Global Cement Newsletter

Issue: GCW589 / 04 January 2023

Headlines


Lafarge Cement Zimbabwe (LCZ) received an unwelcome present before Christmas when the US Office of Foreign Asset Control (OFAC) placed the company buying it on its economic sanctions list. OFAC made its announcement on 12 December 2022. However, the cement producer said that its parent company, Associated International Cement, had concluded its sale of a 76% stake in LCZ to Fossil Mines on 6 December 2022. Local press reports that the Zimbabwe Stock Exchange halted trading in the cement company on 23 December 2022. Then, LCZ said on 29 December 2022 that the OFAC sanctions had “impacted some processes” within it. It added that it was considering various courses of action to protect the business and the interests of all stakeholders.

OFAC took action against Fossil Agro, Fossil Contracting and the group’s chief executive officer, Obey Chimuka, due to alleged links to a previously sanctioned individual, Kudakwashe Tagwirei, and his company, Sakunda Holdings. OFAC said that Tagwirei had “materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe.” It accused him of using his relationships with government officials to gain state contracts, to receive access to currencies, including the US Dollar, and of supplying luxury items such as cars to ministers. It added that Chimuka was a “longtime business partner” of Tagwirei. Fossil Agro was also linked to a mismanaged agricultural subsidy scheme.

When a company says it has concluded a divestment or acquisition the expectation is that everything has finished. However, LCZ has admitted that the OFAC action has caused it some problems. We’ll have to wait for more information to be released to appreciate the full extent of these ‘problems.’ However, it is worth noting that government capital controls caused delays for the handover of a new vertical cement mill ordered from China-based CBMI to LCZ in mid-2022. At the time it was reported that the cement producer still owed the supplier around US$5m but was unable to make the payment due to economic measures the government had taken to avoid depreciation of the local currency. Other potential issues could also lie in any continuing services or materials that Associated International Cement and its parent company Holcim might have agreed to supply to Fossil Mines in the future as part of the divestment deal.

Looking at LCZ’s business more generally, in its third quarter trading update it said that revenue was down by 43% year-on-year due to suppressed cement and mortar sales volumes. Yet, this was due, in part, to a roof collapse at the company’s plant in late 2021 and the commissioning and ramp-up of that new mill in the fourth quarter of 2022. So the company expects ‘significant’ recovery in its sales volumes in 2023. In a sobering aside illustrating the realities of doing business in Zimbabwe, it also mentioned that the local interest rate jumped to above 200% in July 2022! Despite all of this though, it noted that both residential and government-based infrastructure markets were driving market demand.

South Africa’s PPC reported a fall in its cement sales volumes from its subsidiary PPC Zimbabwe in the six months to September 2022 with knock-on declines to revenue and earnings. It blamed this on a planned kiln shutdown, noted the negative role of hyperinflation and forecast that volumes would improve subsequently due to ‘robust’ cement demand. It pointed out that its earnings were hit during the maintenance period because it had to import clinker from South Africa and Zambia and that this was more expensive than locally manufactured clinker. The other thing that both LCZ and PPC raised were power cuts, although LCZ reported that unscheduled outages had decreased in the third quarter of 2022.

The growing demand for cement in Zimbabwe as reported by both LCZ and PPC helps to explain how Holcim was able to finalise a deal to sell its local subsidiary in 2022. Operational and financial hurdles such as coping with hyperinflation and power cuts show the problems these companies have also faced running a business in the country. Merger and acquisition deals in the cement sector often face travails as they are proposed, negotiated, made public and then put to the scrutiny of regulators. It seems unusual though for a divestment deal to run into problems after it has seemingly been closed.


Tanzania: Tanga Cement has appointed Patrick Rutabanzibwa as its chair. It follows the resignation of Lawrence Masha in mid-December 2022.

Rutabanzibwa previously worked as the company’s deputy chair. He is also the country chair of PanAfrican Energy and is a director of the National Housing Corporation. Other notable past appointments include work as a permanent secretary in government ministries, including the Ministry of Lands, Housing and Human Settlements Development, the Ministry of Home Affairs, Ministry of Water and Irrigation and the Ministry of Energy and Minerals. In the 1980s and 1990s he was a research officer at the state-owned Tanzania Petroleum Development Corporation and held positions at the Ministry of Water, Energy and Minerals. He holds a master’s degree in chemical engineering from Loughborough University in the UK.


Indonesia: State-owned Semen Indonesia has expanded its stake in subsidiary Solusi Bangun Indonesia to 84%. The group acquired the new Solusi Bangun Indonesia shares from another cement subsidiary, Semen Indonesia Industri Bangunan.

Solusi Bangun Indonesia’s four cement plants in Java and Aceh command 14.8Mt/yr-worth of production capacity and employ 2400 people.


Saudi Arabia: Southern Province Cement expects to sign a contract for construction of a planned 10,000t/day new line at its Jazan cement plant in early 2023. Mist News has reported that the company commenced tendering for technical and financial offers for the project in May 2022.

When commissioned, Southern Province Cement plans for the new line to replace the plant’s older existing lines.


India: Dow Jones Institutional News has reported that Adani Group is in talks with a ‘major shareholder’ of Orient Cement over a possible acquisition of the latter’s stake in the CK Birla Group company.

Orient Cement first began producing cement in Telangana in 1982, and has since spread to Karnataka and Maharashtra, with a cement production capacity of 8Mt/yr.

Orient Cement previously leased land in Maharashtra for a new grinding plant from coal-fired power plant Adani Power Maharashtra, an Adani Group subsidiary, in late 2021. Adani Group entered the cement sector following its acquisition of ACC and Ambuja Cements from Switzerland-based Holcim on 16 September 2022.


Cuba: Corporación Cementos Cubanos’ has resumed production once more at its Siguaney integrated cement plant in Sancti Spíritus Province. The plant was closed for the last seven months of 2022 due to technical issues. Escambray News has reported that plant manager Gonzalo Reina Aguilar said that imported refractory bricks proved crucial to the successful repair operation. Reina Aguilar also noted a ‘better energy situation’ in the country, ensuring the plant of its ‘necessary allocations’ in future.

Corporación Cementos Cubanos hopes that the return of the Siguaney plant to regular operations will help to ease a shortage of cement in Sancti Spíritus and neighbouring Ciego de Ávila.


Canada/US: Lehigh Hanson has rebranded as Heidelberg Materials North America, with immediate effect. The cement producer said that the new brand reflects its broad, innovation-driven approach to becoming the North American industry leader in sustainability and digital solutions.

President and chief executive officer Chris Ward said “This is a major step change for our company, both globally and here in North America. We are thrilled to begin this transformation in North America today, and continue our global journey to grow our business beyond cement and aggregates and become the most sustainable company in the sector.”


Pakistan: Lucky Cement commenced clinker production from a new 3.15Mt/yr kiln line at its Pezu integrated cement in Khyber Pakhtunkhwa in late December 2022. This latest expansion increases the producer’s domestic production capacity by 26% to 15.3Mt/yr, from below 12.2Mt/yr earlier in 2022. The company also operates cement plants in Democratic Republic of Congo and Iraq with an additional capacity of 4.4Mt/yr.

The International News newspaper has reported that Lucky Cement anticipates domestic cement demand to grow due to the rebuilding of homes destroyed by flooding in 2022.


India: Three cement producers plan to establish new plants in Shankragarh, south of the River Yamuna in Uttar Pradesh’s Prayagraj District. The Uttar Pradesh State Industrial Development Authority said that JK Cement has signed a memorandum of understanding for the construction of a 2.5Mt/yr grinding plant, according to the Hindustan Times newspaper. Eco Cement plans to build a 4Mt/yr grinding plant, and KJS Cement a 2Mt/yr cement plant. All three companies have applied for no-objection certificates from the Uttar Pradesh Pollution Control Board.


Vietnam: Vietnam National Coal and Mineral Industries Group (Vinacomin) has forecast 6.1% three-year growth in national coal demand to 115Mt in 2025 from 108Mt in 2022. Four main industries – cement, fertilisers, metal and power generation – are expected to retain over 90% of the combined share of domestic consumption. Vinacomin expects national coal production to increase by 1.3Mt/yr over the period, retaining a 40 – 45% stake in the domestic market. Five-year consumption of imported lignite is forecast to rise to 70 – 75Mt throughout the period up to 2026.


Chile: A fire at Sites 1, 2, 3 and 5 of Puerto Ventanas port in Valparaíso Region has disrupted clinker transportation to Melón’s Puerto Ventanas cement plant. The La Tercera newspaper has reported that the fire destroyed a clinker conveying system connecting the port to the cement plant. The producer expects the damage to ‘significantly impact’ its cement production capacity for a period which it is ‘not yet possible to specify.’

Melón said, “We have deployed contingency and operational continuity plans in order to ensure our supply to our customers." It added that it could not yet quantify the ultimate impacts on its assets, liabilities or results.


Pakistan: Lucky Cement announced the death of Muhammed Yunus Tabba ‘with deep sorrow and grief’ on 3 January 2023. At the time, Tabba was serving as chair of the company’s board and as a non-executive director of the company.

Lucky Cement instructed investors that it will fill Tabba’s former roles ‘in due course, as per the requirement of law.’


Zimbabwe: A deal by Fossil Mines to buy a 76% stake in Lafarge Zimbabwe has been stalled by the introduction of economic sanctions by the US Office of Foreign Asset Control (OFAC). In mid-December 2022 OFAC added Fossil Agro, Fossil Contracting and the group’s chief executive officer, Obey Chimuka, to its Specially Designated Nationals (SDN) list due to alleged links to a previously sanctioned individual, Kudakwashe Tagwirei, and his company, Sakunda Holdings.

OFAC said that Tagwirei had “materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe.” It accused him of using his relationships with government officials to gain state contracts, to receive access to currencies including the US Dollar and of supplying luxury items such as cars to ministers. It added that Chimuka was a “longtime business partner” of Tagwirei. Fossil Agro was also linked to a mismanaged agricultural subsidy scheme.

In a statement Lafarge Zimbabwe said that it was “considering various courses of action with a view to protecting the business and the interests of all stakeholders.” The deal to sell a majority stake in the subsidiary of Switzerland-based Holcim was originally finalised in early December 2022.


Ethiopia: The Ministry of Trade and Regional Integration (MOTRI) says it will regulate cement factory gate prices in its latest attempt to lower the price for end users. It has set the price from 22 December 2022 for six months, according to the Capital Ethiopia newspaper. This latest attempt to stabilise the market follows measures such as setting fixed consumer prices, limiting sales volumes for individuals and asking producers to cut distributors out of the supply chain. However, Teshale Belhu, the state minister for the MOTRI, admitted that recent control measures had made the situation worse and increased the number of illegal traders instead. The government now intends to reduce its interaction in the cement market.

The country has suffered from a cement shortage since 2020 due to low domestic production levels. This has been exacerbated by security issues, a lack of raw materials and a shortage of foreign currency.


Russia: Eurocement has revealed how it reorganised its business in 2022 in response to foreign equipment suppliers leaving the country and disruptions to domestic supplies of raw materials. The cement producer was forced to take this action in response to the effects of European and US economic sanctions imposed upon Russia following its invasion of Ukraine in February 2022. The cement producer started logging all purchases as prices escalated, special procedures were developed for critical materials and services, a compliance department was created, its network of suppliers in Russia and from countries not part of the sanctions was expanded and the company set up its own repair units at its plants.


Canada: Lafarge Canada has announced a five-year in-kind donation with the Nicomekl Enhancement Society (NES) in British Columbia. The agreement will see the building materials producer donate around US$15,000/yr in aggregates, concrete and labour to enhance the sustainability of the wild Pacific salmon population and ecosystem within the coastal area of the Nicomekl River.

Lincoln Kyne, Vice President and General Manager of Lafarge Canada in British Columbia and the US Pacific Northwest, said, “This key initiative led by NES is a great example, as we will be able to provide the required green construction materials and labour to stabilise, re-shore and line critical spawning beds for returning salmon until 2028.”


Madagascar: Cementis Océan Indien has launched a US$120m upgrade project to its integrated Ibity cement plant. The project is intended to increase the unit’s production capacity to 1Mt/yr from just under 0.2Mt/yr at present. A memorandum of understanding was signed by Cementis and the Ministry of Industrialisation, Commerce and Consumer Affairs in early December 2022. Completion of the project is scheduled for 2025.

Cementis agreed to buy Holcim’s businesses in Madagascar, Reunion, Comoros, Mauritius and Mayotte in late 2021.


China: Jinzhou Tiansheng Heavy Industry has ordered a lime plant with a production capacity of just under 5000t/day from Switzerland-based Maerz Ofenbau. The order includes six PFR-type kilns and will be based at a carbide plant that is being built by Mundra Petrochem, a subsidiary of India-based Adani Group. Maerz says that the new plant will be the largest lime unit ever built at a new site. The equipment manufacturer will supply engineering, material and equipment for the R5S carbide-gas-fired kilns, each with a production capacity of 800t/day.


Vietnam: ThyssenKrupp Polysius’ Asia Pacific division has secured an order for two Polflame-type main burners for an unnamed cement plant. The equipment supplier has highlighted the ability of its burner product to cope with low-grade coal and support high alternative fuel substitution rates as key selling factors. The order follows the purchase of an Impact Crusher by the same customer previously.

Lukas Schoeneck, the chief executive officer of Polysius Asia Pacific, said "We are very proud to add burners number 17 and 18 to our installed base in Vietnam which ensures our market leader position. Now we have to put our focus on the delivery and installation of the burner - in time and quality.”


Australia: Bruks Siwertell has received an order from Hallet Capital for an enclosed ship unloader for Port Adelaide. A gantry-mounted Siwertell 490 F-type unit has been ordered along with a jetty screw-conveyor system feeding a dome silo and individual screw conveyors for installation inside the dome. The unloader will be suitable for discharging bulkers up to 40,000dwt at a rated cement handling capacity of 500t/hr. It is planned for delivery in August 2023 and will be assembled on site.

Hallett Group announced plans in mid-2022 to build a slag cement grinding plant in Port Augusta, South Australia. The project will also include a new distribution facility at Port Adelaide.


Algeria: The National Centre for Cleaner Production Technologies (CNTPP) has signed a cooperation agreement with Lafarge Algeria. The arrangement is intended to provide government assistance towards producing cement more sustainably at the manufacturer’s plants, according to Le Quotidien d'Oran newspaper. The CNTPP is an organisation setup by the Ministry of Environment to support industrial and commercial companies.


US: Lehigh Hanson is preparing to start cutting jobs at the Glens Falls cement plant in New York from April 2023. The majority of the employees at the site will be laid off in April 2023 with some staff to be retained until later until 2023, according to the Times Union newspaper. It was previously reported in November 2022 that the subsidiary of Germany-based Heidelberg Materials was planning to close the plant in a phased manner in 2023. Production from the Glens Falls site will be covered in the future by the company’s new Mitchell plant in Indiana.


Morocco: NovaCim’s new 1.4Mt/yr cement plant at Ouled Ghanem near El Jadida has produced its first cement. Denmark-based FLSmidth supplied equipment for the unit including an OK type vertical roller mill, which it says is the first such installation of the product in the country. FLSmidth said in 2019 that it was going to build the plant for TEKCIM in conjunction with the Société Générale des Travaux du Maroc (SGTM). Full commissioning is scheduled for 2023.


US: Canada-based CEMSI Specialties, a subsidiary of Kontrol Technologies, has received an order for an emission analyser product from an unnamed global cement company. The analyser will provide real-time analysis of continuous emissions from the plant. The contract also includes ongoing annual preventative maintenance. Delivery and installation is scheduled for late 2022 and the first quarter of 2023. No value for the order has been disclosed.


Canada: Lafarge Canada’s Brookfield plant in Nova Scotia has switched to Portland Limestone Cement (PLC) production. The unit will now manufacture the company’s OneCem PLC product. It is the cement producer’s third plant to transition to PLC production in 2022 following the Bath plant in Ontario and the Richmond plant in British Colombia.

Andrew Stewart, the Vice President of Cement at Lafarge Canada (East), said, “We have been steadily moving the needle forward when it comes to cement decarbonisation and we will continue to honour our commitment in progressing our greener portfolio in Eastern Canada over the coming years.”


Ghana: Italy-based Bedeschi has installed handling equipment and conveyor lines for a clinker, bauxite and manganese project at the Port of Takoradi. The initiative is now at the commissioning stage. Bedeschi supplied five conveyor belts with a total length of 3km, two A frame type 50/1400 shiploaders and one eco-hopper. The shiploaders and the eco-hopper were delivered fully erected from the manufacturer’s shipyard directly to the client jetty with a dedicated heavy-lift vessel.


Spain: Mexico-based Cemex and its venture capital subsidiary Cemex Ventures have invested in Waste to Energy Advanced Solutions (WtEnergy), an energy startup company that has developed a process to transform solid waste into synthesis gas (Syngas) for industrial purposes.

WtEnergy converts biomass and non-recyclable waste into Syngas, which can be used in the short-term as a fossil fuel alternative or be upgraded in the medium- and long-term to gases such as biomethane or pure hydrogen. Cemex intends to incorporate this energy source into its clinker and cement manufacturing process, looking to further reduce the carbon footprint of its operations. Cemex aims to increase its fossil fuel substitution rate by 20% by 2030.

Gonzalo Galindo, the president of Cemex Ventures, said, “This investment aligns with our strategy to find innovative clean fuel and energy sources for the cement industry.” He added, “We have outlined an ambitious rollout strategy across multiple operations, starting with Spain and other European countries before expanding to other international markets.”


Canada: Chevron New Energies (CNE), a division of Chevron USA, is the lead investor in Svante’s Series E fundraising round, which raised US$318m. The capital will be used to accelerate the manufacture of Svante’s carbon capture technology. Other fundraising round participants include existing shareholders Temasek, OGCI Climate Investments, Delek US and Hesta AG, and new investors, 3M Ventures, Full Circle Capital, GE Vernova, the Japan Energy Fund, Liberty Media, M&G Catalyst, Samsung Ventures, TechEnergy Ventures and United Airlines Ventures.

Chevron Technology Ventures made an initial investment in Svante in 2014. In 2020, Chevron launched a project to pilot Svante’s technology to capture CO2 from post combustion of natural gas. The project has received funding from the US Department of Energy. In collaboration with Svante and the National Energy Technology Laboratory, the technology will be tested at Chevron’s Kern River facility in San Joaquin Valley, California, with start-up scheduled for December 2022.

Svante was founded in 2007 and it has developed carbon capture and removal technology using structured adsorbent beds, known as filters. The latest funding will support Svante’s commercial-scale filter manufacturing facility in Vancouver. Trials using Svante’s technology in the cement sector have been run at Lafarge Canada’s Richmond cement plant in British Colombia and Holcim US’s Florence cement plant in Colorado.


Philippines: The Department of Trade and Industry (DTI) has decided to impose anti-dumping duties on cement imported from Vietnam. Trade Secretary Alfredo E Pascual said that the dumping of Ordinary Portland Cement (OPC) and Blended Cement from Vietnam posed an "imminent threat of material injury to the domestic cement industry," according to the BusinessWorld newspaper. The duties will comprise 4 – 28% of the export price of OPC and 3 – 55% of the price of Blended Cement. The DTI has identified 11 cement companies from Vietnam that will be targeted with the anti-dumping tariffs.

A report by the Tariff Commission found that 53% of the total cement imported from July 2019 to December 2020 comprised product originating from Vietnam at dumped prices. Overall the country’s OPC and Blended Cement imports rose by 11% year-on-year to 5.90Mt in 2020 and by 16.2% to 6.85Mt in 2021. Imports rose by a further 7% year-on-year to 3.50Mt in the first half of 2022 compared to an average of 3.27Mt for the same half-year periods in 2019, 2020 and 2021. The TC said, "The existence of threat of material injury to the domestic industry is imminent in the near future, as indicated by the significant rate of increase of dumped imports into the Philippines capturing substantial market share, presence of price undercutting, price depression and price suppression.”


Nigeria: The CDP has raised its rating for Dangote Cement to B from B- previously. The improved score indicates that the cement producer made continued efforts to mitigate the environmental impact of its business and has improved its sustainability reporting. It is the fourth time the company has submitted data to the CDP and the second consecutive year it has improved its rating.

Michel Puchercos, the chief executive officer of Dangote Cement, said, “The CDP rating upgrade clearly illustrates the growth we have achieved in our commitment to transparency on climate and environmental issues. This year, our Alternative Fuel Project has reached an advanced stage and aims to leverage waste management solutions and reduce CO2 emissions. As of the first nine months of 2022, we co-processed 101,553t of waste representing a 77% increase over last year.”