Global Cement Newsletter

Issue: GCW503 / 28 April 2021

Headlines


For those not following the news in Nigeria, a nationwide row has broken out about the cost of cement in the country. Two of the three main local producers have been forced to publicly defend their pricing. Alongside this, the Senate of Nigeria has implored the federal government to encourage further local investment in cement production with the goal of keeping the end price down.

The current debacle started to take form in the autumn of 2020 when the price of cement leapt up by 35%. Builders and those immediately affected started complaining then but the argument really heated up in April 2021 when the local press started comparing the price of cement in Nigeria unfavourably against neighbouring countries. Dangote Cement, one of Africa’s largest cement producing companies and a Nigerian-based one at that, immediately defended itself by pointing out that its ex-factory price was the same or lower than in other African countries. It added that it could not control the price of cement between its factory and the end-consumer with dealers and middlemen benefiting from the gap. A week later the Senate of Nigeria intervened with its members discussing the issue in relation to a bill intended to liberalise the sector. This week, BUA Cement said publicly that it had no plans to raise the ex-factory price of its cement at the present time or in the future, “…barring any material, unforeseen circumstances.”

The roots of the current crisis go back to the mid-2010s when Nigeria declared itself ‘self-sufficient’ in cement after building up its domestic production capacity. At the same time it discouraged imports and embraced exports. Today, the country’s cement production capacity is around 49Mt/yr and annual demand is around 21Mt. This self-sufficiency path reached one milestone for Dangote Cement in 2020 with clinker exports starting from its Apapa terminal and the commissioning of its Onne Export Terminal in Port Harcourt. Under the old narrative for the sector this was a moment for congratulation. Suddenly though, instead of being seen as the saviour of the industry, members of the legislature were asking whether it was a good thing for Dangote Cement to hold a 60% share of the local market with most of the rest shared between Lafarge Africa and BUA Cement.

The price row has seen Dangote Cement promptly suspend exports from those new terminals. It also said it had reactivated its 4.5Mt/yr Gboko plant in Benue State, which was reportedly mothballed in 2018. It is worth noting here that the Gboko plant was part of that national capacity total above despite being mothballed until fairly recently. Aside from the middleman argument, the producer said that its production costs had risen over the past 15 months due to negative currency effects but that it hadn’t increased its ex-factory prices since December 2019.

A survey by the News Agency of Nigeria in the north-east of the country revealed all sorts of speculation about why the price was so high but few facts. Some of the opinions expressed included: the coronavirus outbreak; low production rates at the plants; market middlemen; and transport costs. What is clearer is that the country’s cement production capacity is more than double that of its demand. On paper at least the nation should be able to satisfy its own needs and then export the same again with plenty spare. Yet somehow this isn’t happening. If the government really believes in self-sufficiency it may be time to take another look at the cement sector, the challenges it faces and the needs of the end consumers.


China: Gao Dengbang has resigned as the chairman and an executive director of Anhui Conch. The company has proposed appointing Wang Cheng as an executive director subject to shareholder approval at the next annual general meeting.

Wang, aged 55 years, holds a postgraduate degree in economic management from the Central Party School. In March 2021 he joined Conch Holdings. He is currently the party secretary and chairman of Conch Holdings.

He started his career in 1983. Since 2003, he has held key senior positions in a number of provincial cities including deputy mayor and a member of the standing committee of the municipal committee of Huainan city, deputy secretary of the municipal committee and mayor of the municipal government of Bengbu city. Wang is currently a representative of the 13th National People’s Congress.


Turkey: Fatih Yücelik has been elected as the 24th chairman of the board of Türkçimento, the Turkish Cement Manufacturers’ Association. He succeeds Tamer Saka in the role.

Yücelik has worked as a senior executive in the construction sector. He currently works as the vice chairman of the board of directors and chairman of the executive board of Erçimsan Holding. He holds a number of positions with non-governmental organisations, including that of Eastern Anatolian Honorary Consul to the Democratic Socialist Republic of Sri Lanka, deputy chairman of the board of directors of Cement Industry Employers' Union (ÇEİS) and as a board member of Foreign Economic Relations Board (DEİK).


Germany: Schenck Process Group has appointed Ulrich Spiesshofer as the chairman of its advisory board with effect from 1 May 2021.

Spiesshofer recently served as chief executive of the group from 2013 to 2019 and has been a member of the executive committee of ABB since 2005. He currently serves on the board of directors of Infineon, Munich, serves as senior advisor to Blackstone and is assuming the chairman role at Sabre Industries, based in Texas, US. Prior to ABB, Spiesshofer was Senior Partner and Global Head of Operations for Roland Berger and served AT Kearney in Europe, Australia, Asia and the US for 11 years most recently as partner and managing director of their Swiss operations. He holds a PhD in Economics and a master’s degree in Business Administration and Engineering from the University of Stuttgart, Germany.


Germany: Flender has appointed Peter Waller as its chief financial officer (CFO) with effect from 1 May 2021. He will succeed Ulrich Stock in the post who has decided to retire from the post by mutual agreement. Waller holds international and capital market experience. He was most recently CFO of Swissport International and for CEVA Logistics. Stock, has been employed in various functions in the Siemens Group worldwide since 1991 and joined Flender as CFO in October 2012. He will continue to advise the company.


Australia: FCT Combustion has appointed Andy Bailes as its new chief executive officer for Asia-Pacific.

Bailes joins FCT after working for almost 30 years at Metso in Australia, having spent 10 years as General Manager – Engineered Product Services, where he was responsible for managing a large team covering proposals, sales, technical, commercial and contractual obligation of the EP Products (Grinding, Pyro, Process & BMH) Group within the Australia and New Zealand region. He is a previous winner of the NEI International Combustion Scholarship for Chemical Engineering and holds additional qualifications in Business Administration and Management.


China: Anhui Conch’s consolidated net profit rose by 20% year-on-year in the first quarter of 2020 to US$917m from US$763m. Its total operating income rose by 48% to US$5.31bn from US$3.58bn. The group attributed the rise in operating income to the negative effects of the coronavirus pandemic in 2020.


Ireland: CRH recorded a 3% like-for-like year-on-year consolidated net sales increase in the first quarter of 2021. American regional cement volumes increased by 5% and cement prices increased by 4%. Asian cement sales increased due to stronger volumes despite lower prices. Cement volumes rose in France but fell in Ireland due to the different timelines of the Covid-19 outbreak in each country in the periods under comparison. The price of cement rose in Eastern Europe. The group said that there is currently good underlying demand and continued pricing progress across key markets.

In the first quarter of 2021, the company spent US$200m on acquisitions. It says that it continues to have a ‘strong pipeline of opportunities.’ It earned US$200m from divestment of its Brazilian business. The company continues its share buyback programme with a US$300m tranche to be completed by the end of June 2021. It expects its earnings before interest, taxation, depreciation and amortisation (EBITDA) in the first half of 2021 to be ‘well ahead’ of first-half 2020 levels.

Chief executive officer Albert Manifold said “We had a positive start to the year in a seasonally quiet period for our business. He added “While near-term uncertainties remain, as we look ahead to the second half of the year we expect further normalisation in our markets as the health situation continues to improve.”


Mexico: GCC recorded consolidated net sales of US$179m in the first quarter of 2021, down by 2% year-on-year. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 9% to US$49.5m. In Mexico cement sales volumes rose by 6% but in the US they fell by 7.7% due to poor oil well cement sales.

The company’s chief executive officer Enrique Escalante said, "GCC started 2021 with strong financial performance - increasing EBITDA, free cash flow and EBITDA margin. Our results reflect momentum in the industry and show early signs that we are entering into a new phase of the industry's cycle with a stronger demand for most of our products. Therefore, we will focus our efforts in producing cement to supply pent-up demand." Escalante continued "Our backlog and the overall market trends of our business are encouraging in the US and Mexico. Both countries are emerging from tough and uncertain times into brighter months ahead. Our focus continues on maximising production, improving plant reliability, and optimising our logistics network to take advantage of the pent-up demand we are experiencing."


Saudi Arabia: Arabian Cement has placed an order with Denmark-based FLSmidth for the supply of equipment for an upgrade of its Rabigh cement plant. The order includes new DDX top cyclones, a quenching chamber and an ABC Cooler Inlet. Installation and commissioning is expected to be during the fourth quarter of 2021.

Arabian Cement’s chief executive officer Badr Osama Johar said, “With FLSmidth having provided the original line, they were the obvious candidate for the upgrade - we wanted a trusted partner who knows the ins and outs of the plant and is able to secure the success of the upgrade.” The producer previously engaged the company for the supply of its Rabigh plant’s kiln in 2008.


Iran: National cement production increased to 68.3Mt in the 2021 financial year, which ended on 20 March 2021. The figure corresponds to 79% utilisation of the country’s 87.0Mt/yr production capacity. The Tehran Times newspaper has reported that Iranian cement consumption during the year was 65.0Mt and exports were 11.0Mt. Iran supplied both cement and production equipment to its neighbouring countries.


Pakistan: House of Habib subsidiary Thal Limited has invested US$11.0m to establish a polypropylene woven bag plant in Hub, Balochistan. Germany-based Windmoller & Holscher will supply the plant. The Business Recorder newspaper has reported that it will have a capacity of 90m bags/yr.

Chief executive officer Syed Umair Ahmed said "Thal Limited also has a paper production capacity of 250m bags/yr and with a polypropylene woven bag production capacity of 90m bags/yr we will be able to cater to not only the local market but also grow our export business."


Japan: An off-grid power system at Taiheiyo Cement’s Hidaka cement plant in Saitama prefecture exploded overnight on 27 April 2021, damaging a car in a nearby car park. Fire services quickly fought and extinguished a fire in woodland surrounding the plant. Kyodo News has reported that none of the 14 people working at the site at the time was harmed. Residents 2km away reportedly heard and felt the blast.


Pakistan: DG Khan Cement recorded a consolidated net profit after tax of US$18.5m in the first nine months of the 2021 financial year, compared to a US$12.0m loss in the corresponding period of the 2020 financial year. Net sales rose by 8% year-on-year to US$213m from US$198m. Cement sales volumes fell by 5% to 4.09Mt from 4.32Mt.

The company praised Pakistan’s ‘smart lockdown’ as a mitigating factor of the damaging effects of the coronavirus outbreak. Clinker production was 94% of capacity, compared to 101% in the first nine months of 2020. Total kiln operational days fell by 8% to 813 from 883. Depending on on-going outbreak conditions, the company forecast continued momentum gains in housing and infrastructure. It expects to commission a new waste heat recovery (WHR) power plant in the fourth quarter, reducing costs.


Pakistan: Punjab Chief Minister Usman Buzdar says that up to 16 cement plants are being set up in the province. DG Khan will operate three of the new plants, according to the Frontier Star newspaper. Buzdar made the comments at a political meeting in late April 2021.


India: The Andhra Pradesh Pollution Control Board (APPCB) has issued Zuari Cements’ Kapada cement plant with a closure order. The order follows an alleged failure to conform to a previous environmental order from the APPCB. The Indian Express newspaper has reported that, pursuant to the order, the board has requested police to cut off the power supply to the integrated cement plant.


Bolivia: Fábrica Nacional de Cemento (FANCESA) has increased the clinker capacity of its Cal Orcko cement plant to 2100t/day with the inauguration of a new clinker line. The La Razón newspaper has reported that the company launched the project in May 2018 at an investment cost of US$215m. The work employed 1390 people, and a further 4000 indirectly. The producer expects the expanded plant to reach full capacity by mid-2021.


Colombia: Bancolombia has granted a US$108m loan to Grupo Argos. The loan’s interest rate is linked to two indicators, namely greenhouse gas emissions reductions and the increase in participation by women in the group’s upper management. These factors can decrease the interest rate by up to 100 basic points. The group said that signing the deal constitutes another milestone in realising its environmental, social and governance (ESG) commitment. The financing agreement modifies current conditions for debt and will have a five-year maturity. As such, it does not increase Grupo Argos’ current levels of indebtedness.

Group chief executive officer Jorge Mario Velásquez said “We are proud of this significant step, which reaffirms our commitment to driving gender equality and contributing to fighting climate change with concrete actions. Both of these topics lie at the heart of our Business Group’s strategy, in line with global goals defined in the 2030 Agenda for Sustainable Development.”


India: Shiva Cement’s consolidated net sales in the 2021 financial year, which ended on 31 March 2020, were US$3.81m. The figure represents a 12% year-on-year decline from US$4.33m. Net loss also fell, by 4% to US$2.94m from US$3.05m.


China: China Shanshui Cement recorded a consolidated net loss of US$38.7m, down by 34% year-on-year from US$59.0m. ET Net News has reported that its operating sales increased by 70% to US$481m.


Philippines: The Department of Trade and Industry (DTI) has launched a probe into the possible imposition of a new anti-dumping duty on imports of cement from Vietnam. The Philippine Star newspaper has reported that Vietnamese cement continues to enter the Philippine market at allegedly dumped prices despite the DTI’s safeguard measures on the product. The DTI is authorised to investigate where prices are believed to be harmful to the domestic industry. Cemex Philippines, Holcim Philippines and Republic Cement have applied for a probe.


El Salvador: Holcim el Salvador, part of Switzerland-based LafargeHolcim, has invested US$4.0m in the first four months of 2021 in establishing three new 70m3/hr-capacity ready-mix concrete plants and one aggregates plant. The La Prensa Grafica newspaper has reported that the plants have increased the company’s concrete production capacity by 60%. The concrete plants are situated at Apopa, La Paz and Sonsonate, enabling the producer to serve a wide area. The new plants have generated 100 direct and indirect jobs. As part of the investment, the company acquired 22 new concrete trucks. It plans to establish two further concrete plants at Santa Ana and in eastern El Salvador in 2021.

Concrete and aggregates manager Guillermo Torres said “We intend to have national coverage for all builders of all types and sizes.” He added “We have seen a rebound in the construction sector. The main bet is always high-rise, medium and high-end housing, small-scale shopping centres with open concepts, textile industrial buildings plus government investment in roads and maintenance and extension.”


Germany: Messe München has announced the postponement of the Bauma 2022 trade fair to 24 – 30 October 2022. The previously scheduled date for the event had been 4 – 10 April 2022. The organiser said it recognised growing uncertainties about the April date in light of the on-going Covid-19 outbreak. The new dates are at a time when it is confident of the possibility of international travel.

Chair and chief executive officer Klaus Dittrich said, “The decision to postpone Bauma was not an easy one for us, of course. But we had to make it now, before the exhibitors start planning their participation in the trade show and make corresponding investments. Unfortunately, despite the vaccination campaign that has been launched around the world, it is not yet possible to predict when the pandemic will be largely under control and unlimited worldwide travel will be possible again. This makes participation difficult to plan and calculate for both exhibitors and visitors. Under these circumstances, we would not have been able to fulfil our central promise that Bauma, the world's leading trade fair, represents the entire spectrum of the industry and generate international reach like no other comparable event. After all, Bauma’s last edition welcomed participants from over 200 countries around the world. Hence, the decision is consistent and logical.”


Switzerland: LafargeHolcim’s first-quarter consolidated net sales rose by 1% year-on-year to Euro4.86bn in 2021 from Euro4.79bn in 2020. Its recurring earnings before interest and taxation (EBIT) doubled to Euro478m from Euro237m. Cement sales volumes grew by 5.5% to 47.3Mt and ready-mixed concrete by 2.7% to 10.1Mm3. The group said that it anticipates growth to accelerate in 2021. It expects to achieve its Strategy 2022 targets one year ahead of time.

During the quarter, the group concluded its acquisition of US-based Firestone Building Products and received an A1+ social, environmental and governance rating from UK-based Vigeo.


China: China Resources Cement’s turnover grew by 51% year-on-year to US$1.1bn in the first quarter of 2021 from US$720m in the same period in 2020. Its profit rose by 16% to US$166m from US$143m. Sales volumes of cement increased by 65% to 18.4Mt and concrete by 80% to 2.87Mm3.


Germany: Cemex Zement, part of Mexico-based Cemex, has bought a 400t/hr floating bucket chain dredger. The company plans to use the vessel in its aggregates operations on the River Elbe around Rogätz, Saxony-Anhalt. It includes a dewatering screening machine, a fine sand recovery system and a conveyor belt that transports the processed sands and gravels ashore. The dredger replaces an older 350t/hr model which has been in action since the mid-1990s. The company said that the purchase is in line with its strategy to enhance its vertically integrated positions near growing metropolises. Elbe operations supply aggregates to produce concrete for the Berlin market.

Central Europe vice president of materials Rüdiger Kuhn said "With this important investment, our company strengthens its position in the metropolitan market of Berlin and secures the long-term availability of valuable mineral raw materials for its customers."


US: Energy company Luminant has awarded Charah Solutions a fly ash management contract extension for its Miami Fort and Zimmer coal-fired power plants in North Bend and Moscow, Ohio. Charah Solutions says that it will pass on the ash for use in concrete production. It will continue to manage the onsite landfill and impoundment operations under its existing contract with Luminant, including material loading, hauling and disposal of approximately 180,000t/yr. In addition, Charah Solutions will be responsible for the beneficiation and utilisation of approximately 400,000t/yr of fly ash. The contract ends in 2027, when both power plants are expected to close.

President and chief executive officer Scott Sewell said “We have been proud to partner with Luminant on its sustainability efforts for many years and are delighted to extend our relationship at these Ohio sites through 2027. We have dramatically reduced the need to landfill fly ash at Miami Fort and Zimmer through our on-going partnership, saving Luminant both expense and valuable landfill space while lowering their risk.” He added “As a result of this expanded agreement, Charah Solutions will continue to provide a reliable supply of high-quality fly ash to ready mix concrete producers in the Midwest, Northeast and deep South through our MultiSource network.”


US: The Conveyor Components Company has launched its new Model BSD belt speed sensor. The unit has overspeed, underspeed and zero speed control settings and can shut down rotating equipment to stop damage. It can be used with various controllers. The supplier says that the sensor’s ain advantages are drilling-free installation and flexibility as to location.


China: Tangshan Jidong Cement net loss fell by 82% year-on-year to US$7.93m in the first quarter of 2021, down by 82% year-on-year from US$43.3m in the first quarter of 2020. Its operating income rose by 64% to US$785m from US$478m.


Norway: Norcem, part of Germany-based HeidelbergCement, has awarded a contract to Denmark-based FLSmidth to provide modifications to allow for downstream CO2 removal at its integrated Brevik cement plant. The supplier will begin work in the unit’s winter 2022 shutdown. Its upcoming carbon capture and storage (CCS) installation is scheduled for commissioning in September 2024.

Norcem project manager Tor Gautestad said, “We are very excited to have FLSmidth on board and to finally begin the construction of the full-size installation.” He added, “FLSmidth’s extensive process knowledge, and air pollution control in particular, will be critical to the success of the project.”


Germany: Holcim Deutschland, part of Switzerland-based LafargeHolcim, has launched its new ECOPlanet Zero carbon neutral cement. The producer says that it will offset the product’s CO2 emissions through a peatland rewetting service provided by MoorFutures. The cement also has a low clinker factor due to the use of ground granulated blast furnace slag (GGBFS)-enriched binders.

Cement and binders sales director Matthias von der Brelje said “Holcim has been reducing the specific CO2 emissions of binders very effectively for decades by using high-quality GGBFS.” He added, “In the future, we want to work with planners, contracting agencies and users to further advance the use of our CO2-reduced binders. This helps our customers to realise their vision of sustainable building even better. In terms of product technology, the ECOPlanet series also has outstanding - and in some cases even better - properties than Portland cements, for example good workability, light colour, favourable heat development and high fatigue strength.”


Mexico: Holcim Mexico, part of Switzerland-based LafargeHolcim, has launched the new EcoEtiquetas label. The label designates products conforming to a set of ecological criteria set by the company. These include a certain level of recycled content or a reduced carbon footprint, as specified by the label on each product. The label is now found on Holcim Apasco, Maestro and Supra Cemento cement bags. These products say they offer CO2 reductions from 30 – 60% compared to Ordinary Portland Cement.

Chief executive officer Jaime Hill Tinoco said, “This is one more step on our way to becoming a Net Zero Company, but also when our clients buy our cements with EcoEtiquetas, they will have the certainty that they are collaborating in the care of the environment by using or distributing products that have been thought not only in terms of quality and performance, but also in ensuring a better world for present and future generations.”


Turkey: Türkçimento, the Turkish Cement Manufacturers’ Association, says that it has held the sector’s first virtual cement conference and exhibition with the conclusion of Digitalcem on 21 April 2021. The event focused on the need to pioneer in the sector through innovative thinking. Topics included circular economy, sustainable and competitive products, green energy transformation, digital cement anddeveloping technologies. 22 companies hosted booths and over 360 participants took part in the two-day event.

Chair Tamer Saka said, “We keep close track of the European Union climate and environmental policies and the harmonisation process of Turkey’s cement sector, through the target of being a pioneer in our sector’s work performed within the framework of sustainability. In this scope, we started the Turkish Cement Sector Carbon Roadmap project at the end of 2020. We will present Turkey with the sector's roadmap by scrutinising the data on greenhouse gas emissions of almost all cement plants in Turkey.”