Global Cement Newsletter

Issue: GCW496 / 10 March 2021

Headlines


Many Saudi Arabian cement producers have reported increased annual sales and profits in recent weeks. Southern Province Cement’s sales revenue rose by 27% year-on-year to US$440m in 2020 from US$347m in 2019. Net Profit after zakat and tax increased to US$162m from US$123m. Other producers enjoyed similar boosts. The reason can be seen in the country’s domestic cement sales. They rose by 21% year-on-year to 51Mt in 2020 from 42Mt in 2019. After a promising start to the year the coronavirus pandemic hit local production hard in the second quarter of 2020. However, it nearly doubled year-on-year in June 2020 and kept up the pace thereafter.

Graph 1: Domestic cement sales in Saudi Arabia, 2010 – 2020. Source: Yamama Cement.

Graph 1: Domestic cement sales in Saudi Arabia, 2010 – 2020. Source: Yamama Cement.

Graph 1 above puts the cement sales in 2020 into context over the last decade. Sales hit a high in 2015 but then started to wane as infrastructure spending dried up due to lower oil prices and decreased government spending. A ban on exporting cement was subsequently relaxed but the general market appeared to adapt to the new situation. This changed significantly in 2020 with analysts attributing the turnaround to programs organised by the Ministry of Housing. This growth has carried into 2021 with NCB Capital forecasting an increase of 3.5% in local cement sales in 2021 due to the ongoing housing programs, the country’s so-called ‘Giga’ projects and investment by its sovereign wealth fund, the Public Investment Fund (PIF), as part of its 2021 - 2025 strategy. They reported that demand created by the country’s large-scale projects began to be felt along the supply chain in the fourth quarter of 2020 and associated contracts have started to be issued.

To give an example of the scale of some of these schemes, one of the proposed giga projects is to build a new city called Neom from scratch near the Red Sea coast. The resulting conurbation is intended to showcase new technologies and diversify the Saudi Arabian economy away from hydrocarbons. It has a price tag of US$500bn. An airport was built in 2019 and a next step was announced in January 2021, introducing a 160km linear city without roads called ‘The Line.’ Doubtless it will require lots of cement to realise the dream in whatever forms it happens to end up taking.

The wider picture here is that global oil prices hit a low in April 2020 as coronavirus lockdowns triggered a worldwide drop in demand although they then started to recover. The International Monetary Fund (IMF) estimates that Saudi Arabia’s gross domestic product fell by just under 4% in 2020. In response the PIF has upped its investment in the local economy including in the ‘Giga’ projects like Neom. There has been scepticism internationally about whether these projects will progress any further beyond press releases and actually get built. However, the cement producers’ financial results, cement sales figures and reporting from analysts like NCB Capital show that some investment is happening and it’s having results. The sector still faces a battle against overcapacity. It had a production utilisation rate of just under 70% despite the increase in cement production in 2020. Yet cement producers in Saudi Arabia have done well. While the Saudi Arabian government continues to spend on infrastructure in order to rebalance its economy this looks set to continue.


UK: HeidelbergCement subsidiary Hanson has appointed Michael Wildmore as the technical development manager for its cement business. He holds over 30 years’ experience in senior technical and quality management roles in the building materials industry, according to Construction Index.

Wildmore joined Hanson UK, part of the HeidelbergCement, as a technical sales advisor in January 2020 having previously spent five years with Tarmac, latterly as technical manager at Tarmac Building Products. Before that, he worked for 20 years with Redland and subsequently Lafarge and LafargeHolcim after acquisitions and mergers. He is an associate member of the Institute of Concrete Technology and is on technical committees of the Mineral Products Association (MPA).


Russia: Siberian Cement Holding Company (SibCem) has appointed Andrey Rubtsov as its marketing director. He was previously the general director of Iskitimcement, a subsidiary of SibCem. Rubtsov holds a degree in management from the Novosibirsk State University of Economics and Management and a Master of Business Administration (MBA) from the Management College of Southern Africa (MANCOSA). He has worked in the cement industry since 2001.


Chile: Melón’s new 0.25Mt/yr grinding plant that it is building at Punta Arenas is scheduled to start operation by the end of the first half of 2021. The unit is forecast to produce around 80,000t of cement in its 12 months, according to the La Prensa Austral newspaper. It has had an investment of US$30m and will create around 50 jobs. Spain-based Cemengal was previously reported as the supplier of the mill. It is intended to supply the Magallanes Region including Tierra del Fuego. The cement producer is also considering doubling the production capacity of the grinding plant to 0.5Mt/yr if the market supports it.


Ethiopia: East African Holding and China-based West China Cement have formed a joint venture. The Xinhua News Agency has reported that the partners plan to establish a multi-industrial complex in Ensaro Woreda district, Amhara regional state. Called Lemmi National Cement complex, the facility will house a 10,000t/day cement plant in addition to other industrial plants. The partners say that the facility will create 5000 jobs.

The first phase of the project will establish the cement plant and reach completion in late 2022.


Philippines: Japan-based Taiheiyo Cement subsidiary Taiheiyo Cement Philippines has announced the formation of the Philippines Renewal Construction Project team. The company says that the team will support work on a new production line at the company’s integrated San Fernando cement plant in Cebu. When finished, the upgrade will give the company a total production capacity of 3Mt/yr. The producer said that expanding production capacity in the country is among its biggest growth strategies. Its longer-term sales target is 5Mt/yr, corresponding to a domestic sales share of 10%.

The company anticipates a growth in cement demand in 2021, in part due to the government’s infrastructure budget of US$20.8bn, over 5% of gross domestic product.


Saudi Arabia: NCB Capital has predicted a growth in Saudi cement sales of 4% year-on-year to 52.8Mt in 2021. The investment and analyst division of National Commercial Bank described the sector’s outlook as ‘positive,’ due to on-going housing programmes and the Public Investment Fund’s 2021 – 2025 strategy, as well as a pick-up in infrastructure projects.


Europe: The European Union (EU) Emissions Trading Scheme (ETS) has reached a price of Euro40/t for the first time in its history. Data from the environmental campaign group Sandbag show that on 9 March 2021 it hit Euro40.58/t. Carbon prices under the scheme started to climb in 2018 after stagnation in much of the 2010s. The fourth phase of the EU ETS started in January 2021.


US: Data from the US Geological Survey (USGS) shows that cement producers achieved volumes of 87Mt of Portland cement in 2020, a slight increase from 2019 levels. Portland and masonry cement volumes rose by 1% year-on-year to 89Mt from 88Mt, while clinker volumes remained level at 79Mt. Total cement shipments remained level at 103Mt. The value of shipments in 2020 was US$12.7bn. Total exports of cement and clinker were 1.0Mt, down from slightly over 1.0Mt in 2019. The USGS said that on-going upgrades, closed and mothballed plants, low capacity utilisation and relatively inexpensive imports constrained the industry’s growth.

Domestic consumption fell by less than 1% to 102Mt from 103Mt. Cement imports totalled 15.0Mt, up slightly from 14.7Mt, while clinker imports rose to 1.4Mt from 1.2Mt. This corresponded to a 15% rise in reliance on imports of cement and clinker. The main exporters of cement and clinker to the country were Canada, accounting for 33% of US imports, Turkey (16%), Greece (15%) and China (12%).


Germany/Sweden: Refratechnik Group and Sweden-based Höganäs Borgestad Group have started a strategic agreement for the supply of refractory products to customers in Nordic countries. Höganäs Borgestad customers will now have direct access to the product range and application knowledge of the Refratechnik Group. The refractory suppliers said that their arrangement, “underscores the desire of both companies for long-term, sustainable and mutually beneficial partnerships; resulting in a secure supply of top-quality product for the customer.”

Germany-based Refratechnik Group operates refractory and industrial mineral businesses, with over 1900 employees in 27 locations worldwide. Sweden-based Höganäs Borgestad is the largest refractory company in the Nordic region providing installation services and refractory materials to many industries.


Dominican Republic: Cemex Dominicana plans to recommission line 1 at its 2Mt/yr integrated San Pedro de Macorís plant. The move is expected to increase its existing clinker production capacity by more than 0.5Mt/yr. The reactivation is scheduled for the last quarter of 2021. It is part of Cemex Dominicana's growth plan, seeking to strengthen its capacity to response to both local market demand and the export market.

"At Cemex Dominicana, we reiterate our commitment to the sustainable development of the Dominican Republic, in the context of boosting the national economy, aiming with these investment plans to reduce the need for imports, promote local industry, and contribute to the generation of employment in the country," said José Antonio Cabrera, Director of Cemex Dominicana.


India: JSW Cement has signed a contract with JSW Energy to acquire the latter’s 18MW Salboni thermal power plant for US$13.1m. The Press Trust of India newspaper has reported that the companies are conducting the transaction on a slump sale basis. The cement producer plans to optimise labour costs in light of low power demand on the unit. Both companies are subsidiaries of JSW Group.


Austria: RHI Magnesita recorded consolidated net sales Euro2.26bn in 2020, down by 23% year-on-year from Euro2.92bn in 2019. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) were Euro140m, down by 53% from Euro300m. Pre-tax profit for the year was Euro42.0m, down by 30% from Euro200m.

The group attributed the declines to lower refractory volumes as a result of the effects of the coronavirus pandemic on market demand. It said that customers began re-stocking supply chains at the end of 2020 and into the first quarter of 2021, driving increased refractory demand. Its cement and lime business declined by 21% in 2020. The supplier said that the business recorded a ‘strong performance’ in the first quarter, characteristic of seasonal demand, followed by weak second and third quarters when demand was negatively impacted by the Covid-19 outbreak.

Chief executive officer Stefan Borgas said, “2020 has been the most challenging year that our industry has experienced. Throughout the pandemic, RHI Magnesita has protected the health and safety of our employees, ensured business continuity for our customers and taken initiatives to support liquidity and underpin future profitability. Through one of the severest downturns on record, we demonstrated the resilience of our business model and the outstanding commitment of our people while our strong financial position has enabled us to accelerate investment in our strategic priorities.”


Germany: Schenck Process has launched CONiQ, a cloud-based software product designed to access data from machines. The company said that it builds the foundation for all digital services of Schenck Process, enabling data-driven maintenance and performance optimisation. Users are able to monitor equipment using CONiQ’s integrated knowledge base. The supplier said that the product will open up ‘new functionalities’ for various cement plant equipment. Its first version will focus on vibrating screens and provide dashboards and functions to improve condition monitoring.


Germany: Former HeidelbergCement technical director Rainer Nobis has published a book entitled Illustrated History of Cement and Concrete. The over 300-page volume traces the development of cement and concrete from prehistory to the present day, exploring the question of how cement and concrete came to be so closely intertwined with our prosperity, way of life and mobility. It is both a technical history and a story of the people who contributed to the development and application of cement and concrete. Nobis described the book as of interest both to cement experts and laypeople. More than 700 pictures accompany the text. Its first edition is available in English and German versions.

The Illustrated History of Cement and Concrete is currently available prior to its launch on online retailers in mid-March 2021.


Nigeria: BUA Cement has announced that it will commission the second production line at its Kalambiana cement plant in Sokoto state in July 2021. The Daily Independent newspaper has reported that the upgrade will bring the plant’s cement production capacity to 3Mt/yr. The group intends for the plant to serve the growing domestic cement demand and to stabilise prices.


India: ISGEC Heavy Engineering has won a contract for a double waste heat recovery (WHR) unit installation at Shree Cement’s Raipur cement plant. The Business Standard newspaper has reported that the supplier will install one unit on the plant’s pre-heater exhaust, and the other on the 10,500t/day kiln’s cooler exhaust.

Industrial and green energy boilers business head Vinod Luthra said, “This is indeed a very prestigious order for us and we thank Shree Cement for once again showing confidence in ISGEC's capabilities. This is the second project that ISGEC will be successfully setting up for Shree Cement."


China: Anhui Conch Cement recorded consolidated sales revenue of US$27.0bn in 2020, up by 12% year-on-year from US$24.0bn in 2019. Its net profit rose by 5% to US$5.38bn from US$5.14bn.The company said that its total assets were US$30.8bn in 2019, representing an increase of 12% from the end of last year.


Colombia: Grupo Argos subsidiary Cementos Argos has recycled a total of 7m cement bags since 2013 under its Green Bags recycling initiative. The El Nuevo Siglo newspaper has reported that the recycled bags contained 1000t of paper. In water savings alone, the figure corresponds to 80,200m3 - enough water to supply 472,000 people for a day. 159 commercial customers have so far contributed their used bags. In the Medellín metropolitan area, the programme achieved a bag return rate of 95%.The group overcame coronavirus pandemic-related challenges to recycle 15,900 bags in 2020.


UK: The Global Cement and Concrete Association (GCCA) has launched a video in recognition of the positive impact of women in the cement and concrete industry. The ‘call-to-action’ video also advances gender equality, in celebration of International Women’s Day.

Chief executive officer Dinah McLeod said, “As we help build the sustainable world of tomorrow, ensuring gender balance across all levels will encourage innovation and the forward thinking that we need to meet our climate goals. Our industry contributes to all UN Sustainable Development Goals including gender equality. We encourage more women to enter our industry to help shape its future and tackle the biggest challenge of our time – climate change.”

GCCA gender equality initiatives include the Global Cement and Concrete Industry Women’s Network and ‘Lean in Circles.’ The Women’s Network holds meetings and discussions to bring together women across GCCA member companies. Lean in Circles connects women across its networks in addressing specific issues. Women across the sector are encouraged to join. With these, the association aims to provide support, build confidence and ultimately increase diversity in the sector.


UK: QMJ Group has decided to postpone its Hillhead quarrying and recycling show until 21 – 23 June 2022. It follows review of its plans for 2021 with consideration given to the government’s post-Covid pandemic reopening roadmap. The event was originally planned to take place in June 2021.

Event director Richard Bradbury said, “Under these guidelines, it is clear that the show will not be able to operate legally in June this year. Our priority is to provide the Hillhead experience that our exhibitors and visitors have come to expect but, with the continuing uncertainty around travel restrictions and social distancing measures, this is not achievable in 2021.” He added, “By delaying the show until June 2022, the full benefits of a completed vaccination programme will have filtered through, allowing us to deliver a safe and vibrant event. The team looks forward to welcoming you back to Hillhead Quarry, Buxton, from 21 - 23 June 2022.”


Ghana: CBI Ghana has said that its costs have increased because it has had to import clinker during an on-going local shortage. The Ghana News Agency newspaper has reported that the Supacem cement producer attributes a rise in its cement prices to the cost increase.

Commercial manager Kobby Adams said, “The rising cost of cements is due to the unavailability of some products and these materials are imported in large quantities at exorbitant charges coupled with the unstable and high import charges.” He warned customers against accepting counterfeit products to circumvent the rising prices. “CBI Ghana pledges to continue with the expansion to be able to reach and serve more customers,” he added.


Lebanon: Cimenterie Nationale has announced that it will dispatch its last batch of cement for the foreseeable future on 6 March 2021. The L’Orient-Le Jour newspaper has reported the cause for the stoppage as the exhaustion of stocks of raw materials. The Lebanese government suspended access by cement producers to their quarries in October 2020. The nation’s three cement companies are permitted only to produce cement using clinker or limestone from existing stockpiles.

The company currently has 700 employees. It said that 3500 other jobs depend indirectly on its activities.


Spain: Cemex is supplying cement to the site of the upcoming Santolea Canyon dam in Aragon. The 59m-high structure will hold a 105hm3 reservoir, which will provide water to 2000 surrounding farms. Concrete pouring began at the site in March 2020 and is scheduled to reach completion in mid-2021.

Europe, the Middle East, Africa, and Asia regional president Sergio Menendez said, "We are very proud of our participation in the construction of the Santolea Canyon dam, a key project requiring materials and solutions of the highest technical and environmental specifications. The new Santolea dam will greatly contribute to support sustainable growth in the region”.


Pakistan: Bestway Cement claimed three awards at the Corporate Social Responsibility Awards 2021. The company won the Corporate Social Responsibility in Times of Covid-19 Pandemic award, the Education and Scholarships award and the Green Energy Initiatives award.

It said, “Bestway appreciates its responsibility towards local communities, thus playing a vital role in their socio-economic development such as improving access to health services and education, taking part in the urban development and environmental conservation programs and helping generate employment.


Mexico: Cemex has partnered with reintroduction specialist Ovis to release bighorn sheep at a site in Sierra El Viejo, Sonora state. The UMA El Plomito ranch supplied nine sheep. Four more sheep were born in the open pre-release pen which the sheep currently inhabit. The partners will support the animals with supplementary food and water while they adapt to their new environment.

Head of sustainability Vicente Saiso said, "The reintroduction of the bighorn sheep in Sonora represents one more example of our commitment to the conservation of biodiversity. It is a successful example of joint work between companies and conservation organisations to create a better future for our planet."


Ireland: CRH’s consolidated earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 5% year-on-year on a like-for-like basis to US$4.6bn in 2020 from US$4.5bn in 2019. Sales fell by 2% to US$27.6bn from US$28.1bn. The group reported a net debt/EBITDA ratio of 1.3x, its lowest since 2010.

Chief executive officer Albert Manifold said, "Our 2020 performance is testament to the commitment of our people and the strength and resilience of our business model. Through the repositioning of our business in recent years and our relentless focus on continuous business improvement, we have delivered record levels of profitability, margins and cash generation. Although the near-term outlook remains uncertain, our unique portfolio of businesses together with the strength of our balance sheet leaves us well positioned to capitalise on the growth opportunities that lie ahead."

By division the group reported growth in its US cement sales volumes in 2020 on a like-for-like basis due to demand in the west, surpassing the negative effects of the coronavirus pandemic elsewhere. However, volumes fell in Canada, particularly in the first half of the year. In 2020, CRH adopted the Ash Grove brand for all its North American cement businesses, unifying 12 cement plants and 42 cement terminals under one brand. In Europe sales and earnings fell due to poor markets in the west despite better conditions on the east. The group noted that it grew its profit in the Philippines due to a strong recovery in the second half and cost savings despite plant shutdowns.


US: Germany-based HeidelbergCement subsidiary Lehigh Cement has taken legal action against the Santa Clara county planning and development director over processing delays to the company’s planning applications. The Los Altos Town Crier newspaper has reported that the producer plans to fill in an open-pit aggregates mine, to open a second mine and to cut through a natural ridge near to its integrated Permanente cement plant near Cupertino in California. The plans constitute an amendment to a plan previously approved in 2012 .

The company says that it has ‘exhausted available administrative remedies’ against the local government office. It said that the rights it seeks to exercise are not subject to permits. It added that the director deemed the application complete in 2019, before requiring additional processing steps.


Israel: Seebo has announced an extended Series B funding round for a total of US$24m. Vertex Ventures is leading the round, in which10D, The Phoenix and Leumi Partners participate. Seebo will use the funding for a further expansion to its global reach, as well as enhancement of its process-based artificial intelligence product.

The company says that its product enables cement producers to identify process-driven inefficiencies in their operations in order to predict and prevent production losses. It can target losses including those involving kiln throughputs, emissions, clinker quality and ammonia usage. General partner Yanai Oron claimed that Seebo is the only supplier providing a productised solution based on artificial intelligence across the full product line.


China: Starlinger says that its Ad*Star bag has received designation as one of three types of national standard cement bag type specifications by the Chinese government. The supplier developed the block bottom valve bags made of woven polypropylene tape fabric in 1995. Global production was 15.7bn in 2020.

The new Chinese standard for cement packaging was released in October 2020. It applies to cement bags holding up to 50kg and lists laminated woven plastic bags (made of one layer of laminated plastic fabric or with additional paper liner), paper bags (three-layer, three-layer with PE liner, four-layer bags), as well as paper-plastic composite bags (paper bags with plastic liner) as possible packaging options. All three types of bags must be designed as block bottom valve bags.

The standard specifies the dimensions as well as physical and mechanical requirements of the cement bags. Regarding break resistance, for example, a cement bag has to survive a drop from 1m height a minimum of six times before it breaks. Furthermore, printing and marking, general bag appearance, testing methods, and rules for quality inspection during bag manufacture are established in the standard. It also stipulates that each bag must be provided with a certificate before selling.

Local cement companies have been given a transition period until 31 March 2022 to adapt to the new standard. Starlinger expects to deliver and install machines for an additional production capacity of more than 2 billion Ad*Star bags on the Chinese market in 2021 and 2022.


UK: Mexico-based Cemex subsidiary Cemex UK has announced the launch of Supaflo Rapide, a calcium sulphate binder-based screed for all domestic and commercial floor applications. The company said that the product achieved a moisture condition of below 75% relative humidity at between 10 and 15 days under controlled conditions.

West Europe regional quality and product technology director Steve Crompton said, “Our technical expertise has enabled us to develop a new, more sustainable, premium quality screed that will help increase the efficiency of the job site, allow effective use of labour and improve the climate impact of projects. Supaflo Rapide uses an enhanced calcium sulphate binder and the latest admixture technology to cut down on drying time while maintaining the speed of installation associated with these types of screeds.” He added, “This will greatly benefit construction companies as they juggle the on-going challenges of site working requirements alongside increasing demand for fast and safe completion of jobs with a lower environmental impact.”