Global Cement Newsletter

Issue: GCW523 / 15 September 2021

Headlines


Companhia Siderúrgica Nacional (CSN) Cimentos was confirmed this week as the agreed buyer for Holcim’s Brazilian cement business for US$1.03bn. The deal includes five integrated cement plants, four grinding plants and 19 ready-mix concrete facilities. CSN is now poised to become Brazil’s third-largest cement producer by production capacity after Votorantim and InterCement. Or second place if you believe CSN’s cheeky claims about a competitor’s idle capacity!

Figure 1: Map of cement plants included in CSN Cimentos’ deal to buy LafargeHolcim Brazil assets. Source: CSN Investor Relations website.

Figure 1: Map of cement plants included in CSN Cimentos’ deal to buy LafargeHolcim Brazil assets. Source: CSN Investor Relations website.

CSN originally started out in steel production and this remains the major part of its operations to the present day. In 2020 it reported revenue of US$5.74bn. Around 55% of this came from its steel business, 42% from mining, 5% in logistics and only 3% came from its cement segment. CSN’s path in the cement sector started in 2009 when it started grinding blast furnace slag and clinker at its Presidente Vargas Plant at Volta Redonda in Rio de Janeiro state. It then started clinker production in 2011 at its integrated Arcos plant in Minas Gerais. Not a lot happened for the next decade, publicly at least, as the country faced an economic downturn and national cement sales sunk to a low in 2017. From around 2019, CSN Cimentos then started talking about a number of new proposed plant projects elsewhere in Brazil, dependent on market growth and an anticipated initial public offering (IPO). These included plants at Ceará, Sergipe, Pará and Paraná and expansion to the existing units in the south-east. Then CSN Cimentos agreed to buy Cimento Elizabeth for US$220m in July 2021.

It is worth noting that the Holcim acquisition is subject to approval by the local competition authority. For example, the Cimento Elizabeth plant and Holcim’s Caaporã plant are both in Paraíba state and within about 30km of each other. If approved, this would give CSN Cimentos two of the four integrated plants in the state, with the other two operated by Votorantim and InterCement respectively. CSN also stands to pick up four integrated plants in Minas Gerais from Holcim to add to the one it holds at present. Although this would seem to be of less concern due to the high number of plants in the state.

Holcim has made a point of saying that its divestment in Brazil is part of its strategy to refocus on sustainable building solutions with the proceeds going towards its Solutions & Products business following the Firestone acquisition that completed in early 2021. It has also stated previously that it wants to concentrate on core markets with long term prospects. In this context a major steelmaker like CSN diversifying into cement is a contrast. Both industries are high CO2 emitters so CSN is hardly moving away from carbon-intensive sectors. Yet the two have operational, economic and sustainability synergies through the use of slag in cement production. This puts CSN Cimentos in company with Votorantim in Brazil and JSW Cement in India, two other steel manufacturers that also produce cement. Whatever else happens at the 26th United Nations Climate Change conference (COP26) in November 2021, it seems unlikely that global demand for steel or cement is likely to be significantly reduced. CSN Cimentos is now going to resume its IPO of shares to raise funds for the Holcim acquisition.

Acquisitions are all about timing. The CSN Cimentos-Holcim deal follows the purchase of CRH Brazil by Buzzi Unicem’s Companhia Nacional de Cimento (CNC) joint-venture earlier in 2021. As mentioned above, the cement market in Brazil has been doing well since it started recovering in 2018. The coronavirus pandemic barely slowed this down due to weak lockdown measures compared to other countries. The current run of sales growth may be tapering off based on the latest National Cement Industry Association (SNIC) figures for August 2021. Rolling annual totals on a monthly basis had been growing since mid-2019 but this started to slow in May 2021. Annual sales will be up in 2021 based on the figures so far this year but after that, who knows? A CSN investors’ day document in December 2020 predicted, as one would expect, steady cement consumption growth in Brazil until at least 2025, based on correlated forecast growth in the general economy. Yet fears of inflation, rising prices and political uncertainty ahead of the next general election in late 2022 may undermine this. InterCement, for example, cancelled a proposed IPO in July 2021 due to low valuations amid investor uncertainty. CSN Cimentos may encounter similar issues with its own planned IPO or face over-leveraging itself when it picks up the tab for LafargeHolcim Brazil. Either way, CSN decided to take the risk on its path to becoming Brazil’s third largest cement producer.


Zimbabwe: Precious Murena has stepped down as the chief executive officer (CEO) of Lafarge Cement Zimbabwe to “pursue new interests outside the Holcim Group.” She was originally appointed to the role in early 2020. Amr Elmowafy Aly Mowafy, currently the chief financial officer, will assume the position of Acting CEO in the interim period until a replacement is found.

Murena joined Lafarge Cement Zimbabwe in 2011 and worked in various roles including the Industrial Relations & Welfare Manager and Human Resources & Communications Director. She was the first female Zimbabwean to become a CEO of the company.


Ireland: Ecocem Group has appointed Pat Cox as its chair. Cox is a former journalist and television current affairs reporter who later entered politics and became President and Member of the European Parliament (MEP). He is also a former member of the Irish parliament. His sustainability roles include chair of the Finance Green Ireland Committee, chair of the Gore Street Energy Storage Fund, the first ever listed fund for grid scale battery storage by the London Stock Exchange, and chair of the inaugural Dublin Climate Dialogues. He is also a board member of Supernode, an Irish renewables technology start-up and Gresham House Ireland.


India: Shree Cement is planning to launch three projects with a total value of US$646m. The Press Trust of India newspaper has reported that US$476m-worth of the sum will go towards establishing a new 3.8Mt/yr integrated cement plant at Nawalgarh in Rajasthan’s Jhunjhunu district. The producer will invest a further US$102m in establishing a grinding plant in Purulia district, West Bengal, to take advantage of ‘favourable’ demand. Lastly, it will invest US$68m in installing solar power plants at ‘various’ cement plants across India.

Shree Cement said “The company has committed to maximising the use of clean energy in its operations. Setting up of the above solar power plants will enhance the proportion of clean energy usage in the total energy consumption of the company.”


Egypt: Suez Cement is planning to invest US$20m on an 18MW waste heat recovery unit at its integrated Helwan plant. The subsidiary of Germany-based HeidelbergCement started the project in mid-2021 and expects to complete it by the end of 2022. It is currently negotiating with suppliers and hopes to appoint one soon with construction scheduled for 2022.


Pakistan: DG Khan’s full-year profit after tax was US$22.1m in the 2021 financial year, which ended on 30 June 2021. The Dawn newspaper has reported that the company recorded a loss of US$29.2m in the 2020 financial year.


US: LafargeHolcim US says that the integrated 2Mt/yr Midlothian plant in Texas will become the first cement plant in the country to fully convert to Portland Limestone Cement (PLC) production. The unit will switch to producing the company’s OneCem product, a blended cement manufactured with up to 15% of finely ground limestone. The move is intended to help LafargeHolcim US and its customers meet sustainable construction goals and lower carbon emissions.

“This is an important, but not unique, step for us. We were the first to produce OneCem, a PLC product, in one of the fastest-growing metro areas in the country, and fuel our industry’s step towards a zero carbon future,” said Patrick Cleary, senior vice president of sales, LafargeHolcim US Cement.

The company is promoting OneCem as an alternative to Ordinary Portland Cement in terms of concrete workability, set time, durability and strength development. It can be incorporated into a broad spectrum of applications that will support foundational structures. The product is available in the Western and Southern regions of the US and the company plans to ‘rapidly’ expand production.


Australia: US-based Carbon Direct has bought a 7% stake in Calix. Reuters News has reported the value of the stake as US$17.7m. Reuters News has reported that Calix plans to use the proceeds to scale up its carbon capture and storage (CCS) technology, as demonstrated at the LEILAC and LEILAC 2 installations at Lixhe, Belgium, and Hanover, Germany.

Calix chief executive officer Phil Hodgson said "As the world puts emissions trading schemes in place, CCS does start to look like a multibillion dollar addressable market.”


Finland: Betolar has launched Geoprime, an alkali-activated additive for slag and fly ash used in concrete production. The company says that the product will enable concrete production from raw materials with 80% lower CO2 than ordinary Portland cement (OPC).It aims to meet the growing demand for sustainable and cost-effective construction materials. Geoprime enjoys fast global scaling potential thanks to Betolar’s intellectual property licensing business model, which enables the use of existing production facilities, according to the company.

Chief executive officer Matti Löppönen said “We have seen a massive shift in the concrete manufacturing and construction industries driven by investor pressure for environmental, social and governance data transparency and Net Zero commitments, and now people are keen to hear what we have to offer.”


Ukraine: The Interdepartmental Commission on International Trade (ICIT) has introduced anti-dumping duties of 33 - 51% on cement imports from Turkey for five years. The rates are variable depending on the specific manufacturer and exporter, according to the Ukrainian News Agency. This follows an investigation that was launched in September 2020 following complaints by local producers including Buzzi-Unicem subsidiary Dyckerhoff, HeidelbergCement subsidiary Kryvyi Rih Cement and CRH subsidiary Podilsky Cement. ICIT concluded that there was the threat of causing ‘significant’ harm to local cement producers due to growing exports from Turkey, large amounts of idle production capacity in Turkey, lowered domestic consumption in Turkey and a pivot of Turkish manufacturers towards export markets.


Belarus: State-owned utilities provider Beltopgaz is targeting national peat production of 11Mt in the five-year period ending on 31 December 2025. BelTA News has reported that the new target is an outcome of an on-going comprehensive modernisation of peat production in the country. The 2021 peat season ended on 1 September 2021. During the year, Belarus produced 1.5Mt of peat, 14% of the five-year target.

The cement industry currently consumes 300,000 peat briquettes per year, 43% of the total produced nationally.


Asia: France-based Fives says it has commissioned a Pillard Novaflam Evolution burner for an unnamed cement plant in East Asia. Due to the travel restrictions linked to the coronavirus pandemic, the commissioning was carried out remotely with the cooperation of the customer. A 143MW coal and petcoke burner with oil as a start-up fuel was supplied as a replacement for an old burner. The aim of this replacement was to increase the kiln capacity to 9000t/day without impacting its NOx emissions whilst maintaining a good clinker quality despite a high sulphur content in the petcoke. The installation is now in production and an intervention is planned in the coming weeks to further optimise the operation.


Austria: Germany-based Claudius Peters has supplied a conveyor and silos for Schretter & Cie’s integrated Vils Cement plant in Tirol. In the first part of the project Claudius Peters Projects delivered an aeroslide conveying system from the cement mill to the existing silos, including silo bottom aeration systems. For the second part, it built a silo group consisting of three 3500m³ units with expansion chamber technology equipped with truck loading facilities. Each of the silos can be operated at a loading capacity of 250t/hr by a mobile loader with a travelling range of 10m.


Oman: Oman Cement plans to upgrade its 4.2Mt/yr Rusayl cement plant. Reuters News has reported that the producers’ plans consist of a 25% capacity expansion of Line 3 of the plant to 5000t/day from 4000t/day and the construction of a new 10,000t/day Line 4. Lines 1 and 2 will subsequently shut down. Thus, the upgrade will increase the plant’s nominal clinker capacity to 15,000t/day from 8700t/day.


Kenya: Simba Cement plans to begin building a cement plant in West Pokot in 2022. The Star newspaper has reported that the Devki Group subsidiary believes the producer will complete the project 18 months after the start of construction.

Devki Group chair Narendra Raval said “The firm is currently holding public participation and consultative forums with residents and leaders of the area. We want to make sure the community makes the best out of this project.”


Brazil: Companhia Siderúrgica Nacional (CSN) Cimentos plans to resume its initial public offering (IPO) of shares in mid-October 2021. The producer is aiming to raise at least US$478m. It will conclude the offering before 1 January 2022. Parent company CSN previously suspended the IPO in July 2021 due to unfavourable market conditions.


UK: 200 Hanson truck drivers began voting on proposed strike action on 10 September 2021. Building Design Online News has reported that the drivers’ union, Unite, has proposed the measure in response to a ‘hefty pay cut.’ The HeidelbergCement subsidiary offered a 2.5% pay rise to truck drivers for 2022. The union said that UK inflation was currently at 3.9%. It added that a strike would lead to a cement shortage affecting some of the country’s largest projects, including the HS2 high-speed railway. Voting will conclude on 24 September 2021.


Turkey: 120,000 members of the Construction Contractors Confederation (IMKON) downed tools on 9 September 2021 in protest against high cement prices. Emerging Market Watch News has reported that the strike will last until 21 September 2021 or until ‘satisfactory developments.’

The Ministry of Trade has tightened procedural restrictions on exporting clinker. Trade Minister Mehmet Mus is in talks with construction and cement industry representatives.


Libya: Ahmed Abuhisa, the Minister of Industry and Minerals, has laid the foundation stone for a new cement plant at Al-Shahba. Al-Shahba Cement and National Mining Corporation have signed a deal to build the 1Mt/yr plant in Cyrenaica region, according to the Libya Herald newspaper. The project is part of the ministry’s plan to localise industry in the country, provide job opportunities for young people and drive development. Al-Shahba, which is 100km from the city of Tobruk, is without paved roads and suffers from water scarcity, limited electricity access and the loss of public services.


UK: Cemex UK has carried out track improvements and extensions at its Attercliffe, Small Heath and Bletchley rail depots. The works included a new siding and storage bays for offloading at Small Heath. Meanwhile, improvements at the Attercliffe depot will enable delivery vehicles to safely use the same area in the day as trains do at night.

Rail and sea manager Mark Grimshaw-Smith said “The summer months have provided us with the perfect opportunity to complete a considerable programme of investment into track at three of our rail depots. These sites are all very different, and spread out across the country, but they are all important parts of our rail network and ripe for development.” He added, “As our use of trains to transport our materials increases, it is vital that we have the infrastructure in place to support this. Further investment is planned at some of our other UK railheads over the coming months.”

The company is in the process of a transition to rail and sea transport from road. Progress in 2020 eliminated 17,500t of CO2 emissions from 150,000 road movements not taken.


Tanzania: The South Africa-based National Occupational Safety Association (NOSA) has awarded Tanga Cement its international award for safety. The Daily News newspaper has reported that NOSA considers participant companies from all industries across Africa. Tanga Cement has participated in NOSA since 2018. Managing director Reinhardt Stuart said that the achievement was especially significant as the producer retained its rating as a ‘distinguished’ class company among NOSA awarded companies.


Pakistan: The Pakistan International Bulk Terminal plans to invest US$70m in increasing its coal capacity by 40% to 17Mt/yr from 12Mt/yr with the installation of a second conveyor belt. The expanded terminal will open in late 2023 or early 2024. The Dawn newspaper has reported that cement producers previously called for an expansion of the country’s coal import infrastructure. The All Pakistan Cement Manufacturers Association (APCMA) lobbied the government in July 2021 to permit coal discharge at the 10,000t/day Karachi Port Trust port. By contrast, the Pakistan International Bulk Terminal currently has a capacity of around 30,000t/day. It charges importers US$5.49/t of coal, plus a US$1/t handling fee for use of its berth.


Australia: Boral has agreed to sell its roof tiles business to private equity company Lutum and other investors. The Australian newspaper has reported that the deal is part of Boral’s exit out of building materials markets in Australia.


Brazil: Companhia Siderúrgica Nacional (CSN) has agreed to acquire Switzerland-based Holcim’s Brazilian cement business for US$1.03bn. The business’ assets include five integrated cement plants, four grinding plants and 19 ready-mix concrete facilities. Holcim said that the deal strengthens its balance sheet by ‘significantly’ reducing its debt ratio. It will use the proceeds to invest in its solutions and products business, building its recently acquired subsidiary Firestone. Latin America remains a core strategic growth region, according to the company.

Cheif executive officer Jan Jenisch said “This divestment is another step in our transformation to become the global leader in innovative and sustainable building solutions, giving us the flexibility to continue investing in attractive growth opportunities. We are pleased to have found a responsible buyer with CSN that will develop the Brazilian business over the long term.”


US/Denmark: Chart Industries subsidiary Sustainable Energy Solutions has chosen FLSmidth to help adapt and commercialise its Cryogenic Carbon Capture carbon capture and storage (CCS) system for the global cement industry. The system captures and stores CO2 from flue gas as a liquid. FLSmidth says that it will use its global reach and process knowledge to accelerate the commercialisation of Cryogenic Carbon Capture and optimise its design for cement plants. It believes the technology can cut 90% of process CO2 emissions at half the cost and energy consumption of current CCS processes.

FLSmidth cement president Carsten Riisberg Lund said “The cement industry is pursuing all options to reduce its environmental footprint, and CCS is a necessary technology to achieve this goal. Through this agreement with Chart, we lay the foundation for the scale-up and deployment of Cryogenic Carbon Capture technology with our customers. The technology developed by Chart is expected to become the most competitive at scale.” He added “This agreement is a significant leap forward in our joint efforts to enable our customers to reduce their environmental footprint.”


Sweden: Cementa plans to restrict its exports to the Baltic countries and Denmark. Finwire News has reported that the subsidiary of Germany-based HeidelbergCement is enacting the measure in order to focus its cement supply on its Swedish customers.


Mexico: Cemex has partnered with Sweden-based Volvo to develop a zero-emissions cement fleet. The implementation will extend to mobile construction equipment, trucks, productivity solutions, and uptime services. A Cemex European site will host trials of the technologies.

Head of global sustainability Vicente Saiso said “Working together with a leading global company in electromobility construction equipment and trucks such as Volvo will strengthen our efforts to address climate change and reduce our carbon footprint to reach net zero by 2050. We are excited to collaborate and develop a roadmap to introduce electric trucks and equipment throughout our operations.”


Germany: The German Cement Works Association (VDZ) has lobbied national and European Union governments for ‘appropriate and reliable’ framework conditions for the industry’s to realise its sustainability objectives. Its Environmental Data of the German Cement Industry 2020 report set out the sector’s agenda under three overlapping headings: climate neutrality by 2050, preservation of primary raw materials and air pollution control. The VDZ said that government support for the necessary ‘unprecedented’ reduction in CO2 emissions will be especially vital in the area of renewable power and the creation of a functioning CO2 infrastructure.

VDZ president Christian Knell said “The often bureaucratic and complex processes involved in approval procedures and applications for funds to finance necessary investments are a cause for concern.”


Denmark: Aalborg Portland Cement will begin construction of a carbon capture and storage (CCS) system at its Rørdal, North Jutland, cement plant. It will collaborate with Project Greensand CCS consortium partners to store the captured CO2 in drained oilfields below the North Sea. The company estimates that the Danish part of the North Sea has 16Gt of CO2 storage capacity, out of 300Gt under all EU waters. The endeavour aims to help Denmark to realise its targeted 70% reduction of CO2 emissions by 2030.

Research and development director Jesper Sand-Damtoft said “The establishment of capture facilities, transformation from carbon to gas and transport to the North Sea all require great investments from a business such as ours, and the realisation of the climate potential thus depends greatly on financial support.”


UK: Cemex UK has relaunched its used pallet collection service. The scheme aims to reduce timber waste in its supply chain, according to the company. It forms part of its Future in Action – Committed to Net Zero CO2 climate action strategy. Its partner ELM will collect stockists’ pallets free of charge for refurbishment and return to Cemex UK. It will reuse all repaired pallets and recycle those damaged beyond repair.

Packed cement sales manager Graeme Barton said “We want to make life easier for our merchants to work with us to reduce waste. We’d like to make pallet recovery part of the standard delivery process, as many pallets still end up in landfill. It is increasingly costly to dispose of pallet waste and there is far greater value to be gained by recycling and reuse. Rising timber costs, combined with pallet shortages, means there is a heightened need to conserve and maintain pallets throughout the supply chain. Recovery is considerably more cost effective than buying new replacements.” He added “Pallets are a standard format in transporting building products and contribute a significant financial and environmental cost which needs to be captured by the user. We saw a similar situation with supermarkets and plastic bags, but we’d rather not wait for legislation to enforce this; we’d really like to make a difference now with preventative action. The pallet recovery service is regenerative by design and aims to support the key principals of the circular economy to benefit business, society and the environment. If we all pull together it will have a significant impact across the whole supply chain.”


Pakistan: DG Khan has connected its upgraded Hub cement plant and power infrastructure to the national grid. The Pakistan Observer newspaper has reported that the facilities generate 40MW of power via a 10MW waste heat recovery (WHR) plant and 30MW coal-fired power plant. China National Building Material (CNBM) subsidiary Sinoma Energy Conservation provided engineering, procurement and construction (EPC) services for both power plants.


Canada: Three people, of whom two are in a serious condition, are in hospital in Toronto following an explosion at Lehigh Cement’s Picton cement plant in Prince Edward County, Ontario. The Kingston Whig Standard newspaper has reported that the individuals are believed to be external contractors who were carrying out repairs at the plant. The explosion occurred in a kiln on the morning of 7 September 2021.

The Ontario Ministry of Labour and fire services continue to investigate the incident.