Global Cement Newsletter

Issue: GCW578 / 12 October 2022

Headlines


Cement imports are back on the agenda this week in the Philippines with the news that the Tariff Commission has backed repealing the duties currently being implemented. If it’s anything like what happened last time, back in 2019, the commission’s opinion will once again be passed back to the Department of Trade and Industry (DTI) for the final decision. The safeguard measure the commission wants to cut covers Ordinary Portland Cement (OPC) and Blended Cement. It summarised the situation as follows, “There is no existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future.”

The commission reviewed the sector between 2019 and 2021 and concluded that the domestic cement industry maintained its market position, increased its mill capacities, stabilised its manufacturing costs and improved its profitability. It found that local producers recovered their profits in 2021, following the coronavirus pandemic. It also noted that imports continued to rise whilst the safeguard measure was in force. Volumes of imported OPC and blended cements increased at levels above 10% year-on-year in both the 2019 – 2020 and 2020 – 2021 periods. They also rose by 7% year-on-year to 3.51Mt in the first half of 2022 compared to the half-year average from 2019 - 2021. In the commission’s view, relaxing the duties on imported cement would slow price rises for both locally produced and imported cement leading to an overall national economic benefit.

Local cement producers in the Philippines are likely to be unhappy with the Tariff Commission’s recommendation. The Cement Manufacturers Association of the Philippines (CEMAP) spent the summer of 2022 lobbying for the safeguard measure to be extended past October 2022. It too pointed out that imports of cement had continued to grow even whilst the increased duties had been levied from 2019. A few days before the commission’s decision was published, APO Cement said that it had temporarily suspended operations at its Davao terminal. The subsidiary of Cemex Philippines blamed imports of cement, particularly from Vietnam, for the decision.

Yet, the local sector has been active over the last year with a number of capacity upgrades being launched or underway. In January 2022 the government gave tax breaks to San Miguel Equity Investments for the construction of a 2Mt/yr cement plant in Mindanao. In February 2022 San Miguel subsidiary Southern Concrete Industries said it was doubling the capacity of an upgrade to its grinding plant at Davao del Sur, with initial commissioning planned in mid-2022. Meanwhile, Solid Cement’s upgrade of a new production line at its integrated plant in Antipolo, Rizal, has been ongoing since it officially started in 2019. The current commissioning date for the subsidiary of Cemex is now expected in early 2024. In August 2022 Taiheiyo Cement Philippines held a groundbreaking ceremony for the start of construction of a new production line at its integrated San Fernando plant in Cebu. The US$85m project is due to be commissioned in mid-2024. Finally, importer Philcement revealed in late September 2022 that it had taken out a US$1.73m loan for an expansion and upgrades to its Mariveles cement terminal in Bataan.

Holcim Philippines’ president and chief executive officer Horia Adrain told local press in July 2022 that the cement sector was continuing to recover in 2022, following the coronavirus pandemic in 2020, but that the pace would be slower. And so it proved, with reduced revenue, earnings and profits reported by Holcim for the first half of 2022. Costs rose due to higher fuel and energy prices like elsewhere in the world but a construction ban in connection with the presidential election in May 2022 didn’t help either. Both CRH and Cemex Philippines reported a similar situation in their financial results. However, Eagle Cement did manage to raise its revenue in the same period.

The Tariff Commission has been explicit with its opinion about the impact of imports upon the local cement sector. Investment by the local producers has been forthcoming with a number of new plants and upgrades on the way. Finally, despite the market recovering since 2020, there has been less growth in the first half of 2022 due to global energy prices and the country’s elections. This last point has handed a gift to the cement producers as any further reductions in growth can be blamed on imports, whether it is connected or not. One thing is certain, if or when the safeguard measures are lifted, then the regular calls to restrict imports will resume just like they did prior to 2019.


France: Monitoring systems producer ENVEA Global has appointed Trevor Sands as its chief executive officer (CEO). He succeeds Christophe Chevillion in the post.

Sands worked recently as the Global President of Servomex Group, a company in the gas analysis sector. Prior to this he ran the Control Valves business for IMI, he was the CEO of Cosalt and also spent 13 years with Emerson, including leading the Fisher Valves European business and later running the Daniel Measurement and Controls Division. His early career was spent with Invensys, Unitech and Arthur Anderson in various finance roles. Sands graduated from the University of Bristol in the UK with an undergraduate science degree.

ENVEA Global is a manufacturer of on-line monitoring solutions for industry, laboratory and local and government institutions. It was founded in 1978 and became a public company in 2006. Carlyle Group is its majority shareholder.


India: JSW Cement has announced a planned US$389m investment in the construction of a new integrated cement plant in Madhya Pradesh and a grinding plant in Uttar Pradesh. Together, the plants will have a cement capacity of 5Mt/yr.

The Economic Times newspaper has reported that JSW Cement's acquisition of Springway Mining has given it access to 106Mt of new limestone reserves, with a mining lease until 2065.


India: Vicat Cement subsidiary Bharathi Cement has inaugurated its 750,000t/yr Coimbatore cement terminal in Tamil Nadu. The Deccan Chronicle newspaper has reported that the terminal will serve Tamil Nadu and Kerala. The facility has dedicated container wagons and a 24-hour loading facility with end-to-end logistical automation.

Vicat India chief executive officer Anoop Kumar Saxena said "With its rapid infrastructure development and urbanisation, India proves to be a key market for our business. By investing in the new terminal we align with our commitment towards India's progress and growth. The Coimbatore terminal is Vicat India's second terminal after the Mumbai terminal, which was set up in 2018.


France: Vicat has revised its full-year 2022 earnings forecast. The group now expects to record a drop in its earnings before interest, taxation, depreciation and amortisation (EBITDA). In France and Switzerland, rapidly rising energy costs have outstripped the producer's sales growth so far in 2022, while, in the US, its upgraded Ragland, Alabama, cement plant only entered production following a 'very gradual start-up' in mid-late 2022. Vicat also carried out debottlenecking work on its Kalburgi, India, cement plant during the year to date.

Vicat said that all other markets in which it operates are developing in line with the expectations detailed at the time of the publication of its first-half 2022 results in August 2022.


Germany: Heidelberg Materials has reaffirmed its 2030 CO2 emissions reduction targets and submitted them to the Science-Based Targets Initiative (SBTi) for review. These include a reduction in Scope 1 emissions per tonne of cementitious material of 47% between 1990 and 2030. The initiative will now ensure that the targets conform to a 1.5°C climate change scenario.

Heidelberg Materials chair Dominik von Achten said “We have been actively supporting SBTi’s efforts to develop a 1.5°C roadmap and impactful criteria for the cement industry. With the industry's most ambitious CO2 reduction targets and a steadily growing portfolio of CCUS projects, we are eager to continue leading the way.”


Colombia: BBVA has extended a sustainable line of credit to Cemex Colombia customers for purchases of the producer's Vertua reduced CO2 cements range. The line will enable them to extend their payment term on invoices for the products.

Portafolio News has reported that Cemex's Colombia and Peru president Alejandro Ramírez said "Within the framework of our Future in Action strategy, which seeks to develop products, solutions and processes with lower carbon emissions with the aim of becoming a company with zero CO2 emissions, we seek synergies with high-level partners such as BBVA to encourage our customers to buy products that reduce their carbon footprint, as well as to work hand in hand with our stakeholders to generate shared value.”


El Salvador: Holcim El Salvador plans to invest up to US$50m over the next three years to help it generate 70% of the energy it uses. It plans to build a 17MW solar plant and a wind farm to enable this, according to La Prensa Gráfica newspaper. The investment will also help the subsidiary of Switzerland-based Holcim to progress towards its net-zero sustainability goals. The solar project has a budget of US$19m and will be built in agreement with AES Corporation. It will be located at Holcim’s integrated El Ronco cement plant. It will supply 21% of the energy used at both the El Ronco and Maya cement plants.

The investment has also included the installation of a solid waste shredder earlier in 2022. Its official inauguration is planned for mid-November 2022. Holcim El Salvador reached a 30% alternative fuels substitution rate in October 2022.


Ivory Coast: The local cement sector is preparing to reach a production capacity of 20Mt/yr by the end of 2022. Albert Kouatelay, director of deputy cabinet of the Ivorian Minister of Trade, Industry and Promotion of SMEs, made the comment at the launch event for LafargeHolcim Côte d'Ivoire's new white cement product, according to the Agence de Presse Africaine. The country has 13 cement plants and the latest boost is expected once a new cement unit starts operation. Domestic production capacity was reportedly 2.4Mt/yr in 2011, 12.5Mt/yr in 2019 and 17Mt/yr in 2022.


Libya: Zliten Cement Company, part of the Gulf Cement Group, started production at its Zliten plant in late September 2022. The Libya Herald reports that the company will market its cement products under the trademark ‘Zliten Cement Company’ according to Libyan Standard Specifications No. 340/2009 and Portland cement CEM 42.5N.


Tanzania: The Fair Competition Tribunal (FCT) has blocked an attempt by Heidelberg Materials to buy a 68% stake in Tanga Cement for around US$59m saying it was contrary to the law. The Germany-based building materials producer announced in October 2021 that it had agreed to buy Tanga Cement from South Africa-based AfriSam via various subsidiaries, according to the Citizen newspaper. The Fair Competition Commission (FCC) provisionally approved the transaction but required the buyer to keep the operations of Tanga Cement running, to continue producing and promoting the Simba Cement (Tanga Cement) brand and to keep employing the existing staff at Tanga Cement. However, Chalinze Cement Limited and the Tanzania Consumer Advocacy Society opposed the decision due to a potential reduction in market competition and successfully made an appeal to the FCT.

In a statement Tanga Cement said that Heidelberg Materials and AfriSam were, “considering how to proceed, but the FCT ruling has placed the acquisition at great risk of not being implemented.” It added that the parties were waiting for a formal ruling from the FCT and would then seek further advice on how to proceed.


Egypt: The government has raised the price of gas to cement producers by 109% from US$5.75/one million British thermal units (BTU) to US$12/MBTU. South Valley Cement, Misr Cement Qena, Misr Beni Suef Cement, and Sinai Cement all said that the higher gas prices would not affect the cost of production because they have switched to using coal, according to the Daily news Egypt newspaper.


Botswana: PPC Botswana says it has purchased 230,000t of coal at a value of US$45m from Morupule Coal Mine. It intends to make the investment on an annual basis going forward, according to the Voice newspaper. The subsidiary of South Africa-based PPC also plans to send some of the coal to PPC's cement plant at Slurry in northern South Africa.


Russia: China-based West China Cement has been presented as a new partner in the Alabuga special economic zone (SEZ) in Tatarstan. The cement producer plans to invest around US$260m towards building a 1.2Mt/yr plant at the site. The project was revealed as part of an event presenting the progress of the development for the SEZ.


India: India Cements has agreed to sell Springway Mining to JSW Cement for US$57.9m. Springway Mining is currently building an integrated cement plant in Damoh, Madhya Pradesh, with dedicated limestone reserves in nearby Panna.

India Cements has received US$45.4m-worth of its payment for the business, and expect to receive the outstanding US$12.5m by 31 December 2022.


China: China National Building Material (CNBM) expects its profit to decline by 50% year-on-year in the first nine months of 2022. The group said that this will be due in part to reduced cement sales, increased costs resulting from high coal prices and a 'substantial' decline in the value of its financial assets.


Nigeria: Dangote Cement has denied the Kogi State government's purported accusation that it sponsored an arson attack on the state legislative assembly complex. The Punch newspaper has reported that a fire destroyed the Kogi State House of Assembly on the night of 10 October 2022. Dangote Cement helped to extinguish the fire at 8AM on 11 October 2022, sending one of its fire engines to the scene of the disaster. The state government published a statement entitled 'Obajana: desperation sets in as imported hoodlums burn down Kogi Assembly,' in which it allegedly suggests that Dangote Cement had some involvement in the fire's outbreak ‘in an attempt to possibly destroy evidence relating to the ownership tussle between the Kogi State government and Dangote Group over the Obajana Cement Company.’

Dangote Cement's chief branding and communications officer Tony Chiejina said “As a socially responsible corporate entity, we refute this allegation and condemn this unprofessional and irresponsible attempt to smear our image before local and international investors, and thus erode our brand value. Dangote Group would never stoop so low as to sponsor thugs to destroy any property, whether it belonged to the government or an individual. This runs contrary to our business ethos and everything we stand for as a leading manufacturer with teeming customers and consumers across Nigeria and Africa. Our lawyers have been mandated to react appropriately to the damaging allegation from the Kogi State government within the full extent of the law." Chiejina concluded “We urge our stakeholders and the public to disregard such irresponsible and insane statements, as we ask all our stakeholders, namely shareholders, customers, suppliers, employees, and the entire community of Obajana and Kogi State at large, to remain calm while we follow the legitimate and lawful process to resolve this matter with the state government.”


India: Four UltraTech Cement cement products have received Environmental Product Declaration (EPD) certification. UltraTech Cement's ordinary Portland cement (OPC), Portland pozzolana cement (PPC), Portland slag cement (PSC) and Portland composite cement (PCC) all successfully underwent lifecycle assessment studies in line with EPD requirements.

The Aditya Birla subsidiary said that 70% of its cement sales consist of blended cement. It offers over 70 different GreenPro certified products across its range.


India: Finland-based Betolar has launched its first concrete products manufactured using Geoprime on the Indian market. Geoprime is an additive designed for use in cement-free concrete production with ash and ground granulated blast furnace slag (GGBFS). The new concrete product range consists of precast blocks, paving slabs and tiles, and is currently on display at World of Concrete India in Mumbai, Maharashtra.

Betolar's India managing director Abhishek Bhattacharya said "We are happy to introduce our first products to our customers for the Indian markets. We have now moved from laboratory tests into the production phase, and can show concretely how well this solution works. It is great to hear the feedback from the concrete industry in the region to our sustainable solution. Decarbonisation of the concrete industry is a very current and important topic."


India: Adani Group and Jaiprakash Associates are reportedly in 'advanced talks' over the latter becoming Adani Group's latest cement sector acquisition at a price of US$606m. Reuters News has reported that Jaiprakash Associates' board of directors approved the sale of the company on 10 October 2022. Adani Group plans to buy the business via one of its newly acquired cement subsidiaries.

Adani Group is also planning a US$7.9bn investment package in a Rajasthan cement plant expansion, solar power plant project and airport upgrade. The solar power plant has a planned capacity of 10GW. Adani Group owns the 1.8Mt/yr Rabriyawas cement plant and the 5Mt/yr Lakheri cement plant in Rajasthan. The group plans to raise US$10bn to fund its growth plans. Potential investors in 'early talks' with the group include Singaporean sovereign wealth fund Temasek Holdings.

Adani Group completed its acquisition of ACC and Ambuja Cements for US$10.5bn in September 2022.


India: JSW Cement is 'closing in' on an acquisition of some of India Cements' assets in Madhya Pradesh and Rajasthan. The Business Standard newspaper has reported that JSW Cement beat an offer by UltraTech Cement for the Rajasthan assets.

India Cements began construction of a new 3Mt/yr cement plant with a dedicated limestone mine in Madhya Pradesh in 2022. In May 2022, it announced that it was contemplating a land sale in order to reduce its debt. India Cements ended the 2022 financial year with debt of US$369m, up by 1.4% year-on-year from US$364m at the close of the 2021 financial year.


Pakistan: Pakistani cement companies sold 9.61Mt of cement during the first quarter of the 2022 financial year, down by 25% year-on-year from 12.8Mt in the first quarter of the 2021 financial year. Exports declined by 34% to 1.01Mt of cement, from 1.55Mt. The All Pakistan Cement Manufacturers Association (APCMA) said that current economic conditions impacted both domestic and export sales.

Separately, the APCMA has expressed its concern over State Bank of Pakistan limits on the use of letters of credit by companies for the purchase of spare parts and other machinery. The association says that present restrictive conditions will create operational difficulties for the industry.


India: Adani Group subsidiary Adani Port has sued the government of Kerala for US$9.56m in compensation for on-going delays to the construction of the upcoming Vizhinjam port in the south of the state. A local church-led protest over the rights of fishing communities has stalled construction of the port. The New India Express newspaper has reported that Adani Port had lost over US$12m on 8 October 2022 as a result of the delay. The company rented 12 barges for the work.

The government will hold talks with protestors on 13 October 2022.


UK: Denmark-based architecture fund Henrik Frode Obel Foundation has named Seratech as winner of its Obel Award 2022. The award recognises architectural contributions to global development. Seratech has developed an olivine-based composite cement produced using CO2 from flue emissions, which can sequester double the CO2 of ordinary Portland cement (OPC). When used as 40% of a blend with OPC, it is able to completely offset the emissions of concrete production.

Team member Barnaby Shanks said "The beauty of the idea is that you can just use it as normal concrete. There are other carbon-neutral materials, but they can be limiting because they can only be precast, cured in a lab in special conditions and shipped elsewhere. We want people to retain the freedom to use concrete the way that they are used to. We don’t want to limit people in any way because we’ll just lessen the amount of impact we can have."


Philippines: The board of directors of Eagle Cement has acknowledged the acquisition of 89% of the producer's issued shares by San Miguel Equity Investments (SMEI). SMEI has conducted a mandatory tender offer for the remainder of Eagle Cement's shares. The board adopted three resolutions, namely to extend its cooperation to SMEI, to voluntarily delist its shares on the Philippine Stock Exchange (subject to SMEI's acquisition of more than 90% of shares) and to hold a special meeting of its shareholders.


China: China Resources Cement has issued a profit warning for the nine-month period ending on 30 September 2022. The producer said that it expects its profit to 'significantly' decline year-on-year on account of lower sales volumes and an increased cost of sales during the period, compared to the corresponding period in 2021.


Kazakhstan: Steppe Cement's sales were US$68.7m during the first nine months of 2022, up by 13% year-on-year from US$60.6m in the corresponding period in 2021. Its cement sales volumes were 1.36Mt, down by 1% year-on-year from 1.38Mt.

Kazakhstan's cement demand grew by 2% year-on-year to 9.4Mt in the first nine months of 2022. Steppe Cement expects the Kazakh cement market to grow by 2% year-on-year to 11.8Mt throughout 2022. Steppe Cement holds a 15% market share.


Pakistan: Fecto Cement recorded sales of US$30.4m during the 2022 financial year, up by 37% year-on-year from US$22.3m during the 2021 financial year. Throughout the year, the producer's cement volumes fell by 1.9% to 713,000t from 729,000t, while its exports fell by 51% to 26,600t from 54,700t. Its cost of sales increased by 32% year-on-year to US$26.5m from US$20.1m, but this failed to offset sales growth, resulting in a US$1.29m profit for the company, compared to a US$309,000 loss in the 2021 financial year.


Denmark: Switzerland-based Holcim has made an investment in 3D concrete printer supplier COBOD International. Holcim hopes that the investment will help it to further expand its TectorPrint 3D printing ink range. Holcim and COBOD International's collaboration dates to 2019, since which time the partners have 3D printed windmill tower bases in Denmark, a school in Malawi and a housing development in Kenya.

Holcim's head of global research and development Edelio Bermejo said “At Holcim, we are continuously expanding our range of building solutions to build better with less, working to improve living standards for all in a sustainable way. 3D concrete printing will help us meet these goals."


Nigeria: The House of Assembly of the Nigerian parliament has ordered Dangote Cement to suspend its operations at the Obajana cement plant until the company presents 'credible evidence' of its acquisition of the plant from the government. The Premium Times newspaper has reported that the state and Dangote Cement concluded a deal for transfer of ownership of the plant in 2002. Kogi State Commissioner Kingsley Fanwo says that Dangote Cement has failed to show evidence of its payment for the asset.

Local people petitioned the state for an enquiry into the plant's legal status after it allegedly created industrial pollution 'bordering on' a hazard. Protestors have reportedly 'driven out' staff from the plant.


Pakistan: Power Cement's sales rose by 23% year-on-year to US$78.3m in its 2022 financial year, from US$63.6m in its 2021 financial year. Nonetheless, it recorded a comprehensive loss of US$2.06m, compared to an income of US$1.58m in the 2021 financial year. The company's cost of sales rose by 35% to US$67.2m from US$49.8m.


Pakistan: Thatta Cement recorded net sales of US$19.1m during its 2022 financial year, up by 75% year-on-year from US$10.9m in its 2021 financial year. This included gross export sales of just US$3160, down by 99% from US$394,000 in the 2021 financial year. Thatta Cement's total cost of sales increased by 96% to US$18.1m from US$9.24m. Its raw material costs tripled to US$1.64m from US$546,000, while its fuel and power costs more than doubled to US$12.5m from US$5.89m. As a result, the producer recorded a profit for the year of US$387,000, down by 68% year-on-year from US$1.19m.

Chair Khawaja Muhammad Salman Younis said "The company showed better performance during the year, despite the tough market conditions, coupled with significant challenges and uncertainties due to political instability and the Russian-Ukraine war. Due to these factors, Pakistan’s economy remained under pressure throughout the year. Other economic factors such as the rise in energy prices in local and international markets, significant currency depreciation and a sudden hike in interest rates severely affected the industry's, as well as the company’s, performance." Noting the 'changing and challenging economic environment,' Younis said that Thatta Cement 'remained successful in achieving budgetary targets in terms of volumes and retention price.' He added "Our sales and marketing team put extra efforts into identifying the needs of our valued customers and explored new markets for the company, despite severe competition in the cement industry."


Vietnam: The Vietnam National Cement Association (VNCA) recorded combined national cement and clinker exports of 24.8Mt in the first nine months of 2022, down by 26% year-on-year from the same period in 2021. This corresponded to US$1.1bn in value, down by 14% year-on-year. Việt Nam News has reported that the VNCA expects to achieve total cement and clinker production of 107Mt, against a national capacity of 130Mt/yr. Domestic demand was 65Mt.

Earlier in 2022, Long Son Cement commissioned a new 2.5Mt/yr integrated cement plant, raising national overcapacity to 200% from 196%.


Pakistan: Lucky Cement has engaged telecommunications provider Zong 4G to supply its communication services. Pakistan Press International News has reported that the partners expect the collaboration to enhance Lucky Cement's operationality by addressing any connectivity issues.

Lucky Cement executive director Noman Hassan said "By harnessing the power of connectivity, we can identify opportunities to enhance our business operations."