Global Cement Newsletter

Issue: GCW475 / 30 September 2020

Headlines


The one thing that the Egyptian cement industry really didn’t need this year was any more jolts. Since the gargantuan 13Mt/yr government/army-run El-Arish Cement plant at Beni Suef opened in 2018, the sector has been stuck in production overcapacity and struggling to catch up. Yet, like the rest of us, they got one nasty surprise in the shape of the coronavirus pandemic. This has added stress to the whole situation and we can see some of this in various news stories that Global Cement has covered recently.

HeidelbergCement’s local subsidiary Suez Cement has been busy in recent days making changes to its corporate structure in the form of a tender offer to buy a 100% stake in Egyptian Tourah Portland Cement. Production stopped at Tourah Cement in June 2019 due to market conditions. This follows yet more lacklustre financial results earlier in September 2020 that show the pain that it and other cement producers have been enduring. Suez Cement’s loss nearly doubled year-on-year to Euro38m for the first half of 2020 and its sales fell by 18% to Euro145m. This was blamed on production overcapacity and a coronavirus-related lockdown. Other producers, both multinational and local, have experienced a similar situation.

Suez Cement also announced in mid-September 2020 that its Ready Mix Beton subsidiary had secured a contract for the supply of concrete for the construction of two new monorail lines connecting the country’s new city projects. Unfortunately, as Suez Cement’s chief executive officer (CEO) Jose Maria Magrina explained in an interview to Daily Egypt News in July 2020, “the New Administrative Capital (NAC) is a very big project, but in the end it has not offset the decrease in informal buildings that have been stopped.” Despite Suez Cement being a major supplier and the proximity of its plants to the site, overall sales have gone down.

Graph 1: Cement consumption in Egypt. Source: Cement Division of the Building Materials Chamber of the Federation of Egyptian Industries.

Graph 1: Cement consumption in Egypt. Source: Cement Division of the Building Materials Chamber of the Federation of Egyptian Industries.

Magrina’s gloom is shared by other industry figures with a general assumption that perhaps up to a quarter of the country’s 20-something cement plants may have to close in the next year or so. Coronavirus has only deepened this view as the government’s response was to cease issuing construction licences for private buildings in Greater Cairo, governorate capitals and major cities from late May 2020 for six months. Solomon Baumgartner Aviles, the CEO of Lafarge Egypt, said in July 2020 that local cement demand fell by 6.5% year-on-year in the first half of 2020. He added that coronavirus had ‘strongly’ impacted the building materials sector with a big effect on the individual market, and with the licence halting exacerbating the situation further. As data from the Cement Division of the Building Materials Chamber of the Federation of Egyptian Industries shows above in Graph 1 demand peaked at 56.5Mt in 2016 and has since declined to a low of 48Mt in 2019. By month the sector recovered in January and February 2020 respectively with growing cement sales on a year-on-year basis but this has since declined with losses in most months subsequently. This is set against a production capacity of 81.2Mt/yr in 2018, giving an excess of 30Mt/yr and a utilisation rate of 59%.

One story that was mentioned in the local press this week is that Arabian Cement Company (ACC) had started negotiations with the European Bank for Reconstruction and Development and the Commercial International Bank – Egypt to secure new loans worth over US$20m. The ACC has denied this publicly in a statement to the Egyptian Exchange but it’s a sign of the trouble that is expected in the sector given the current circumstances.

All of this leaves cement producers scrabbling to hold on until the market picks up again, takes action in other ways or the government intervenes. Some analysts expect the market to stabilise in the medium to longer term as work on large infrastructure projects like the NAC mounts. Suez Cement’s Jose Maria Magrina has said that, “the government must, within the law, dictate norms that will rationalise the market, while making sure that companies survive since current prices do not cover the costs of production.” Local press has since reported that the Ministry of Trade and Industry has started trying to help cement companies, including measures such as limiting production to balance supply and demand, and decrease the surplus in the market. Another option is a coordinated export subsidy programme in coordination with the government but nothing appears to have happened yet after several years of discussion. Unhelpfully for any export aspirations, Egypt finds itself in a very cement export-heavy part of the world, wedged as it is between North Africa, Turkey and Southern Europe.

Hope springs eternal though as, almost unbelievably, Egyptian Cement Group’s CEO Ahmed Abou Hashima surfaced last week to remind everyone that his company still plans to inaugurate its new integrated cement plant in 2021. The project to build a new 2Mt/yr unit in Sohag has been brewing since 2017 when it was announced with China-based Sinoma on board as the engineering partner. It was originally scheduled to open in the first half of 2020 but it was delayed by coronavirus. Let’s hope the picture looks better when it finally opens.


Ireland: Senan Murphy intends to retire as Group Finance Director of CRH in 2021. He will remain in post until the group’s board successor finds a successor to ensure a smooth transition. Murphy has been in the post since mid-2015.


Oman: Raysut Cement has appointed Salim Ahmed Alawi Al-Ibrahim as Acting Deputy Group chief executive officer (CEO). He will support Raysut’s Group CEO Joey Ghose in the role. Salim has been with Raysut Group since 2014 and has been described as ‘contributing significantly’ to the company in the sales department.

Mohammed Ahmed Aideed has also been promoted as the Acting General Manager of Raysut Cement. Mohammed holds over a decade of experience in sales and marketing and has been working with Raysut Cement since 2009. He started his career as a sales representative and subsequently moved up to managerial positions. He has also held senior positions such as Head of Marketing and Business Intelligence, Acting CEO and Head of Business Support.


Spain: LafargeHolcim España has appointed Oswaldo Pereda as the director of its integrated Villaluenga de la Sagra cement plant near Toledo. He was previously the director of the plant from 2010 to 2012. He succeeds Maruxa Suárez, who will work at the company’s Carboneras plant in Almería.

Pereda is a graduate in mechanical engineering from the Simón Bolívar University in Venezuela. He first worked for Venezolana de Cementos in 1987 before moving to Lafarge Venezuela in 1995. He has since worked in production and operation roles for Lafarge, Cementos Polpaico and LafargeHolcim in Spain, Brazil and Chile.


Canada: Torxx Kinetic Pulverizer has announced the death of vice president of sales Nicolas Belanger. He died unexpectedly a week before his 50th birthday. He was the former co-owner of Machinex Group, where he worked for over 20 years. He was also the co-founder and president of Waste Robotics.

“Our hearts are heavy, and we’re stunned by the untimely and devastating passing of our colleague, friend and industry icon,” said Peter Everson, the chairman of Torxx Kinetic Pulverizer. “Nicolas had been instrumental in moving our company - and the industry - forward over the past 25 years. He was a talented engineer and strong business leader, whose industry knowledge and experience were second to none. He is greatly missed, and we share the grief of his family, friends and colleagues.”


Togo: Cimenterie de Côte Ouest-Africaine (CimCo) says that it has hired Germany-based Intercem Engineering and Gebr. Pfeiffer for the supply and installation of a 2.5Mt/yr-capacity integrated cement plant in Lomé, Maritime Region. Togo First News has reported that the company has secured a US$35.8m loan from Banque Ouest Africaine de Développement (BOAD) towards construction of the US$179m plant.

CimCo said, “The targeted goal is to contribute to the satisfaction of cement demand in Togo and the region by taking advantage of the geographic location of the port of Lomé, as well as to contribute to the country's economic growth by boosting the competitiveness of the industrial sector along with performances of the infrastructure sector.”


Democratic Republic of Congo: The government of Tanganyika Province has announced the start of construction of a 2.0Mt/yr-capacity integrated cement plant in Kabimba. The Financiel Afric newspaper has reported that the plant will occupy the site of the former Kabimba cement plant, which was mothballed in 2016.

Governor Zoé Kabila Mwanza Mbala said, “The revival of the Kabimba cement plant will revitalize the social sector and restore the economic fabric throughout Tanganyika Province.


Uzbekistan: Karauzak Cement has signed a contract for China-based Tianjin Cement Industry Design and Research Institute (Sinoma TCDRI) to supply a 1.6Mt/yr clinker plant for US$273m. The scope of supply includes a full production line from raw material crushing to shipping finished cement. The project will be located in Nukus District in Karakalpakstan. Commissioning is expected within about two years after advance payment is received.


Pakistan: Maple Leaf Cement plans to expand the waste heat recovery (WHR) unit to 25MW at its integrated Iskanderabad plant. The project is scheduled for completion in September 2021. It has a projected budget of around US$11m.


Philippines: The Department of Trade and Industry says that it is considering banning Bureau of Philippines Standards-certified companies’ cement from bearing the label ‘Made in the Philippines’ where it was produced in another country. The Cement Manufacturers Association of the Philippines has complained that the labels constitute false advertising.

Trade Secretary Ramon Lopez said that any regulative action would follow a thorough review, but “offhand, if products are not really manufactured here, they cannot be labelled as ‘Made in the Philippines.’”


Japan: Sumitomo Osaka Cement says that independent tests have confirmed that the radioactivity levels of cement produced at its 0.9Mt/yr Tochigi plant in Sano, Tochigi Prefecture are “below the lowest detectable limit,” meaning that the product is safe. The company said, “We hope that you will continue to use our products with peace of mind.”

Production at the plant was disrupted in 2011 when it was discovered that it was co-processing sewage sludge sourced from near the Fukushima Daiichi Nuclear Power Plant in Ōkuma, Fukushima Prefecture. The power plant suffered a nuclear meltdown following the Tōhoku earthquake and tsunami in 2011 that led to widespread radioactive fallout.


Mexico: The board of directors of Cemento Cruz Azul has asserted legal control of its Cementos y Concretos Nacionales (CYCNA) subsidiary cement plants in Puebla and Aguascalientes following accusations of ‘looting’ by partners in the company. In a video statement José Antonio Marín, president of the board of directors, said that the move would give the producer greater control over its operations since all cement would be registered in an internal audit programme, according to the Milenio newspaper. He alleged that some partners of the company had sold cement manufactured at the units independently.

José Antonio Cárdenas has been appointed manager of the CYCNA plants to replace Benito Rodríguez Fayad. Fayad allegedly had links to Cruz Azul’s former director Guillermo ‘Billy’ Álvarez, a former director of the company who is currently being investigated by law enforcement for links to organised crime and money laundering.


Mexico: Cemex says that Carbon Trust has validated its roadmap to decarbonise global operations in line with the Sectoral Decarbonisation Approach (SDA) 2-degree scenario (2DS) developed by the International Energy Agency (IEA). The validated roadmap is intended to help the company to achieve a 35% reduction of net carbon emissions by 2030. The findings validate Cemex's roadmap for reducing Scope 1 and 2 emissions.

The Carbon Trust has assessed the technical feasibility of the plan based on guidelines defined by international institutions including the International Energy Agency, the Cement Sustainability Initiative, and the European Climate Research Alliance. The CO2 reduction methods include the use of alternative fuels, using decarbonated raw materials, renewable power projects, and novel cements, among others. The validation also included a review of Cemex's commitment to implement the scheme based on governance mechanisms and business planning.

“The magnitude and complexity of change required by a company such as Cemex to decarbonise its global operations is significant. Our assessment provides the organization’s management, investors and stakeholders with an independent validation that its commitments are backed up by sound assumptions and planning,” said Aleyn Smith-Gillespie, Associate Director Advisory at the Carbon Trust.


Austria: Waste processing specialist Lindner has celebrated the groundbreaking ceremony for its new headquarters. The company says that the 45,000m2 site will also encompass a new “state-of-the-art waste processing technology production plant.” It says that the facility will enable it to better serve the industries that depend on its expertise, including the cement sector. “That’s why it is so important to us to constantly expand this know-how, develop new solutions and systematically prepare and pass on the knowledge gained,” it added.


Germany: HeidelbergCement says that it has supplied concrete for the construction of an 80m2 two-storey detached house in Beckum, North Rhine-Westphalia. The concrete contains i.tech 3D, a ground sulphoaluminate clinker developed by HeidelbergCement subsidiary Italcementi for use as an additive in concrete for 3D printing. Engineering & Innovation head Jennifer Scheydt said, “The development of a cement-bound material for 3D printing is a major challenge. It should be easy to pump and extrude. It must also quickly develop sufficient load-bearing capacity so that the lower layers do not give out under the load of the upper layers. At the same time, the bond between the layers must be ensured.”

The property, the first of its kind, will consist of three-shelled insulation-filled walls when completed in late 2020.


India: Shree Cement has announced that it plans to establish a US$135m clinker production unit in the state of Chhattisgarh. The company has said that the plant will become operational in mid-2022.


Portugal: Secil Group has engaged Italy-based CTP Team to supply and install a 29MW waste heat recovery (WHR) plant at its 2.0Mt/yr Secil-Outão cement plant in Setúbal, Lisboa Region. Dry Cargo International News has reported that the WHR plant will include a 7.2MW Turboden turbine. CTP Team says that, when operational in mid-2022, the plant will cover 30% of the Secil-Outão cement plant’s electricity consumption, reducing its CO2 emissions by 14,000t/yr.

CTP Team said, “Thanks to the specific advantages of organic cycles and to the total absence of water treatments in the process, the operating expenditure (OPEX) is 75% lower than for an equivalent steam rankine-based WHR cycle.


Egypt: The board of HeidelbergCement subsidiary Suez Cement has approved the launch of a tender offer for the company to acquire a 100% stake in Egyptian Tourah Portland Cement. Reuters News has reported the value of the deal as US$32.6m.


Pakistan: Asiamoney has named Lucky Cement as most outstanding in the cement producers category of Pakistan’s Most Outstanding Company 2020 following a national poll. The Pakistan Observer newspaper has reported that “the aim of this poll is to identify and give recognition to Asia's most outstanding listed companies in each market and sector.”


UK: Welding Alloys says that it has carried out maintenance on a vertical roller mill at HeidelbergCement subsidiary Hanson’s 1.0Mt/yr Purfleet slag plant in Essex, repairing the mill’s Loesche 46 2+2S grinding table and rollers. The company said that the mill, which had ground 3500t of granulated blast furnace slag (GBFS), was “in urgent need of refurbishment.” Following a wear audit, Welding Alloys took the grinding components back to the profile template using its Integra Wire Mill products.

The group said that “both companies overcame the challenges of completing the project within the limited shutdown period while complying with the Covid-19 lockdown measures.”


US: LafargeHolcim subsidiary Holcim US has rebranded its blended cement and supplementary cementitious materials range as Envirocore. Envirocore products include OneCem Portland limestone cement, MaxCem blended cement and NewCem slag cement.

The company noted that the partial substitution of cement with supplementary cementitious materials “not only results in more durable, high-performance concrete, but also lowers energy consumption and greenhouse gas emissions. CO2 emissions are reduced by approximately 800,000kg/t of clinker replaced.” It also called on consumers to “adopt solutions that lower carbon emissions.”


Thailand: King Monkut's University of Technology Thonburi has conducted a cradle-to-grave analysis of the environmental impacts of 1t of cement from neighbouring Myanmar. The study concluded that the cement’s production had major environmental impacts in terms of “climate change, photochemical oxidant formation, fine particular matter formation, terrestrial acidification, fossil resource scarcity, damage to ecosystems and damage to human health. Resultantly, researchers concluded that “some improvement measures should be considered, which include upgrading the cement manufacturing process, increasing the share of clinker substitutes, utilising alternative fuels, optimising energy efficiency and implementing energy recovery technologies."


Pakistan: Lucky Cement has partnered with Hunar Foundation to launch scholarships for dedicated vocational training programmes for eligible young people in Lakki Marwat District, Khyber Pakthunkhwa Province. The Daily Messenger has reported that the company said that the scheme aims to “empower the youth of Pakistan through skill development.”


Pakistan: The Competition Commission of Pakistan (CCP) has conducted a search of the All Pakistan Cement Manufacturers Association (APCMA) headquarters in Lahore, Punjab Province as part of it investigation into alleged anticompetitiveness by cement producers. The Daily Frontier Star has reported that the aim of the search was “to gather evidence of possible communication, arrangement, agreement or understanding between cement producers pertaining to the alleged violation of the provisions of the Competition Act.” The CCP launched the investigation in May 2020 following a request from the Ministry of Industries and Production (MoIP).


India: Dalmia Bharat subsidiary Dalmia Cement has joined five leading companies of other sectors in signing the Near-Zero pledge, an industry charter targeting “near-zero carbon dioxide (CO2) emissions by 2050” at the virtual Climate Week NYC. The Times of India newspaper has reported that the pledge consists of a commitment to “undertake carbon sequestration efforts, if needed, and set reporting indicators and targets to enable tracking of corporate goals on the decarbonisation pathway.”

Dalmia Cement urged national governments to “positively enforce targets for efficiency, emissions reduction and circular economy to make carbon neutrality by 2050 a reality.”


India: Dalmia Bharat subsidiary Dalmia Cement has announced the launch of Dalmia Masters, an online platform for builders using Dalmia products. The company says that the platform “will offer opportunities for skill advancement, best-in-class construction practice sharing and a wide range of rewards.”

Chief operating officer (COO) Ujjwal Batria said, “As a leading cement brand, our product’s validation and recommendation by the contractor and technocrat community plays a large role in our success. Reaching out to thousands of contractors and masons, Dalmia Masters will help redefine what construction professionals can expect from cement brands.”

Executive director and head of marketing Pramesh Arya added, “Dalmia Cement’s outreach to construction professionals has always been pioneering. Dalmia Masters is a robust performance-linked loyalty programme, which will also expand our Future Today promise. The programme respects and celebrates the contractor community’s skill and vision, and will further strengthen the relationship we have built with it.”


Bangladesh: Metrocem Cement says that it has contracted with US-based software specialist NURTech to “develop a unique AOS and IOS-based integrated software for Metrocem Cement. This will ensure smooth operation and alleviate complications, which in turn will benefit employee as well as customers.” Managing director Khandakar Rifat said that he looked forward to the fruits of this expansion of Metrocem Cement’s existing relationship with the supplier.


Uzbekistan: Producers sold 15.0Mt of cement in the first eight months of 2020, up by 105% year-on-year from 7.33Mt over the corresponding period of 2019. Sales fell by 44% in value to US$67.6m from US$120m due to deflated demand, according to Trend News.

Uzpromstroymaterialy head Botir Khuzhabekov said, “In 2019 cement production amounted to 11.0Mt. By the end of 2020, it is planned to bring production to 20.0Mt of cement of grades 400, 500, and 600.”


India: A public hearing over Birla Corporation subsidiary Reliance Cement’s planned 3.9Mt/yr Mukutban cement plant in Yavatmal district, Maharashtra has raised objections against the company’s quarry plans. The Times of India newspaper has reported that the plant is due to source its limestone from a 7.6km2 quarry in Korpana, Chandrapur district. Critics say that the company has failed to complete a wildlife management plan, and that the site of the mine lies on a 120km wildlife corridor between the Tipeshwar Wildlife Sanctuary and the Kawal Wildlife Sanctuary in neighbouring Telangana. Reliance Cement said that an environmental report had shown the presence of no scheduled species within 10km of the proposed site.

Maharashtra state wildlife board member and honorary wildlife warden Bandu Dhore said, “Although there is no forest area under the proposed mining site, it acts as a regular corridor as there is forest on either side within 1km. We are pursuing the matter with the forest department and would press it with higher officials to ensure that the precious corridor remains undisturbed. Protection of corridors is a must for conservation of wildlife and hence we are going to raise the demand of re-survey of the project site from the wildlife point of view.”


Kazakhstan: Steppe Cement has recorded a consolidated profit after tax of US$4.1m in the first half of 2020, down by 24% year-on-year from US$3.1m in the first half of 2019. Sales volumes declined by 2% to 765,000t from 780,000t. The company says that it maintained its 2019 prices until the end of the first quarter of 2020, when reduced demand due to the coronavirus lockdown caused a fall. Production costs declined by 4% over the entire period.


UK: CRH subsidiary Tarmac has announced its renewal of multiple contracts for transportation of its products by rail, effective until 2025. The contracts - with Colas Rail UK, GB Rail Freight, Freightliner and DB Cargo - cover the shipment of 9.0Mt/yr of cement and building products.

Head of rail Chris Swan said, “The renewal of these contracts highlights both our on-going commitment to supporting the delivery of a lower-carbon built environment and the continued enhancement of our rail freight capabilities. Effective use of the rail freight network is key in supporting the UK’s transition to a net-zero society and supporting a green recovery as we emerge from the Covid-19 crisis. Collaborative working has a vital role to play in this and we are looking forward to working with our freight operating partners as the industry focuses on increasing the volumes of material moved by rail, as well as enhancing efficiencies and service.”


China: Conch Group has announced the signing of a partnership agreement with Shanghai Jiaotong University for the establishment of a technology centre called the Intelligent Equipment Joint Research and Development Centre.

General manager He Chengfa said, “This centre established in cooperation with Shanghai Jiao Tong University is an important carrier for the group's innovation and development. Shanghai Jiao Tong University is a first-class domestic and internationally renowned comprehensive university with strong scientific research capabilities and a complete talent training system. It is hoped that Shanghai Jiaotong University will educate Conch Group's future scientific research team, enhance Conch Group's innovation level and provide assistance for the Conch Group to become a world-class enterprise with global competitiveness.”


Spain: LafargeHolcim subsidiary Holcim España has announced the launch of the Carbon Challenge, a think tank to promote CO2 emissions research and reduction. The company says that the plan involves “the formation of various working groups in areas such as reducing process emissions, reducing the emission factor for fuels and changing cement content of concrete and investigating alternative additives.” This is part of its Ecological Transition strategy, in addition to its Euro20m carbon footprint reduction investments announced on 31 December 2019.

Sustainability and Health director Raúl Pérez said, “We have high expectations for this project. It is a laboratory of ideas that will allow us to add and share knowledge that materialises in concrete initiatives applied to our processes, products and solutions, all with a common denominator: anticipating the new European decarbonisation scenario with an established plan to be carbon neutral by 2050.”