Global Cement Newsletter

Issue: GCW474 / 23 September 2020

Headlines


Cemex last week. HeidelbergCement and LafargeHolcim this week. China yesterday. One can’t seem to move for major building materials companies (or their owners) issuing carbon neutral strategies at the moment. This week HeidelbergCement first launched its ‘Beyond 2020’ plan, a mixture of financial, portfolio and sustainability goals. Then, LafargeHolcim said that it had signed a pledge with Science-Based Targets (SBT) towards meeting intermediate targets by 2030. Last night, President Xi Jinping told the United Nations (UN) General Assembly in New York that China was aiming to hit peak emissions before 2030 and carbon neutrality by 2060.

The timing of these various sustainability goals are directly or indirectly linked to Climate Week NYC, a notable annual event on the climate change calendar that is taking place at the moment. So it’s a good time for large-scale industrial CO2 emitters, like building material producers, to have something positive to say.

China’s announcement steals the limelight given that the country produces around half of the world’s cement and holds a higher share of clinker production capacity. Western media has pointed out the geopolitical implications of Xi’s statement that was delivered shortly after a speech by US president Donald Trump, a notable climate change sceptic. Xi’s speech didn’t contain any details so it may simply have been an attempt to demonstrate global leadership. Yet if the Chinese government makes a go of it, the effect could be profound. Data from the Centre for International Climate and Environmental Research (CICERO) shows that the Chinese cement industry emitted an estimated 782Mt CO2 in 2018 compared to 1.50Gt CO2 from the cement industry globally and 37.1Gt CO2 from all human-related sources. In other words, the Chinese cement industry was responsible for 2% of all CO2 emissions in 2018. And this industry is mostly owned by a government that has just publicly declared a carbon neutral target.

In some ways the other announcements, by the western-based multinational building material companies, are even more radical since these producers are subject to market forces. These companies don’t have to do this. They also contain more specifics than Xi’s words so far.

HeidelbergCement says it has brought forward its CO2 emissions target for 2030 of 525kg CO2/t (specific net CO2 emissions per tonne of cementitious material) to 2025. That’s a 30% decrease from 752kg CO2/t in 1990. Its new goal for 2030 is below 500kg CO2/t. The main emission reduction methods it outlines include: increased use of alternative raw materials and fuels; increased use of secondary cementitious materials to reduce the clinker factor of cement; investment in plant efficiency and CO2 reduction at the plant level; and increased share of low-carbon concrete products.

Chart 1: HeidelbergCement’s path to net carbon zero concrete: Source: Leading the way to carbon neutrality, HeidelbergCement.

Chart 1: HeidelbergCement’s path to net carbon zero concrete: Source: Leading the way to carbon neutrality, HeidelbergCement.

Chart 1 above outlines HeidelbergCement’s thinking post-2030 with further reductions to CO2 emissions mainly achieved through circular economy methods and different carbon capture techniques. Two points to hold in mind here. One: note the current uncertainty about which route will provide the biggest share of the reduction. Two: this chart considers concrete, not cement.

LafargeHolcim’s announcement was that it has joined Science Based Targets initiative (SBTi) ‘Business Ambition for 1.5°C.’ It says that by doing so it has become the first global building materials company to sign the pledge with intermediate targets for 2030, validated by SBTi. This is slightly confusing given that other building materials companies have had different dealings with the SBT as it has worked towards its current scheme. Earlier this month, for example, we reported that Taiwan Cement had started an SBT project in 2019 and had some targets approved by the SBTi in June 2020. Grupo Cementos de Chihuahua (GCC) said it was joining SBTi at the start of 2020 and HeidelbergCement reported its SBTi approved targets in mid-2019. Finally, India-based Dalmia Cement is also on the SBTi ‘Business Ambition for 1.5°C’ list but it is a stretch to describe it as a ‘global’ company.

The core of LafargeHolcim’s statement is a further reduced target for CO2 intensity in cement of 475kg CO2/t by 2030. So far it’s decreased its CO2 intensity by around 23% to 516 kg CO2/t in 2019 from ~730kg CO2/t in 1990. There’s less looking ahead after 2030 compared to HeidelbergCement but the measures outlined until then include: more use of low-carbon and carbon-neutral products; increased use of alternative raw materials and fuels; doubling waste-derived fuels in production to reach 37%; greater use of calcined clay and developing novel cements with new binders; and operating the company’s first net zero CO2 cement production facility.

Many of the various networks and initiatives across the climate action community came together in June 2020 as part of the UN backed ‘Race To Zero Campaign,’ an attempt to align the disparate leading net zero initiatives ahead of the 26th United Nations Climate Change Conference (COP), due to take place in November 2021 in Glasgow, Scotland. This swirl of different net zero schemes also partly explains the confusion over the different organisations backing sustainability targets that companies can sign up to. So it’s a good thing to see closer collaboration here.

More cynical readers will have latched on to president Xi’s opportunity to show up President Trump in the climate change action stakes. They may also prefer news stories about activist investors prompting change at shareholder-owned companies as they increase their portfolios or stories like Morgan Stanley’s announcement this week that it has a new commitment to reach net-zero financed emissions by 2050. If the investment bank actually means it and other financiers follow suit then the fiscal incentives for net zero draw closer and the rest should follow. Moneys talks… and hopefully CO2 stays buried in the ground.

For sustainability comparisons among the top global cement producers see the October 2020 issue of Global Cement Magazine


Germany: The supervisory board of KHD has appointed Jianlong Shen as chairman of the management board (CEO) from 1 October 2020 until 30 September 2023. Current chairman Yizhen Zhu has resigned for personal reasons.


Bangladesh: Bashundhara Group has taken a loan of US$82.0, which it says will go towards the construction of a 4.0Mt/yr cement plant in eastern Bangladesh for a total investment of US$117m. The Daily Star newspaper has reported that the new plant will produce cement primarily for export to northeast India. Bashundhara Group’s two cement plants currently have the capacity to produce 5.1Mt/yr of its King Brand cement.

Bank Asia is the lead arranger for the syndicated loan, which it will provide along with Dhaka Bank, First Security Islami Bank, Pubali Bank, Social Islami Bank and United Commercial Bank. Full repayment is due in 2027.


Mexico: Elementia has announced the commissioning of a new 0.25Mt/yr grinding plant in Progreso, Yucatán State. The group says that the plant cost US$25m. Chief executive officer (CEO) Jaime Rocha Font said “Through this project, Elementia aims to participate in the growth of the Yucatán Peninsula and Southern Mexico.”


Kyrgyzstan: Aravan Cement Plant, part of the Southern Combine of Building Materials, is considering building a third production line with a capacity of 1.5Mt/yr. Plant director Kubanychbek Turdubaev made the announcement to Kyrgyzstan Newsline in a discussion reflecting on the completion of the unit’s second line in 2018, which increased total capacity to 1Mt/yr. The Russian-Kyrgyz Development Fund (RKDF) provided a loan for that project and the company intends to continue the relationship for the next one. China-based Tianjin Cement Industry Design and Research Institute (Sinoma TCDRI) and the Nanjing Long-W Energy Conservation Engineering were also involved. At present the plant sells half of its cement domestically and exports the rest.


Egypt: Egyptian Cement Group’s chief executive officer (CEO) Ahmed Abou Hashima says that the company plans to inaugurate its new cement factory in 2021. The plant is located in Sohag and has a total investment cost of US$285m, according to the Hapi Journal. The 2Mt/yr project was originally scheduled to open in the first half of 2020 but was delayed due to the coronavirus pandemic.


Turkey: DAL Teknik Makina says that Çimsa Çimento has engaged its services for a cyclone replacement at its 3.4Mt/yr Mersin cement plant in Mersin Province. The upgrade consists of “modification of the first and second-stage cyclones and riser ducts in the first clinker production line, downcomer ducts modification, dip tubes, pendulum flaps, meal pipes and splash boxes installation and refractory procurement and installation.”

The group said, “The modification project will allow electrical and a small amount of heat energy reduction by reducing pressure drop and improving separation efficiency of the cyclones.”


Nigeria: Lafarge Africa has made a donation of US$1.29m to the battle against Covid-19 in Nigeria. Business Day news has reported that the money will go towards “various initiatives aimed at fighting the pandemic.” Lafarge Africa previously gave the use of three of its facilities and donated personal protective equipment (PPE) for the isolation and treatment of Coronavrius patients in April 2020.


US: CRH subsidiary Ash Grove Cement says that it is undertaking an upgrade of its Port Manatee, Florida deep water cement terminal to install a high capacity FLSmidth Kovako unloader and modernise existing material transfer and electrical systems, as well as establishing self-loading capabilities. The aim of the upgrade is “to improve Ash Grove’s capacity to import cement clinker, slag and fly ash to meet the existing and future needs of customers in the Florida and South Georgia markets.

Regional president Monica Manolas said, “The underlying fundamentals in the Florida market are positive with good population and employment growth. The upgrade of the Port Manatee import terminal will expand our capabilities and strengthen our ability to meet growing demand in the region.”

The company says that construction will begin in early 2021 and the upgraded terminal will open in late 2021.


UK: Hanson Cement’s Ketton plant has been featured in a short film as part of ‘Triple Harvest’ by Fermynwoods Contemporary Art, an arts charity’s online exhibition of video films looking at public spaces in Northamptonshire. The programme explores the push and pull between nature and human presence and the effect that extracting resources from the landscape has upon those living within it. Amanda Loomes’ film ‘Combine’ mixes footage from the Ketton cement plant in Rutland in 2017 with archive extracts from ‘Double Harvest,’ ‘The Great Jib’ and ‘Iron Ore in Britain.’

Other works in the programme examine the experience of steel production, farming and the experience of refugees moving to the area. The project has been supported by Corby Borough Council Archives and funded by Arts Council England.

View the 'Triple Harvest' online exhibition here: http://fermynwoods.org/triple-harvest-films/


India: Credit rating agency Fitch Ratings has forecast a 15% year-on-year decline in domestic cement demand in the 2021 financial year, which ends on 30 March 2021 due to “weak property demand and a sluggish construction cycle.” Fitch Ratings gave the reasons for the decline as “low consumer confidence caused by business uncertainty and unemployment concerns,” causing “underlying appetites of financial institutions to lend to the construction sector to remain weak” in spite of the Reserve Bank of India’s temporary funding relief measures to the sector, which include “loan restructuring, moratoriums and relaxed lending limits.”

Fitch Ratings reported that steel demand will also fall by 10% in the 2021 financial year.


UK: Breedon Group says that it has “continued to deliver an encouraging trading performance since demand began to return in early May 2020 after the Covid-19 lockdown,” recording eight-month sales of Euro580m over the period that ended on 31 August 2020, down by 15% from Euro681 over the corresponding period of 2019. The group says that the figure includes the contributions of its newly acquired Cemex ready-mix and aggregates assets for August 2020.

As a result of this performance, the board reinstated its 2020 guidance, with underlying earnings before interest and taxation (EBIT) for the second half of 2020 anticipated to be in line with that in the second half of 2019. It added, “We continue to be reassured by the UK government's restated commitment to investment in the UK's infrastructure and to encouraging demand from the UK housing market, complemented by similar trends in the Republic of Ireland.”


Norway: The Norwegian government has introduced a bill to parliament to allow funding for industrial scale implementation of HeidelbergCement’s carbon capture and storage (CCS) project at its 1.2Mt/yr Brevik plant in Porsgrunn, Telemark. If enacted, the legislation will provide for the majority of required funding.

HeidelbergCement chair Dominik von Achten, “We are very pleased with the proposal of the Norwegian government. This allows us to continue the pioneering work that we started together with our partners in Brevik. The CCS project in Norway is an important cornerstone in our climate strategy. It will enable us to significantly reduce otherwise unavoidable greenhouse gas emissions related to the cement production process.”


US: Fortune has named Cemex amongst socially impactful companies on its 2020 Change the World list. It gave the reasons for the company’s inclusion as “its efforts in social impact business models. One such initiative was the rapid deployment of solutions to meet the current challenges caused by the Covid-19 pandemic. Working with the Mexican Institute of Social Security and in coordination with more than 20 multi-sectoral partners in Mexico, Cemex built mobile hospitals with highly durable precast antibacterial concrete modules in a record time of two weeks per medical facility. This effort in Mexico will be replicated in other countries where Cemex has operations to contribute to global challenges positively.”

Chief executive officer (CEO) Fernando González said, “Once again, we are honoured by Fortune’s recognition of our efforts to improve the well-being and quality of life of the population. By living our purpose of building a better future and working with our stakeholders, we seek to develop innovative solutions while promoting a sustainable and resilient future.”


Switzerland: LafargeHolcim has signed the Science-Based Targets initiative (SBTi) Business Ambition for 1.5°C pledge, which commits it to net-zero carbon dioxide (CO2) emissions by 2050. Additionally, the company has committed itself to a 20% reduction in its CO2 intensity between 2018 and 2030.

The company says that over the period it will: “accelerate the use of low-carbon and carbon-neutral products such as ECOPact and Susteno, recycle 100Mt of waste and by-products for energy and raw materials, scale up the use of calcined clay and develop novel cements with new binders, double waste-derived fuels in production to reach 37%, reach net CO2 emissions 475kg/t of cementitious material and open and operate its first net-zero CO2 cement plant.

Chief Executive Officer (CEO) Jan Jenisch said, “I believe in building a world that works for people and the planet. That’s why we are reinventing how the world builds today to make it greener with low-carbon and circular solutions. I am very excited to be working with SBTi, taking a rigorous science-based approach to shape our net zero roadmap and accelerating our efforts to substantially lower our CO2 footprint. I will not stop pushing the boundaries to lead the way in green construction.”


Iran: Data from the Islamic Republic of Iran Customs Administration (IRICA) shows that cement producers exported 5.85Mt of cement in the first five months of the local 2021 financial year, which began on 20 March 2020. The value of cement exports fell by 52% year-on-year to US$128m from US$266m, according to the Tehran Times newspaper. Iraq, Kuwait and Afghanistan were the top destination for the exports. Cement was also sent to India, Russia, Qatar, Kenya, Sri Lanka, Pakistan, Armenia, Turkmenistan, Kazakhstan, Azerbaijan, Bangladesh, China, and Oman.

In its 2020 financial year Iran exported a total of US$7.0bn-worth of building materials and produced 85Mt of cement against a domestic consumption of 65Mt.


South Africa: PPC says that it has extended existing short-term banking facilities with its two primary South African lenders until at least September 2021 and deferred scheduled interest and capital repayments on long-term facilities until March 2021. The company says that it will “enhance its security position through a security pool arrangement” and “reduce the levels of gearing in South Africa through a combination of a capital raise and asset sales.” It added, “Any capital raise is conditional on the implementation of the other project steps.”

PPC also signed a new working capital facility with its third South African lender, which it says “provides on-going liquidity until December 2021.”


Pakistan: Bestway Cement has recorded a loss of US$157,000 in the 2020 financial year, which ended on 30 June 2020, compared to a US$80.3m profit in the 2019 financial year. Its net turnover declined by 31% year-on-year to US$224m form US$324m.

Group chair Sir Mohammed Pervez said, “Despite various challenges, it is a matter of great satisfaction that management’s proactive approach and preparedness meant that the company demonstrated resilience and remains in good financial health.”


Germany: HeidelbergCement has presented a new business strategy, involving an accelerated climate action plan, called Beyond 2020. Under the Strategy, the company will aim to reduce its specific carbon dioxide (CO2) emissions by 10% to 525kg/t of cement by 2025 from 585kg/t in 2019. Its financial targets over the period are “a significant increase in earnings before interest, taxation, depreciation and amortisation (EBITDA) margin by 300 basis points and return on invested capital (ROIC) to clearly above 8%. The group says that it will target a leverage ratio between 1.5 and 2 times its result from current operations in 2020.

Chief executive officer (CEO) Dominik von Achten said, “We see climate change and digitalisation as the two central challenges of the future for society and for our company. As one of the world's leading building materials producers, we have the ambition and the innovative strength to actively shape this change in a pioneering role. At the same time, we see further optimisation potential in our plants and processes. Ecology and economy are not contradictory. Our new medium-term targets for 2025 illustrate this claim.”


Philippines: Germany-based Hazemag says that it has supplied two HRC 1230 roller crushers to Northern Cement’s 2.0Mt/yr Bulacan, Quezon cement plant. The supplier says that each crusher has a capacity of 800t/hr and will grind pozzolan, shale and silica in the plant’s additive crushing and handling line.


Mexico: Cemex subsidiary Cemex Ventures has signed an agreement with US-based carbon capture and storage (CCS) specialist Carbon Clean for the development of a CCS solution for under US$30/t of carbon dioxide (CO2) captured. Cemex cement plants will host the products during pilot testing. Cemex Ventures head Gonzalo Galindo said, “The ambitious target of making carbon capture technology accessible and more efficient would be an unprecedented achievement for the cement sector, opening a door of opportunities for further developments.”


US: LafargeHolcim says that Department of Energy institution National Energy Technology Laboratory has awarded US$1.5m of federal funding to the company’s CO2MENT Colorado project. The project aims to capture 2.0Mt/yr of carbon dioxide (CO2) from the company’s 1.9Mt/yr Portland cement plant in Florence, Colorado for sequestration underground by Occidental.

The group said, “With the successful completion of the initial scoping study in June 2020 and confirmation of Department Of Energy funding, the partnership has committed to the next project phase.”


US: The Portland Cement Association has announced the winners of the Energy Environment Awards 2020. Cementos Argos’ 1.1Mt/yr Harleyville, South Carolina cement plant won the Energy Efficiency Award “by reducing kiln specific heat consumption and increasing the utilisation of the new vertical cement mill,” while CRH subsidiary Ash Grove Cement’s 1.0Mt/yr Midlothian cement plant won the Environmental Performance Award for “operating a whole-tyre burning system utilising a first-in-the-US hot disk system supplied with whole tyres from a nearby tyre recycling company.” Other winners were GCC’s 0.9Mt/yr Odessa, Texas cement plant for Innovation, LafargeHolcim’s 2.2Mt/yr Holly Hill, South Carolina plant for Land Stewardship, Titan Cement's Roanoke Cement Troutville plant for Outreach and HeidelbergCement subsidiary Lehigh Hanson’s 3.2Mt/yr Union Bridge, Maryland plant for Overall Environmental Excellence.

PCA president and chief executive officer (CEO) Michael Ireland said, “America’s cement manufacturers continue to focus on researching and developing new and innovative ways to reduce environmental footprint. The companies receiving these awards are great examples of our industry’s commitment to sustainability and energy efficiency.”


Vietnam: The Vietnam National Cement Corporation (VICEM) says that total cement and clinker exports in the first eight months of 2020 were 23.9Mt, up by 16% year-on-year from 20.7Mt in the corresponding period of 2019. The total value of exports rose by 1.2% to US$882m from US$872m, corresponding to a price drop of 12% to US$36.9/t from US$42.1/t.

Saigon Online News has reported that the main source of demand growth is China’s burgeoning post-coronavirus lockdown construction market, where a 35% year-on-year increase in cement consumption in July 2020 has enabled Vietnamese producers and traders to undercut the cement prices of the newly streamlined domestic industry. China received 12.6Mt (53%) of Vietnam’s cement and clinker exports, followed by the Philippines with 4.5Mt (19%) and Bangladesh with 1.7Mt (7.1%).


Zimbabwe: The National Social Security Authority (NSSA) has lifted a prohibition order which it issued to Livetouch Investments subsidiary Diamond Cement after the death of a worker on 6 March 2020 at the company’s 0.4Mt/yr Redcliff grinding plant. The incident brought to light “sub-standard safety and security arrangements.” The Chinese-owned company had also failed to register any employees under the NSSA’s Workers’ Compensation Insurance Fund (WCIF) and the National Pension Scheme (NPS).

The New Zimbabwe newspaper has reported that the NSSA lifted the prohibition order in mid-September 2020 after the company was found to have complied with its registration and safety requirements. NSSA communications officer Tendai Mutseyekwa said, “After a joint visit by the NSSA’s Occupational Safety and Health Inspectorate and the Compliance Inspectorate, the company registered with the NSSA schemes. They subsequently settled their subscriptions for the two NSSA schemes from the effective date of 4 April 2017, when the company started operating.”

A police investigation into the fatality continues.


Japan: Sumitomo Osaka Cement has started using Michibiki, a Japanese satellite positioning system, as part of a demonstration project by its limestone mining operations to improve efficiency. At present the company uses so-called ‘internet of things’ technology such as yard inventory management by drone and rough stone quality management by heavy equipment, including loaders and dump trucks, equipped with Global Positioning System (GPS) tablet terminals. The group operates eight limestone mines in Japan and it mines 20Mt/yr.


Egypt: Suez Cement subsidiary Ready Mix Beton says that it has secured a contract for the supply of concrete for the construction of two new monorail lines projects. Due to begin in late-2020, the contract covers the construction of a monorail line between Cairo and the New Administrative Capital and another between 6 October City and Giza. The company says that it will use Suez Cement’s CEM III/A ground granulated blast furnace slag (GGBFS) cement to produce concrete for the 96km monorail network.

Suez Cement said, “CEM III/A cement is highly recommended when building thick concrete supports and massive structures because its hydration temperature of less than 210kJ/kg reduces cracking compared with Ordinary Portland Cement (OPC) when the applied concrete is subjected to dual exposure to sulphates and chloride ions, as happens in coastal areas.”


US: Mississippi Lime has announced its acquisition of the Transload Terminal in Edwardsville, Kansas from LG Everist. President and chief executive officer (CEO) William Ayers said, “We are pleased with this acquisition and looking forward to further integrating this operation into our business. Mississippi Lime has been a long-term supplier of calcium-based products in this region, serving construction projects as well as many other industries. This acquisition serves to strengthen that commitment.”