Global Cement Newsletter

Issue: GCW617 / 19 July 2023

Headlines


The government in Indonesia made building new cement capacity harder this week. The new rules are intended to strengthen the local sector in the face of a utilisation rate of only 53%. A moratorium policy and/or new investment arrangements have been placed on new cement plant projects. Instead, companies have been asked to focus on the regions of Papua, West Papua, Maluku and North Maluku instead, where demand for cement is higher than what the local production base can produce. Ignatius Warsito, the Director General of the Chemical, Pharmaceutical and Textile Industry at the Ministry of Industry, said that the new rules would be reconsidered once the capacity utilisation rate reaches 85%.

Other measures the government is also looking at include increasing exports of cement, changing regulations related to the coal Public Service Agency (BLU) and improving overland transport. On that last point the authorities and the cement producers are looking at how logistics costs can avoid rising in the face of the impending Zero Over Dimension Over Load (ODOL) policy. Proposals the sector has submitted include implementing a multi-axle policy for trucks and improving the quality of certain roads to allow for higher capacity vehicles.

As one of the government’s focus areas - coal - suggests, fuel prices have been a headache for the cement sector in recent years. Warsito noted that international coal prices started to rise in late 2020. This was likely due to the logistical mess that the coronavirus pandemic caused to the global economy. Higher coal prices caused a “significant” effect on the cement industry through both higher production costs and restrictions on supplies. One irony to note here is that Indonesia is one of the world’s leading coal producers. Donny Arsal, the head of Semen Indonesia, told the government in 2022 that the war in Ukraine had enticed local coal companies to export more coal due to the rising international price. At this time he lobbied the administration to use its local domestic market obligation (DMO) subsidy to better serve the cement sector by giving it more coal at a fixed price.

Graph 1: Cement demand and capacity in Indonesia. Source: Semen Indonesia and Indonesia Cement Association. 

Graph 1: Cement demand and capacity in Indonesia. Source: Semen Indonesia and Indonesia Cement Association.

Overcapacity has been a recurring feature of the Indonesian cement market since at least the 1990s as the demand and capacity have grown sometimes out of step. The capacity utilisation rate reached 90% in the early 1990s only to fall to 50% by the end of that decade due to the Asian financial crisis. More recently Holcim left the market in 2019 when it sold its business to the Semen Indonesia. The state-owned company consolidated more than half of the country’s cement production capacity at the time. According to its data for the first quarter of 2023 it has a 51% market share and a 46% production capacity share. It also said that 92% of local demand was catered for from four of the country’s 14 producers, namely: Semen Indonesia; Indocement; Conch; and Merah Putih.

A recent study by the Jakarta Post newspaper suggested that after a poor first half in 2023, cement demand was expected to rebound and create modest overall annual growth by the end of the year. The key reasons for this outlook are increased government infrastructure spending, ongoing work on the new capital city Nusantara and anticipated price stability. The new city project, for example, is expected to require 1.6Mt of cement in the 2022 - 2024 period. Risk factors, of course, abound such as a global economic slowdown, financial problems at some of the government-owned construction companies like Waskita Karya and new capacity. A new 8Mt/yr (!) plant owned by local company Kobexindo and China-based Honshi Cement, for instance, is scheduled to start operation in the second half of 2023 in East Kalimantan. Even though the government says that the new unit will export 90% of its production, it will place pressure on other existing sites hoping to increase exports.

The country’s largest cement producer being majority owned by the government is a pertinent feature here given that the same government has also effectively banned new capacity. Semen Indonesia’s earnings before interest, taxation, depreciation and amortisation (EBITDA) have fallen each year consecutively since 2020. As mentioned above overcapacity has long been present in the local sector and recent events have made it worse. Yet, the companies that are likely to benefit the most from a block on newer, competitive cement plants are likely to be the established players. That said, though, with the utilisation just above 50% and new projects like the Kobexindo-Honshi plant on the way, the government likely feels it has to take some form of action. Other tools at its disposal include a national carbon exchange set to launch in September 2023. Power companies will participate from the start with cement producers anticipated to follow at a later stage. Despite the uncertain short-to-medium term outlook the cement sector in Indonesia remains one of the largest in the world with plenty of business to be done. Denmark-based FLSmidth was clearly mindful of this when it opened a new office in Jakarta in April 2023.


India: The Cement Manufacturers' Association has elected Neeraj Akhoury. He is the managing director of Shree Cement. In a statement the association said “Akhoury brings with him more than 30 years of experience in steel and cement industries. He has worked in various leadership roles in India and other emerging markets.” The association also elected Parth Jindal as its vice-president. Jindal is the managing director of JSW Cement.


Romania: Holcim Romania has appointed Claudiu Anghel as the plant manager of its Campulung cement plant. Anghel took up the post in May 2023 when the previous manager, Cornel Banu, was promoted to the role of Industrial Director of Holcim Romania & Moldova, according to the Diplomat Magazine. Anghel has worked for Holcim and its subsidiaries in Romania, Azerbaijan Russia and Slovakia in electrical engineering roles for over 20 years. He worked as a project manager for electrical and automation for CRH Slovakia in the late 2010s before returning to work for Holcim Romania in managerial positions from 2019.


Türkiye: Votorantim Cimentos Türkiye has appointed Şule Gözüpek as its Central Anatolia Regional Manager. Gözüpek has worked by Votorantim Cimentos for over 15 years. She holds masters and bachelors degrees from Gazi University in Ankara and Erciyes University in Kayseri respectively.


India: UltraTech Cement has appointed Vivek Dheer as Zonal Head UBS. He has worked in sales and management roles for the cement producer since 2014. Prior to this he worked for ACC and the Hindustan Construction Company. Dheer holds a bachelor’s degree in civil engineering from the Motilal Nehru National Institute Of Technology as well as marketing and business qualifications.


India: Ramco Cements plans to invest a total of US$91.3m towards growing its capacity during the 2024 financial year, which ends on 31 March 2024. Its planned investments consist of US$15.8m in an expansion to its Haridaspur grinding plant in Odisha and US$75.5m in the acquisition of land in Bommanalli, Karnataka, on which to establish a limestone mine.

During the previous financial year, which ended on 31 March 2023, Ramco Cements invested US$215m in capital expenditure.


India: The first quarter of the 2024 financial year, which began on 1 April 2023, brought revenues of US$72.5m for Heidelberg Cement India, up by 1% year-on-year from US$71.9m during the first quarter of the previous financial year. The subsidiary of Germany-based Heidelberg Materials reported a 1.6% rise in its costs, to US$61.2m from US$60.3m. As such, its net profit rose by 1.3% year-on-year, to US$6.37m, compared to US$6.29m in the first quarter of the 2023 financial year.


India: UltraTech Cement and other industrial partners are participating in the development of the World Economic Forum’s first net zero transport cluster in India. The cluster, called Moving India, will deploy 550 zero-emissions trucks in western Gujarat and Maharashtra. Participants aim to create scale, support the deployment of shared assets and infrastructure, encourage the creation of a vehicle supply and servicing ecosystem and inform policy through consensus.

GPEO News has reported that UltraTech Cement managing director Kailash Jhanwar said "India is the second largest cement producing country in the world, with cement plants spread across the country. The cement sector can provide an ideal use case for early adoption of zero emission trucks. At UltraTech Cement, we are committed to evaluating all means to reduce our emissions and environmental footprint. We see large scale deployment of zero emission trucks and liquefied natural gas/compressed natural gas vehicles as the next key initiative to make our operations more sustainable."


India: Three workers died after an oxygen cylinder exploded at UltraTech Cement’s Hirmi cement plant in Chhattisgarh on 18 July 2023. The Indian Express newspaper has reported that the workers were subcontractors hired to carry out repairs at the 1.9Mt/yr integrated cement plant. They reportedly brought the cylinder with them to the site before it exploded for unknown reasons. Police are investigating the event, and have named the victims as Lakesh Kumar Gayakwad, Shatruhan Lal Verma and Umesh Kumar Verma. The men were aged between 21 and 27.


Tajikistan: The government ordered the immediate shutdown of Tajikcement’s Dushanbe cement plant ‘due to serious air pollution’ on 18 July 2023. Asia-PLUS News has reported that the suspension will likely last until the end of 2023. The government has indicated that an upgrade to the plant’s equipment would be necessary for it to be able to reopen. It previously stated that the plant would have to shut down altogether and relocate to a new site, to be replaced by a confectionary factory.


Malaysia: YTL Cement and Thailand-based SCG have signed a memorandum of understanding with Innocement, a joint venture between the Sarawak Economic Development Corporation (SEDC) and the Bintulu Development Authority (BDA). The agreement is intended to strengthen the cement supply chain, secure the reliability of supply and stabilise prices in the region, according to the Star newspaper. In January 2023 representatives of the SEDC and the BDA had visited SCG in Bangkok. At this time it was reported that a joint venture between the SEDC and the BDA wanted to import 0.5 – 1Mt/yr of cement from SCG.


Slovenia: Salonit Anhovo has announced a planned name change to Alpacem Cement Slovenia. STAkrog News has reported that the inclusion of the word ‘Slovenia’ will require special government approval. The company said that Alpacem better reflects its ownership, while Cement reflects its core activity.

Salonit Anhovo is 75% owned by Austria-based Wietersdorfer Alpacem and 25% owned by Italy-based Buzzi.


China: China Shanshui Cement has warned investors of an anticipated net loss during the first half of 2023. Dow Jones Institutional News has reported that the group expects to record a '145 - 150%' year-on-year decline in its profit compared with first-half 2022 levels. It attributed this to a fall in the price of its cement throughout the period.


Bosnia & Herzegovina: Hungary-based Talentis Group and Austria-based Asamer Baustoffe have signed a letter of intent giving the former exclusive negotiation rights in the sale of Lukavac Cement. The subsidiary of Asamer Baustoffe operates the 650,000t/yr integrated Lukavac cement plant in Tuzla Canton. It also controls the nearby Vijenac limestone mine.

Talentis Group already holds foreign assets in Croatia and Romania.


Kyrgyzstan: The Ministry of Natural Resources, Environment and Technical Supervision has requested an inspection of Sinji-Pirim's Sinji-Pirim cement plant in Osh Region's Aravan District. Central Asia News has reported that a video emerged on social media showing smoke rising from pipes at the plant on 6 July 2023.

Sinji-Pirim Cement has operated the Sinji-Pirim cement plant since March 2018.


US: Buzzi subsidiary Buzzi Unicem USA has published an update following a fire on the evening of 13 July 2023. The producer said that it first detected smoke from an alternative fuel (AF) store that housed wood chips and shredded tyres. Staff contacted the fire service, which brought the blaze under control without any injuries. The fire damaged the siding of the storehouse, as well as some electrical equipment. The producer said that the Stockertown cement plant did not lose electrical power, and that it is currently evaluating the extent of the damage.

Plant manager Rad Slavov said “I want to thank all the emergency responders for their quick response and professionalism in getting the fire under control swiftly.”


Spain: The Spanish cement association, Oficemen, recorded total national cement consumption of 7.54Mt throughout the first half of 2023. This corresponds to a 0.3% year-on-year rise from first-half 2022 levels. Meanwhile, first-half exports fell by 2.3% year-on-year to 2.84Mt.

The Cinco Días newspaper has reported that Oficemen general director Aniceto Zaragoza said “The first half of 2023 has closed with zero growth, in line with our forecasts at the beginning of the year. The confluence of three elections, which will end with the general elections on 23 July 2023, is an unusual circumstance, which has affected not only investments in public works but also at the business level." Zaragoza added that construction decision-making had 'already slowed down by itself due to the current international situation.'


Kenya: The government says that it has found a 'strategic investor' to buy a 30% stake in East African Portland Cement Company (EAPCC). Business Daily News has reported that the buyer will acquire shares from the National Treasury, the National Social Security Fund (NSSF) and Lafarge South Africa. The government holds 25% of EAPCC's shares through the Treasury, while the NSSF holds 27% and Lafarge South Africa 42%.

Lafarge South Africa denied that it plans to sell any of its shares in EAPCC. Chief executive officer Geoffrey Ndugwa said "We are not aware that we will be ceding shares.”

The government said that shareholders currently face the decision to sell EAPCC's land, seek a bailout from the Treasury or liquidate the company. It expects shareholders to reach a decision and establish a comprehensive plan for the company by 17 August 2023.


Ghana: Dangote Cement says that it has finished building a new grinding plant in Ghana. Tech Economy News has reported that the new facility has a capacity of 400,000t/yr.

Dangote Cement already operates the Tema cement terminal in Accra. Local press previously reported that Dangote Cement imported 1.5Mt of cement into Ghana in 2022.


Oman: Raysut Cement reported a net loss of US$4.52m during the first half of 2023. This corresponds to a drop of 67% year-on-year from US$13.8m in the previous first half. The Oman Daily Observer newspaper has reported that the producer attributed the loss reduction to its implementation of operational efficiency and cost reduction measures, as well as growth in sales volumes, during the latest half.


Indonesia: The Indonesian cement industry produced 29.3Mt of cement during the first half of 2023. This corresponds to a utilisation rate of 51% across an installed national capacity of 116Mt/yr. Throughout 2022, the industry produced 64Mt of cement and recorded a utilisation rate of 55%. Local capacity utilisation levels in the first half of 2023 were as low as 45% in some regions. Only Bali-Nusa Tenggara Region and Maluku-Papua Region did not suffer from overcapacity. National demand was 28Mt in the first half of 2023 and 63Mt throughout 2022. Meanwhile, first-half exports rose by 12% year-on-year in opening six months of 2023.

Indonesia Government News has reported that the Ministry of Industry has instigated a moratorium on investments in the construction of new cement capacity. Director general Ignatius Warsito said "These efforts can provide legal certainty for cement industry players in the country, as well as support competitiveness." Warsito noted the health of Indonesia's existing export markets for cement, but noted the uncertainty of the industry's coal supply and its price. Coal currently accounts for 40% of Indonesian cement's fuel consumption by value.


Ivory Coast: LafargeHolcim Côte d'Ivoire has invested a total US$677,000 in sustainability-enhancing upgrades to its 2Mt/yr Abidjan grinding plant since 2020. Agence Ivoirienne de Presse has reported that the producer has now implemented 80% of recommendations made by sustainability auditor Centre Ivoirien Antipollution (CIAPOL). Recommendations included the installation of dust capture systems.

General manager Rachis Yousry said "In 2022, LafargeHolcim received zero complaints from local residents for environmental degradation.” He added the producer was on track to realise net zero CO2 emissions by 2050.


Germany: Dyckerhoff has launched Dyckerhoff Weiss Blue Star, a pozzolanic white cement CEM IV/A (P) 42.5 R product. It was approved by the German cement association, the VDZ, in mid-June 2023 and is now being manufactured at the Amöneburg plant. The lower CO2 credentials of the new product have been promoted as it releases around 15% less CO2 compared to CEM I cements. It is also notable for being a blended white cement.


Russia: Soyuzcement, the national cement manufacturing union, has held a meeting discussing reverse engineering components for cement plants. The meeting of the committee for cement engineering took place at Cementum’s Schurovsky plant. The context of the meeting was that, before international sanctions were imposed upon Russia in response to its invasion of Ukraine in early 2022, around 70% of the equipment and components for the cement sector was imported. At the event representatives of Cementum shared best practice of reverse engineering, including methodology and specific examples of manufacturing spare parts including scanning them to build three-dimensional models. The sector intends to further collaborate with local manufacturers to source the necessary parts.


Poland: Germany-based Schade Lagertechnik has upgraded the bulk handling equipment for raw materials including limestone and flue gas desulfurisation (FGD) gypsum at a cement plant in Górażdże. A Schade cantilever reclaimer was supplied to double the conveying capacity to 400t/hr with an associated belt conveyor.

Notably, the subsidiary of Aumund says that the order presented several challenges such as integrating the new equipment into the existing infrastructure, adapting it to the design of the building that dated back to the 1970s and installing the new kit whilst allowing the plant to continue operating. Once the new equipment had been assembled the installation team only had 10 days to dismantle the old machine and to switch operation over to the new equipment.

Schade Lagertechnik was responsible for the engineering, design, fabrication and supply. Aumund Group Field Service also assisted with the installation.


Europe: Holcim has secured funding for three separate carbon capture, utilisation and storage (CCUS) projects at its cement plants in Europe. The recipient projects are the Go4Zero project at Holcim Belgium's Obourg cement plant in Belgium, the KOdeCO project at Holcim Croatia's Koromačno cement plant in Croatia and the eM-Rhône project at Lafarge Ciments' Le Teil cement plant in France. The Le Teil plant's system will be used to produce e-methanol, while the investment at the Koromačno plant will be part of a package of upgrades to turn the plant carbon neutral.

Alongside on-going projects in Germany and Poland, this will bring Holcim's total number of EU-funded CCUS projects to five. Holcim is committed to US$2.33bn-worth of investments of its own in over 50 carbon capture projects worldwide before 2030.

Holcim's Europe regional head Miljan Gutovic said “It’s exciting to be at the forefront of decarbonising the building sector in Europe. The support we are receiving from the EU Innovation Fund for five of our CCUS projects is a great testament to the strength of our engineering teams, the maturity of our technologies and our advanced partnerships across the value chain. Our robust pipeline of projects positions us as the partner of choice to scale up carbon capture technologies in Europe.”


Greece: The IFESTOS carbon capture project at Titan Group's Kamari cement plant was among eight CO2 emissions-reducing projects chosen for funding following the latest EU Innovation Fund call for projects. IFESTOS consists of a planned 1.9Mt/yr carbon capture installation at the Kamari plant. Titan Group says that it has concluded necessary memoranda of understanding (MoUs) with suppliers. The IFESTOS project will receive a share of a funding pot worth a total Euro3.6bn.

Chair Marcel Cobuz said "We are truly excited that the European Commission has chosen to support our large-scale, highly innovative project. IFESTOS is a cornerstone of our accelerated decarbonisation roadmap to net-zero. In line with EU climate policy, together with our technology partners, we are pioneering an innovative carbon capture project, the largest in Europe, with a highly positive impact. The group has strong capabilities and is committed to executing this project fast over the next few years, decarbonising production and offering green growth opportunities to our customers in Europe. We embrace the opportunity to widely share our knowledge and expertise and promote green cements as modern materials for infrastructure and housing.”


Germany: The EU Innovation Fund has granted funding to the GeZero carbon capture project at Heidelberg Materials' Geseke cement plant in North Rhine-Westphalia. The project consists of a 700,000t/yr carbon capture system and an oxyfuel kiln upgrade. A captive solar power plant will provide energy for the new systems. CO2 storage partner Wintershall Dea will receive purified liquefied CO2 from the capture system via its Wilhelmshaven distribution hub for storage under the North Sea.

Heidelberg Materials Germany general manager Christian Knell said “This project sets an important milestone for the cement industry and for effective carbon management in Germany. We are now counting on the tailwind of Germany’s future Carbon Management Strategy and the regulatory framework to come.”

CEO Dominik von Achten added “With GeZero, we will once again show how Heidelberg Materials’ pioneering spirit is paving the way for the decarbonisation of our industry. We will be the first to realise a full CCS chain for the capture, transport and permanent storage of all CO₂ emissions from an inland location in Germany. I appreciate the support of the EU Innovation Fund, which expresses both an important recognition and the required backing from the political side.”


US: Brimstone has announced a new method of ordinary Portland cement (OPC) with a negative carbon footprint. Brimstone's method uses carbon-free calcium silicate in the place of limestone. Its calcination also produces magnesium compounds, which naturally sequester further CO2 from the atmosphere. The technology will now proceed to the testing phase at an upcoming pilot plant in Reno, Nevada, before proceeding to commercial-scale production. Brimstone will then begin to market its OPC, along with supplementary cementitious materials produced by its process.

Brimstone's chief technology officer Hugo Leandri said “By delivering the exact same cement, we clear away the main obstacles to adoption, offering an opportunity to dramatically speed up the path to net-zero construction. The same buildings, bridges and roads being built today can be built tomorrow, without carbon."


Bangladesh: The government inaugurated the Dasherkandi sewage works, the largest sewage treatment plant in South Asia, in Dhaka on 13 July 2023. United News of Bangladesh has reported that the plant will incinerate dried sewage sludge to produce 16,400t/yr of ash. The plant will supply this to the local cement industry for use as a raw material.

The Dasherkandi sewage works is one of five planned new sewage plants expected to process 100% of Dhaka's sewage by 2030.


Japan: Taiheiyo Cement has concluded an agreement to dispose of waste produced by any natural disasters that should occur in Hidaka City and Saitama Prefecture. Under the agreement, Taiheiyo Cement will establish a disposal system with realises the potential of disaster waste as a resource. This will work alongside another recycling programme for conventional wastes. The cement producer says that this will help to build a safe and secure community.


Azerbaijan: Total national cement production was 1.76Mt during the first half of 2023, according to the State Statistics Committee. This corresponds to a 1.9% year-on-year rise from first-half 2022 levels. Clinker production rose more sharply, by 16% to 1.82Mt, while ready-mix concrete production rose by 15% to 1.77Mt.


India: UltraTech Cement has announced the inauguration of its expanded Sonar Bangla II cement plant. Reuters has reported that the expansion has more than doubled the plant's capacity to 1.3Mt/yr. It increases UltraTech Cement's total installed capacity by 0.5% to 131Mt/yr.


China: China National Building Material expects its net profit to drop by 80% year-on-year during the first half of 2023. AAStocks Financial News has reported that the group partly attributed the anticipated drop to a fall in its cement prices, as well as its commercial concrete prices.


France: Cem'In'Eu has launched FUSIOCIM, a CEM II/C pozzolan cement, that offers a 43% reduction in CO2 emissions compared with ordinary Portland cement (OPC). FUSIOCIM has specific CO2 emissions of 506kg/t. It is suitable for various concrete applications and comes in 25kg bags.

Cem’In’Eu general manager Fabien Charbonnel said "We created Cem’In’Eu with the ambition of reducing the carbon footprint of the cement industry. And we are proving it today with a low-carbon offer that easily replaces traditional cements, without any change for construction professionals. We are convinced that this transition can only be done with pragmatism and taking into account the needs of users.”


Pakistan: Lucky Cement has successfully completed the buyback of US$742,000-worth of its shares. Pakistan Company News has reported that the producer finished buying the shares during the 12 July 2023 trading session of the Pakistan Stock Exchange.


India: Ramco Cements has received board approval to sell its entire stake in its transport subsidiary Lynks Logistics. CNBCTV18 News has reported that the producer plans to execute a share subscription and purchase agreement with food delivery service operator Bundl Technologies.

Ramco Cements originally invested in a 46% stake in Lynks Logistics for US$700,000 in January 2020. It enlarged its stake to 69% for US$273,000 in September 2020.