Global Cement Newsletter

Issue: GCW529 / 27 October 2021

Headlines


Interesting move from HeidelbergCement this week with the news that it has agreed to buy a cement plant in Tanzania. The Germany-based multinational producer has signed a deal to buy a 68% stake in Tanga Cement from South Africa-based AfriSam. There has been no indication of the price but the arrangement will give HeidelbergCement a 1.3Mt/yr integrated plant in the north of the country along with a limestone quarry with reserves to last 30 years. The transaction is expected to close in the second quarter of 2022. HeidelbergCement says it then hopes to buy the remaining shares in the company.

HeidelbergCement already operates one integrated plant in Tanzania, Tanzania Portland Cement’s (TPC) Wazo Hill Plant in the capital Dar es Salaam. It took control of the plant in the early 2000s when its subsidiary Scancem International purchased over half of the company’s shares. The plant commissioned a new cement mill in 2014 to increase its production capacity to 2Mt/yr. Local press reported in April 2021 that the subsidiary planned to invest US$15m towards modernising the unit in 2021. It sells cement under the Twiga brand.

Tanga Cement runs a plant near Tanga that was originally commissioned in 1980. Holcim took it over in the mid-1990s before South-Africa based AfriSam assumed control in the early 2010s. The plant commissioned a second production line in 2016 and it has a production capacity of 1.3Mt/yr. It sells cement under the Simba brand.

HeidelbergCement’s decision to buy a plant in Tanzania is noteworthy because it goes against the general trend in acquisitions by western-based multinational cement companies in recent years. Instead of shrinking away from markets in developing economies and doubling-down on ‘safe havens’ in mature markets it has bought a plant in a developing country. Although one might argue that it does fit the definition of a well-chosen bolt-on acquisition.

Graph 1: Cement production in Tanzania, 2011 – 2020. Source: Tanzania National Bureau of Statistics.

Graph 1: Cement production in Tanzania, 2011 – 2020. Source: Tanzania National Bureau of Statistics.

As Graph 1 above shows, cement production in Tanzania has more than doubled over the last decade, from 2.4Mt in 2011 to 6.5Mt in 2020. Tanzania Portland Cement estimated local demand at 5.9Mt, including exports, in 2020. This was against a total cement production capacity, from both integrated and grinding plants, of 11Mt/yr. As well as the TPC and Tanga Cement plants mentioned above, Holcim runs an integrated plant in Mbeya and Huaxin Cement operates one near Tanga. Alongside this, new integrated plants have opened including Lake Cement’s 0.5Mt/yr Kimbiji plant in 2014 and Dangote Cement’s 3Mt/yr Mtwara plant in 2015. The big project on the horizon is a proposed 7Mt/yr integrated plant from China-based CNBM/Sinoma, although not much has been heard publicly about it since mid-2020. At that time local press was reporting that compensation was being finalised for residents of the proposed site near Tanga. Needless to say, given the size of the plant compared to the Tanzanian cement market, much of the plant’s output is intended for export.

With the CNBM plant in mind, it is noteworthy that HeidelbergCement committed to buying an extra plant in the country. Production has been going up over the last decade to presumably meet demand but the new Chinese project could potentially blot out the entire existing production. Tanzania faced a cement shortage at the end of 2020 despite coronavirus. TPC has repeatedly warned of production overcapacity in Tanzania and the challenges of competition. Yet it reported a new sales record in 2020 and growth of 7% in the national cement market. Despite a 5Mt overcapacity, TPC says it managed to adapt to the new market conditions. It also managed to grow its operating profit by 20% year-on-year to around US$46m in 2020 compared to HeidelbergCement Group’s 8% rise in results from current operations in 2020. This kind of return no doubt helped HeidelbergCement to make up its mind.


UK: The Global Cement and Concrete Association (GCCA) has elected Jan Jenisch as its president. He takes up the role with immediate effect and succeeds outgoing president, Albert Manifold, the chief executive officer (CEO) of CRH. As the first president of GCCA, Manifold oversaw its founding as a global platform for the concrete and cement industry and its work to unite the sector around the launch of its 2050 global roadmap to net zero concrete.

Jenisch was appointed CEO of Holcim (then LafargeHolcim) in 2017, having previously been CEO of Sika. He was also elected to the board of directors of Holcim in 2021. As president of the GCCA Jenisch will oversee the implementation of GCCA’s 2050 roadmap to net zero concrete, launched earlier in October 2021.

Jan Jenisch, GCCA President and CEO of Holcim said: “The net zero roadmap is exactly the collective endeavour that the association was established to deliver. Together we have set out a positive vision for how the cement and concrete industry will play a major role in building the sustainable world of tomorrow. With my board member peers, I look forward to overseeing the key progress we will make along that pathway, turning our vision and commitment into a reality.”


Peru: Yura has appointed Fernando Rojasa as its general manager. He succeeds Julio Cáceres who was working the position on a provisional basis, according to the Gestión newspaper.

Rojas, a Costa Rican national, holds a degree in chemical engineering and a Master in Business Administration from the University of Costa Rica. He worked for Cemex for over a decade becoming the director of operations for cement and lime in Puerto Rico and then the director of sustainability optimisation for Central America and the Caribbean.

Cáceres, who worked as Yura's Commercial Management Manager for Cement, has been appointed as the new Commercial Director of Cementos, Concretos y Cal in Peru, Chile and Bolivia.


France/US: Fortera has appointed Thierry Legrand as the president of its European region. The company said that the addition of a president in Europe was the first step in creating a broader presence allowing for Fortera's carbon reducing cement to be deployed on a global scale.

Legrand previously worked for Lafarge and Holcim for over 25 years in European, Asian and African markets. During this time he became the country chief executive officer (CEO) in South Africa and Malaysia before finally becoming the Project Director Logistic Europe for LafargeHolcim between 2018 and 2020. Legrand follows former LafargeHolcim CEO Eric Olsen in joining Fortera. Olsen was appointed to Fortera’s board of directors in June 2021.

Read more about Fortera in the October 2021 issue of Global Cement Magazine


Russia: Kavkazcement has announced that it will use its Kavkaz cement plant's annual shutdown in the winter of 2021 - 2022 to upgrade the plant's raw materials mills and kiln lines. The Eurocement subsidiary plans to spend US$7.14m on the work, which also includes the replacement of burners in kilns 2 and 4 and the installation of new drying drums, compressors and electrostatic precipitators. The upgrade will increase the 3Mt/yr plant's cement capacity by 10% and its clinker capacity by 30%. Managing director Vladimir Sokoltsov said that the upgrade focused on minimising the plant's environmental impacts.

Sokoltsov said “We will prepare the plant for the high construction season in April 2022. Our products are used in the construction of the largest industrial, transport and municipalinfrastructure in southern Russia." He continued "We understand that the quality of life of a large number of people depends on the pace of our work.”


Zimbabwe: Lafarge Zimbabwe says that a ‘critical’ incident occurred at its Manresa plant in Harare on 11 October 2021 when the roof collapsed over a cement mill. It reported no fatalities or injuries. However, the subsidiary of Switzerland-based Holcim warned that the incident might have an impact on its business performance for the last quarter of 2021. It added that it had already started taking action to repair the structure and restart the mills.

The Herald Zimbabwe newspaper reports that there has been a “general low visibility of the company’s cement in the market.” It added that the company started building a new cement mill at the plant in March 2021 with an expected commissioning date of March 2022.


Switzerland: Jura Cement has installed a PREMAS 4.0 continuous monitoring system supplied by Aumund at its Wildegg cement plant. The system informs operators about the condition of the equipment used in cement production at the plant in real time via the PREMAS Cloud. It also provides service life estimates for critical components.

The Wildegg plant previously hosted a prototype PREMAS 4.0 in early 2020.

Head of Maintenance Ramona Keller said “We are convinced that predictive maintenance has a future. With PREMAS 4.0, we can better plan spare parts and maintenance, which has a positive effect on resources and costs. The PREMAS Portal is easy to use and very clear. It enables us to recognise immediately where there is a need for action, regardless of time and place."

Watch out for more on this project in the forthcoming December 2021 issue of Global Cement Magazine


Colombia: Cementos Argos has announced its new commitment to reduce the CO2 emissionsfrom its cement operations by 29% over a period ending in 2030. The company has additionally committed to producing all of its concrete CO2-neutrally by 2050. It said that its strategy will comprise several carbon mitigation techniques, including maximised alternative fuel (AF) substitution, clinker factor reduction, energy optimisation, clean technology upgrades and a diversification of its range of its cement range to include more sustainable products.

Chief executive officer Juan Calle said "We are determined to face this important challenge and we are convinced that we can build the future we have planned and achieve a more prosperous, inclusive and low-carbon world if we work together with determination to accelerate this transition." He added "We will continue to strive to implement tangible actions, achieve measurable progress each year and deliver information about out opportunities and progress transparently."


Croatia: LafargeHolcim Croatia has successfully commissioned a continuous mercury monitoring system in the stack of its Koromačno cement plant in Istria. Gasmet supplied the system via its regional distributor RACI.

LafargeHolcim Croatia Production Engineer Ivan Marićsaid “The product gives us exactly what we want – peace of mind. We now know where we stand with our mercury emissions.”


India: Wonder Cements has dispatched cement from its Nardana, Maharashtra, grinding plant via a new rail route to Ahmednagar, also in Maharashtra. The Free Press Journal newspaper has reported that Wonder Cement plans to extend its use of the route 'in the near future' to send cement by rail to Mumbai Port. Western Railway's Mumbai Division expects to receive revenues of US$26,700/yr for use of its services. At its current rates, this would equate to annual deliveries of 383t.


South Africa: Sephaku Cement has reported a second unexpected kiln stoppage at its integrated Aganang plant in Lichtenburg. It attributed the second delay on the need for a repair to the inside of the kiln. The second stoppage started on 16 October 2021 and was expected to be completed by 26 October 2021. Previously, the kiln was stopped from 30 September 2021 to 6 October 2021 due to preheater refractory material damage caused by a corrosive element in one of the raw materials being used. The producer said that the raw material was subsequently replaced with an alternative option. The subsidiary of Nigeria-based Dangote Cement said that the outages were expected to reduce its sales volumes.


Sri Lanka: Harsha Cabral, the chairman of Tokyo Cement Company (Lanka), says that the company has taken several immediate measures to address a local cement shortage. He said in a statement that it is operating its grinding plant at Trincomalee at its full capacity of around 170,000t/month, according to the Daily Mirror newspaper. He added that the company had been importing 30,000t/month of bulk cement through the Tokyo Cement Colombo Terminal. It had also, following a request by the government, made arrangements to import an additional 12,000t /month of cement as a contingency measure. However, Cabral, noted that the cement shortage was due to a variety of reasons beyond the control of the company. These included a lack of bulk cargo ships and delays in opening credit letters with local banks.


Sweden: Cementa says it is preparing to ration deliveries of cement in December 2021 due to uncertainty about whether it can renew the mining licence at its integrated Slite plant in Gotland beyond the end of October 2021. The subsidiary of Germany-based HeidelbergCement has warned customers that it is preparing to implement quotas of cement products from its two plants and five terminals on a week-by-week basis. The quotas will be based on what level of cement customers have ordered previously over the past 36 months. It will also take into account whether there have been significant volume changes during the period.

Cementa says it submitted its application for an emergency permit in late September 2021. It needs approval from the government by mid-November 2021 to avoid a potential cement shortage. However, any such approval may be subject to an appeal leading to further delays in mining.


Tanzania: HeidelbergCement has signed an agreement to acquire 68% of Tanga Cement shares. Upon closing the deal in early - mid-2022, the group plans to make a public tender offer for the remaining outstanding shares in Tanga Cement.

HeidelbergCement already owns Tanzania Portland Cement, which operates a 2Mt/yr cement plant in Dar Es Salaam. Tanga Cement’s 1.3Mt/yr Tanga plant is situated in the north of the country.


Kenya: Cement companies are in the process of expanding their total clinker production capacity by 70% to 10.7Mt/yr by 2023 from 6.3Mt/yr. The Business Daily newspaper has reported that six producers – Bamburi Cement, East African Portland Cement Company (EAPCC), Karsan Ramji & Sons, National Cement, Rai Cement and Savannah Cement – will add a total of 4.4Mt/yr to their clinker capacities.

Global Cement News previously reported that Kenya faced a 3.3Mt/yr national clinker shortage on 13 October 2021. Domestic producers are in the process of lobbying the government to raise the duty on imports of clinker to 25% from 10%.


China: China Shanshui Cement has increased its nine-month consolidated sales by 15% year-on-year to US$2.75bn in 2021 from US$2.40bn. It net profit in the period fell by 24% to US$279m from US$365m.


Finland: Wärtsilä’s sales fell by 6% year-on-year to Euro3.18bn in the first nine months of 2021 from Euro3.39bn in the corresponding period of 2020. It increased its order intake by 11% to Euro3.58bn from Euro3.24bn. The company’s cash flow from operating activities fell by 12% to Euro360m from Euro407m. It expects that demand for its offering will increase ‘considerably’ year-on-year in the fourth quarter of 2021.

The supplier announced that it will aim to achieve carbon neutral operations and to provide a product portfolio which will be ready for zero carbon fuels by 2030. It published a report entitled Front Loading Net Zero on how production economies can make savings while managing the renewable energy transition. The report concludes that full decarbonisation before 2050 will be financially viable if properly supported by governments and energy companies.

President and CEO Håkan Agnevall said “These new targets demonstrate our commitment to a sustainable future. Our aim is to support our customers on their decarbonisation. Our products, solutions, and services will meet the stringent environmental requirements, and the fuel flexibility and fuel efficiency of the engines powering these sectors are key to enabling the transformation.” Agnevall added “Naturally, we also need to do our part as an organisation and minimise our own environmental footprint.”


Switzerland: Holcim has announced new global social impact targets for 2030 under its new People Strategy. The targets fall under three pillars. These are ‘bridging the housing and infrastructure gap,’ ‘improving livelihoods’ and ‘upholding human rights.’ The company says that this will entail efforts to ensure adequate housing and infrastructure for all, support for health, education and skill building and the implementation of due diligence across its value chain. The strategy includes a target to create Euro468m of social value by 2030. The figure will include the total value of schools, hospitals, rural roads and affordable housing renovated or built in the period. Between 2016 and 2020, Holcim benefited over 31m people with Euro187.21m in social investment.

CEO Jan Jenisch said “Our business plays an essential role in society's progress. We build the roads, bridges, hospitals and schools that enable people to thrive around the world. With 3bn people expected to lack access to adequate housing by 2030, I am committed to putting our business to work to uplift our communities.”


China: China Resources Cement’s consolidated turnover was US$3.96bn in the first nine months of 2021, up by 13% year-on-year. ET Net News has reported that the company saw its net profit fall by 28% to US$683m.


China: The government plans to implement a benchmark level of energy efficiency for cement plants by 2025 in order to realise its national goal of no CO2 emissions growth by 2030 and carbon neutrality by 2060. Local press has reported that the government has yet to set a specific benchmark for the cement industry. The corresponding figure for aluminium production will be 13,000kWh/t.


Uzbekistan: Qizilqum Cement’s nine-month sales fell by 11% year-on-year in 2021. A 4.4% decline in cost of goods sold failed to create earnings before interest (EBIT) growth during the period. The company recorded a 36% fall in EBIT.

Bluestone Investment Bank recorded 4.5% year-on-year growth in Uzbekistan’s volume of construction during the first nine months of 2021. In the first eight months of the year, its cement companies produced 8Mt of cement, up by 18% year-on-year. Cement imports rose slightly to 0.56Mt.


Switzerland: Holcim Schweiz has replaced the kiln stack at its Eclépens cement plant. Deputy plant manager Christian Petit said that the previous stack had been in place since 1971. He thanked the team which installed the new 100m-high stack on 22 October 2021.


Sri Lanka: The government has adjusted the monopoly situation at Trincomalee Harbour to allow multiple industries to freely make use of land at the port. The policy aims to further boost the development of Indian Ocean trade.

Tokyo Cement (Lanka) operates a 2.4Mt/yr grinding plant at Tincomalee Harbour, and is in the process of establishing a new 1Mt/yr integrated cement plant at the port’s China Bay dock.


Spain: The large taxpayers unit of the Tax Agency has imposed a Euro63m fine on Cemex España for issues relating to past tax payments. The El País newspaper has reported that the fine follows an investigation of the company’s corporation tax payments between 2010 and 2014. The agency previously imposed a Euro456m fine on Cemex in 2011 for inflating its losses between 2006 and 2009.


Japan: Ube Industries has revised its profit forecast downwards for the 2022 financial year. It now expects a net profit of US$171m in the year to March 2022, a 15% fall year-on-year, compared to its previous forecast of US$184m. It has also forecast full-year consolidated sales of US$5.57bn, a rise of 3.4% year-on-year. The Nikkei newspaper has reported that the group attributed the lower figure for profit to increased costs of cement production, transport and its on-going integration of its cement businesses.


Turkey: Sormas Refrakter has agreed to sell 85% of its shares to RHI Magnesita for Euro38.8m. The Turkey-based refractory manufacturer has a production capacity of 60,000t/yr. The companies expect to conclude the deal in the first half of 2022

RHI Magnesita said "With an enlarged product portfolio, further potential exists from this opportunity to deliver full-line service solutions to customers in Turkey.”


Spain: Cementos Portland Valderrivas has warned the increased operating costs may force it to suspend production at its 2.8Mt/yr El Alto cement plant in Morata de Tajuña near Madrid. EuroNews has reported that energy prices more than doubled month-on-month to Euro300/MWhr on 21 October 2021 from Euro100/MWhr on 21 November 2021. Grinding operations use half of the plant’s electricity consumption.

Operations director Luis Herrers said "Because the cost of electricity has shot up by 300%, we have crossed a red line. Our production cost has exceeded our selling price.” He added “We are in a critical situation right now."


Argentina: Sit-in protesters from the Argentinean Mining Workers Association (AOMA) have blocked access to the hoppers of limestone crushers at Minerar’s Olavarría quarry, according to the Clarín newspaper. The quarry supplies limestone to Loma Negra’s La Amali cement plant.

The cement producer said “The biggest problem is that if they don't solve the problem, and stop the supply raw material, it will complicate cement production."


China: Tangshan Jidong Cement has received the approval of the China Securities Regulatory Commission (CSRC) to incorporate its subsidiary BBMG East Cement. Tangshan Jidong Cement is a joint venture formed by BBMG and Jidong Cement in early 2019.


UK: The government has awarded funding to the planned HyNet North West low-CO2 industrial cluster. The cluster will reduce industrial CO2 emissions by 10Mt/yr in North Wales and North West England. It includes a planned 800,000t/yr carbon capture installation at Hanson UK’s Padeswood cement plant in Flintshire. The producer is currently carrying out a feasibility study at the plant. Parent company HeidelbergCement said that the project will play a ‘critical role’ in the UK’s transition to net zero CO2 emissions by 2050.

Chair Dominik von Achten called the decision “A well-deserved recognition for the HyNet consortium and our colleagues working on carbon capture and storage (CCS) in the UK as part of this collaborative project. Cutting CO2 emissions is a key priority for us, and we are delighted to add our Padeswood cement works to our growing range of CCS activities, as a key part of our pathway to reaching net zero.”


Kenya: National Cement has awarded a contract to Sinoma International Engineering for the construction of power plants with a total capacity of 35MW. Gelonghui News has reported that the supplier will provide a biomass-fuelled power plant and waste heat recovery (WHR) plant with a combined capacity of 10MW and a further 25MW power station. It previously delivered a WHR system for the producer in 2019.


India: HeidelbergCement India’s results in the second quarter of the 2022 financial year showed an 11% year-on-year rise in sales to US$76.1m from US$68.5m in the corresponding quarter of the 2021 financial year. Dion News Service has reported that the company’s net profit for the quarter was US$7.96m, down by 4.6% from US$8.34m. Its operating costs were US$61.5m, up by 19% from US$51.8m.


India: JK Lakshmi Cement resumed dispatches of cement as usual from its Durg cement plant in Chhattisgarh on 19 October 2021. India InfoLine News has reported that this followed the ending of a strike by the Chhattisgarh Cement Transport Association (CTA) on 18 October 2021.

The company said “The illegal strike called by the CTA has since been called off by them. It is hoped that normality will be restored shortly.”