Global Cement Newsletter

Issue: GCW542 / 02 February 2022

Headlines


Russia made imports easier last week. At the end of January 2022 an order from Rosstandart, the national standisation agency, relaxed inspection controls allowing for simpler imports from countries outside the Eurasian Economic Union (EAEU). Previously each such batch required a 28 day inspection period. This has now been dropped to encourage more imports of cement. Deputy Industry and Trade Minister Viktor Yevtukhov explained the reasoning behind the measure to InterFax, “In order to avoid problems in the domestic Russian cement market in the future, it is necessary to spur competition. It will balance the prices for this basic building material and will restrain their growth in case of such risks.”

Some idea of the situation facing the Russian cement market at the moment can be gleaned from market data supplied by CM Pro. Production rose by 7% year-on-year to 56.4Mt in the 11 months to November 2021. Imports rose by 26% to 1.6Mt at the same time. The Ministry of Industry and Trade has attributed this to a construction boom created by growth in both government-funded infrastructure projects and domestic housing. It also noted a local shortage and price increases in the Central Federal District in the autumn of 2021, although it said it redistributed cement from other regions to remedy the situation. This imbalance in the country’s main cement producing and consuming region, including Moscow, can also be seen in the figures. Production was about 2Mt below consumption in this area in 2019 and 2020. Yet so far, to November 2021, this gap grew to 2.7Mt. At the same time the price of cement reportedly jumped by 20% from November 2020 to December 2021.

Graph 1: Cement production in Russia, 2015 – 2021. Source: CM Pro and estimate from Global Cement.

Graph 1: Cement production in Russia, 2015 – 2021. Source: CM Pro and estimate from Global Cement.

It has been reported that the Ministry of Industry and Trade has also been wondering publicly why a study conducted in 2021 found that the national cement sector had an apparent operating capacity of 65Mt/yr compared to a total production capacity of 105Mt/yr, including mothballed and inactive plants and production lines. In other words the sector has been operating at a 62% production utilisation rate and the government is trying to coax it higher by opening up imports. And just to make sure that there was no confusion on the matter, Yevtukhov added, “I am sure that if the domestic producers will cope with the task of increasing the real volume of cement production and will not allow prices for their products to increase above the rate of inflation, the market will self-regulate, and additional imports of cement to Russia (which are traditionally small) will not be needed."

Given the country’s large size, imports seem to be mainly a threat to producers in the big population centres around Moscow and the Volga with good international transport links. Producers appear to have received and understood the message from the government as they have pledged to increase real operating capacity by 3 – 5Mt. The bear in the room for both Russian and European cement producers though is what happens in Ukraine in 2022. With North Atlantic Treaty Organization (NATO) members threatening economic sanctions and Russia supplying a significant share of Europe’s gas supply, any progression from the current rhetoric could cause discomfort to markets in both Russia and Europe. Turkish cement exporters, manufacturing in a NATO member country and hoping to take advantage of increased exports to Russia, could be in a particular bind if events heat up. All of this indicates that Smikom picked an interesting time to buy Russia’s largest cement producer, Eurocement, back in mid-2021. There’s an ongoing construction boom but also risks aplenty.

With apposite timing, LafargeHolcim Russia announced this week that it was going to reopen its integrated Voskresensk cement plant near Moscow. The unit was originally stopped in 2016. Now it plans to spend Euro23m on restarting the plant and building a dry construction mix unit at the site. Who says big government doesn’t work?


Nigeria: The Cement Manufacturers Association of Nigeria (CMAN) has appointed Mohammed Lawal Bello as its chair.

Bello started his career 1985 as an engineer with the engineering and technical services department of the Nigerian National Petroleum Corporation and left in 1988 to set up his businesses. He is the founder of the Universal Petroleum Company, Robinson International Inspections, International Diamond Drilling Company and he also owns a joint-venture with US-based Delaney. His executive positions include chair of Nitel-Mtel and vice-chair of the Nigerian Electricity Regulatory Commission in Ambuja. He is also the chair of the Gede Foundation, a non-government organisation focused on health projects. Bello is a graduate of Harvard University in the US and a member of the Energy Institute in the UK.


Argentina: Holcim Argentina has appointed Sergio Vaimberg as its Chief Marketing Officer. He joined Holcim in mid-2020 with roles in Argentina and Mexico, according to the Norte en Linea newspaper. Prior to this he worked mostly for Coca-Cola in Argentina. Vaimberg is a certified public accountant, holds a Master of Business Administration (MBA) and has a postgraduate degree in leadership from the Harvard Business School.


India: Shree Cement recorded consolidated revenues of US$430m in the third quarter of its 2022 financial year, down by 2.8% year-on-year and up by 0.4% quarter-on-quarter. The group’s cement sales totalled 6.4Mt, down by 10% year-on-year and up by 2.1% quarter-on-quarter. It reported a 26% year-on-year fall in earnings before interest, taxation, depreciation and amortisation (EBITDA) to US$107m.


India: CK Birla Group subsidiary Orient Cement’s third-quarter sales rose by 2.1% year-on-year in the 2022 financial year to US$82.6m from US$80.9m in the corresponding quarter of the 2021 financial year. The company saw a 19% year-on-year decline in its net profit to US$5.84m during the quarter.


Colombia: Analyst S&P Global has given Grupo Argos the rank of Gold in its Sustainability Yearbook 2022. Grupo Argos is the only construction materials company to have achieved Gold in the yearbook. Thailand-based Siam Cement Group (SCG) ranked Silver, while Ireland-based CRH and Switzerland-based Holcim, along with the latter’s subsidiary Ambuja Cements, ranked Bronze.

Legal and sustainability vice president María Isabel Echeverri said “This recognition is a result of teamwork and the permanent commitment of Argos to building a better future in which the creation of value for society and for the company is our greatest motivation. We will continue to strengthen our initiatives and strive to positively contribute to the responsible development of our sector and the well-being of our stakeholders, to enable a more sustainable, prosperous and inclusive society.”


UK: Cemex’s corporate venture capital unit Cemex Ventures has invested in gas-to-hydrogen plant producer HiiROC. HiiROC’s thermal plasma electrolysis technology can process biomethane, flare gas and natural gas into hydrogen and carbon black without any CO2 emissions.

Cemex Ventures president Gonzalo Galindo said “HiiROC's solution is sustainable, scalable, cost-effective and has strong growth potential inside the hydrogen ecosystem. This investment is yet another important step in our transition from fossil to alternative fuels (AF) and towards achieving our Net Zero goal for 2050. Cemex is the clear industry leader in the use of hydrogen, and this partnership allows us to further expand our hydrogen knowledge in the ultimate quest to replace fossil fuels with hydrogen in our plants." He added "With hydrogen becoming an increasingly attractive element for industrial decarbonisation, we are excited to be one of the top companies in the cement industry that includes a clean hydrogen production startup in its investment portfolio."


India: Orient Cement’s board of directors has approved a change to the company’s agreement for the acquisition of a 26% stake in renewables company AMPSolar Systems. Indiainfoline News Service has reported that the producer will now pay US$556,000 for the stake, up by 2.7% from the US$541,000 it previously negotiated in December 2020.

AMPSolar Systems recently commissioned its new 13.5MW solar power plant.


Russia: The Federal Technical Regulation and Metrology Agency (Rosstandart) has relaxed import rules for cement originating from outside the Eurasian Economic Union (EAEU). Under the new regulations the 28 day inspection period has been cut, according to InterFax. The Industry and Trade Ministry has taken the action to cope with a rise in cement consumption created by both government-backed infrastructure projects and domestic housing. It added that the Central Federal District experienced a shortage in the autumn of 2021 with associated price rises.

"We expect that the reduction of the procedure's duration may encourage importers of cement to increase the volume of its import into the country. And this, in turn, should in fact increase competition in the market and stabilise prices. This, I repeat, is the most important thing that needs to be achieved in the domestic building materials market for its balanced operation," said Deputy Industry and Trade Minister Viktor Yevtukhov.


Russia: LafargeHolcim Russia plans to restart its integrated Voskresensk cement plant near Moscow. The 1.3Mt/yr unit was originally stopped in 2016. The subsidiary of Switzerland-based Holcim says it will spend Euro23m on restarting the plant. It also intends to build a dry construction mix unit at the site.


India: Shree Cement has started commercial production at its 3Mt/yr Patas grinding plant in the Pune District of Maharashtra. The project had an investment of around US$80m and it will source clinker from a group site in Karnataka. Covid-19 related delays previously saw the scheduled commissioning date moved from late 2020 to September 2021.


India: Prism Johnson has decided to move a proposed increase in its cement grinding capacity from its integrated Satna plant in Madhya Pradesh to a location in eastern Uttar Pradesh. It has done so in response to geographical demand. Previously the cement producer said it was going to add around 1Mt/yr of grinding capacity for a cost of US$34m with a commissioning date scheduled for September 2023. Now it wants to build a 2Mt/yr grinding unit in Uttar Pradesh for around US$67m with a commissioning date by December 2024.


Algeria: Ali Bey Nasri, the president of the National Association Algerian Exporters, says that his country exported 5Mt of cement in 2021 with a value of US$200m. Local cement production exceeded 40Mt in 2021 and a rise in exports is expected in 2022, according to the Horizon newspaper. Groupe des Ciments d'Algérie (GICA) operates half of the country’s cement production plants.


India: One worker has been killed and two injured at UltraTech Cement’s Jafrabad plant in Gujarat. Police report that during the incident hot liquid raw material fell on the workers as they cleaned a silo during a plant shutdown, according to the Times of India newspaper. The accident took place on 30 January 2022. The investigation continues.


South Africa: Data from Industry Insight shows that cement imports grew by 18.7% year-on-year to 1.1Mt in the first 11 months of 2021. Imports hit a monthly high of 162,000t in November 2021, according to Moneyweb. The majority of the imports came from Vietnam followed by Pakistan. The increase in imports in November 2021 appears to have occurred despite a ban on the use of imported cement on all government-funded projects that started in the same month. Bryan Perrie, the head of Cement & Concrete SA, said that it was likely that imports in November 2021 remained high is because the cement was “probably already on the water before the designation came in."


Japan: Sumitomo Osaka Cement started using an internal carbon pricing system for capital investments from January 2022. It is intended to create economic incentives for emission reductions and promote low-carbon investment. The starting price will be around Euro39/t of CO2. The measure follows the company’s introduction of its 2050 carbon neutral goals and policies in late 2020.


Ghana: Professor Karen Scrivener has paid a working visit to the Ghana Standards Authority (GSA). The visit was part of a tour by Scrivener to Ghana to discuss innovations in cement and cementitious products and to introduce Limestone Calcined Clay Cement (LC3) to the authority, according to the Ghana News Agency. The Head of Laboratory of Construction Materials at the Ecole Polytechnique Fédérale de Lausanne (EPFL) in Switzerland met with GSA management and staff of the Building and Civil Engineering Lab at the Authority's Head Office in Accra. Scrivener noted that she was interested in learning more and engaging with the GSA on standards and its testing capabilities as well as a potential collaboration in capacity building in cement and cementitious products.


Germany: HeidelbergCement recorded sales of Euro18.7bn in 2021, up by 6.3% year-on-year from Euro17.6bn in 2020. The group says that the growth exceeds its anticipated ‘slight increase’ in sales. Sales in the fourth quarter of 2021 were Euro4.7bn, up by 4.4% from Euro4.5bn in the fourth quarter of 2020. The company announced a preliminary result from current operations of Euro2.61bn, up by 11% from Euro2.36bn in 2021.


Denmark: FLSmidth’s 2021 full-year sales were US$2.66bn, up by 6.8% year-on-year from US$2.99bn in 2020. The group had previously forecast sales of US$2.42 – 2.57bn in its guidance for the year. Its EBITA margin was 5.9%, in the upper end of the company’s guidance of 5 – 6%. The company said that the result included costs of acquiring Thyssenkrupp’s mining business.


Italy: Holcim has signed a collaboration agreement with energy company Eni for the development of ENI’s magnesium silicate-based carbon utilisation technology. The reaction of the magnesium silicate with captured CO2 emissions yields a product which Holcim hopes to use in its cement production.

Holcim Innovation Center head Edelio Bermejo said “Reaching net zero in cement manufacturing will require the deployment of carbon capture, utilisation and storage technologies at scale. ENI’s solution is very promising, and we are happy to explore its potential as it could take us all one step further on our decarbonisation journey.”


UK: Cemex UK has launched ReadyBlock Zero, a zero carbon concrete block, on the UK market. The product joins the company’s Vertua reduced-CO2 product range. Cemex UK achieved zero carbon production by means of offsetting. It said that ReadyBlock Zero will help builders to meet the UK’s government’s Future Homes Standard, which requires a 75 – 80% CO2 emissions reduction in all newly built homes.

Cemex’s Europe regional urbanisation solutions director of asphalt, paving and building products Carl Platt said “We have developed the UK’s first carbon neutral concrete block to help housebuilders get ahead of the game when it comes to building low carbon homes that meet and exceed government guidelines and changes to building regulations. We want to make life easier for housebuilders to make simple sustainable choices that make large scale impacts on the often complex road to net zero. Concrete blocks are the most common structural component in the construction of UK homes, so by switching to zero carbon blocks, ReadyBlock Zero presents a huge opportunity for housebuilders to make significant carbon reductions.”


Germany: The PowTech powder and bulk solids processing and analytics trade fair in Nuremberg, Bavaria, will now take place on 27 – 29 September 2022, in conjunction with the FachPack packaging trade fair. The organiser decided to postpone the event once again due to continued pandemic-related disruption.


Pakistan: Lucky Cement increased its standalone first-half sales in the 2022 financial year by 20% year-on-year to US$2.87bn from US$2.39bn in the first half of the 2021 financial year. This was despite a 5.9% year-on-year decline in cement volumes to 4.7Mt. Domestic cement sales increased by 0.8% to 3.66Mt from 3.63Mt, while exports fell by 20% to 1.07Mt from 1.34Mt.

The Business Recorder newspaper has reported that the company increased its consolidated net profit by 27% year-on-year. Its consolidated profit after tax was US$972m in the first half of the 2022 financial year.


India: Udaipur Cement Works plans to raise US$114m through an issuance of non-convertible debentures (NCDs). India Infoline News Service has reported that the company will use the money it raises to fund Phase 1 of its on-going expansion project.


Germany: Master Builders Solutions has announced the addition of a new range of admixtures consisting of MasterEase and Master X-Seed to its admixtures portfolio. The company developed MasterEase and Master X-Seed to best enable European cement companies to produce cement of the EU’s new CEM II/C-M and CEM VI Portland-composite cements. Master Builders Solutions hopes that the new products will drive the construction industry’s transition to low-clinker cements and CO2-optimised concrete.

Parent company MBCC Group’s European president Christian Geierhaas said “Providing sustainable solutions is a key factor of Master Builders Solutions’ portfolio and overall strategy. Strong partnerships are essential and support and accelerate the development of significant innovations. We work with major players to continuously develop efficient admixtures to add value to our customers and achieve a long-term sustainable positive effect on the construction industry.” He added “In addition to the usual performance criteria, such as fluidity and compressive strength, our new solutions for our ready-mix customers are characterised by their outstanding robustness. Our admixtures provide an important differentiator by guaranteeing consistently high quality concrete, even upon variation of the cement type and fluctuation of the raw materials used to produce these new, more sustainable cements.”


Turkey: OYAK Cement says that it eliminated 200,000t of CO2 emissions during 2021 through its use of US-based DataRobot’s AI software. The producer said that the technology enabled it to multiply its alternative fuel (AF) substitution rate by seven an reduce its mechanical failure prediction time by 75%. It added that the software contributed to a US$39m/yr drop in costs.


Japan: The CP Concrete Consortium has received US$80m in funding under the New Energy and Industrial Technology Development Organisation (NEDO)’s Green Innovation Funding Programme. The funding will support the consortium’s development of its Carbon Pool Concrete reduced-CO2 concrete production technology until 2032. Hazama Ando Corporation leads the consortium along with 14 other members of the Japanese Ready-Mixed and Returned Concrete Solution Association.

Carbon Pool Concrete technology can be used in the construction of pavements, buildings and other civil engineering structures. Through comprehensive carbon life cycle evaluation, the consortium is attempting to robustly link the use of its technology with carbon market instruments and environmental and social governance infrastructure funding. Its aim is to redefine concrete as a carbon neutral material.


India: Dalmia Cement (Bharat) has reported a 59.2% decline in its consolidated net profit to US$9.7m for the three months to 31 December 2021. The company had posted a net profit of US$23.6m during the corresponding quarter of 2020. The company reported that its revenue for the quarter was almost unchanged year-on-year at US$363m. The company’s cement sales volumes fell to 5.7Mt during the quarter compared to 5.8Mt in a year earlier.

Dalmia Cement (Bharat) Managing Director and chief executive officer (CEO) Mahendra Singhi said, “Margins during the quarter were impacted due to a significant inflation in the energy prices and market weakness in core regions of our operation. However, beginning in mid-December, things have started to look good. To mitigate the impact of external exigencies, we are working to further strengthen our operational efficiencies and explore avenues for cost rationalisation.”


Vietnam: Vicem But Son Cement has reported that it sold more than 3.8Mt of cement and clinker in 2021, fulfilling 94.1% of its whole year’s target, according to local media. During the year, the firm produced more than 2.8Mt of clinker, fulfilling 96.6% of its plan and over 3.2Mt of cement, fulfilling 91.1% of its target. In financial terms, the company contributed US$6.64m to the state budget last year, surpassing the whole year’s target by 6.7%.

In 2022 Vicem But Son Cement aims to sell 4.0Mt of products, comprising 3.4Mt of cement and 0.6Mt of clinker, as part of its mission to become ‘a leading’ cement producer in Vietnam and in the Southeast Asian region.


Nigeria: President Muhammadu Buhari inaugurated BUA Group’s new 3.0Mt/yr Line 4 at its Sokoto plant in northern Nigeria on 27 January 2022. The plant is the largest private sector employer of labour in the north-western part of Nigeria.

At the inauguration, the President expressed delight that the Federal Government policies on economic diversification, job creation and creating an enabling environment for businesses to thrive were working. He pledged to continue his administration’s support for ‘serious investors’ to set up businesses that will take advantage of huge reserves of resources in different parts of the country.

The President thanked the Founder of BUA Cement, Abdul Samad Rabiu and the BUA team for the ‘great work they are doing’ in supporting the government's economic diversification and job creation agenda.

Speaking personally, President Buhari added that, as the head of Sokoto State in 1985, he had also inaugurated Line 2 at the same plant, saying, "Today, almost 37 years later, to commission the fourth line is a very special day for me personally. As you all know, one of the key economic pillars of our administration has been to create an enabling environment for businesses to thrive. This is necessary for job creation and indeed, for our economy and national security.”


Nigeria: Dangote Cement announced on 26 January 2022 that it bought 126.75 million of its own shares in the week to 21 January 2022, the second tranche of a buyback programme set to return cash to shareholders. The producer, majority-owned by Africa's richest man Aliko Dangote, aims to buy back up to 10% of its US$41m share capital in tranches. The company now has 16.87 billion shares outstanding.


Tunisia: The overall turnover of Les Ciments de Bizerte rose by 17.8% year-on-year in 2021, to US$45.1m in 2021, from US$38.2m in 2020. Its local turnover rose by 5% to US$38.1m from US$36.3m. The company’s export turnover soared by 256% from US$1.96m to US$6.96m. The volume of cement it produced in 2021 was 673,079t, up by 17,829t (2.7%) compared to 2020.


Italy/Albania: Officials from the Customs and Monopoly Agency (ADM) and the soldiers of the Guardia di Finanza, have identified cement lacking CE and proper importation markings, among other questionable building materials, in three articulated trucks that disembarked from Albania at the port of Ancona. A total of more than 36t of materials has been held.

The authorities stated that the use of trademarks of Italian companies on imported products or goods without clearly indicating the country or place of manufacture and, more generally, incorrect information on the origin of the goods, damages both the market and consumers’ interests.


Czech Republic: The high prices of European Union (EU) Emissions Trading Scheme (ETS) emission allowances, more than Euro84/t of CO2 emitted in the week to 28 January 2022, are likely to make cement production more expensive. Manufacturers are currently unclear how much prices will have to rise but stated that they could no longer absorb the rising cost of buying extra allowances.

Pavel Pavel Zdeněk, sales director of Lafarge Cement, the local Holcim subsidiary, said "The price of emission allowances are around Euro85/t. This year, the price may remain the same, but it could also rise to Euro100/t. This will already be reflected in the costs."


Russia: Siberian Cement’s concrete arm SiberskyBeton produced 243,420m3 of concrete and mortar in 2021, a 14% increase compared to 2020. The growth is a result of increased demand for building materials in 2021. According to Artem Safyanov, managing director of SibirskyBeton, the company pays close attention to quality of its mixes, which helps the company to hold leadership positions in the market of Siberian Federal District.


Mexico/US: GCC plans to invest US$500m over the next three years to the end of 2024 on increasing its production capacity and strengthening its logistics and distribution network in North America. New projects in development include the expansion of a cement plant, debottlenecking at the integrated Samalayuca plant in Mexico, the construction of two new terminals and other projects to improve the company’s operational efficiency and its social and environmental strategy. The cement producer reported strong sales in 2021 and it expects even better results in 2022 and 2023, particularly in the US, due to the effect of the US infrastructure bill.

Notably GCC reported that both the kilns at its Odessa plant in Texas were running at full capacity in 2021 and an additional kiln at a plant in Chihuahua, Mexico was complimenting supply to the US state. High demand was also recorded in Montana.


Czech Republic: Ceskomoravsky Cement is planning a Euro12m upgrade of its integrated Radotín plant. The work will include installing a new vertical grinding mill and other environmental measures, according to the Czech Information Agency. The subsidiary of Germany-based HeidelbergCement will choose suppliers and apply for building permits by early 2023, ahead of construction in mid-2023 and potential operation in 2025.


India: Ramco Cements plans to commission a new 2.5Mt/yr clinker production line at its new plant near Kurnool, Andhra Pradesh in February 2022. A 1Mt/yr grinding unit, 12MW waste heat recovery system and 18MW captive power unit at the plant are expected to be commissioned in the 2022 – 2023 financial year, which starts in April 2022.

The cement producer also intends to commission at upgrade to its Nagar cement plant in the 2023 – 2024 financial year. The US$63m project includes installing a new 300t/day kiln at the plant in Tamil Nadu.


Canada: Lehigh Cement and Enbridge have announced a memorandum of understanding to collaborate on carbon storage for the integrated Edmonton cement plant in Alberta. Captured emissions will be transported via pipeline and sequestered by Enbridge. Lehigh Cement says it is developing North America’s first full-scale carbon capture, utilisation and storage (CCUS) unit for the cement industry at its Edmonton plant, with the goal of capturing approximately 0.78Mt/yr of CO2.

Pipeline company Enbridge intends to apply to develop an open access carbon hub in the Wabamun area, west of Edmonton in conjunction with Lehigh Cement and Capital Power, as part of the Government of Alberta's Request for Full Project Proposals process. Once complete the Open Access Wabamun Carbon Hub would be among the largest integrated CCUS projects in the world. Subject to the award of carbon sequestration rights and regulatory approvals, the project could be in service as early as 2025.


UK: Northern-Ireland-based Cookstown Cement plans to invest around Euro14m on environmental and process upgrades to its integrated 0.45Mt/yr plant in Cookstown. The company is managed and co-owned by David Millar, a sales director with Lafarge, according to the Belfast News Letter newspaper. Holcim announced the sale of its cement business in the region in late January 2022. Cookstown Cement has acquired a cement plant, a limestone quarry in Cookstown, a shale quarry in Dungannon and a terminal at Belfast Harbour.


Azerbaijan: Cement production grew by 6.3% year-on-year to 3.4Mt in 2021. 113,000t of cement in inventory was reported on 1 January 2022, according to the State Statistical Committee and the Trend News Agency. Production of construction gypsum and limestone rose by 48% and 4.4% to 35,800t and 35,800t respectively.