Global Cement Newsletter

Issue: GCW409 / 12 June 2019

Headlines


There was a glimmer of good news visible through the Delhi smog this week with the launch of a market-based emissions trading scheme (ETS) for particulate matter (PM). A pilot has started at Surat in Gujarat. The scheme will apply to 350 industries in the locality and it will be scrutinised for wider rollout in the country.

China robustly started to tackle its industrial PM emitters a few years ago although the work remains on-going. In its wake India has increasingly made the wrong sort of headlines with horrifically high dust emissions. Delhi, for example, reportedly had PM2.5 emissions of over 440µg/m3 in January 2019. To give this some context, the World Health Organisation’s (WHO) annual upper guideline figure for safe human exposure is 10µg/m3. Research by the Financial Times newspaper suggested that more than 40% of the Indian population is subject to annual PM2.5 emissions of over 50µg/m3.

Air Quality Life Index (AQLI) research reckons that if India were able to meet its national PM2.5 standard of 40µg/m3 then its population would live 1.8 years longer or 4.3 years longer if it met the WHO guideline level. The current situation is an unnecessary tragedy. In strictly structural terms the country’s productivity is being thrown away by damaging the health of its workforce. For comparison amongst other major cement producing countries, AQLI data placed China’s PM2.5 emissions at 39µg/m3, Indonesia at 22µg/m3, Vietnam at 20µg/m3 the US at 9µg/m3. These figures cover all industries in different conditions and climates. If the US can do it, why not the others?

Back on trading schemes, the famous ETS at the moment is the European one for CO2 emissions. Similar schemes are slowly appearing around the world as governments look at what the European Union (EU) did right and wrong. For example, South Africa started up a carbon tax in early June 2019. Yet as the supporting documents by the Gujarat Pollution Control Board (GPCB) point out there have been a variety of ETS systems’ over the years. The US’s Acid Rain Program is generally seen to have achieved significant reductions in SO2 and NOx emissions although the National Emission Standards for Hazardous Air Pollutants (NESHAP) has continued this work. Chile even ran its own PM ETS in the 1990s although the outcomes have been disputed.

One problem with a CO2 ETS, and anthropomorphic or man-made climate change in general, is that it is intangible. Even if sea levels deluge major coastal cities, rising mean temperatures reduce agricultural yields and human populations contract sharply, people will still be arguing over the research and the causes. The beauty of a PM ETS is that if it works you can literally see and feel the results. A famous example here is the UK’s Clean Air Act in the 1950s that banished the fog/smog that London used to be famous for.

The Gujarat PM ETS is a pilot, the results of which will be considered by researchers from a number of US-based universities and the Abdul Latif Jameel Poverty Action Lab. Explicitly, the study plans to use a randomised control trial to compares its results against the command and control style approach used in the rest of the country. On the cement-side various Indian news stories have emerged as state pollution boards have increasingly started fining producers for emission limit breaches. Clearly the government is taking dust emissions seriously. Reduction is long overdue.


Cyprus: Vassiliko Cement has appointed George Savva as its general manager with effect from 1 August 2019. In addition, Antonios Antoniou, the executive chairman of the company, will retain his position as chief executive officer (CEO) for a transitional period of five months until 31 December 2019. After the end of the transition period, he will retain the position of the executive chairman.

Savva, aged 48 years, is a Cypriot national. He holds a bachelors degree in Accounting and Finance from London South Bank University in the UK and later became a Chartered Certified Accountant with membership of the Association of Chartered Certified Accountants (ACCA) and the Institute of Certified Public Accountants of Cyprus (ICPAC). He has also attended the LEAP Executive Programme of INSEAD Business School.

He worked for Deloitte in auditing and business advisory for four years before working as an internal auditor for two years. He became the chief financial officer (CFO) for Vassiliko Cement in 2001 and became the deputy general manger in 2017.


Germany: HeidelbergCement has appointed Christoph Beumelburg as Director Group Communication & Investor Relations. He succeeds Andreas Schaller, who has left the organisation.

Beumelburg started his career at BASF in 1995. He has since held different management positions both domestically and abroad, including Director Investor Relations USA. In 2010 he moved to the automotive and industrial supplier Schaeffler, where he held the position of Senior Vice President Communications, Marketing and Investor Relations. He holds an Industrial Engineering degree from the University of Kaiserslautern.


Switzerland: Thomas Schmidheiny says he has reduced his share in LafargeHolcim to 7.2% from 10.9% to diversify his investment portfolio. He said that the decision was part of his ‘retirement and heritage’ planning, according to Reuters. He has no plans to minimise his stake any further.

Schmidheiny was made honorary chairman of LafargeHolcim in 2018 when he stepped down from the board. He began his career at Holcim in 1970. He became a member of the executive committee six years later and served as chief executive officer (CEO) between 1978 and 2001. After joining the board of directors in 1978 he was chairman of the board of directors from 1984 until 2003. Later, he was a key part of the merger between Holcim and Lafarge that completed in 2015.


France/Syria: Lafarge SA and three of its former executives are appealing against accusations of crimes against humanity. The Court of Appeal is expected to address the indictment in late June 2019, according to the Agence France Press. The former executives involved include Bruno Lafont, former chief executive offcier (CEO) of Lafarge, former safety director Jean-Claude Veillard, and one of the former directors of its Syrian subsidiary, Frédéric Jolibois. The Presecutor General has supported some arguments of the defence team.

If the appeal is succesful the legal case will focus instead on the financial aspects of Lafarge’s conduct in Syria between 2011 and 2014. It has been accussed of financing terrorism through indirect payments to extremist groups to keep its Jalabiya cement plant operational after the outbreak of war in Syria.


India: Larsen & Toubro (L&T) has been awarded an order to build a cement plant in Kurnool, Andhra Pradesh. The end client was not named but UltraTech Cement said in mid-June 2019 that it had received approval from the environment ministry to build a 6Mt/yr integrated cement plant in the same location. The plant will have a 60MW captive power plant and a 15MW waste heat recovery-based power unit. No value for the order has been disclosed.


Bolivia: Empresa Publica Productiva Cementos de Bolivia’s (ECEBOL) at Caracollo in Oruro will start commercial operation in August 2019. The US$306m plant will have a production capacity of 1.3Mt/yr, according to Radio FM Bolivia. A consortium of Sacyr, Imasa and Polysius have worked on the project.


Argentina: Loma Negra says it has started to close its Barker cement plant because it has been unable to reach an agreement with the union over staff redundancies. The company alleges that the union would not accept its plans to convert the unit into a grinding and bagging plant, according to El Cronista newspaper. The plant will now move to a single shift of operation with 24 employees whilst plans for its final closure are implemented.


US: A fire broke out in the preheater tower at Buzzi Unicem’s Stockertown cement plant in Pennsylvania on 7 June 2019. No staff injuries were reported at the plant, although a fireman required medical treatment, according to the Express-Times newspaper. Fire crews were on the site for around two hours.


Guyana: Concrete manufacturer KSM is taking legal action against the Guyana Revenue Authority (GRA) for over valuing the cost of cement imports. It alleges that the GRA charged it US$16.6m too much for five shipments between January and March 2019, according to the Stabroek News newspaper.

It grew its imports from 2015 to 2018 and it imported 24,480t of cement from Domicem in the Dominican Republic in 2018. However, KSM says that the GRA increased the declared value of cement by over 40% in the second half of 2018 without offering any ‘reasonable or justifiable grounds’ for so doing. KSM says it imported its shipments in 2019 at the lower rate and this was approved by customs. The GRA then demanded the shortfall from KSM in May 2019.


Algeria/Iraq: Dal Machinery & Design (DMD), part of Turkey’s Dal Engineering Group, has been awarded a contract to supply a kiln shell to LafargeHolcim Algeria’s Oggaz cement plant. The shell has an internal diameter of 5mm. The shell will be manufactured from a single part, with one single welding in the axial direction. It is expected to be delivered by September 2019. No value for the order has been disclosed.

Other recent orders for DMD include the supply of two kiln shells for LafargeHolcim’s Bazian cement plant at Sulaimani in the Kurdistan region of Iraq. The kiln shells were manufactured with a diameter of 5.2m. Delivery was made at the beginning of March 2019. DMD’s other kiln shell clients in Iraq included the Gasin cement plant in 2018. It also supplied a mill tunnion to LafargeHolcim’s Kerbala cement plant.


Mexico: According to figures from INEGI, Mexico’s national institute of statistics, sales of cement were worth US$1.21bn during the first quarter of 2019. This figure was 7% lower than during the first quarter of 2018. In volume terms sales fell from 11.89Mt to 10.91Mt, a fall of 8.1% year-on-year.

Market leader Cemex reported a sales fall of 15% in the analysed period despite a price increase of 4%. Cementos Fortaleza, owned by Elementia, posted a sales growth of 1% in terms of value, thanks to rising prices.

Swiss firm LafargeHolcim, through its subsidiary Holcim Apasco, saw total sales shrink by 7.4% in Latin America, with sales of cement falling by 2.6% as a consequence of the demand drop in Mexico and Argentina. Only Cementos Chihuahua registered significant growth, with sales increasing by 8% in during the quarter due to the construction of new industrial buildings and mining projects in the north of the country.


India: UltraTech Cement has received approval from the environment ministry for a US$360m project in Andhra Pradesh, in which it will set up a 6Mt/yr integrated cement plant at Petnikote village in Kurnool district. The plant will have a 60MW captive power plant and a 15MW waste heat recovery-based power unit.

The company has already acquired 432 hectares of land for the project, which UltraTech says will generate employment for 900 people. The company still has to get 'consent to establish and operate' from the Andhra Pradesh Pollution Control Board.


Dominica: Argos, Grupo Argos’ subsidiary in Dominica, has opened a new packing plant to allow a more reliable and timely supply of cement. The plant's packer has three nozzles and a capacity of more than 1000bags/hr. The scope of the project includes structural and ergonomic improvements and the replacement of the system's dust collector, which will allow for cleaner and more environmentally-friendly processes.


Puerto Rico: Total cement sales in Puerto Rico fell by 11.1% year-on-year in May 2019, to stand at 1.21 million 42.5kg bags (51,425t). Cement sales have been contracting since February 2019, after 13 consecutive increases. Meanwhile, domestic cement production plunged by 33.1% year-on-year, to stand at 1 million bags, representing the fourth consecutive fall.


Brazil: According to data from SNIC, the Brazilian national cement industry union, 4.6Mt of cement was sold in Brazil during May 2019. The figure is 27.6% higher compared to May 2018, with the large percentage increase due to the low base resulting from a truck drivers’ strike in May 2018. The first five months of 2019 recorded sales of 21.6Mt, a 5.6% year-on-year rise.


Argentina: Cement sales rose by 4.7% to 0.97Mt in Argentina in May 2019, compared to May 2018, according to data from AFCP. Sales totalled 4.65Mt in the first five months of 2019, a 5.4% drop from 4.91Mt in the year-earlier period. Out of the volume sold in May 2019, 942,762t of cement was sold domestically, with just 8891t exported.


Philippines: The Cement Manufacturers Association of the Philippines (CEMAP) says it is confident that the Tariff Commission will increase the duty on imported cement on a permanent basis. In a statement Cirilo M Pestaño II, CEMAP’s executive director, noted that the commission had observed a rise in import volumes since 2016, according to the Manila Bulletin newspaper. He said that the association was confident that the commission would issue a, “ruling consistent with the national interest.” The association added that imports might be good for consumers in the short-term but they were bad for everyone beyond this due to lost economic earnings and reduced industrial production capacity.


France: The government is preparing to approve an extension to the quarry at Ciments Calcia’s Gargenville plant. The extension will cover an area of 74 hectares near the communes of Guitrancourt and Brueil-en-Vexin, according to the Le Parisien newspaper. Local environmental activists are preparing to contest the decision.


Guinea: LafargeHolcim Guinea has ordered a MVR 2500 C-4 vertical roller mill from Germany’s Gebr. Pfeiffer for its Sonfonia cement grinding plant in Conakry. The cement mill will have a total drive power of 1300KW. It has been designed to grind 75t/hr of CEM IV 32.5 and 69t/hr of CEM IV 42.5 to a specific surface of 3440cm²/g and 3340cm²/g acc. to Blaine respectively. The order for the mill was placed by the China’s CBMI working as a general contractor on the project. No value for the order has been disclosed.


India: The state of Gujarat has launched a market-based cap-and-trade system in particulate matter to reduce air pollution. It says it is the first such initiative in the world. The project is being piloted in Surat with the aim to expanding it nationally subsequently.

“With this program, we are kicking off a new era of cleaner production, while lowering industry compliance costs and rewarding plants that cut pollution in low-cost ways,” said Rajiv Kumar Gupta IAS, chairman of the Gujarat Pollution Control Board (GPCB). The GPCB is carrying out the emissions trading program with the help of a team of researchers from the Energy Policy Institute at the University of Chicago (EPIC), the Evidence for Policy Design at Harvard Kennedy School, the Economic Growth Center at Yale University and the Abdul Latif Jameel Poverty Action Lab. The researchers are evaluating the program’s benefits and costs, relative to the status quo, using a randomised controlled trial.

The emissions trading program builds on work by the GPCB in using continuous emissions monitoring systems to track industry emissions in real time. About 350 industries around Surat have installed continuous emissions monitoring systems and now transmit real-time emissions data. The new scheme takes advantage of this technology for its monitoring.


India: Transport and Small, and Medium Enterprises (MSME) minister Nitin Gadkari says that cement producers have raised their prices without justification. He alleged that input prices for the industry had not increased and speculated that the companies acted ‘like a cartel’, according to the Times of India newspaper. He added that the higher cost of cement was negatively affecting road and affordable housing construction.

Gadkari said he has asked his officials to intervene in an on-going case in the Supreme Court and also explore the option of approaching the Competition Commission of India. The National Highway Builders Federation has also sought government intervention over the issue.


Mexico: A team led by José Iván Escalante Garcíaat at the Saltillo unit of the Center for Research and Advanced Studies of the National Polytechnic Institute (Cinvestav) is researching the use of volcanic ash in making blended cements and concrete. Volcanic ash is being considered to reduce the clinker factor of cement due to its abundance, low cost and its appropriate chemical composition. A clinker substitution factor of up to 80% has been achieved using volcanic ash. The research group has developed 15 alternatives to Ordinary Portland Cement (OPC) using waste or materials or minerals.


US: Terex MPS has launched the TG series of cone crushers as part of its Cedarapids range. The bronze bushing spider bearing cone product is intended to complement the company’s MVPX Series (screw type cone) and the TC Series (floating bowl cone).

The new spider bearing range will consist of four models focused on the aggregate and recycling industries: the TG120 (120HP); TG220 (220HP); TG320 (320HP); and TG420 (420HP). Each model is available in two versions: the TG (tertiary) and TGS (secondary). There will also be two larger models available for large capacity mining and quarrying applications: the TG820 (820HP) and the TG1020 (1020HP).


France: Cemex has supplied over 0.3Mm3 of ready-mixed concrete and more than 0.55Mt of aggregates for the Grand Paris Express project over the past three years. It has used mobile on-site concrete plants and a local network of 21 plants in Île-de-France to support the large-scale railway infrastructure scheme.

"The Grand Paris worksites present a daily challenge to deliver ready-mix concrete on time, supply aggregates to our production sites, and move earthworks from the stations and tunnels out of Paris,” said Benjamin Lecendrier, Major Projects Director at Cemex France.

The Grand Paris Express worksites on metro lines 11, 14 and several sections of line 15 South have involved most of Cemex’s staff in the Île-de-France region, with four full-time operatives working in a dedicated unit. Given the scale of operations, logistical organisation is a challenge, with the twin demands of delivering construction materials and removing 40Mt of earthwork by 2030.