Global Cement Newsletter

Issue: GCW488 / 13 January 2021

Headlines


LafargeHolcim took what appeared to be a surprising decision this week when it announced it was buying roofing and building envelope producer Firestone Building Products (FSBP). The deal raises eyebrows because it seems to be a departure from the building material producer’s previous dedication to its three major pillars: cement, aggregates and ready-mixed concrete. Yet, it follows the logic of sticking to safer markets both geographically and in terms of sustainability.

First some background. Originally, Global Cement was following the auction for FSBP via its sister publication Global Insulation. Reporting from Bloomberg in December 2020 focused on more obvious bidders such as Ireland-based insulation producer Kingspan and roofing products producer Standard Industries. However, Kingspan has been struggling publicly with fallout from the Grenfell Tower fire inquiry in the UK. Despite not formally supplying any of its products for the tower block in London, it has become embroiled in the allegations of a general culture of cheating safety tests for foam board-based insulation products. At the almost the same time that it dropped out of the FSBP bidding, its chief executive officer (CEO) Gene Murtagh apologised for ‘process shortcomings’ that had been highlighted by the ongoing inquiry. Make of this what you will. No word on why Standard Industries left proceedings but it also seems to part of a consortium trying to take over US-based chemical producer WR Grace. All of this is relevant because, from publicly-available sources, LafargeHolcim appeared to emerge out of nowhere to snaffle up FSBP. However, it seems ludicrous that a company with a revenue of around Euro25bn in 2019 could simply pull something like Euro2.8bn out of its pocket at the last minute. It’s likely it was quietly in the bidding process the whole time.

Back in the early 2010s Lafarge was busy selling off its major ‘non-core’ assets like its gypsum business in the wake of picking up debts from acquisitions like cement-producer Orascom in the Middle East. This then turned into a string of divestments following the merger with Holcim to try and shore up the business along with a general pivot towards concrete as the key end-product as sustainability concerns gathered pace. Producing cement remains a major part of LafargeHolcim’s business but a focus on the whole lifecycle of concrete is vital as a hedge against the high process emissions associated with making clinker. Cement factories run the risk of becoming so-called stranded assets depending on future government regulations.

In its acquisition statement LafargeHolcim played up the sustainability credentials of buying FSBP. It noted that up to 60% of buildings’ energy is lost through roofs and that FSBP’s products help to reduce this. Then it made the link that FSBP’s technologies and products complement LafargeHolcim’s sustainable building solutions like its ECOPact green concrete and its EcoLabel sustainable product range. Later, when LafargeHolcim CEO Jan Jenisch spoke to US broadcaster CNBC he described the move as a ‘perfect fit’ for his company’s goal, “to be the most sustainable and most innovative building materials supplier in the future.” The geographical point of the acquisition hasn’t been dwelt on as much as sustainability but no doubt buying a business based in the US with revenue of US$1.8bn is seen as being far safer than buying, say, a similar concern in East Asia.

Investing in a business that sells products that reduce energy loss in the building envelope follows the trend of the moving sustainability-related risk along the supply chain from cement to concrete and beyond. Ultimately consumers will have to pick up the true carbon price of their buildings, but if building materials producers buy more of the envelope they can spread this cost more thinly and hopefully build up the market in the process. One can also imagine it fitting with the mindset of CEO Jan Jenisch, the former boss of Sika, a company that sells speciality chemicals across a wide range of markets. The real test here is whether LafargeHolcim will buy more companies in the wider building materials sector or if other heavy building materials producers will copy them. If so then the days of heavy building material producers sticking to the three pillars of cement, aggregates and concrete may be numbered.


Romania: Holcim Romania has appointed Bogdan Dobre as its chief executive officer (CEO). He suceeds Horia Adrian, who has held the post for the last three years.

Dobre started working for Holcim Romania in 2000. Originally he worked as Regional Cement Sales Manager before later becoming National Cement Sales Manager and eventually Commercial Director for the company in 2013 until 2020. He graduated from the Organic Chemistry Faculty within Bucharest University and holds an Executive Master of Business Administration (EMBA) from Tiffin University, US.


Saudi Arabia: Southern Province Cement has appointed Hamad bin Sulaiman Al-Bazai as the chairman of its board of directors. Other appointments include Muhammad bin Nasser Al Nabit as vice-chairman of the board and Saud bin Safar Al Burgan as secretary.


UK: The Mineral Products Association (MPA) has appointed Jeremy Greenwood as the Chair of UK Concrete. He will work with Chris Leese, the Director of UK Concrete, to coordinate the work of the Concrete Centre, MPA Cement, British Ready-mixed Concrete Association (BRMCA) and British Precast on the roadmap the sector is implementing to go ‘Beyond Net Zero by 2050.’ Greenwood previously worked for Tarmac as its managing director, having been at the company since 1988.


Germany: INFORM has appointed four new co-chief executive officers (CEO) alongside Adrian Weiler, the company’s CEO since 1986, who will continue in his leadership role. Andreas Meyer, Matthias Berlit, Peter Frerichs and Jörg Herbers all assumed their new roles at the start of 2021. The four new executives hold over 75 years in leading positions at the company. Their appointments are intended to hasten the company’s development.

INFORM is a provider of artificial intelligence (AI) driven optimisation software for digital decision making and agile operations that was founded in 1969. In the construction materials industry is has a particular focus on improving supply chains and logistics. The company has its is headquarters in Aachen, Germany with a North American regional office in Atlanta, Georgia in the US and an Australian office in Sydney.


US: Kevin R Peterson is to retire from Vortex Global in late January 2021. During his 25 years with Vortex, he has held many key positions including Director of Marketing, Special Projects Director, Regional Sales Manager and Director of Business Development.

Peterson’s involvement in the dry bulk industry includes membership in the International Association of Operative Millers, International Milling Education Foundation, the Society for Mining, Metallurgy & Exploration, and the Industrial Minerals Association of North America. He was elected an Emeritus Member of the International Association of Operative Millers, was a past Advisory Board Member of the Powder & Bulk Solids Expo, and served on the board of directors of the Industrial Minerals Association of North America. Peterson received the Outstanding Service Award from Kansas State University’s Department of Grain Science and Industry. He was also a contributor to the Dust Control Handbook for Industrial Minerals Mining and Processing published by the National Institute for Occupational Safety and Health (NIOSH).


India: Cement producers in southern India have joined together to form the South Indian Cement Manufacturers’ Association (SICMA). United News of India has reported that the association aims to serve as an intermediary between producers and federal and state governments. In this, it says that it will help to realise Prime Minister Narendra Modi’s vision of ‘affordable housing for all’ and ‘infrastructure for future.’ The India Cements vice-chair and managing director Narayanaswami Srinivasan will head the new organisation, supported by Barathi Cement’s director Ravinder Reddy as vice-president and Penna Cement’s director Krishna Srivastava as secretary.

SICMA alleges that the construction industry has exaggerated the effects of rising cement prices on its costs. In so doing, the association says, it has deprived the public of the housing the government had planned. It added that, with around 30% of India’s limestone reserves situated in Andhra Pradesh, Karnataka and Telangana alone, the South has the potential to become a cement hub for development across India, as well as for export.


India: Credit ratings agency ICRA expects cement demand to rise by 20% year-on-year in the 2022 Indian financial year, which starts in April 2021, allowing the local market to return to volumes previously seen before the coronavirus pandemic. In its latest report the credit ratings agency predicts that growth will be supported by rural demand, including affordable housing, and recovery in infrastructure segment, according to the Press Trust of India. Cement production capacity is forecast to increase by up to 22Mt compared to 17Mt in the previous year. Most of this additional capacity is expected to be in the eastern region. Capacity utilisation rates should recover to 64% from 56%.


Switzerland: Dürr is supplying a regenerative thermal oxidation system (RTO) to Jura Cement Fabriken integrated plant in Wildegg as the main stage in its air pollution control system. The upgrade is intended to enable the cement producer to comply with anticipated lower gas emission limits for carbon monoxide, hydrocarbons, and ammonia (NH3). The supplier says its solution combines Dürr’s Ecopure RTO multiple-chamber principle with an optimisation of the existing process technology in the calciner. It is scheduled to start operation in 2022.

Jura Cement operates two integrated plants in Switzerland. It is part of the Switzerland-based Jura Materials Group, which has been part of the Ireland-based CRH since 2000.


France: Vicat has joined US-based Schlumberger New Energy, clean energy specialist CEA, Vinci Construction and the Occitan Regional Agency of Energy and Climate (AREC) in a hydrogen production technology joint venture called Genvia. The partnership will establish a ‘gigafactory’ at which to develop high-temperature reversible solid oxide electrolyser technology. The gigafactory will be situated in Béziers, Occitan. Deployment will take place via CEA’s Grenoble, Auvergne-Rhône-Alpes site.

“We are very pleased to be working alongside such experienced and strong partners as we strive to develop technologies that enable decarbonisation,” said François Jacq, chairman of the CEA. “Together, building on a set of technologies developed by the CEA over the last decade, we have ambitious growth plans for a technology that we expect to be a game-changer in the production of clean hydrogen. This initiative demonstrates an alignment of environmental and economic growth ambitions that is important for France and Europe in support of the government's and the commission's recovery plan.”

The technology Genvia plans to use is intended to achieve a high system efficiency, resulting in less electricity use per kg of hydrogen produced. The venture says that the technology is the first of its kind that is fully reversible, giving it the flexibility to switch between electrolysis and fuel cell functions.


Spain: Cementos Molins has dismantled kilns 3, 4 and 5 of the Sant Vicenç dels Horts cement plant in Catalonia. The company says that it will use 48,000t of waste material from the demolition process in cement production in kiln 6 at the plant. The material consists of 35,000t of concrete, 10,000t of scrap metal, 1450t of refractory material and 1500t of other waste.

The total investment cost of the dismantling work was Euro2m. The company said that the demolition of silos presented the most complex challenges of the 24-month process.

The plant mothballed lines 3, 4 and 5 upon the opening of line 6 in 2010.


Switzerland: CemSuisse, the Swiss cement association, says that cement deliveries fell by 1.5% year-on-year to 4.15Mt in 2020. Deliveries remained stable in the first quarter before falling by 3.3% year-on-year in the second quarter at the same time of the first wave of the coronavirus pandemic. They subsequently recovered to a small increase in the third quarter before falling by 3.1% year-on-year in the fourth.


Argentina: Data from the Asociación de Fabricantes de Cemento Portland (AFCP) shows that cement shipments fell by 11.1% year-on-year to 9.87Mt in 2020 from 11.1Mt in 2019. They fell significantly in the first half of the year but subsequently recovered. Overall shipments - including local sales, imports and exports – last rose in 2017. Despite this, exports rose by 31% to 0.13Mt in 2020 from 0.10Mt in 2019.


Jamaica: Caribbean Cement says that it produced a record 0.94Mt of cement in 2020 due to market demand. This has been attributed to capital investment, positive government policies in response to the coronavirus pandemic, the company’s own reaction and the ‘expertise’ of its employees. It said it did not experience an overall loss of productive time due to closures related to the public health situation. Heavy rainfall, inconsistent power supplies and disruptions to mining in the third quarter of 2020 prevented the cement producer from surpassing 1Mt for the year.

“The market responded opposite to what might have been expected given the pandemic. Instead of slowing down, construction grew, and we kept in step with our customers by meeting their demand consistently. We will continue to ramp up production as the market grows,” said Yago Castro, General Manager of Caribbean Cement. He added, “The Government of Jamaica assessed the situation well and allowed critical sectors to continue operating once certain protocols were followed. Prioritising health, while keeping economic goals in mind, have mitigated against the negative impact on our sector.”


Cuba: Corporacion Cementos Cubanos’ Siguaney plant produced over 90,000t in 2020. Centrovision News has reported that the plant produced 87,000t of grey cement and 3000t of white. It had planned to produce 10,000t of white cement, but still exceeded its cement target overall. Cost per tonne of cement was also lower than planned.

The company said that grinding operations were disrupted when the Cienfuegos cement plant delivered less clinker than expected. As a result, the Siguaney plant’s kiln produced 18,000t of additional clinker. It achieved this through the use of refractory bricks from another kiln. Disruptions to imports also caused the company to hire Cuban Lubicrants Company (Cubalub) to provide lubricants for the plant’s compressors.

The producer said that it foresees no increase in cement production in 2021. It will launch two new pozzolanic cements, PP-35 and PZ-25.

General manager Gonzalo Reina said "PP-35 and PZ-25 have similar benefits to other cements, but their constitution saves clinker, a raw material that generates the greatest cost and constitutes the greatest difficulty in maintaining stable production.”


Philippines: The Department of Trade and Industry (DTI) plans to establish a new cement testing facility. The Philippine News Agency has reported that the department has made an allocation in its 2021 budget for the facility.

DTI Bureau of Product Standards (BPS) Catajay said “For setting up a testing facility for cement by BPS, our target is to finish within the first half of 2021. Our procurement of equipment is on-going, so that we can conduct testing in the third quarter of 2021.”

The Philippines presently has two cement testing facilities.


India: Star Cement has announced the completion of its US$61m grinding plant project in Jalpaiguri, West Bengal. The Press Trust of India has reported that the 2Mt/yr grinding plant is set to enter production shortly. This will bring the company’s installed capacity to 6.3Mt/yr. The company intends to source clinker from its integrated cement plant in Meghalaya that has mines nearby. Fly ash will be procured from West Bengal or Bihar.

Star Cement plans to discontinue its lease of another grinding plant in Siliguri, West Bengal, at the end of January 2021.


Brazil: Cement producers sold 60Mt of cement in 2020, up by 11% year-on-year. The Valor Econômico newspaper has reported that residential and commercial renovations and new projects contributed to the increase. The National Cement Industry Association (SNIC) has forecast that growth will not exceed 1% in 2021. It said that this will be due to an economic downturn and the end of the government’s emergency aid programme.


Cameroon: Nigeria-based Dangote Cement plans to increase the capacity of its 1.5Mt/yr Douala cement grinding plant near the Cameroonian capital of Yaoundé to 3Mt/yr. The Nigerian Guardian newspaper has reported that the company’s current expansion plan aims at exploiting multiple trade routes within the African Continental Free Trade Area (AfCFTA).

Aliko Dangote said that the plant is “our largest greenfield project in a neighbouring country with which we not only share a border but also a long history of brotherly relations dating from our colonial days. Owing to the rich culture and history that we share, we have a better understanding of Cameroon.” He added, “Our desire to increase our investment with the Phase-2 project is based on not only the fast growth rate of the Cameroonian economy but also due to the warm welcome extended to us and the enabling environment created by the government of Cameroon. Our choice of Cameroon for this multi-million-dollar investment is quite strategic. Cameroon is the largest economy in Central Africa and is well endowed with abundant natural resources. The country also enjoys political stability, adequate security and growing infrastructural development. In addition, President Biya has created an enabling environment that has continued to attract investors both from within and outside the African continent.”


UK: Cemex UK has announced plans for two new plastic packing production lines at Rugby cement plant. The company said that the lines will directly serve the plastic packing needs of packed cement production at the plant. The total investment cost of the installation will be Euro5.6m. Work will begin in early 2021 and be completed from June 2021. Cemex first entered the plastic packed cement market in 2011.


US: LafargeHolcim has signed an agreement to buy Firestone Building Products from Bridgestone Americas for US$3.4bn. The company said that the new subsidiary recorded estimated net sales of US$1.8bn and earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$270m. The group will finance the deal through cash and debt. It said that the acquisition is a milestone in its transformation to become the ‘global leader in innovative and sustainable building solutions.’

Chief Executive Officer Jan Jenisch said, “I am excited to be entering the highly attractive roofing business. With Firestone Building Products we are strengthening our biggest market, the US, while also building a global growth and innovation platform for the company. Today’s milestone is a strategic leap on our journey to become the global leader in innovative and sustainable building solutions to build a world that works for people and the planet. I have great respect for the high-calibre leadership and expertise of the Firestone Building Products’ team and look forward to welcoming them into the LafargeHolcim family.”


Vietnam: The Vietnam National Cement Corporation (VICEM) aims to increase cement production by 1% year-on-year to 22Mt in 2021. The Viet Nam News newspaper has reported that the company is targeting a sales increase of 7% to US$1.5bn and a profit increase of 13% to US$99m. The company says that it expects domestic cement consumption to rise by 5% to 30Mt.

The group has set out six solutions by which to achieve its goals: continue to ‘optimise and improve production capacity’ through promoting research and application of advanced science and technology, focus on ‘investment in depth,’ reduce consumption, use resources economically and reduce environmental impacts throughout the supply chain.

VICEM chair Bui Hong Minh said, “Implementing the comprehensive restructuring project of the corporation in the period of 2019 - 2025 approved by the Ministry of Construction, VICEM is focussing on promoting innovation and creativity to bring new development space and motivation to the Bim Son Cement unit in particular and the cement industry in general.”

In 2020 VICEM increased its full-year profit by US$30m.


Vietnam: Vietnamese cement export growth is forecast to slow in 2021. The Viet Nam News newspaper has reported on research by SSI Research that expected exports to remain stable due to high infrastructure spending in China, but that growth is unlikely due to the full recovery of Chinese domestic cement supply in 2020. SSI Research forecasts a total 2021 cement and clinker sales growth of 2% year-on-year to 104Mt from 102Mt. It predicts a 5% - 7% increase in domestic sales. The country’s installed cement production capacity is due to rise by 7% or 7Mt in early 2021.


Kazakhstan: Steppe Cement increased its full-year sales by 1% year-on-year to US$73m in 2020 from US$72m in 2019. Its cement sales fell by 4% to 1.6Mt from 1.7Mt, and its exports rose by 30% to 0.2Mt. Domestic demand rose by 6% to 9.4Mt from 8.9Mt. Steppe Cement’s market share fell to 15%.

Kazakhstan’s overall cement exports rose by 25% in 2020 to 2.0Mt from 1.6Mt. Imports fell by 14% to 0.6Mt from 0.7Mt.


Syria: The General Company for Cement and Building Materials in Hama central province (Hama Cement) recorded cement sales in excess of 1Mt in 2020. Clinker sales were 0.7Mt. Syrian Arab News Agency (SANA) has reported that the total value of sales was US$96m. The year included the beginning of concrete paving slab production at the company’s plant.

The company said that 2021’s tasks consisted of improving the technical specifications of the product and producing new cement types, modernising equipment, developing workers’ skills and diversifying investments.


Algeria: Groupe des Ciments d'Algérie (GICA) subsidiaries Société des Ciments de Hamma Bouziane (SCHB) and Société des Ciments de Ain El Kebira (SCAEK) are planning to export 50,000t of cement to West Africa. The L’Expression newspaper has reported that SCHB will supply 35,000t of the cement, and SCAEK will supply the remainder. SCHB produced 0.8Mt of cement in 2020.


Indonesia: Semen Indonesia subsidiary Semen Padang’s cement and clinker exports totalled 1.6Mt in 2020. Indonesia Government News has reported that the company said that it exported 0.2Mt of cement and 1.4Mt of clinker throughout the year. The main markets for its products were Bangladesh, China, Malaysia, Myanmar, the Philippines, Australia, the Maldives and Sri Lanka.

Semen Indonesia group senior export sales manager Fifit Abriyanto said, “There are two types of cement that we export, namely ordinary Portland cement (OPC) Type I grade 52.5N and OPC Type I grade 42.5N."


Nigeria: The National Association of Block Moulders of Nigeria (NABMON) has warned that its members are struggling to continue their trade due to the high price of cement. The Daily Independent newspaper has attributed the price rise to post-coronavirus shutdown maintenance challenges in the cement industry, increased exports, logistical disruptions and an unseasonably high demand for cement. The association is lobbying government to put in place and enforce competition laws to help return the price to a more ‘stable’ level.


Brazil: Votorantim Cimentos has built a new distribution centre in Campos Novos, Santa Catarina. When it opens in January 2021, the facility will supply a ‘complete portfolio for the civil construction market’ in Santa Catarina, Paraná and Rio Grande do Sul. It will receive goods from six cement and building materials plants in the company’s South Brazil region.

Regional commercial general manager Tony Noritake said, “We invested in this distribution centre to better meet customer demand in the South, expand our presence and optimise costs."


Iceland: HeildelbergCement subsidiary Sementsverksmidjan has apologised for an incident which caused cement dust to be released from a silo at its terminal in Akranes. An overflow during loading caused the dust to settle on nearby houses. The company collaborated with fire services, utilities companies and residents to tidy up.

The company said, “The incident yesterday was an accident which did not comply with the policy and will of the company or its owners. The company therefore apologises to all those who suffered inconvenience and will do everything in its power to ensure that accidents of this kind do not recur.”


Libya: Tripoli residents whose homes have been damaged during fighting between government and Libyan National Army forces will receive priority access to cement. The Libya Herald has reported that the Libyan Interior Ministry has established a committee to coordinate between state-owned Ahlia Cement Company and citizens involved in reconstruction. It said that the committee will update people who have ordered cement on their scheduled deliveries. The initiative is intended to overcome allegations of corruption connected to obtaining cement from the producer.


China: Huaxin Cement has ignited the kiln and started production at a new integrated 2.9Mt/yr cement plant near Huangshi City in Hubei Province. The company said that the plant will combine second-generation intelligent dry kilns, alternative fuel (AF) co-processing and a waste heat recovery (WHR) power plant, at a total investment cost of around US$465m. The group expressed its commitment to digital innovation and the promotion of Internet and industry. An artificial sand and gravel unit has also been started at the same site.


Cameroon: Aumund France has won a contract to supply three BWZ type bucket elevators with central chain, three BWG type belt bucket elevators and three Samson material feeders to Oyak Çimento’s upcoming plant near Kribi. When commissioned in September 2022, the plant will grind 100t/day of cement and 720t/day of calcined clay. ThyssenKrupp Industrial Solutions (France) is responsible for the overall design, supply and installation of equipment to the plant.


India: The government of India has granted licences to JSW Cement subsidiary Shiva Cement for the expansion of its cement plants in the state. The New Indian Express newspaper has reported that the company has received approval for an integrated capacity expansion of 1.1Mt/yr and a clinker capacity expansion of 1.3Mt/yr.

The state government approved a total of US$730m-worth of planned investments in various industries on 6 January 2020.


India: Meghalaya Cement, Star Cement and Amrit Cement have been accused of illegally mining 1.8Mt of limestone in Meghalaya between 2013 and 2018. The Northeast Now newspaper has reported that the companies mined the limestone in a tribal area of the state without environmental, forest or wildlife clearance or No Objection Certificates (NOCs). Local cement producers also allegedly owe the state government around US$40m in related limestone mining licence fees. All three cement producers reportedly made donations to a local political party.

The state government is also investigating allegations that two of the cement producers have polluted two local rivers, Wah Lukha and Wah Lunar. The former river allegedly turned ‘deep blue’ due to pollution.


Pakistan: Cement dispatches in the first half of the 2021 financial year were 29Mt, up by 16% year-on-year from 25Mt in the first half of the 2020 financial year. The Pakistan Observer has reported that the All Pakistan Cement Manufacturing Association (APCMA) recorded an 11% year-on-year rise in December 2020 dispatches to 4.8Mt from 4.3Mt. Exports for the half were 5.0Mt, up by 15% from 4.4Mt.