Global Cement Newsletter

Issue: GCW533 / 24 November 2021

Headlines


Holcim’s investors’ event last week confirmed the changes the company has been making to its sales mix. At its Capital Markets Day it revealed its commitment to expand the net sales of its Solutions & Products division to 30% of the group total by 2025. This division covers products such as roofing, mortar, precast concrete and asphalt. At the same time it is reducing the proportion of sales from its cement division. Graph 1, below, from a presentation given by chief executive officer Jans Jenisch, hints at what group may be aiming for: roughly a third of its sales from cement; a third from aggregates and ready mixed concrete; and a third from the Solutions & Products division in 2025.

Graph 1: Forecast growth of sales by Holcim’s Solutions & Products division to 2025. Source: Holcim Capital Markets Day 2021 presentations on website.

Graph 1: Forecast growth of sales by Holcim’s Solutions & Products division to 2025. Source: Holcim Capital Markets Day 2021 presentations on website.

To give readers an idea of the scale of change in Holcim’s cement business since the merger with Lafarge in 2015, just look at the figures. In 2015 LafargeHolcim sold 256Mt of cement and it had a cement production capacity of 374Mt/yr. In 2020 it sold 190Mt of cement and it had a cement production capacity of 288Mt/yr. However, the ratio of sales from cement has remained consistent at just below 60%.

This all changed in January 2021 when Holcim announced it was buying roofing and building envelope producer Firestone Building Products for US$3.4bn. Instead of trimming down the business to make synergistic changes as it had been for the previous five years the group significantly changed its sales mix. As noted in ‘2021 in Cement’ in the December 2021 issue of Global Cement Magazine, Holcim remains the world’s largest non-Chinese cement producer. Yet its acquisitions in 2021 have consisted of ready-mixed concrete and aggregate companies in mature markets, and Firestone. Its divestments have been cement subsidiaries. Since 2019, and including the agreed Brazilian sale, planned to complete in 2022, the group has generated US$4.1bn in these divestments. Almost as if to reinforce this change of direction the group also switched its name to Holcim in May 2021.

Aside from the focus on expanding the scope of the Solutions & Products division over the next few years, the group said at its recent investors’ event that it wants to lead in sustainability and innovation. It also reminded investors that growth remains in building materials markets. Once Jenisch had established the potential the construction market has in the coming years it was all about so-called ‘green’ growth. On the sustainability side this includes promoting the group’s Science Based Targets initiative net-zero targets by 2050, pushing sales of its low-carbon concrete products and working on increasing the uptake of construction and demolition waste in Europe. The group has a target of reaching 25% or higher for sales of its ECOPact ready-mixed concrete product by 2025. Holcim reported Scope 1 CEM specific CO2 net emissions of 555kgCO2/t in 2020 and it has target of 475kgCO2/t by 2030. This is broadly in line with its peers. Cemex has also committed to 475kgCO2/t or lower and HeidelbergCement is currently aiming for 500kgCO2/t or lower by 2030.

Simultaneously promoting sustainability and growth in products that release CO2 during their manufacture is quite the balancing act for all cement producers. The way Holcim appears to be squaring this particular circle is by heading elsewhere. Back in January 2021 we asked whether Holcim would leave it with the Firestone acquisition or go further. This question has now been answered with Holcim’s intent to increase the share of its Solutions & Products to 30% by 2025. Other large cement producers don’t seem to be diversifying their sales mix at the same speed but similar strategic thinking along supply chains can be seen from the proposed buyer of LafargeHolcim Brazil, Companhia Siderúrgica Nacional (CSN) Cimentos. CSN is a steel manufacturer and buying cement assets gives it somewhere to use its slag. Fittingly, Holcim’s investors’ day ended with a night out at a museum holding an exhibition on the history of concrete. For now at least concrete looks set to remain a key part of the business.


UK: Carbon8 Systems has appointed David Clemmitt as Chief Engineer. He will be responsible for leading the engineering direction and execution of Carbon8 Systems’ Advanced Carbonation Technology (ACT) across global markets. As part of the role, he will have ownership of growing and developing the engineering function of the company in the carbon capture and utilisation sector. Clemmitt will join the board of Carbon8 Systems and will work closely with Paula Carey, the co-founder and Chief Technical Officer of the company.

Clemmitt joins the company from Baker Hughes, a global energy technology company, where he was Global Engineering Leader of their UK business from 2017. Prior to this, he held senior engineering roles at Meggitt, Schlumberger and Spirax Sarco Engineering. Clemmitt is a Fellow of the Institution of Mechanical Engineers and a member of the UK Engineering Council.


China: Ma Mingliang, the chairman and president of Sinoma Energy Conservation, has died at the age of 57. He was reportedly taken ill whilst on a business trip to Zhaotong City in Yunnan Province. Ma Mingliang was a trained engineer who worked for China Triumph International Engineering from 1997 to 2006 before later becoming the chief engineer of the foreign department of China National Building Material (CNBM) International Engineering from 2006 to 2007. Subsequently he held a number of senior positions within CNBM group eventually leading Sinoma Energy Conservation, the subsidiary of CNBM responsible for manufacturing waste heat recovery (WHR) systems.


Indonesia: China-based China National Building Material (CNBM) International Engineering has commissioned a 2.1Mt/yr cement plant at Grobogan, Semarang, in Central Java for GITI Group. The 6000t/day project was ignited and started production in mid-November 2021. Work on the US$350m project originally started in late 2017. GITI Group is a conglomerate based in Singapore principally known for tire manufacture.


South Africa: PPC’s revenue grew by 20% year-on-year to US$324m in the first half of its financial year to 30 September 2021 from US$269m in the same period in 2020. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 13% to US$59.6m from US$52.9m. The group reported that cement sales volumes rose by 12 – 15% in South Africa and Botswana due to strong retail demand. It also described new procurement measures supporting locally produced cement for government-funded project as “an essential first step in ensuring the economic sustainability of the South African cement industry.” It noted cement sales volumes growth of 19% in Zimbabwe despite local economic problems, but earnings declined due to additional costs incurred in importing clinker and an unplanned kiln shutdown. In Rwanda the group noted flat sales volumes and falling earnings due to a coronavirus-related lockdown.


France/US: Vicat Group has signed a Euro250m financing agreement taking the form of a private placement with US investors. The first tranche of the agreement covers Euro100m, with a maturity of 10 years, at a fixed rate of 1.27%. The second tranche is for Euro150m, with a maturity of 15 years, at a fixed rate of 1.57%. The group says it will use the funding to strengthen the liquidity of its balance sheet, extend the overall maturity of its debt and reduce its average debt ratio.


Philippines: The Board of Investments has approved China-based Sinoma Energy Conservation as the operator of a new 4.5MT waste heart recovery (WHR) unit that will be built at an unnamed cement plant in Naga, Cebu. The project has a budget of US$10.5m, according to the Manila Bulletin newspaper. Commercial operation of the unit is scheduled for the first quarter of 2022.


China: China Resources Cement has agreed to buy new head office, with an area of 26,700m2 , in Shenzhen from its real estate subsidiary China Resources Shenzhen for US$126m. It consists of 91 units in the Runqi Technology Mansion in Shenzhen’s Louhu district. The property will be used by another subsidiary, CR Cement Investments, as its new headquarters. The group says that it wants to use the deal as a showcase of a ‘successful’ high profile transaction in the Shenzhen market to boost sales of other projects.


Sweden: The government has extended Cementa’s permit to continue mining limestone at the quarries supporting its Slite cement plant for just over one year until the end of December 2022. The cement producer said that it would restart its mining activity immediately. However, it warned that the decision could still be appealed and work stopped whilst the case was pending. The subsidiary of Germany-based HeidelbergCement also refused to rule out shortages of cement in the future due to general uncertainty with the situation. Cementa has now started applying for a three to four year mining permit at the site.


US: The Environment Protection Agency (EPA) has fined Lehigh Cement’s Mason City plant in Iowa US$198,000 for alleged violations of the Clean Air Act. The agency alleges that the company exceeded Clean Air Act emissions limits, failed to submit required reports to the state and failed to conduct required testing of equipment. The EPA also determined that air pollution from the facility may affect nearby overburdened communities. Under the terms of the settlement with the EPA, Lehigh Cement is required to conduct additional air emissions testing to demonstrate ongoing compliance with the Clean Air Act.


Brazil: Germany-based Loesche says that it has acquired burner manufacturer Dynamis for an undisclosed amount. The engineering company was founded in 2003 and its products include the D-Gasifier, the D-Flame Burner, the D-Igniter, and the D-HotGas. Dynamis said it was excited by the opportunities that the agreement with Loesche would bring.


Kuwait: Bruks Siwertell has received an order from Kuwait Portland Cement for a ST 490-M type ship unloader. The rail-mounted unit will handle various cement types and deliver a continuous material handling capacity of 800t/hr, discharging vessels up 50,000dwt. It will be installed on an existing jetty next to the customer’s older ST 490-F type rail-mounted Siwertell unloader. Delivery to the port is planned for mid-2023. A notable feature of the order is the unit’s ability to withstand high ambient temperatures of up to 55°C.


Germany: ThyssenKrupp's consolidated sales rose by 18% year-on-year in its 2021 financial year to Euro34bn. Its adjusted earnings before interest and taxation (EBIT) rose to Euro796m, compared to a loss before interest and taxation of 1.76bn in the 2020 financial year. Its order intake during the year rose by 41% to Euro39.6bn.

The company's multi tracks segment, which includes cement plant production, recorded a 2% sales rise and a 34% rise in its order intake. Its plant technology segment's sales fell due to a depressed order intake in the 2020 financial year. It increased its order intake in all business areas and won its first contracts in the hydrogen market. Hydrogen is one of the division's key growth markets.

Chief executive officer Martina Merz said, “After a good two years of intensive transformation work, we can now say that the turnaround is evident. ThyssenKrupp is going in the right direction. Our performance is improving significantly, which is reflected in our figures." She continued, "We aim to benefit from this momentum in the next phase of our transformation in order to restore our businesses to profitable growth. However, enormous challenges remain, especially due to the semiconductor shortage and the uncertainties arising from the coronavirus pandemic.”


India: RHI Magnesita has opened its new Indian regional research and development centre. The centre is its fifth of its kind globally, and joins existing facilities in Austria, Brazil, China and the US.

The company is in the process of implementing a refractory production capacity expansion plan worth a total of US$53.8m. The plan consists of upgrades to its Bhiwadi plant in Rajasthan, Cuttack plant in Odisha and Vizag plant in Andhra Pradesh. It has already completed US$6.72-worth of the work with a 30% expansion at the Vizag plant. The company says that the remaining upgrades consist of both the establishment of new lines and the automation of existing ones.

RHI Magnesita India managing director and chief executive officer Parmod Sagar said “The centre will help us to better understand local market needs and to react faster to customer requirements. This is a world-class facility that will work closely with our global research and development network for local raw materials development, will provide solutions support for customer’s performance improvement projects and will support local manufacturing in the three India plants.”


South Korea: Researchers at Incheon National University have discovered an optimal conductive carbon fibre volume for cement-based conductive composites for use in net-zero energy buildings. The team reported that a 1% conductive carbon fibre content facilitates maximum energy generation from the movements of occupants and the weather against floors and walls. It also enables the storage of electricity at safe voltages. The product is based on triboelectric nanogenerator (TENG) technology.

The team published its results in the journal Nano Energy in November 2021.


Ireland: CRH’s consolidated sales rose by 11% year-on-year to US$22.8bn in the first nine months of 2021, according to the group’s nine-month trading update. The company recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$3.9bn, up by 15% year-on-year. CRH forecast a full-year EBITDA of US$5.25bn.

CRH said that it invested US$1.4bn in new acquisitions in the first nine months of 2021. It added that there remains a strong pipeline of opportunities open to it. At the end of the third quarter of 2021, the company had completed US$800m-worth of its share buyback programme.

Chief executive officer Albert Manifold said “CRH continues to perform well, with good underlying demand and pricing progress across our key markets. Our uniquely integrated and solutions-focused business model has supported further margin expansion across our businesses, while our strong cash generation and disciplined approach to capital allocation provides further opportunities to create value for all of our stakeholders.” He added “Looking ahead to the remainder of the year, we expect to deliver another record performance for the group.”


Germany: Cemex Zement has partnered with sustainable technology supplier Orcan Energy for the establishment of a waste heat recovery (WHR) plant at its Rüdersdorf, Brandenburg, cement plant. Orcan Energy will supply six generator modules for the installation. When commissioned in mid-2022, the WHR plant will cover part of the plant’s energy consumption. The German Federal Ministry for Economic Affairs and Energy contributed 50% of funds for the project.

Europe, Middle East, Africa & Asia regional president Sergio Menendez said “Efforts to achieve carbon neutrality at our Rüdersdorf cement plant by 2030 continue apace, and this project to install a WHR system is the latest significant milestone in our journey. It further demonstrates the value of forming expert alliances to investigate and then implement innovative technologies that will ensure the decarbonisation of our operation.”


Philippines: Singapore-based Blueleaf Energy says that it has secured a 20-year solar power supply with Holcim Philippines. The companies have signed a power purchase agreement whereby Blueleaf Energy will finance, build and operate a total of 29MW of solar power infrastructure in Norzagaray, Bulacan, and Bacnotan, La Union. These will supply 15% of the energy requirements of Holcim Philippines’ Bulacan and La Union cement plants respectively. Construction is scheduled for completion in 2024.


Holcim Philippines president and CEO Horia Adrian said “Reducing the carbon footprint of our operations is one of our key sustainability commitments. This year, we have made great progress in this area by stepping up production of blended cements and replacing coal with alternative fuels. Shifting to renewable solar energy will help us further improve as an environment steward and a partner in building progress in the country sustainably.”


Chile: Cemento Polpaico has obtained a licence for the use of Canada-based CarbonCure’s CO2 utilisation technology. The Diario Financiero newspaper has reported that the cement company plans to implement the technology in its concrete production.

Head of development and projects Matias Saenz said that Cemento Polpaico was among the first cement producers to commit to the UN’s Race to Zero decarbonisation initiative. It has also set out 20 sustainability goals to achieve before 2025. The company said that by implementing CarbonCure technology it is contributing to CarbonCure’s vision of eliminating 500Mt/yr of CO2 emissions.


Tanzania: Prime Cement has received a 50,000t shipment of Saudi clinker via the Port of Tanga. The Daily News newspaper has reported that the clinker will continue its journey by road to Rwanda.

Prime Cement’s business operations manager Mvayo Fabrice said "I call upon Tanzania Ports Authority to continue marketing the Port of Tanga so that we can receive more cargo and boost the regional economy and people's welfare."


France: Vicat has reiterated its CO2 emissions reduction target of 55% between 1990 and 2030 and reaffirmed its 2050 carbon neutrality commitment. The company says that its will invest Euro800m in transitioning to lower-CO2 cement production between 2021 and 2030 in order to meet the 2030 target. It said that eight US and European cement plants with ‘limited decarbonisation standards’ currently generate 67% of its earnings before interest, taxation depreciation and amortisation (EBITDA).


Japan: Taiheiyo Cement and the University of Tokyo have patented a carbon capture system based on a new carbon fixation method. The method passes CO2-bearing gas over 40mm granules of a hardened cementitious material at 75 - 100°C. The granules then fix the CO2 from the stream to themselves, for utilisation or storage.


Pakistan: The government plans to raise the rate of federal excise duty for cement plants operating at less than 100% capacity utilisation. The Dawn newspaper has reported that the measure aims to reduce cement prices in the country. Taxes are currently US$8.55/t of cement produced. In the 2021 financial year, capacity utilisation was at 84% of the available 69.3Mt/yr total capacity. Since the 2017 financial year, it has dropped below 75% in some years. Over the five-year period, the national cement capacity has increased at an average of 8.6% annually.

Ministry of Finance spokesperson Muzzammil Aslam said “Who should we protect: consumers or cement makers? Is it not harmful for the country that they have joined hands and set a higher market price?”


Paraguay: State-owned Industria Nacional del Cemento (INC) says that its Vallemi plant has suffered a grinding mill breakdown due to an ‘engine failure.’ The producer reassured customers that the issue will not affect the plant’s regular dispatches of cement.


US: Inhabitants of Ravena, New York, have reported a ‘gritty, sticky, dusty’ residue in areas of the town to mayor Bill Misuraca. The residents described the apparent dust spill as ‘more stubborn to remove’ than on previous occasions.

LafargeHolcim US, which operates the Ravena cement plant in the town, contacted the mayor about the issue, stating “We take all concerns and complains about the plant very seriously and aim to operate in a manner that causes zero harm to employees, contractors, customers, and most of all, local residents, in keeping with our core values.” It added "The plant will be working with the New York Department of Environmental Conservation (DEC) to collect data on the type and source of these materials."


Nepal: Udayapur Cement has commenced a US$42m upgrade and capacity expansion of its cement plant at Jaljale. The work includes replacing the shell of its 20m rotary kiln by the end of February 2022 and installing a reinforcement suspension preheater system, according to the Kathmandu Post newspaper. It will expand the plant’s capacity by 38% to 0.4Mt/yr from 0.29t/yr. The plant’s current equipment dates to 1988. Company spokesperson Laxman Pokharel said "Since the machines are old, we face frequent problems." He added that this has led to increased costs.

The Nepal government has agreed to loan Udayapur Cement US$34.4m, 80% of the project’s budget.


France: Vicat plans to test hydrogen electrolysis technology provided by Genvia for a pilot project at its Montalieu-Vercieu cement plant. Genvia made the announcement following a tour of its facilities by President Emmanuel Macron. It will be working with Vicat, Hynamics, a subsidiary of EDF group, and EDF Energy on the initiative. Other pilot projects have been announced with steel producers ArcelorMittal and Ugitech.

Genvia is a hydrogen production joint venture between French Alternative Energies and the Atomic Energy Commission (CEA), Schlumberger New Energy, VINCI Construction, Vicat Group and the Occitanie Region. It is developing and promoting solid oxide technology to enable industrial decarbonisation through hydrogen production, energy storage and fuel applications at scale.


Austria: W&P Zement says that it has commissioned an expanded 18GWh Wietersdorf hydroelectric power plant chain on the River Görtschitz in Carinthia. The chain consists of two new power plants and an existing one which the company optimised during a Euro12m project begun in October 2019. Together, the plants will supply 25% of the producer’s Wietersdorf cement plant’s electricity needs.

Technical director Florian Salzer said “With six modern Francis turbines, 18GWh of green electricity are generated in three power plants along the Görtschitz.” He added “That roughly corresponds to the supply for 3600 four-person households.”


Uganda: Security provider G4S has installed solar powered laser security systems for Hima Cement at one of its plants and several mines. The system was commissioned in March 2021 and it uses chargeable solar cells in perimeter security towers. G4S says that the system will improve sustainability and reduce costs compared to conventional alternatives. Where sensors detect a breach, security guards will investigate using electric bikes. The supplier says that the bikes facilitate more covert operations compared to motor vehicles, in addition to having sustainability benefits.

Head of technology Samuel Tebandeke said “We wanted to challenge ourselves to think of a better solution for our customer. We knew that we wanted to introduce electronic perimeter security to enhance the protection for the three mines and the cement plant we protect. Other providers were proposing laying many kilometres of cabling underground to provide power for their electronic perimeter monitoring, but our team decided to investigate a greener solution.”


Switzerland: Holcim has announced its support of Beton, the first Swiss exhibition dedicated to the history of concrete, at the Swiss Architecture Museum in Basel. The exhibition will run until 24 April 2022 and feature talks by an industry expert on the future of concrete.

Holcim chief executive officer Jan Jenisch said “I congratulate our partners at the Swiss Architecture Museum for creating this first-of-its-kind exhibition showcasing the essential role of concrete in our world. This exploration is a great inspiration for all of us at Holcim as we shape the future of concrete, making it green, circular and technology-driven. Throughout its history, concrete has been part of building progress in our world. Today we are reinventing it to make it work for people and the planet.”


Switzerland: Holcim has launched its Strategy 2025 – Accelerating Green Growth plan to become a global innovative and sustainable building solutions leader. Under the plan, the group will expand its solutions and products sales to account for 30% of consolidated sales by 2025. During the three-year period, it aims to deliver continuous group sales growth of 3 – 5% and over-proportional recurring earnings before interest, taxation, depreciation and amortisation (EBIT) growth on a like-for-like basis. It is also targeting a 10% return on invested capital (ROIC), cash conversion of 45% and leverage below 1.5x.

As part of the new strategy, the group will aim to recycle 75Mt of materials, including 10Mt of construction waste, in its products in 2022 – 2024. It aims to invest Euro476m in green capital expenditure (CAPEX) and link 40% of its financing agreements to its sustainable performance.

Chief executive officer Jan Jenisch said “We delivered what we promised with our Strategy 2022 one year in advance, setting strong foundations for our next era of growth. With our new level of performance, we have the firepower to invest in solutions and products to make it 30% of our company, while leading the way in green building solutions from ECOPact green concrete to energy-efficient roofing.” He added “With our Accelerating Green Growth strategy, we are ready to seize the opportunities ahead on our way to becoming the global leader in innovative and sustainable building solutions.”


Canada: St Mary’s Cement plans to apply for a licence to substitute alternative fuel (AF) for a part of its coal, gas and petcoke fuel mix. The plant previously held a two-week AF substitution trial in May 2011. CBC News has reported that the subsidiary of Votorantim Cimentos will present its plan at an evening meeting for the general public on 18 November 2021. The company says that it plans to implement similar AF arrangements to those at its Bowmanville plant, where it uses 90,000t/yr of biomass, wood from construction and demolition and non-recyclable paper and plastics.

Environmental manager Ruben Plaza said "Lower CO2 emissions is the first consideration and, equally as important, the material has to be approved and available in sufficient quantities with a reliable and sustainable long-term supply."


Colombia: Cementos Argos says that it uses simulation software for logistics at six of its port operations. The company explained that simulation helps to avoid delays in the rotation of resources and to optimise ships’ capacity.

International commercial advisor Alfonso Andrés Ibarra said “The simulator facilitates the decision-making process when delivering our material, since it allows us to evaluate different scenarios in advance to define the best alternative for loading the shipments. This way, time and costs are reduced, and our supply chain is optimised.”


Spain: Spain’s 10-month cement consumption was 12.5Mt in 2021, up by 12% year-on-year from 10-month 2020 levels. Interempresas News has reported that consumption grew by 10% year-on-year in October 2021 to 1.3Mt from 1.18Mt. During the month, exports fell by 14% year-on-year to 581,000t from 485,000t.


Japan: Sumitomo Osaka Cement has secured an agreement with Hyogo Prefecture for the future reception and processing of the prefecture’s waste from disasters such as earthquakes. The company says that the agreement will facilitate the rapid reception of such materials and to best support clean-up efforts.

President Hironori Morohashi said “We will continue to strengthen our cooperative relationship with Hyogo Prefecture and work to form a sustainable society and develop and improve the region.”