Global Cement Newsletter

Issue: GCW363 / 25 July 2018

Headlines


Earlier this year South Africa’s PPC commented on the drought facing Cape Town. It said that cement manufacturing was not water intensive, that its operations were ‘totally’ self-sufficient from its own surface water sources with capacity for several months and that it was working with the local government which viewed construction as an important economic sector. Point made!

Water conservation is an established part of the sustainability toolkit for cement producers. Yet recent weather patterns in the Northern Hemisphere may also test how well companies are doing. Above average temperatures have been recorded this summer, in some places accompanied by unusually dry conditions. A news story this week about Cemex Colombia being fined for using water from a river shows one aspect of the problems that can face industrial users. Another story that we’ve covered previously has been the legal action taken against producers using water from a site near to the Katas Raj Temples in Pakistan.

Wet process cement manufacturing uses more water than dry process but even modern plants use water for cooling equipment and exhaust gases, in emission control systems such as wet scrubbers. In addition, quarrying and aggregate production may require water, and concrete production also needs water. Issues also arise with quarry dewatering and discharging water into rivers and the like. Global Cement Directory 2018 data indicates that, where known, about 10% of integrated cement plants still use a wet production method.

Graph 1: Specific water consumption by selected cement producers in 2017. Source: Corporate sustainability reports. 

Graph 1: Specific water consumption by selected cement producers in 2017. Source: Corporate sustainability reports.

As Graph 1 shows there is some variation between the major cement producers with regards to how much water they use. They all operate with different types of equipment and production methods in different geographical locations so the difference between the companies is to be expected. A cement plant in northern Europe that normally experiences high levels of rainfall will have a different approach to water conservation than one, say, in a water stressed area like the Middle East. Incidentally, the definition used to define a water-stressed or scarce area is one where there is less than 1000m3/yr per person. One other point to note here is that each of the companies has a higher consumption figure than the 100 – 200L/t that the Cement Manufacturers' Association of the Philippines (CeMAP) reckoned that an average dry-process cement plant used when it was promoting water conservation back in 2013.

Looking at specific recent success stories, India’s UltraTech Cement reported a specific water consumption of 54L/t of clinker at its Star Cement plant in Dubai, UAE in 2016 – 2017 following a dedicated initiative at the site. An another milestone that UltraTech Cement was keen to point out in its last sustainability report was that three of 13 integrated plants had achieved water sufficiency though the use of the company’s 360° Water Management Model with its use of rainwater harvesting and recharging groundwater. These plants are not dependent on any groundwater or fresh water sources. The other larger cement producers all have similar water management schemes with reduction targets in place.

Climate change models generally predict hotter and wetter weather but changing weather patterns and growing populations are likely to impact upon water management and consumption. Given the integral nature of water in the cement production process, many cement producers have realised the importance of it and treat it as an input material like fuel or limestone. Hence the highlighting of water conservation in company sustainability reports over the last decade. The test for the success of these initiatives will be how producers cope in drought situations where they may be seen as being in competition with domestic users. Thankfully in PPC’s case, Cape Town avoided having to ration water to the general public, as the rains returned in the spring.


US: Cementos Argos has appointed Bill Wagner as the vice president of its US operations. Wagner, a US national, is a graduate of Georgia Southern University. He holds over 35 years of industry experience and is on the board of directors of the National Ready Mixed Concrete Association. He joined Cementos Argos in 2014 and worked as the head of its US concrete business.


Thailand: Siam Cement Group has appointed Thammasak Sethaudom as its Vice President-Finance & Investment. He succeeds Chaovalit Ekabut. The appointment will take affect from 1 September 2018.


US: Ametek Brookfield has appointed Hitesh Shah as Global Vice President Sales. He holds over 25 years’ experience in sales and executive positions in North America, India, the Middle East and Asia. He has worked for General Electric, Meggitt Sensing Systems and most recently served as Global Sales Director with Novanta. Hitesh has a graduate degree in Mechanical Engineering. He also served on the engineering faculty at the Maharaja Sayajirao University of Baroda in India.


Thailand: Siam Cement Group’s sales revenue from its cement business rose by 4% year-on-year to US$2.74bn in the first half of 2018. Its profit grew by 8% to US$125m and its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 4% to US$355m. The cement producer said that the country’s demand for Ordinary Portland Cement (OPC) rose by 2% year-on-year in the second quarter of 2018 due to an increase in demand from the public sector. Overall the company’s sales revenue grew in the first half of 2018 but its profit and earnings fell due to currency variations and increasing cost of input chemicals.


Vietnam: The Ministry of Construction has opposed the Ministry of Industry and Trade’s proposal to transfer the Quang Son cement plant from Vietnam Industrial Construction Corporation (Vinaincon) to Vietnam Cement Industry Corporation (Vicem) on the grounds of the plant’s losses and debts. Both Vinaincon and Vicem are government owned, according to the Viet Nam News newspaper.

Luong Quang Khai, chairman of Vicem’s board of members, said that the Quang Son cement plant is located in a poor position for transport logistics, which has led to high production costs. The plant has also suffered from losses while its loans have grown to equal 95% of the plant’s total investment. Khai also noted that the potential new owner Vicem has undergone financial difficulties following its acquisition of the Ha Long and Song Thao cement plants.

Previously, the Ministry of Industry and Trade suggested that the government transfer the Quang Son cement plant to Vicem from Vinaincon. Under the proposal, Vicem would back the loans taken out by Vinaincon for the Quang Son cement plant. Formerly known as the Thai Nguyen cement plant, Quang Son started commercial operation in July 2011 with a cement production capacity of 1.5Mt/yr.


Mexico: Grupo Cementos de Chihuahua’s (GCC) net sales rose by 11.4% year-on-year to US$399m in the first half of 2018 from US$358m in the same period in 2017. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 22% to US$115m from US$94.2m.

Its US sales rose by 11.1% to US$283m and its Mexican sales rose by 7% to US$60m. Cement sales volumes increased by 6.1% and 2.5% in the US and Mexico respectively. However, the cement producer reported falling sales volumes in the second quarter of 2018 in the US due to poor weather in Iowa, North Dakota and South Dakota and delays in paving projects.


Nigeria: Lafarge Africa is considering raising up to US$248m in a share sale. The sale will take place in the fourth quarter of 2018 said chief financial officer Bruno Bayet whilst reporting the company’s half-year results, according to Bloomberg. Its sales rose by 5% year-on-year to US$448m in the first half of 2018 from US$427m in the same period in 2017. However, its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 25% to US$76.4m from US$102m. The subsidiary of Switzerland’s LafargeHolcim blamed its falling earnings on poor performance in South Africa.


India: The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal by cement producers against a US$975m fine for alleged cartel-like behaviour. The Competition Commission of India penalised 11 cement companies in August 2016, according to the Press Trust of India. The companies included UltraTech Cement, ACC, Ambuja, Ramco and JK Cement and the Cement Manufacturers’ Association (CMA). UltraTech Cement has been fined US$171m, the highest amount in the group.


Ukraine: Cement production fell by 3.5% year-on-year to 4.01Mt in the first half of 2018. In June 2018 production rose by 5.2% year-on-year to 1.03Mt, according to the Ukrainian News Agency. In 2017 the country’s cement production increased by 2.3% to 9.31Mt.


India: ACC’s net sales rose by 14% year-on-year to US$1.06bn in the first half of 2018 from US$934m in the same period in 2017. Its net profit after tax rose by 8% to US$125m from US$108m. Its sales volumes of cement increased by 8% to 14.4Mt from 13.3Mt.

Neeraj Akhoury, managing director and chief executive officer (CEO) of ACC, said that input prices, such as fuel and slag, and logistics costs were continuing to mount. However, the company has made operational and productivity efficiencies that had partly offset this.


Qatar: Qatar National Cement’s sales revenue dropped by 21.9% year-on-year to US$119m in first half of 2018 from US$153m in the same period in 2017. Its net profit rose slightly to US$46.2m, according to the Qatar Tribune newspaper.


Germany: Hermann Trollius has purchased a used MPS 125 A type mill as part of a capacity expansion and has additionally ordered a selection of new equipment from Gebr. Pfeiffer. The company operates a lime and crushed stone works at Lauterhofen in Bavaria. It produces limestone and dolomite for use in the building, steel, glass, sugar and animal feed industries, as well as for agricultural applications.

Gebr. Pfeiffer will assist Hermann Trollius in setting up the entire grinding plant, taking maintenance measures on the MPS mill and coordinating the delivery of the additional plant equipment. Two distribution table SUT 2800 type separators will be supplied by Gebr. Pfeiffer along with a TRT Triplex dryer with a length of 3.15m and a diameter of 2000mm to be used for drying dolomite, which has a moisture of 4 - 11%. The dryer will have a new hot gas generator of the type HMG 900 for natural gas firing. The hot gas generator to be used for the mill will be of the HMG 800 type.

The new machines will be on the site in early November 2018 so that the customer’s new plant will go online in early 2019 at the latest.


Nigeria: The recovery of the local economy has driven the performance of Dangote Cement’s sales in the first half of 2018. Its sales revenue grew by 16.9% year-on-year to US$1.34bn from US$1.15bn. Revenue in Nigeria rose by 18.1% to US$959m and in the rest of Africa (Pan Africa) they rose by 11.4% to US$386m.

“Our first-half performance was very strong and driven by an excellent recovery in Nigeria, where our sales volumes increased by nearly 14% and revenues rose by more than 18%. Pan-African operations saw a slight fall in volumes but both revenues and earnings before interest taxation depreciation and amortisation (EBITDA) increased because of better pricing and currency conversion effects.” said Joe Makoju, Group Chief Executive Officer. Makoju also mourned the loss of colleagues who were been killed in a gun attack in the group’s subsidiary in Ethiopia in May 2018.

Sales volumes of cement in the group’s Pan Africa region fell by 3.9% to 4.57Mt from 4.75Mt due to lower sales in Tanzania, disruptions due to civil unrest in Ethiopia and a reduction in exports from Nigeria to Ghana. However, the group noted stronger performances in other Pan-African territories, notably Zambia, and volumes outside of Nigeria benefited from maiden first half sales from Congo and increased volumes in Sierra Leone. Sales volumes in Nigeria increased by 13.9% to 7.81Mt from 6.86Mt. EBITDA rose by 20.8% to US$685m from US$568m with a particular emphasis on earnings in the group’s Pan-Africa region.


Peru: Cementos Pacasmayo’s sales revenue grew by 7.5% year-on-year to US$184m in the first half of 2018 from US$171m in the same period in 2017. Its production of cement rose by 3.9% to 1.08Mt from 1.04Mt and clinker production rose by 15.9% to 0.87Mt from 0.75Mt. Its consolidated earnings before interest taxation depreciation and amortisation (EBITDA) rose by 12.2% to US$54.7m from US$48.7m.

The cement producer said that, despite growth, it felt that the pace was lower than its expectations. Infrastructure reconstruction in the north of the country had suffered delays and self-construction has grown at lower rates than expected. It party blamed this on the country’s qualification to 2018 FIFA World Cup as funding was focused on ‘soccer-related categories.’


Georgia: HeidelbergCement Georgia plans to close a kiln at its Rustavi cement plant due to imports from Iran. It will also reduce production at the Dedoplitskaro limestone quarry, according to GBC Daily News. The Georgian Cement Association has lobbied the government to enact anti-dumping measures against Iranian imports.


Russia: The management of Gornozavodskcement is looking for a co-investor to upgrade its cement plant to a dry production method. Previously the company had conducted negotiations with Ireland’s CRH over the upgrade but these have been abandoned, according to Construction and Real Estate Daily News. The cement producer operates a plant near Perm.


India: Orient Cement plans to upgrade its Devapur in Adilabad District, Telangana. It will invest US$290m towards more than doubling the unit’s cement production capacity to 7.5Mt/yr from 3Mt/yr, according to the Press Trust of India. The cement producer obtained first stage clearance from the Ministry of Environment, Forest and Climate Change to expand the existing integrated cement plant. However, final clearance from the Ministry is still awaited.


India: Birla Corporation plans to increase its cement production capacity to 20Mt/yr by 2021. At present it has a capacity of 15.5Mt/yr, according to the Hindu newspaper. The company plans to increase its capacity by both expanding existing units and building new ones. It acquired Reliance Cement in mid-2016.


India: UltraTech Cement plans to build five waste heat recovery (WHR) units with an investment of US$72.6m. The new WHR units will have a capacity of 63MW and they will take the company’s total WHR capacity to 121MW, according to the Hindu newspaper. It is anticipated that the cement producer will be able to meet half of its power requirements from its WHR plants. They are also intended to protect the company from changes in the price of coal.


UAE: India’s JSW Cement plans to invest around US$150m in a new integrated 1Mt/yr plant in Fujairah. The project will also include a captive power plant, according to the Economic Times newspaper. The company expects to commission the new plant by December 2019. The project is part of the group’s target to reach a production capacpty of 20Mt/yr by 2020.


UK: Tarmac plans to restructure the distribution model for its cement and lime division. Following a strategic review it will move to a regional model for both bulk and packed cement distribution, which have previously operated on a national basis. Tarmac’s own fleet operations will handle around 50% of bulk cement and 20% of packed cement distribution, supported by five regional distribution providers selected through a procurement process.

“Our supply chain and logistics operations are crucial to maintaining Tarmac Cement and Lime’s position as the UK’s market leader. The new regional transport operating model will provide enhanced resilience, flexibility, service, cost and safety for our customers, who trust us to deliver the products they need to realise major projects,” said Mike Eberlin, managing director at Tarmac Cement and Lime.

Tarmac Cement and Lime’s regional distribution partners will be engaged on new five-year logistics contracts effective from December 2018. They are Abbey Logistics (bulk cement – Scotland), Pollocks (packed cement – Scotland & North), Lomas Distribution (bulk and packed cement – Central), Wincanton (bulk and packed cement – South West), Stobarts (bulk and packed cement – South East) and Proctors (packed cement – Barnstone).

Tarmac’s Lime & Powders operation will remain fully subcontracted on a national basis to Lomas Distribution (bulk lime and powders and lime tippers) and RR Andrews (powder tipper operations).

There will be no change to customer order arrangements.


India: Shree Digvijay’s income rose by 11% year-on-year to US$17m in the quarter to 30 June 2018 from US$15.4m in the same period in 2017. It profit for the period increased by nearly four times to US$0.86m from US$0.22m.


Ivory Coast: LafargeHolcim Ivory Coast has launched Bélier SuperBéton. The 52.5N strength cement product offers high resistance. It has been specially developed for concrete applications with increased compatibility with admixtures.


Cuba: The Nuevitas cement plant expects to produce 0.12Mt of cement in 2018. Nearly 80% of this output will be used to build houses, according to the Adelante newspaper. The plant serves the Camagüey province as well as Las Tunas, Granma and Ciego de Ávila.


Turkey: Sabanci Group, the controlling shareholder of Çimsa Cement, is in talks to sell three of the cement producer’s plants. It is considering divesting integrated plants at Kayseri, Nigde and Ladik, according to sources quoted by Reuters. The company operates five integrated plants and a grinding plant.


Bolivia: Soboce (Sociedad Boliviana de Cemento) has inaugurated a new vertical grinding mill at its Viache integrated plant. Together with its other integrated plants at Oruro and Tarija and a grinding plant at Santa Cruz the company now has a cement production capacity of 2.9Mt/yr, according to the Diario Pagina Siete newspaper. The upgrade cost US$85m. Soboce ordered an OK 36-4 vertical roller mill from Denmark’s FLSmidth for the project. To coincide with the new mill the company will also launch ‘Viacha LP12 Insuperable,’ a new cement product.


Mexico: The Procuraduría Federal de Protección al Ambiente (PROFEPA) awarded an Recognition of Environmental Excellence to 12 Cemex cement plants. The award is presented to companies that demonstrate a continuous commitment to protect the environment. The plants that were recognised were: Atotonilco in Hidalgo; Barrientos in Mexico State; Ensenada in Baja California; Huichapan in Hidalgo; Mérida, in Yucatan; Monterrey in Nuevo León; Tamuín in San Luis Potosí; Tepeaca in Puebla; Torreón, in Coahuila; Valles in San Luis Potosí; Yaqui, in Sonora; and Zapotiltic, in Jalisco.


Iran: Cement exports grew by 4.6% year-on-year to 3.6Mt in the first quarter of the local financial year to 21 June 2018. It exported cement to 27 countries to including Kuwait, Iraq, Afghanistan and Bangladesh, according to the Trend News Agency. The country produced 54.7Mt in the previous reporting year, a decline of 1.5% year-on-year. The local cement industry has faced problems, including a recession in the construction sector, poor gas supplies and obstacles to its export markets.


Pakistan: Lucky Cement has won the Environment Excellence Award at the 15th Annual Environment Excellence Awards 2018. It received the award in recognition to its commitment towards sustainable development and contribution towards protecting the overall environment for a ‘greener’ Pakistan, according to the PPI news agency. The award was presented by the National Forum for Environment and Health, a non-government organisation that aims to promote environmental, healthcare and educational awareness.

"Implementation of sustainability into our core business operations has always been one of our main objectives. We follow a comprehensive Environmental Management and Monitoring Plan. The management strongly believes in preserving the ecosystem through the management of gaseous emissions, particulate matter, noise levels, effluents (sewage) and solid waste," said Amin Ganny, Chief Operating Officer, Lucky Cement.


India: Bharathi Cement has launched ‘Bharathi Ultrafast,’ a new multipurpose cement product. The new product as an Ordinary Portland Cement (OPC) 53.3 grade cement, according to the United News of India agency. The subsidiary of France’s Vicat operates an 5Mt/yr integrated plant in Kadapa, Andhra Pradesh and Vicat also owns a subsidiary, Kalburgi Cement, which runs a 2.75Mt/yr integrated plant in Kalaburagi, Karnataka. Both companies market their products under the Bharathi Cement brand.