Global Cement Newsletter

Issue: GCW494 / 24 February 2021

Headlines


News has been dripping out slowly over the last few months about which assets HeidelbergCement is planning to divest. This week reporting from Bloomberg suggested that the German-based building materials producer might be seriously considering selling one or more integrated plants in Spain. The idea is reportedly part of a wider review of its portfolio in the country with the possible inclusion of cement plants at San Sebastian and Bilbao at a future date also. A proposed price of Euro300m for the national business was put forward by the sources to the reporters but it is unclear how many cement plants that figure includes.

HeidelbergCement announced in July 2020 that it had reduced the value of its total assets by Euro3.4bn following a review. It blamed this on reduced demand for building materials due to the coronavirus pandemic and the devaluation of its Hanson subsidiary in the UK, in part related to the UK’s exit from the European Union. A divestment plan followed at its Capital Markets Day event in September 2020 when it said it was simplifying its country portfolio and prioritising the strongest market positions. To this end it said it was setting up a watch list of underperforming assets to keep an eye on.

Over the next few months a number of corporate reorganisations and actual confirmed divestments occurred as well as plenty of speculation. HeidelbergCement-controlled Suez Cement started to acquire a 100% stake in its own subsidiary, Tourah Portland Cement, in September 2020. Suez Cement then sold its majority stake in Kuwait-based Hilal Cement in late January 2021. This week HeidelbergCement Bangladesh informed the local stock exchange that it is planning to amalgamate its subsidiary Emirates Cement.

Signs that European reviews had taken place could be seen later in the autumn of 2020. In November 2020 the Italian press picked up on rumours that HeidelbergCement was planning to move subsidiary Italcementi’s research centre from Bergamo, Lombardy, to Heidelberg in Baden Württemberg. Whether this was ever a serious proposition or not, this appeared to have been avoided in early February 2021 when an Italian union said it had agreed with Italcementi to keep the research centre in Italy as well as a preserving jobs generally. Meanwhile, also in November 2020, France-based subsidiary Ciments Calcia announced a major upgrade at its integrated Airvault cement plant but along with the conversion of two other integrated plants into a grinding unit and a terminal respectively, and changes at the French headquarters at Guervill.

Just before Christmas the bigger speculations started to appear in the press, with a story suggesting that HeidelbergCement was considering selling assets in California, US, with a target price of US$1.5bn for three integrated plants and associated concrete and aggregate units. That story is particularly beguiling given Cemex’s decision this month to reopen a kiln in Mexico to supply cement to the southwest US to meet shortages (See GCW 493)! Incidentally, readers should also note the story this week about a shortage of natural gas exports from Texas, US, that has caused cement plants in northern Mexico to shut down. This week, as mentioned at the start, has seen Spain added to the list of places that HeidelbergCement might be considering selling up in. The Spanish market like Italy has been rationalising heavily over the last decade particularly as export markets have dwindled. Oficemen, the Spanish cement association, reported that domestic cement consumption fell by 10% year-on-year to 13.3Mt in 2020 from 14.7Mt in 2019. On top of this Oficemen has repeatedly warned of the threat that CO2 emissions prices pose for its members’ exports.

Group chairman Dominik von Achten told Reuters this month that the company plans to sell the first of the five assets in early-to-mid 2021. Of course he wouldn’t say where, except for adding that the company would stay in ‘rock solid’ markets like Northern Europe. Indonesia has been seen as a candidate for disposal by analysts, likely due to local production overcapacity levels and LafargeHolcim’s own departure in Indonesia 2018. All Von Achten would say on the matter was that Indonesia was an ‘important’ market for the group. Whether it’s seen as important for reducing company debt or building value remains to be seen. HeidelbergCement hasn’t exactly been shy about saying what they are doing over the last half year or so but they are only going so far and they won’t comment on speculation. So in the meantime we must wait to find out more.


Philippines: Horia Adrian has been appointed as the president and chief executive officer (CEO) of Holcim Philippines. He succeeds John Stull will be reassigned to another position within LafargeHolcim Group after three years in the post.

Adrian is a graduate of the masters degree programme in business administration at Anjou University in South Korea and of the bachelors and masters programme in mechanical engineering at ‘Dunărea de Jos’ University in Galați in Romania. He joined the LafargeHolcim Group in 2000 as a project manager for Holcim Romania’s Ready-mix and Aggregates Division. Between 2004 and 2010 he was the sales, marketing and logistics director, and respectively the CEO, of Garadagh Cement in Azerbaijan. He later became the CEO of Romania and Market Head Emerging Europe in 2018.


Sweden: HeidelbergCement subsidiary Cementa has appointed Matilda Hoffstedt as the manager of its integrated Slite plant. She will succeed the current plant manager, Fred Grönwall, in June 2021. Grönwall has been in post since 2018 and will leave the company.

Hoffstedt holds a master's degree in science from Uppsala University and started working for HeidelbergCement in 1998. She worked as a supervisor and project manager at Slite until 2010. Later she ran operations at the Skövde plant for 10 years until 2020 and is currently working as Manager Technical Support for HeidelbergCement Northern Europe.


Canada: Progressive Planet Solutions has appointed Randy Gue and Chris Halsey-Brandt to its advisory board. The company is developing pozzolan-based supplementary cementitious material (SCM) products. It operates its Z1 Zeolite quarry in Cache Creek, British Columbia and is working on other projects also in the province.

Gue will advise on introducing Progressive Planet's developing products into the marketplace with the initial focus on markets for PozGlass SCM. Randy spent 17 years with Lafarge Canada as the Director of Business Development and Resource Recovery where he led Lafarge's Western North American initiative to reduce variable operating costs by developing business-to-business relationships primarily related to the recovery and reuse of wastes and by-product streams from industries and institutions.

Halsey-Brandt will assist in financial analysis of the first PozGlass SCM manufacturing plant and will also assist in evaluating opportunities to grow the company through strategic acquisitions. He is both a chartered professional accountant (CPA) and a chartered business valuator (CBV). At present Halsey-Brandt owns and operates a successful food processing business. Prior to becoming an entrepreneur, he was a partner at Blair Mackay Mynett Valuations, an independent firm in Vancouver providing business valuation services.


Australia: Adbri’s revenue fell by 4% year-on-year to US$1.15bn in 2020 from US$1.20bn in 2019. Underlying earnings before interest, taxation, depreciation and amortisation (EBITDA) decreased by 3% to US$216m from US$222m. Despite construction growth in Western Australia, cement volumes were reported as being down by 7.1%. The company said that clinker volumes dropped by 23% due to lower offtake by its Sunstake Cement joint venture partner Boral. It added that the impact of the coronavirus pandemic had been ‘well managed’ and that all sites remained operational.

“In the context of the challenging operating environment, the financial outcomes we delivered for the 2020 financial year are better than we had expected and reflect the successes of our cost-out and business improvement programs. Adbri also benefitted from improving demand in the Western Australian market during the period which offset slowing demand in east coast markets, particularly in New South Wales,” said Nick Miller, Adbri’s chief executive officer.


South Korea: Ssangyong Cement has announced a planned name change to Ssangyong C&E. The Korea Herald newspaper has reported that the ‘C’ stands for cement while the ‘E’ stands for environment. Besides signalling its move into new industries driven by green value-creation, the new name is intended to reflect the company’s existing values. Since the beginning of 2016, it says it has spent US$90m/yr on environmental upgrades to cement production. Shareholders will finalise the change on 25 March 2021.

Ssangyong Cement chair Hong Sa-seung said, “For the past 60 years, we have led Korea’s cement industry and contributed to country’s industrialisation and economic development. With the know-how we have gathered from the cement business, we seek to expand our business to environmental businesses.”


Chile: Melón has signed an electricity supply contract with Enel Generación. The contract covers the supply for its La Calera, Puerto Montt and Ventanas cement plants, and its San Bernardo aggregates quarry, until 2043, according to the La Tercera newspaper. All energy supplied under the contract will come from renewable sources. There is also the possibility of expanding the scope of the contract.

General Manager Iván Marinado said, “Our commitment to the sustainability of our operations is permanent. We have state-of-the-art technologies, we work together with our carriers in programmes to reduce logistical impact and energy efficiency, and we have a solid co-processing strategy for the use of alternative fuels (AF) and raw materials. Today we are happy to take a new step and start the use of renewable energies, as a concrete and effective example of our concern to contribute to the environmental improvement of the localities where we operate.”


India: Odisha police have successfully shut down a fake cement operation in Jagatpur. The New Indian Express newspaper has reported that the unit was producing fake cement using various raw materials including marble dust and artificial colours. The unit had reportedly been in operation since as early as 2015.

Assistant police commissioner Amarendra Panda said, “The factory and the go-down have been sealed. The investigation is on to ascertain since when the factory was operational, the source of raw materials and the destinations or shops where the products were supplied. It is also being ascertained whether the owner of the unit is part of a racket engaged in manufacturing adulterated cement.” This is the third fake cement unit uncovered in the city since late 2020.


Pakistan: Medics took three protestors from the site of a hunger strike outside a cement plant in Hattar, Khyber Pakhtunkhwa, to hospital in Haripur. The News International newspaper has reported that nine fired workers won a case before the National Industrial Relations Commission (NIRC) to be reinstated to their jobs at the plant. When not given back their jobs, they began the hunger strike on 17 February 2021.

The cement company said that it is appealing the NIRC’s decision.

Bestway Cement, Dewan Hattar Cement and Mustehkam Cement all operate cement plants in Hattar.


Germany: HeidelbergCement’s preliminary results show a 5% decline in revenue on a like-for-like basis to Euro17.6bn from Euro18.9m. Cement volumes fell by 3% to 122Mt from 126Mt. Its result from current operations before depreciation and amortisation (RCOBD) rose by 6% to Euro3.71bn from Euro3.58bn. Revenues and cement volumes declined in all regions except Africa-Eastern Mediterranean Basin, where revenues rose by 7% and volumes rose by 10%, and Northern and Eastern Europe-Central Asia, where revenues rose by 3%.

The group attributed the general decline to the impacts of the coronavirus on construction’s activity levels, and therefore demand for building materials. A ‘significant improvement’ in results in the second half of 2020 resulted from its own cost-saving programmes and the economic recovery in mid-2020. The producer implemented a major carbon capture and storage (CCS) scale-up in the form of its LEILAC (Low Emissions Intensity Lime And Cement) collaborative project. Throughout the year, it reduced its debt by Euro1.5bn.

Dominik von Achten, chair of the managing board said, "We closed the 2020 financial year with a top result. We were able to not only reach but exceed our forecast for all key figures. The key to this success was the good operational performance across our market regions and business lines. We managed to more than compensate for the coronavirus-related decline in sales volumes through consistent spending discipline. This is a great result of the entire HeidelbergCement team, of which I am very proud. My thanks therefore go to all employees for their extraordinary commitment in the past year."


Mexico: Cemex plans to start using hydrogen as part of its fuel mix at its cement plants around the world in 2021. The estimated cost of the roll-out is US$40m. The company says it completed the deployment of its hydrogen technology across all of its cement plants in Europe in 2020 following trials at the Alicante Cement Plant in Spain in mid- 2019.

Global operations, technical and energy vice-president Roberto Ponguta said, “The fast adoption of this new hydrogen-based technology is a clear example of Cemex's innovation efforts and its strong commitment to decarbonise the cement production process.” He added, "We continue to identify and deploy existing technologies which have a high potential to contribute to our sustainability goals, and hydrogen is a key lever.”


Bangladesh: HeidelbergCement Bangladesh plans to amalgamate its subsidiary Emirates Cement. The Daily Star newspaper has reported that fellow HeidelbergCement Bangladesh subsidiary Emirates Power Company will also be merged as part of the reorganisation.

The subsidiary of Germany-based Heidelberg Cement acquired Emirates Cement Bangladesh and Emirates Power for around US$21.5m in 2019. Emirates Cement Bangladesh operates a plant at Munshiganj with a production capacity of 0.66Mt/yr.


Mexico: Nearly 500 cement and concrete plants in the northern Mexican states of Chihuahua, Coahuila, Nuevo León and Sonora have partly or fully suspended production due to an on-going regional shortage of natural gas. The El Financiero newspaper reports that plants run by Grupo Cementos Chihuahua (GCC), Cemex, Holcim and Cruz Azul operate in this region.

GCC said that a lack of electricity and natural gas had affected production at three of its plants in Chihuahua, Samalayuca and Juárez. Mexican Association of the Ready-mix Concrete Industry (AMIC) president Ana Laura Burciaga said that the situation has caused a 50% drop in the cement supply to concrete plants.

The cause of the shortage is reported to be the suspension of natural gas exports from Texas, US. Mexican steel and automotive manufacturers have also been affected.


Austria: Lafarge Zement has ordered a new conveying system for raw materials and alternative fuel (AF) for its Mannersdorf cement plant from Germany-based Beumer Group. The system consists of two pipe conveyors. The first will be 192m long with a capacity of 22t/hr. While the second will be 87m long and have a conveying capacity of 10t/hr. The lifting heights will be approximately 39m and the maximum angle of inclination will be 15 degrees. The order also includes three buffer bins and a weigh feeder.

The system replaces the cement plant’s pre-existing conveyors, which were seriously damaged in a fire in June 2020. Beumer will be responsible for delivery, installation, engineering and commissioning of the new conveyors. Commissioning is scheduled for mid-April 2021.


US: Martin Engineering has launched the N2 Twist tensioner, an autonomous tensioning system that continuously monitors and delivers proper cleaner tension. The company says that the system integrates with its Martin Smart Device Manager software product to alert operators when the blade needs changing or if there is an abnormal condition. It says that this facilitates efficient cleaning, increased safety, reduced labour and a lower cost of operation.

Product development engineer Andrew Timmerman said, “We designed the unit for heavy-duty applications and tested it outdoors in punishing environments and applications. The N2 Twist Tensioner has proven itself to be a rugged and highly effective way to maximise both cleaning efficiency and blade life.”


Spain: Germany-based HeidelbergCement is reviewing its Spanish assets, which includes three integrated cement plants and related businesses. It is considered ‘likely’ it will sell its plant in Malaga and it might sell its other plants at San Sebastian and Bilbao also, according to Bloomberg. The company’s assets in the country have been valued at around Euro300m by one source quoted by Bloomberg. Group chairman Dominik von Achten told Reuters earlier in February 2021 that the company completed a review of its business and identified five assets to sell.


Russia: Eurocement recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$182m in 2020, up by 6% year-on-year from US$172m. Sales remained consistent with 2019 levels at US$674m.

Interfax reports that the Auction House of the Russian Federation partly disclosed the group’s 2020 results in a presentation related to the sale of its parent company, GFI Investments, and related debts. Potential investors have until 15 March 2021 to submit price indications. The sale is scheduled for conclusion in April 2021.


Pakistan: DG Khan’s profit after tax was US$5.03m in the first half of the 2021 financial year. In the corresponding half of 2019, it recorded a US$5.33m loss after tax. Its sales grew by 5% to US$138m from US$131m. Cement sales volumes fell by 6% to 2.76Mt from 2.95Mt.


Europe: Cemex commissioned seven new bolt-on investments across Europe in January 2021. The company says that all of the investments are aligned to its key priorities of climate action, sustainable construction and earnings before interest, taxes, depreciation, and amortisation (EBITDA) growth. They include advances in fossil fuel reduction, lower CO2 footprint products, circular economy investments and products that demonstrate life cycle CO2 and energy consumption advantages for buildings. It made various changes at its cement plants, for example the installation of a new alternative fuel (AF) system in the Czech Republic. In France and the UK, it made circular economy and recycling improvements, and shifted to lower-CO2 cement production in Croatia and lightweight concrete production in Spain. Additionally, it made efficiency upgrades to sites in Spain and the UK.

Europe, Middle East and Africa regional president Sergio Menendez said, “We have made a strong start to our 2021 ambitions to both grow our business and improve our climate impact. In 2020, we achieved our ambition of a 35% reduction in our CO2 emissions compared to our 1990 baseline in Europe. We are also the first company in our sector to align our Europe operations to the EU aspiration to reduce CO2 emissions by at least 55% by 2030. These investments represent further advances towards this 2030 target, as well as to deliver net zero CO2 concrete globally by 2050.”


Pakistan: The Punjab provincial minister for industries and trade Mian Aslam Iqbal says that the government will soon issue new no objection certificates (NOC) to Bestway Cement for three of its new plant projects in the region. The Nation newspaper has reported that a delegation from the cement producer met the minister in late February 2021 to discuss its plans to establish new plants in Attock, Khushab and Mainwali. The company does not currently have NOCs for the planned projects.


Bolivia: Fabrica Nacional de Cemento (FANCESA) has secured a contract for the supply of over 582,000t of cement to the Nueva Santa Cruz Ciudad Inteligente housing development near Santa Cruz. The Correo del Sur newspaper has reported that value of the contract as US$72.0m.


UK: The Transition Pathway Initiative (TPI) has conducted a study into the emissions reduction practices of 33 large cement producers. The study concluded that five of the companies are currently aligned with the emissions reduction pathway which would keep the global temperature rise below 2°C by 2050 compared to pre-industrial levels. This corresponds to 15% of large cement companies assessed in the study compared to 14% of large companies in heavy industries globally. The TPI commended the five producers, noting that in global industry “fewer companies are aligned with 2°C after 2030 [than by 2030], because the pace of decarbonisation required in the industrial sector really picks up next decade, requiring drastic falls in emissions between 2030 and 2050 to meet Paris Agreement goals. More industrial companies need to set longer term targets to 2050 that require greater levels of decarbonisation.” Just one aluminium producer and no paper producers are in line with the 2050 target.

TPI Co-Chair Adam Matthews said, “As we enter the transition decade these hard-to-abate sectors are critical to achieving net zero goals by 2050. Whilst it is concerning that so few industrial companies are ready, it is clear new industrial processes based on circular economy principles give us a tipping point of technically viable, economically attractive solutions.”


India: Germany-based Gebr. Pfeiffer has received an order from Aditya Birla subsidiary UltraTech Cement for nine vertical roller mills. The producer plans to install the mills across three newly-built clinker lines. The supplier said, “The cooperation between UltraTech Cement and Gebr. Pfeiffer is based on the understanding of not only being a customer or supplier, but to achieve common goals in partnership.”


India: ACC’s audit committee and board of directors have approved the renewal of the company’s master supply agreement with Ambuja Cements from 2 May 2021 to 2 May 2024. The agreement will continue on its current terms.


Spain: Cementos La Cruz has partnered with other building materials, construction and waste management companies and the Murcia Technological Centre for Construction to support a study by the Polytechnic University of Cartagena (UPCT). The Europa Press newspaper has reported that the research aims to develop geopolymeric concretes from industrial and urban waste, without the use of cement. The study is 80% financed by the European Regional Development Fund (ERDF).

UPCT science and advanced construction technology research group coordinator Carlos Parra said, “Stopping the use of concrete is not the solution, as it is a relatively accessible material that allows access to housing and multiple services for millions of people around the world and is also a material with high resilience against natural catastrophes such as floods, hurricanes and resistant to the passage of time.”


Spain: Cementos Portland Valderrivas has made donations worth Euro3000 of food and sanitary products to host communities in the neighbourhood of its Alcalá de Guadaíra cement plant in Seville. The company says that the donations are intended to support vulnerable families and groups affected by the coronavirus crisis.


Peru: Cementos Pacasmayo recorded sales of US$354m in 2020, down by 7% year-on-year from US$381m in 2019. Consolidated earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 21% to US$86.3m from US$110m. Sales volumes of cement, concrete and precast shipments fell by 1% to 2.58Mt from 2.61Mt. Cement production capacity utilisation was 45%, down by 2% from 47%. In the fourth quarter of 2020 cement dispatches rose by 37% year-on-year.

The company said, “Despite political changes, the economic recovery continued its course during the fourth quarter of 2020. Thanks to the economic relief measures taken by the government and the fast adaptation of the private sector, an important part of the productive capacity was preserved. Public investment in particular has played an important role in the economic recovery, and it is expected to continue to do so during 2021.” It added, “The uncertainty around the end of the Covid-19 pandemic continues, but what is certain is that the world has been forever changed. The capacity to adapt quickly and efficiently in an increasingly digital world is key to success and will prevail long after this pandemic is behind us. We believe that the steps we have taken in that direction have both helped us weather the storm and given us a promising future. We are confident that we are better equipped to face another year that may prove challenging and continue to generate value to our stakeholders.”

The Good Employers Association (ABE) recognised the company in the Leadership category at its ABE Awards 2020.


Pakistan: The board of directors of Kohat Cement Company Limited (KCCL) has approved plans to establish a 7800 – 10,000t/day integrated cement plant at Khushab, Punjab. The company will also set up an 8 – 10MW waste heat recovery (WHR) plant and a 25MW coal-fired power plant at the site. The total estimated cost of the project is US$189m. The producer will raise finances through a mix of debt and equity. Commissioning is scheduled for mid-2023.


Austria: Germany-based Loesche has received an order to supply a new raw materials grinding plant to LafargeHolcim subsidiary Lafarge Zement’s Mannersdorf cement plant. The plant will consist of a type LM 45.4 mill, a LSKS type classifier, a rotary feeder, a magnetic separator, a conveyor, a pair of Hurriclons, a mill fan and the ‘Digital Ready 4.0!’ digital package. Loseche’s subsidiaries Kingsblue and AixProcess are responsible for the digital products and A-Tec for the Hurriclons. Commissioning is scheduled by the end of February 2022.

Cement and ore head of sales Stefan Baaken said, "Many cement plants in Europe are facing similar challenges to our customer in Mannersdorf. For us as an original equipment manufacturer and also for the customer, the new grinding plant is an important signpost towards more energy-efficient and sustainable cement production.”


Germany: Claudius Peters’ 2020 sales were Euro80.2m, down by 19% year-on-year from Euro98.8m in 2019. The company recorded a ‘small profit’ compared to a loss in 2019. It said that it started the year with a historically low order book. This was compounded by the effects of the coronavirus pandemic. Despite this, the supplier exceeded targets in China, Romania and the US.

The company said, “Order intake is currently looking much more promising than a year ago with several major projects, delayed due to the pandemic, coming into the decision phase during the first quarter of 2021. With an operational overhaul now well under way, the future for Claudius Peters is looking more positive.”


Nigeria: Dangote Cement has warned the public that confidence tricksters are using its name to offer ‘jobs’ On social media. The Vanguard newspaper has reported that applicants are then being required to pay an ‘administrative fee’ to the scammers.

Corporate communications directorFrancis Awowole-Browne said, “The job advertisements are entirely false and are intended to defraud unsuspecting members of the public. We are clarifying that we have not engaged any individual or job website to advertise job positions on our behalf and none of the contact details, either phone numbers or email, are those of Dangote Cement.” He added, “At Dangote Cement, we fill job positions through a formal procedure with all career opportunities clearly listed on our own website. Furthermore, we never request candidates to pay a fee before they are considered for any position.”