Global Cement Newsletter

Issue: GCW572 / 31 August 2022

Headlines


The larger cement producers in China have published their half-year financial results and the numbers are looking grim. Starting with data from the National Bureau of Statistics of China, cement output in the country fell by 14.5% year-on-year to 979Mt in the first half of 2022 from 1.14Bnt in the same period in 2021. This is the lowest first half output figure since 2012. The decline on a monthly basis started in May 2021 and has carried on consistently since then. Rolling cumulative annual output hit a low of 2.18Bnt in July 2022, the lowest figure since at least the start of 2019 and well before the coronavirus pandemic started.

Graph 1: Cement output in China, 2018 to 2022. Source: National Bureau of Statistics of China.

Graph 1: Cement output in China, 2018 to 2022. Source: National Bureau of Statistics of China.

The financial figures from the cement producers have mostly followed this trend. Of the companies covered here, Anhui Conch’s drop in sales revenue was the most distinct at 30% year-on-year to US$8.14bn. However, Jidong Cement actually managed to increase its revenue and Huaxin Cement’s decrease was fairly small, possibly due to its growing stable of overseas projects. None of these companies could avoid falling cement and clinkers sales volumes though. Again, Anhui Conch is the outlier here with a larger fall in sales volumes proportionally at nearly 40% compared to around 20% for the rest. Chen Bolin, the deputy secretary-general of China Cement Association (CCA), told the 21st Century Business Herald newspaper that of the 20 or so listed cement companies that have published their half-year reports by the end of August 2022, more than half had reported falling sales revenue and net profit and only one company had managed to increase its net profit.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports. Note: Cement revenue shown only for CNBM & Taiwan Cement.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports. Note: Cement revenue shown only for CNBM & Taiwan Cement.

Graph 3: Sales volumes of cement and clinker from selected Chinese cement producers. Source: Company financial reports.

Graph 3: Sales volumes of cement and clinker from selected Chinese cement producers. Source: Company financial reports.

The financial reports from the Chinese cement companies detailed here have been fairly light on the reasons for the current state of the sector. Repeated coronavirus outbreaks, instability in the real estate market, a lack of funding for infrastructure projects, growing energy and raw materials costs, pressure on prices and a generally weak economy have all been blamed for the situation. Media channels outside of China have continued to scan the country’s real estate sector for signs of collapse following Evergrande’s problems in 2021. However Chen Bolin diplomatically held back by describing the real estate market as not yet stabilised and a drag on cement demand. Instead he hoped that large-scale infrastructure projects would offer some form of relief.

One last point to note, that both the CCA has made and could be seen in some of the company reports, is that some of the Chinese cement companies are already starting to diversify their businesses. This is in parallel to what some of the larger western-based multinational cement producers have also been doing in recent years with forays into concrete, light building materials and construction chemicals. CNBM already has large concrete, light building materials and engineering subsidiaries. However, Huaxin Cement and Anhui Conch have also started to branch out recently into aggregates, concrete and new energy generation, in the case of the latter company. Things may get worse before they get better, especially depending when or if the Chinese government decides to act on the real estate market. However, whatever kind of adjustment the cement sector may face, there are some signs present already of what some of the companies may do next.


Argentina: Holcim Argentina has appointed Gerardo Kemnitz as its Director of Operations. He will lead Holcim’s operations in the country, where it operates three integrated cement plants and one grinding unit.

Kemnitz started working for the group in 1988 and spent the next 20 years working in maintenance roles at different plants. He later became a Health and Safety consultant for the Americas, Europe and Asia before being appointed as the director of the Tecomán plant in Mexico in 2014. More recently he worked as the manager of the Malagueño plant in Argentina.


Belgium: Magotteaux has appointed Gonzalo Cavada as its chief executive officer with effect from 31 October 2022. He will succeed Sébastien Dossogne, who will stay in post until the end of October 2022 as part of a transition period. Cavada will be based in Vaux-sous-Chèvremont in Belgium, at Magotteaux’s headquarters.

Cavada currently works as the chief financial officer of Magotteaux’s parent company Sigdo Koppers (SK). He previously worked for SK’s acquisition team when the Chile-based conglomerate purchased Magotteaux in 2011. He is a trained civil engineer who attended the Pontifical Catholic University of Chile and he holds a master’s degree in Business Administration (MBA) from the University of Cambridge.


China: CNBM has blamed declining sales of cement on repeated coronavirus outbreaks, a decline in the real estate market, lack of funding for infrastructure projects and a generally weak economy. Its cement sales revenue fell by 10% year-on-year to US$7.80bn in the first half of 2022 from US$8.65bn in the same period in 2021. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 39% to US$1.72bn from US$2.82bn. Cement and clinker sales volumes decreased by 17.8% to 128Mt and 14.6% to 18Mt respectively. Sales volumes of concrete decreased by 24% to 39.5Mm3.

Overall, the group’s revenue fell by 11% to US$15.8bn in the first half of 2022 from US$17.6bn in the same period in 2021. Its adjusted EBITDA dropped by 23% to US$2.87bn from US$3.71bn.


China: Anhui Conch’s operating revenue fell by 30% year-on-year to US$8.14bn in the first half of 2022 from US$11.6bn in the same period in 2021. Its net profit dropped by 33% to US$1.44bn from US$2.17bn. Its overall sales volumes of cement and clinker decreased by 37% to 130Mt. By region the group reported its biggest drop in sales volumes in East China. Anhui Conch blamed its falling sales and profit on continued coronavirus control measures, falling market demand and rising energy prices.


China: Huaxin Cement’s operating income decreased by 2% year-on-year to US$2.08bn in the first half of 2022 from US$2.13bn in the same period in 2021. Its net profit dropped by 35% to US$230m from US$353m. Its sales volumes of cement and clinker declined by 22% to 29Mt. Domestically, the group blamed the situation on the coronavirus pandemic, a “sharp” decline in demand for cement, the high cost of fuel and pressure on prices.


China: China Resources Cement’s (CRC) turnover fell by 21% year-on-year to US$2.05bn in the first half of 2022 from US$2.57bn in the same period in 2021. Its profit decreased by 50% to US$230m from US$463m. Its cement and concrete sales volumes dropped by 26% to 30.7Mt and 23% to 5.4Mm3 respectively. However, its clinker sales volumes rose by 5% to 2Mt. The group also reported that the capacity utilisation rate for its cement and clinker production lines were 70% and 87% in the first half of 2022 compared to 97% and 108% in the same period in 2021.


Paraguay: Cementos Concepción (CECON) has started commissioning its new plant at San Lázaro in the Concepción department by grinding raw material. Alexander Gonzalez, the project manager for the plant, told La Nación newspaper that start-up of the unit had been successful and that the process would now continue along the production line. The plant’s kiln is expected to start operation in October 2022.


Kenya: Bamburi Cement’s turnover rose by 3% year-on-year to US$168m in the first half of 2022 from US$164m in the same period of 2012. However, its profit before tax tumbled by 89% to US$1.03m from US$9.25m. The subsidiary of Switzerland-based Holcim attributed its rising turnover to mounting sales volumes and rising prices. However, it blamed its falling profit on “significant inflation of the fuel prices, logistics costs and imported clinker prices in both Kenya and Uganda.” It added that it expected the local market to improve after the Kenyan general election in August 2022 and growth in infrastructure spending in Uganda propped up by the oil industry.


Botswana: Keletsositse Olebile, the chief executive officer of the Botswana Investment and Trade Centre, hopes that the country could become a net exporter of cement in 2023. Olebile made the comment whilst on a tour of the Matsiloje integrated cement plant, according to the Weekend Post newspaper. The cement company was recently acquired by Whale Rock Cement, a Chinese joint-venture based in Namibia. At present the plant is producing 0.1Mt/yr and following a planned investment drive this may rise to 0.9Mt/yr. At present the country imports around 0.62Mt/yr of cement and it is hoped that expanding production at the Matsiloje plant could create the right conditions to create an export market. Matsiloje Portland Cement, the previous owners of the Matsiloje plant, closed in 2018 due to competition from South African imports.


Egypt: Suez Cement says it is the first grey cement company in Egypt and Africa to obtain an environmental product declaration (EPD) certificate in accordance with international ISO standard. Four certificates have been issued for cement products manufactured at the company’s Helwan, Kattameya and Suez integrated plants. These are: CEMII BP 42.5N; CEMIIIA 42.5N; CEMII AL 42.5N; and Masonry 12.5X.

“With this certification, our customers will be able to make an informed choice of one of the lowest carbon footprint materials and reduce the environmental impact of emissions in their investments,” said Mohamed Hegazy, the managing director of Suez Cement.


Pakistan: Germany-based Menzel Elektromotoren has revealed work on a replacement motor it has built for an unnamed cement plant in Pakistan. As part of the project it has designed a motor to fit a limited installation space that could drive the unit’s raw mill, another cement mill or a fan.

The engineering company’s solution was a compact slip ring motor in frame size 710 with the cooling system tailored to fit around a steel girder in the cement plant. To accommodate the existing couplings in two different sizes, Menzel designed the replacement motor with two shaft ends with different diameters. The motor output is configured to ensure efficient continuous operation in each of the three applications. The machine has a rated output of 4600kW and a rated voltage of 6300V. It complies with protection class IP55. At the customer's request, it was designed in cooling type IC 666, with permanent external ventilation of the inner and outer cooling circuit. Before delivery, Menzel also ran a load test in its in-house test field with the end-user attending via video streaming.


South Korea: Ssangyong Cement has ordered equipment from Germany-based KHD Humboldt Wedag as part of an upgrade to clinker production line five of the Donghae plant. The scope of supply for the contract includes: a Pyroclon R type calciner with Pyrotop mixing chamber; a Pyrorotor type alternative fuel combustion reactor; a Pyrobox type coal firing system for process start-up and operation balancing; replacement of stage four cyclones with new high-efficiency cyclones for calciner connection and an overall pressure drop reduction; a new kiln inlet chamber with orifice, kiln hood and tertiary air ducts; and a new Pyrofloor PFC 738AW type cooler with a Pyrocrusher PRC 420-4ES.

This project will be the fourth Pyrorotor installation at the Donghae plant. KHD’s scope includes the engineering and supply of mechanical equipment for the clinker production as well as electrical equipment for the overall modernisation of the production process. The project scope is the same as the modernisation contract of line four of Donghae plant, which was signed in February 2021 and currently is in commissioning. The commissioning of the modernised line five is scheduled for the fourth quarter of 2023.


Gabon: The Global Cement and Concrete Association (GCCA) and the United Cities and Local Government of Africa (UCLG Africa) have signed a memorandum of understanding (MOU) at Africa Climate Week 2022 that is intended to collaboration towards decarbonising cement and concrete industries in Africa. The MOU was signed by UCLG Africa’s Secretary General Jean-Pierre Elong-Mbassi and the GCCA’s Director of Concrete and Sustainable Construction Andrew Minson. The agreement was made during Africa Climate Week 2022 in Gabon and sets out how both parties will work together to strengthen stakeholder advocacy towards net zero and encourage local governments to take policy action towards decarbonisation targets.

Through this agreement the two organisations will work together towards building sustainable and resilient cities, with a focus on an initial first five pilot cities to scope out opportunities and challenges. The two parties will jointly organise events that strengthen advocacy for the involvement of local governments in decarbonisation. Both parties will also aim to help make low carbon cement manufacturing more attractive to investors in Africa, as well as stimulate demand for low-carbon concrete products and to cultivate a positive environment for circular and Net Zero manufacturing across Africa.

To reach these objectives, both parties will work to ensure African cities have more capacity to embrace innovative cement products and that these cities can be mobilised effectively to join the Net Zero by 2050 efforts. GCCA and UCLG Africa will also look to build stakeholder support for multi-level governance in urban planning and housing across Africa.


Ireland: Strong sales revenue and earnings growth from CRH’s America Materials and Building Products divisions have driven its performance in the first half of 2022. The group’s total revenue rose by 14% year-on-year to US$15bn in the first half of 2022 from US$13.2bn in the same period in 2021. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 21% to US$2.21bn from US$1.82bn. Its sales revenue of cement, lime and cement products grew by 5% to US$2.47bn.

The group’s America Materials division reported an increase in sales revenue and EBITDA of 17% to US$5.55bn and 12% to US$820m respectively. Cement sales in the region grew by 15% although lower activity was noted in Canada. The group’s Europe Materials division reported an increase in sales revenue and EBITDA of 5% to US$5.43bn and 4% to US$609m respectively. However the company said that before sales and earnings in the region grew by 14% on a like-for-like basis. The group’s Building Products division - which supplies architectural products, infrastructure products and construction accessories – performed particularly well compared to the other sectors.

Albert Manifold, the chief executive officer of CRH, said “CRH has delivered another strong performance with further growth in sales, EBITDA and margin despite a challenging and volatile cost environment. This performance reflects the continued execution of our integrated and sustainable solutions strategy.”


India: UltraTech Cement has commissioned a 1.3Mt/yr upgrade at its Dalla plant in Uttar Pradesh. Following the work the plant now has a total cement production capacity of 1.8Mt/yr. The cement producer said that the project was the first part of a capacity expansion drive previously announced in late 2020. It added that with this latest upgrade its total cement production capacity in India is just under 116Mt/yr.


Jamaica: Mexico-based Cemex plans to expand production by up to 30% at its integrated Rockfort cement plant near Kingston. The first phase of the upgrade project will cost around US$40m and be completed during 2024. Cemex’s chief executive officer Fernando A Gonzalez made the announcement during a visit to the plant. Andrew Holness, the Prime Minister of Jamaica, also attended the event.

Gonzalez said “We are in the final stages of the engineering phase and in obtaining permits from the local authorities.” He added, “Very soon we will begin to procure the equipment needed for this initial phase of the project, designed to not only expand our capacity, but also allow us to optimise our heat consumption in the manufacturing process, and therefore, reduce the carbon footprint of our cement facility in Jamaica.”

The event also included the unveiling of a mural at the plant which commemorates the 60th anniversary of Jamaica’s independence. Titled ‘Reignited for Unity’, the mural measures around 15m tall by 50m wide. It was painted by Mexican artists Irving Cano and Freddie Herrera and Jamaican artists Anthony Smith, Yanque Yip and Jordan Harrison. The mural is part of a local government initiative to use art to promote different communities in Kingston.


Dominican Republic: Cemex says it is planning to start using hydrogen technology at its integrated San Pedro De Macoris cement plant. It inaugurated the project during a visit by chief executive officer Fernando A Gonzalez. It is part of the company's Future in Action program that seeks to achieve carbon neutrality by 2050.

The group currently uses the technology by injecting hydrogen into cement plant kilns to optimise the combustion process and to increase the use of alternative fuels. It ran a trial at its Alicante cement plant in Spain using hydrogen in 2019 and says it rolled the process out to all of its European cement plants in 2021. Other hydrogen-based projects the cement producer is working on include a partnership with Hiiroc, a gas-to-hydrogen plant producer, and the creation of a renewable hydrogen industrial plant in Spain in collaboration with Acciona and Enagas.


South Korea: Halla Cement has awarded a supply and engineering contract to Germany-based KHD Humboldt Wedag for an upgrade of line 2 at Okke plant. KHD will supply a new Pyroclon R type calciner, with a Pyrotop type mixing chamber, and a 4.2m x 15m Pyrorotor type combustion reactor. Other equipment being provided includes: a Pyrobox type coal firing system for process start-up and operation balancing; replacement of stage five cyclones with new high-efficiency cyclones; and a new kiln inlet chamber with orifice. Erection and commissioning of the modernised production line is scheduled for the first quarter of 2024.

This latest project marks the second installation of a Pyrorotor at Halla Cement’s Okke plant. The installation of line 3 at the site is currently ongoing with commissioning scheduled for the first quarter of 2023. Overall, this will be KHD’s ninth installation of a Pyrorotor in South Korea.

The Pyrorotor has been promoted to cement plants as a way of using low-quality alternative fuels with minimal pre-processing. It offers a thermal substitution rate of over 85% and will also allow the Okke plant to reduce its NOx emissions. The installation of the new Pyroclon R type calciner and the high-efficiency cyclones in the lowest preheater stages will also provide the production line with an increase in efficiency due to an overall pressure drop reduction in the entire preheater.


India: Adani Cement Industries has ordered a MVR 3750 C-4 type vertical roller mill from Germany-based Gebr. Pfeiffer for a new 165t/hr cement grinding plant it plans to build at Dahej in Gujarat. The order also includes an integrated SLS 4000 VC type classifier and a drive with a rated power of 3090kW. The subsidiary of Adani Group will produce fly ash-pozzolan mixed cement at the site.

Gebr. Pfeiffer’s local subsidiary, Gebr. Pfeiffer (India), will act as the general contractor for the project and will provide plant engineering. The commissioning of the new mill is planned for the period before the rainy season in the summer of 2023.


UK: Bunting plans to promote its magnetic separator and metal detector products at the Powtech trade fair taking place in Germany in late September 2022. The company will be displaying a number of high-strength rare earth magnetic separators including its Plate Magnet Housing (PHMS), Drawer Magnet (HFS), Grate Magnet, Plate Magnet and Bullet Magnet products. Each magnetic separator effectively removes fine tramp iron from a wide range of granules and powders at different locations within a plant. The company promotes its products to the aggregate, quarrying, recycling and slag processing sectors amongst others.