Global Cement Newsletter

Issue: GCW519 / 18 August 2021

Headlines


Our latest look at South America starts by posing the question: how far can the market in Brazil keep growing? As Graph 1 shows below, cement sales skyrocketed through the coronavirus pandemic, due to a general recovery locally that started in 2018 and relatively weak lockdown measures compared to other countries. Rolling annual totals on a monthly basis from the National Cement Industry Association (SNIC) suggest that this growth period tailed off from May 2021. SNIC was also keen to point out that, despite nearly hitting nearly a 20% growth rate at one point, the sector was still 11% behind where it was before the lull that lasted from 2015 to 2018. As ever the association has an eye on potential risks. At present these include legislative reforms, price inflation and carbon pricing. It noted that Mexico, Colombia, Chile and Argentina all price carbon already but said that the country ‘has a great ally in the Brazilian cement industry’ on the issue.

Elsewhere the big story in Brazil has been the ongoing sale of Holcim’s local assets. The latest news at the start of August 2021 was that the bidders included CSN Cimentos, Cimentos Mizu, Cimento Apodi, InterCement and Votorantim. The first three companies were reportedly working in a consortium in an attempt to buy 10 production plants while InterCement and Votorantim were focusing on smaller bids to avoid the ire of the competition regulators. Aside from this, CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021 and Companhia Nacional de Cimento (CNC), part of Italy-based Buzzi Unicem’s 50% subsidiary BCPAR, acquired CRH Brasil following approval by the regulators. Of note on the production side, Votorantim Cimentos started operation of a new production line at its Pecém grinding plant in Ceará in July 2021.

Graph 1: Cement sales in selected South American countries in first half of year, 2019 – 2021. Source: Local cement associations and national statistics offices.

Graph 1: Cement sales in selected South American countries in first half of year, 2019 – 2021. Source: Local cement associations and national statistics offices.

Over in Peru the now familiar gap-tooth pattern of stunted growth in 2020 can be seen in the sector’s cement sales, but sales rebounded far stronger than comparable sized markets in Argentina and Colombia. Sales nearly doubled to 6.42Mt in the first half of 2021 from 3.33Mt in the same period in 2020 and were significantly higher than the 4.94Mt recorded in the first half of 2020. Imports are also worth watching. Combined cement and clinker importers nearly doubled from 0.76Mt in the first half of 2019 to 1.4Mt in the first half of 2021. Clinker imports made up about two thirds of this figure and the Association of Cement Producers (ASOCEM) noted in June 2021 that 88% of the imported cement came from Vietnam while about two thirds of the clinker came from Japan and Indonesia.

Away from the market data, both Cementos Pacasmayo’s and Unión Andina de Cementos’ (UNACEM) financial results bounced back in the first half of 2021. Cementos Pacasmayo attributed the rebound to sales of bagged cement to the self-construction sector and public sector reconstruction demand. UNACEM also noted the effect of the self-construction sector and said it expected its ‘solid’ cement despatches to continue for the rest of the year despite the risk of a third wave of coronavirus in the country and the messy presidential elections. Other stories of note so far in 2021 include new developments in Cementos Interoceanicos long-held plans to build a 1.0Mt/yr cement plant in Puno and a major upgrade planned to Yura’s integrated plant in Arequipa.

In Colombia local cement despatches grew by 34% year-on-year to 6.20Mt in the first half of 2021 from 4.61Mt in the same period in 2020. Cementos Argos reported major improvements in sales, sales volumes of cement and earnings due to the lockdown in 2020. However, a national wave of protests calling for social reform that started in the spring of 2012 forced the company to shut down its integrated Yumbo plant for over a month. This represented 18% of its national sales. The output of other plants in the country was also negatively affected by roadblocks created by the unrest. Cemex reported the same problems in the country.

Finally, Argentina’s cement despatches rose by 44% to 5.52Mt in the first half of 2021 from 3.83Mt in the same period in 2020. Loma Negra reported that its sales, sales volumes and earnings were all up by a similar rate. The subsidiary of Brazil-based InterCement started up the kiln on its new 2.7Mt/yr production line at the L’Amalí cement plant in Olavarría in June 2021 and commissioning of the new mill and despatch centre on the line were reportedly coming soon in early August 2021. Earlier in the year, in May 2021, Holcim Argentina inaugurated a new 0.5Mt/yr clinker production line at its Malagueño cement plant in Cordoba. These expansion projects were ordered long before coronavirus appeared so it will take a while to see their effects upon the local market. However, the government intervened in June 2021 when it persuaded some building materials producers to agree to reference prices in a bid to curb mounting inflation.

This is what recovery looks like so far in 2021 in the larger cement producing countries in South America. The Brazilian market’s growth phase may be waning after a furious period that even coronavirus wasn’t allowed to slow. Peru’s potential seems set to take off, Colombia’s rebound should have been greater (but it was dented by social unrest) and Argentina seems to be resetting to its usual level. Whatever else happens in the coming months the story to watch going forward will be which company picks up Holcim’s assets in Brazil.


India: Shree Cement has appointed Shrinath Savoor as its chief sustainability officer. Savoor trained at the Birla Institute of Technology and Science and the Institute of Chartered Accountants of India. He later worked for Holtec before becoming the Joint President for Strategy and Business Development at Shree Cement in 2009.


US: Solidia Technologies has appointed Russell Hill as its chief technology officer. He succeeds Nicholas DeCristofaro, who will retire in September 2021.

Hill joins Solidia after 25 years working for Boral, most recently as Group Chief Innovation Officer. In 2012, he led the discovery and development of a new series of ‘green’ products that opened new market segments and geography to the building materials producer. Hill holds a doctorate in chemistry from the University of North Texas and is named as an inventor on 56 patents, consisting of over 20 distinct families. He is a member of the American Concrete Institute, ASTM, the American Chemical Society and Alpha Chi Sigma.

Solidia Technologies produces reduced-CO2 concrete with lower-energy cement and water-free CO2 curing.


US: Pozzolan cement producer Green Cement has appointed Grant Quasha as its chief executive officer (CEO). He succeeds John T Preston, who will remain as chairman of the board. Quasha will be based in Texas, where the company has its headquarters and existing production facilities. He will also be joining the company's board of directors.

Quasha previously worked as the regional chief investment officer of GFG Alliance. Before this he was the CEO and managing director of Paringa Resources, a mining company, and the chief commercial officer of Wolverine Fuels, a producer of bituminous coal. He also worked as the North American Manager of Corporate and Structured Finance at Trafigura AG, as an investment banker in JPMorgan's New York mining and metals division and has worked on the board of directors of the National Mining Association. Quasha holds a Bachelor of Arts degree from Harvard College and a Master of Business Administration (MBA) from Harvard Business School.

Green Cement produces cements made using pozzolonic materials including its PozzoSlag product. It sold over 2Mt of cement in 2020.


Iran: 56 cement companies out of 78 have joined the Iran Mercantile Exchange (IME), a commodities exchange based in Tehran. Abbas Yaghoubi, Director of Commodity Exchange Market Operations, told the Mehr News Agency that all the country’s cement will eventually be traded on the exchange. The IME has to set a based offering volume for every cement production factory. The remaining cement producers outside of the IME have been asked to join and the Iranian Cement Industry Association has written to them also on the matter. Yaghoubi revealed that cement trading on the exchange reached 1Mt/week in August 2021 after starting from around 0.1Mt/week.


Spain: Construction work has started on 6.2MW solar plant that will supply electricity to Cementos Cosmos’ Toral de los Vados integrated plant in León. Commissioning is scheduled by February 2022. The photovoltaic plant will include over 11,400 solar panels in an area of around 10 hectares. It will meet 15% of the plant’s electricity demands. Spain-based solar specialist EIDF (Energía, Innovación y Desarrollo Fotovoltaico) is supplying the unit at a previously reported cost of Euro4m.


Russia: SLK Cement has ordered 100 gondola railway wagons to improve its logistics operations over the busy summer sales period. It increases the company’s fleet of railway wagons - including hoppers, gondolas and dump cars – to 570 units. Yevgeny Grishchenko, the Logistics Director of SLK Cement, said that the expanded railway fleet would reduce delays in deliveries and reduce transport costs.


Bahrain: Saudi Arabia-based Saudi Cement has increased its share in its Bahraini subsidiary United Cement Company (UCC) by 37% to 100%. The purchase of additional shares cost it around US$7.5m in May 2021. UCC is an importer and distributor of bulk cement. It operates a marine terminal and was founded in 1999.


India: The Energy and Resources Institute (TERI) and the Global Cement and Concrete Association (GCCA) India have signed a memorandum of understanding to accelerate sustainable development of cement and concrete sectors. Under the agreement, TERI will provide its domain expertise and knowledge to support GCCA India's work to achieve sustainability in the Indian cement and concrete sector, according to the Press Trust of India. The collaboration will see TERI's involvement in GCCA India work programs while GCCA India and its members will support TERI's projects on technology innovation, energy efficiency enhancement, and resource efficiency implementation.

"The demand for cement and concrete will only increase in the decades to come due to population growth and urbanisation. Therefore, reducing CO2 emissions in the cement and concrete industry is critically important,” said Mahendra Singhi, chairman of GCCA India. He added that working with stakeholders across sectors and with civil society would be essential to reaching the association’s sustainability goals.


Denmark: 29 consortium members, including Aalborg Portland Cement, Aker Carbon Capture and INEOS, have signed up to phase two of the Greensand carbon capture and storage pilot project. Proof of concept planning is now underway with a potential start date of around late 2021 subject to securing funding from the government’s Energy Technology Development and Demonstration Program. If successful an offshore injection pilot is scheduled for late 2022.

A majority of the Danish Parliament decided in December 2020 to set aside a special funding pool to support a CO2 storage pilot project, aiming to investigate the reservoir-CO2 interaction in the Danish North Sea. This pilot project, if designed correctly, could form the basis for a decision, to enable CO2 storage by 2025.

Mads Weng Gade, Head of Country, Denmark and Commercial Director INEOS Energy said, “We are taking this step by step. We now have the consortium in place, and if we are successful in receiving ongoing support from the Danish Government and advisory board, Greensand will be able to take another important step forward in supporting the Danish Climate Strategy.”


Spain: An anonymous source informed the Regional Government of Andalusia about the discovery of a cave with interesting geological features at a quarry run by FYM near its Malaga integrated cement plant. Photographs of the cave subsequently circulated on social media raising local awareness, according to El Español. The local government has commissioned a study to assess whether the site has any archaeological interest that might protect it however the condition of the site is reportedly poor. FYM, a subsidiary of Germany-based HeidelbergCement, has confirmed that activity in that part of the quarry has been ‘paralysed’ while it waits for the study to be completed.


Uzbekistan: The Minister of Investments and Foreign Trade (MIFT) says that an unnamed Singapore-based company is considering building an integrated cement plant in the country. The Uzbekistan National News Agency reports that investors from Singapore attended a meeting with Aziz Voitov, the First Deputy Minister of MIFT, and Adham Ikramov, the chairman of the Chamber of Commerce and Industry.


Uzbekistan: Cement production grew by 23% year-on-year to 5.8Mt in the first half of 2021. Data from the State Statistics Committee of Uzbekistan shows that production increased fastest in the second quarter. It was previously reported that the country imported 1Mt of cement in the first four months of the year. 48% came from Kazakhstan, 27% from the Kyrgyzstan, 23% from Tajikistan and 1% from both Iran and Turkmenistan.


Pakistan: Maple Leaf Cement’s sales rose by 22% year-on-year to US$216m in the financial year to 30 June 2021 from US$177m in the same period in 2020. It reported a profit after tax of US$23.2m compared to a loss of US$21.6m previously.


Russia: Cemix, a subsidiary of the Austrian firm Lasselsberger, has launched its new 0.24Mt white cement plant at Bashkiria, near Magnitogorsk in Chelyabinsk Oblast. President Vladimir Putin attended the ceremony. The building materials producer plans to distribute its products nationally from terminals at Lukhovitsy in Moscow Oblast and Afipsky in Krasnodar Krai. The company is a subsidiary of Austria-based Lasselsberger.


Germany: Holcim Deutschland says it has joined Madaster, an online registry for materials and products. Under the scheme, buildings are registered, including the materials and products that were used in their construction. This is intended to make the reuse or recycling of the materials easier, to encourage ‘smart’ design and to eliminate waste. Thorsten Hahn, the chief executive officer of Holcim Deutschland said “The use of alternative raw materials and the closing of product cycles are among the greatest challenges in the construction industry. We owe it to future generations to use the resources that are available to us responsibly and sensibly.”


Colombia: Argos North America has taken out a US$300m loan where the interest rate is linked to CO2 emission reduction indicators and the increase in the percentage of women in leadership positions. It will be used to prepay an existing syndicated loan. The loan has been taken out from BNP Paribas Securities, Natixis, Sumitomo Mitsui Banking Corporation and the Bank of Nova Scotia. This loan is the first linked to environmental, social and corporate governance performance that Argos has signed with international banks.


Saudi Arabia: Qassim Cement plans to build a new 10,000t/day production line at its Buraydah cement plant to replace some of the site’s existing lines. Construction will begin in the first half of 2022. The company will announce the cost of the project after completing preliminary studies.


China: China Resources Cement recorded a consolidated turnover of US$2.59bn in the first half of 2021, up by 19% year-on-year from US$2.17bn in the first half of 2020. Cement and clinker sales volumes increased by 16% to 41.6Mt and 30% to 7.04Mm3 respectively. Its profit attributable to owners of the company rose by 13% to US$467m from US$538m. Its capital expenditure (CAPEX) for the half totalled US$159m. It plans to spend US$540m in the full year in 2021.


India: Holcim subsidiary ACC has signed the Business Ambition for 1.5°C pledge and joined the UN Framework Convention on Climate Change’s Race to Zero campaign. The producer partnered with CDP India’s Science-Based Targets (SBT) Incubator programme to develop its targets. It has committed to reduce its cement’s Scope 1 emissions by 21% to 409kg/t from 511kg/t and its Scope 2 emissions by 48% per tonne between 2018 and 2030. In 2020, the Scope 1 emissions of ACC’s cement were 493kg/t.

CDP India executive director Shankar Venkateswaran said, “CDP India’s SBT Incubator supports companies in India to align with these targets. By committing to science-based emissions reduction targets, ACC has positioned itself as an industry leader, showing the way for the sector’s transformation to a low carbon sustainable future. We believe that this will encourage more companies on their Net Zero Journey.”


Colombia: London Stock Exchange Group subsidiary FTSE Russell has listed Grupo Argos subsidiary Cementos Argos among the top companies on its FTSE4Good environmental, social and governance sustainability index. The index evaluates company performance across 150 indicators including water efficiency, health and safety, labour standards, human rights, fiscal transparency and anti-corruption.

Legal and Sustainability Vice President María Isabel Echeverri said, “We are very excited about being included in the FTSE4Good because it recognises the importance of sustainability management and value creation for us, as well as the efforts we have been making to communicate our goals in a transparent and timely manner in environmental, social commitments and government aspects.”


Mexico: Cemex has supplied over 100,000m3 of its Vertua concrete product range to projects in its home country. Deliveries reached 113,000m3 to 1700 projects by the end of July 2021. Outstanding orders exceed 500 projects. The company launched the low and net-zero CO2 concrete products in early 2021.


US: Martin Engineering has launched new online conveyor training content. The supplier says that the content integrates with client customer learning management systems (LMS). It is intended to enable users to independently assign, monitor and certify progress of participants across all of a producer’s locations.

Training manager Jerad Heitzler said, “With this new effort in place, Martin has taken another step forward in global conveyor training.” He added “We’ve emerged as an LMS content provider to deliver greater flexibility and control over employee learning, helping customers attain the highest levels of efficiency and safety.”


Russia: Denmark-based FLSmidth has won a contract with Sebryakovcement for the supply of a grinding mill for its Sebrakovsky cement plant in Volgograd Oblast. The mill will have a capacity of 175t/hr. The supplier plans to commission the mill in 2023.


Russia: Kaluga Cement Plant has put its unfinished cement plant in Kaluga Oblast up for auction. AK & M News has reported that the auctioneer has valued the site at US$374,000, with a reserve of just US$243,000. The reason for the sale is the bankruptcy of Kaluga Cement Plant.


Spain: Acciona and Enagás-led consortium Power to Green Hydrogen Mallorca has begun the construction of one of two planned solar power plants at Cemex España’s Lloseta plant in Majorca. The first, 13,500MWh/yr, plant will consist of 16,600 solar panels. A second, 10,800MWh/yr plant consisting of 12,700 panels will subsequently bring the total power capacity to 24,300MWh/yr. This is enough to produce 300t/yr of green hydrogen for the Lloseta cement plant’s operations.

The project to develop a ‘renewable hydrogen ecosystem’ in Majorca currently has Euro10.0m-worth of funding. The consortium has agreed with local to sheep farmers to allow the latter to use the solar power plant sites for grazing after construction is finished.


India: The board of directors of Prism Johnson has approved plans for the company to raise funds through unsecured non-convertible debentures. The total value raised will be US$12.8m. The producer will issue the debentures on a private basis.


North America: US-based CalPortland has become a corporate member of the Wildlife Habitat Council. The council manages habitats to support sustainable ecosystems and the communities surrounding them. The Japan-based Taiheiyo Cement subsidiary says that the move formalises its commitment to integrating biodiversity and conservation action into its sustainability efforts.

President and chief executive officer Allen Hamblen said "Our membership with the Wildlife Habitat Council provides a unique opportunity to take corporate sustainability goals and objectives and translate them into tangible, on-the-ground actions which ensure a sustainable environment for the next generation."


India: Three construction workers have died after scaffolding collapsed inside the chimney of Saurashtra Cement’s Porbandar cement plant in Gujarat. India Today Online News has reported that a team of ten builders was performing repair work before the accident occurred. Four of the seven survivors remain trapped. District officials have established contact with them via a drone.


Argentina: Loma Negra recorded first-half 2021 consolidated sales of US$290m, up by 44% year-on-year from US$201m. It increased its earnings before interest, taxation, depreciation and amortisation (EBITDA) by 64% to US$100m from US$61.0m. Its net profit was US$86.0m, compared to US$12m in the first half of 2020. The company sold 2.79Mt of cement in the period, up by 39% from 2.01Mt.

Chief executive officer Sergio Faifman said “We are pleased to announce another quarter with an excellent performance. Demand continues with a strong momentum, and after several quarters of recovery is now exceeding pre-pandemic levels.” He continued “For the second half, we expect strong recovery to continue and an expansion vis-à-vis pre-pandemic levels, as seasonality and public works should begin to contribute positively. Nonetheless, we remain cautious, as the macroeconomic context may affect the recovery and some degree of uncertainty remains in relation to the pandemic.”


Denmark: FLSmidth recorded consolidated sales of Euro1.05bn in the first half of 2021, down by 7.0% year-on-year from Euro1.13bn. Its cement business’ sales fell by 17% to Euro346m from Euro419m. The supplier recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of Euro76.9m, up by 6.0% from Euro72.9m. Its total order backlog grew by 10% to US$2.24bn from US$2.05bn. It expects the majority of this to be converted into revenue in 2021. During the second quarter of the year, the company took in an order for Europe’s first full-scale clay calcination installation.

Chief executive officer Thomas Schulz said “Our second quarter showed positive progress across the board: A strong order intake, higher revenue from both service and capital businesses, 50% higher earnings before interest, taxation and amortisation (EBITA), further reduction in net working capital and a strong free cash flow.”


Canada: Giatec has launched Roxi, an AI testing programme designed to reduce cement use in ready-mix concrete production. The programme combines with Giatec’s proprietary sensing technology. The supplier has received funding from Sustainable Development Technology Canada (SDTC) for Roxi’s development and industrial roll-out.

CEO Pouria Ghods said “Based on two case studies, we estimate that up to 20% reduction in cement usage can be achieved using our technology. With this funding, Giatec will provide a solution that will bring not only economic, but also environmental benefits, by reducing CO2 emissions, air pollution, and water use in the construction industry.”


India: Germany-based HeidelbergCement subsidiary HeidelbergCement India has secured 22GWh-worth of power from Lalganj Power. The energy company will source the electricity from its solar power plants. The deal is expected to reduce the company’s CO2 emissions by 0.4Mt over the life of the contract.


Spain: Cemex España has inaugurated its refurbished central laboratory at Buñol, Valencia. The Valencia Plaza newspaper has reported that the laboratory is equipped with new analytical equipment. It will introduce several new techniques for testing cement to the company’s existing procedures.

Quality Director Jesús De la Calle said "The company's strategy is currently focused on decarbonising all of its products and processes and developing specific low-carbon products for specific needs, and the central laboratory is key in the achievement of these objectives." The facility is one of the company’s three central laboratories. The others are situated in Monterrey, Mexico, and Tampa, US. The Buñol laboratory will be closely involved in the conversion of Cemex España’s Alicante cement plant to a ‘benchmark, pioneer’ low-CO2 cement plant.