause of this along with other sources but what a court might think about this remains to be seen. Yet, it is intriguing that the plantiffs have decided to go after the 47th largest corporate emitter rather than, say, one of the top 10. Regardless of how far the islanders get this is likely not to be last such similar attempt. If the case does make it to court though it seems likely that Holcim will mention its work on CCUS such as the two projects above. Only another 200-odd cement plants in Europe to go.