Global Cement Newsletter

Issue: GCW444 / 26 February 2020

Headlines


The Queensland state government in Australia took a blunt approach to health and safety earlier this month when a report it commissioned said that it expected 12 deaths to occur in the mines and quarries sector over the next five years unless changes were made. This is far removed from the usual news stories that industry magazines like Global Cement and others cover. Typically, these are either plants or companies reaching Lost Time Injury (LTI) milestones or sad (but thankfully rare) reports of death.

The forecast in Queensland was based on a review of fatalities in the sector that the state commissioned from Sean Brady, Department of Natural Resource, Mines and Energy, looking at the years 2000 to 2019. Year-by-year the figures were significantly lower than those occurring in the 1900 to 2000 period but didn’t appear to have any discernable pattern. However, when presented as a 12-month rolling sum of fatalities, a two to three year cycle seemed to occur. Brady then went on to look at how the fatalities happened, how the industry behaved and reacted and what could be done to improve the situation. His recommendations included looking more deeply at the causes of seemingly unrelated accidents and then changing overall organisational behaviour and insight through methods such as adopting principles of High Reliability Organisational theory, simplifying the reporting system and changing the standard safety indicators like LTI.

That last point is interesting given the prevalence of LTI indicators on corporate sustainability reports in the cement industry. The point that Brady cites here is that LTI can become a measure of how well injuries are managed, not how safely an organisation is performing. For example, the definition of what an injury is can be manipulated, leading to distortion, as can workers being brought back to work before they recover or into lighter duties. Instead he recommends that ‘serious accidents’ be used in place of LTI. These are defined as incidents that result in a fatality or incidents where an individual requires admission to hospital for treatment of an injury. The preference here is based on so-called ‘serious accidents’ being unambiguous and transparent because they are defined by a third-party medical practitioner.

Wider critiques of health and safety measurements have identified under-reporting of incidents arising from safety incentive programmes, safety culture, employee perceptions of reporting and workplace bullying. This isn’t to say that the LTI measure is not fit for purpose. It has undoubtedly led to higher safety conditions around the world, with reduced injury and mortality from working conditions, and it allows for comparisons between organisations. Yet, any health and safety metric or indicator could be liable to bias or manipulation either unconsciously or consciously. Serious accidents, for example, could be potentially undermined by an organisation having its own medical centre and would also suffer from different health care systems in different locations. Throw in different legislative frameworks around the world and comparing countries can also start to become confusing.

This tension between data and real-life safety is acknowledged by the Global Cement and Concrete Association (GCCA) in its sustainability guidance from late 2018. It distinguishes between so-called ‘lagging’ indicators, like LTI and fatalities, which show the effectiveness of a safety programme after the fact and the importance of continual safety improvement plans that aim to prevent adverse events before they happen. It is easy to become lost in a dust storm of facts and figures on health and safety but, as the Queensland authorities and the GCCA agree, measuring health and safety is a means to an end. The aim is zero harm to everyone involved.


India: Bimlendra Jha, Managing Director and CEO of Ambuja Cement, a member of LafargeHolcim, has left the company to pursue other interests. The company has appointed Neeraj Akhoury as MD and CEO with effect from 21 February 2020. His appointment is subject to the approval of the shareholders.

Meanwhile, LafargeHolcim’s other Indian subsidiary, ACC, which is in the process of merging with Ambuja, has promoted its chief commercial officer Sridhar Balakrishnan to the position of MD and CEO.


France: Cem’In’Eu, the France-based operator of modular grinding plants, has appointed Magali Laurenço as director of its Rhône Ciments subsidiary. She has been in post since January 2020.

Magali Laurenço spent the first years of her professional career at Ciments Calcia, where she held the positions of manufacturing engineer (2006 - 2008), manager of the mechanical maintenance sector (2008 - 2014), then manager of the maintenance and new works (2015 - 2020) and production and maintenance service manager (2018-2020).


UK: Germany-based HeidelbergCement’s subsidiary Hanson Cement will be the subject of a study in the use of biomass and hydrogen fuels coordinated by the Mineral Products Association (MPA). The Department for Business, Energy and Industrial Strategy is funding the Euro3.81m study, the results of which it says will be shared across the cement industry. HeidelbergCement CEO Dominik von Achten said, "In addition to our activities in the field of carbon capture, use and storage (CCUS), this project is an important step towards realising our vision of carbon-neutral concrete by 2050.”


Uzbekistan: The State Committee on Ecology and Environmental Protection (SCEEP) has suspended operations at SingLida’s 0.1Mt/yr integrated Ahtachi plant in Andijan region. Trend News has reported that, following an audit of clinker production between 12 February 2019 and 21 February 2019, the cyclones had failed to meet lawful standards of dust collection. Rates varied between 53% and 61% dust collection, compared to a design capacity of 100%. The government body said that it had given ‘instructions for prompt elimination of deficiencies and reduction of pollutant emissions into the air,’ and has suspended operations of the clinker line and mill until such a time as the problem is resolved.


Egypt: Alexandria Portland Cement has reduced its margin of loss by 40% year-on-year to US$15.2m in 2019 from US$25.3m in 2018.

Greece-based Titan Cement is the 89% owner of Alexandria Portland Cement via its subsidiary Alexandria Development Ltd.


Kenya: East African Portland Cement Company (EAPCC) has recorded losses of US$16.2m in 2019, up by 0.6% from US$16.1m in 2018, in spite of sales growth over the period of 8.0% year-on-year to US$14.7 from US$13.6m. Reuters has reported that the company will not be paying its shareholders.


Tajikistan: Builders completed the construction of 1.36Mm2 of multi-storey housing in Tajikistan in 2019, up by 24% from 1.10Mm2 in 2018. Tajikistan Newsline has reported that all residential construction concrete comes from domestically produced cement. Tajikistan produced 4.2Mt of cement in 2019 - up by 11% from 1.8Mt in 2018 - exporting 1.5Mt. It imported 20,000t, primarily of white cement.


Germany: Siemens subsidiary Flender, which supplies couplings and gearboxes to the cement industry, has signed a partnership agreement for technological solutions with digital drive specialist Currax. The partnership aims to bring a comprehensive increase in efficiency to Flender’s business and a high level of flexibility for customers. Currax executive director Daniel Aßman said, “From customer acquisition to sales, from implementation to support, Currax is the contact for all matters relating to the Flender portfolio.”


Tanzania: Manyara Cement has shared plans for a 0.2Mt/yr integrated cement plant in Hanang district, for which it has already acquired limestone and pumice extraction licences for sites around Mount Hanang. The plant will use a vertical shaft kiln.

The plant will sell cement on the northern Tanzanian and southern Kenyan markets.


Colombia: In 2019 Grupo Argos subsidiary Cementos Argos’ sales rose by 11% year-on-year to US$2.8bn from US$2.5bn in 2018 and its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 14% year-on-year to US$0.5bn from US$0.4bn in 2018. Cement dispatches rose by 0.6% to 16Mt. In the US, its main market, the company sold 6.3Mt of cement, up by 9.5% from 5.8Mt in 2018.

Argos CEO Juan Estaban Calle praised the company’s successes in 2019, such as the completion of its Thermally Activated Clays (TAC) project at its 1.4Mt/yr integrated Cementos Rioclaro plant in Colombia. “This allows for production and distribution of green cement with a greatly reduced clinker factor, 38% lower CO2 emissions and 30% of the energy consumption of ordinary Portland cement (OPC) production,” he said.


China: Huaxin Cement says that it has disposed of 55t of medical waste from coronavirus-infected hospitals in Wuhan province at its 3.4Mt/yr Yangxin cement plant in Hubei province. Xinhuanet News has reported that the plant’s precalciner and rotary kiln have safely processed the batch, from its delivery in sealed trucks, through the combustion of the waste and its packaging, into cement.


Afghanistan: Ghori Cement says that it has produced 18,600t of cement in January 2020, up by 400% from 3720t in January 2019. This would give the plant an annual production rate of 0.22Mt/yr, following ‘operational reforms and modernisation of spare parts.’ Arab News has reported that plans for the replacement of Ghori Cement’s Ghori, Pul-e-Khumri, cement plant with a new 0.4Mt/yr plant were interrupted by on-going civil strife in the region, north of the Afghan capital Kabul. Ghori cement plant general manager Riazudin Sharifi said, “Efforts are underway to further improve the capacity of the plant.”


Australia: A report commissioned by the Queensland Ministry of Mines has investigated the causes of all 47 deaths in mines and quarries in the state between 2000 and 2019, concluding that systemic, organisational, supervision or training failures caused the deaths in almost all cases. The report proposed that the state government should require quarry operators to use the Serious Accident Frequency Rate (SAFR) as their metric for health and safety monitoring, calling the Lost Time Injury Frequency Rate (LTIFR) unreliable because it is prone to manipulation, being “a measure of how the industry manages injuries after they have occurred. It is possible, therefore, to reduce the LTIFR without making the industry safer,” said the report’s author Sean Brady.

In the Australian 2019 financial year, ending 31 July 2019, six people died in Queensland’s quarries and mine.


Pakistan: Fauji Cement has reported a profit of US$1.23m in the second quarter of the 2020 fiscal year, between 1 October 2019 and 31 December 2019. This corresponds to a drop of 82% year-on-year from US$6.83m in the corresponding period of Pakistan’s 2019 fiscal year. The Express Tribune newspaper attributed the plunge to currency depreciation, lower retention prices and higher electricity tariffs. Sales in the three months to 31 December 2019 were US$34.4m, up by 5.5% year-on-year from US$32.6m to 31 December 2018.

The company said that the second quarter saw a 20% jump year-on-year in cement dispatches to 0.93Mt from 0.77Mt in the second quarter of the 2019 fiscal year. It expects a return to profitability in 2020.


Azerbaijan: Azerbaijan produced 0.19Mt of cement in January 2020, down by 24% from 0.25Mt in January 2019. Trend News Agency has reported that this is due in part to a shift in construction towards the ready-mix concrete with a lower clinker factor and the use of other materials such as brick. The total value of building materials produced in January was US$30.8m, up by 35% from US$22.8m in January 2019.


Tunisia: Carthage Cement has submitted a statement to Tunisian police in which it alleges false testimony by FLSmidth’s lawyer who advised the Danish supplier in a criminal case which saw one employee sentenced to five years for illegal payments to Carthage Cement’s owners in 2017. Ritzau Finans newspaper has reported that FLSmidth’s management admitted to knowledge of the payments on 21 February 2020, something it had denied to authorities when under investigation prior to the trial, which concluded in November 2019.


Mexico: Group Cementos Chihuahua (GCC) reported a better-than-expected fourth quarter in 2019, due largely to record sales volumes in the US, its main market. A delay to the start of the construction season, an order book containing contracts for oil well cement and alternative energy projects and strong residential and infrastructure segments, boosted its cement sales volumes by 12.3%. Along with an increase of 2.9% in prices overall (4.8% rise in the US), this gave rise to sales figures 13.2% higher than in the fourth quarter of 2018.

"Our excellent operational execution and robust distribution network, supported by improved climate, once again contributed to record volumes in cement in the US, surpassing our estimates," said Enrique Escalante, GCC’s Managing Director.

In its domestic Mexican market, sales increased by 5.6% due to a mixture of higher prices and appreciation of the national currency. Industrial warehouse construction segments, mining projects and middle housing in border towns were factors for the rise.


Spain: The Association of cement manufacturers of Spain (Oficemen) attended a debate at the European Parliament Headquarters in Brussels, Belgium that discussed future population trends across the EU.

The Vice President of Cembureau and Oficemen, Isidoro Miranda, was in charge of opening the meeting. He highlighted the role of the industry as an “activity that solidly confers on the economy of a country in terms of wealth generation, employment and the economic and social wellbeing.”

Highlighting that many cement plants operate for 80 or more years, Miranda added that of Spain’s 33 integrated cement plants, 12 are within what is considered to be ‘empty Spain,’ areas that have experienced rapid depopulation in the past 20-30 years.

To end the meeting, the President of Oficemen, Víctor García Brosa, highlighted that, "Depopulation is one of the great political challenges facing Europe today. It affects 80% of the territory and it is necessary to have strategies specific to promote economic development, access to services and connectivity. The decline or disappearance of traditional industries in Europe leads to loss of qualified employment and a mismatch between supply and demand in the labour market. A role for industries is essential to address the challenge of population fixing and combating emptied Europe."

During the event, Oficemen and The Industrial Federation of Food and Beverages (FIAB) presented a 'Manifesto against the Empty Europe,’ which they say is "a call made to the institutions of the EU to strengthen the role of the industry as a brake on the demographic decline.


India: Lafarge Holcim-owned Ambuja Cement’s consolidated net profit almost halved to US$100.4m during the three months to 31 December 2019, from US$191.4m in the three months to 31 December 2018. The 2018 result was boosted by a one off benefit of US$121.5m, meaning that underlying operating profit has improved year-on-year. Ambuja’s revenue from operations was up by 6% to US$992m from US$936m.


Kuwait: Kuwait Portland Cement has reported that its fourth quarter profit for 2019 fell by 44% to US$4.57m from US$8.15m in the fourth quarter of 2018. Its fourth quarter operating revenue in 2019 was US$76.3m, down by 36% from US$119m a year earlier.


Turkey: Turkey exported a total of 23Mt of cement and clinker in 2019, a year-on-year increase of 68%, according to Dr Tamer Saka, the Chairman of the Board of Directors of the Turkish Cement Manufacturers’ Association (TÇMB). The value of the country’s cement and clinker exports was US$877m, a 44% increase. The discrepancy between volume and value growth rates indicates that Turkish exporters are sold at lower prices in 2019 than in 2018 on average. The nation’s cement is transported to more than 100 countries in 2019, with the most important recipients listed as the US, Israel, Ghana and Ivory Coast.”

Speaking upon the occasion of TÇMB’s General Assembly meeting on 17 February 2020, at which he was re-elected as Chairman, Dr Saka said, “In January 2020, cement exports increased by 81% to reach 1.1Mt and clinker exports grew by 29% to reach 1.3Mt. Our forecast is that the Turkish cement sector will grow by approximately 2% in domestic sales and 15% in exports this year.”

In the Board of Directors of Turkish Cement Manufacturers’ Association (TÇMB) where Dr. Tamer Saka acts as the Chairman of the Board, Adil Sani Konukoğlu became the Deputy Chairman and Nihat Özdemir, Ali Pastonoğlu, Gökhan Bozkurt, and Fatih Yücelik were appointed as Vice Chairmen.


Mexico: Cemex has announced a new Climate Action strategy, which outlines the company’s vision to advance towards a carbon-neutral economy and to address society’s increasing demands more efficiently. The company states that it believes climate change to be one of the biggest challenges of our time and support collective action.

It says that it has already reduced its net specific CO2 emissions by more than 22% compared to its 1990 baseline. It has now defined a more ambitious target of a 35% reduction of net specific CO2 emissions by 2030. This new goal is aligned with the Science-Based Targets methodology, a requirement that is necessary to meet the goals of the Paris Agreement. To complement this strategy with a longer-term vision, Cemex is also establishing a new ambition to deliver net-zero CO2 concrete by 2050.

“Climate change has been a priority for Cemex for many years,” said Fernando A Gonzalez, Cemex CEO. “Our efforts have brought significant progress to date, but we must do more. This is why we have defined a more ambitious strategy to reduce CO2 emissions by 2030 and to deliver net-zero CO2 concrete by 2050.”

To fulfil this strategy, Cemex has a laid out a CO2 roadmap to accelerate the roll-out of proven technologies across its facilities, including investing in energy efficiency, using alternative fuels, expanding the use of renewable energy, and increasing the substitution of clinker with alternative cementitious materials. It says its aim of net-zero CO2 concrete will require open innovation that requires strategic partnerships and cross-industry collaboration in the development of breakthrough technologies like CO2 capture, storage and utilisation, novel clinkers with low heat consumption, alternative decarbonated raw materials, carbonation of concrete waste for use as recycled aggregates, and the promotion of circular economy models that transform waste into fuel.


Vietnam: A Memorandum of Understanding (MoU) to build public private collaborations towards a circular economy for plastic waste management was signed in Hanoi on 19 February 2020. The agreement, the first of its kind in Vietnam, was signed by the Ministry of Natural Resources and Environment, Dow Chemical Company Vietnam, Siam Cement Group (SCG), and Unilever Vietnam International.

Deputy Minister of Natural Resources and Environment Vo Tuan Nhan said the average use of plastic per capita in Vietnam is not as high as that of developed countries in the world. However, with a population of nearly 100 million and an incomplete solid waste management infrastructure, plastic waste has been a big challenge for developing countries like Vietnam. It is likely that SCG will act as an off-taker of non-recyclable plastic residues, burning them as an alternative for fossil fuels in its cement kilns.


Australia: Boral has seen a 40% decrease in its profit during the first half of its fiscal year a period that ended on 31 December 2019. Its profit fell to US$90.4m for the period from US$151m a year earlier. Boral said that this was due to higher costs and weak housing activity in Australia and South Korea. It was also affected by the costs of transactions between its USG-Boral joint-venture partner USG and Knauf, which bought USG in 2019, along with its interest in USG-Boral.