Global Cement Newsletter

Issue: GCW628 / 04 October 2023

Headlines


The European Union (EU) carbon border adjustment mechanism (CBAM) started its transitional phase this week ahead of the full adoption of the scheme in 2026. Importers of goods with a high carbon cost, including cement, will have to report the direct and indirect CO2 emissions associated with production. No financial penalty will be incurred during the transition period, but from 2026 onwards importers will have to start buying certificates at the EU emissions trading scheme (ETS) price. However, even the full version of the CBAM will be phased in with the cost of embedded emissions increased gradually from 2026 to 2034. Readers can catch up on the CBAM guidance for importers here.

 Graph 1: Sources of cement and clinker imports to the EU in H1 2023. Source: Eurostat/Cembureau.

Graph 1: Sources of cement and clinker imports to the EU in H1 2023. Source: Eurostat/Cembureau.

Global Cement Weekly has covered the EU CBAM frequently, but it is worth remembering which countries are most likely to be affected. According to data from Eurostat and Cembureau, the EU imported just over 10Mt of cement and clinker in 2022. This compares to around 2.5Mt in 2016. Graph 1 (above) is even more instructive, as it shows where the cement and clinker came from in the first half of 2023. Most of it was manufactured in countries on the periphery of the EU with, roughly, a third from Türkiye and a third from North Africa. These are the countries with the most to lose from the CBAM.

Graph 2: CO2 emissions intensity for cement exports. Green signifies cleaner than the EU average, Red signifies more carbon intensive than the EU average. Source: World Bank. 

Graph 2: CO2 emissions intensity for cement exports. Green signifies cleaner than the EU average, Red signifies more carbon intensive than the EU average. Source: World Bank.

Türkiye is the most exposed. Data from Türkçimento shows that it exported 3.4Mt of cement and clinker into the EU in 2022 or 13% of its total exports. Bulgaria, Italy and Romania were the main destinations for cement. Belgium, Spain and France were the main targets for clinker. Notably, more clinker than cement was exported to the EU. For context, in total Türkiye exported 18.5Mt and 8.5Mt of cement and clinker respectively in 2022. The US was the leading destination for Turkish cement at 9.7Mt and Ivory Coast for clinker at 1.3Mt. Türkiye seems set to tackle the problem that CBAM poses for its iron and cement sectors by introducing its own emissions trading scheme. One view expressed has been that if the country has to pay for its carbon emissions it would much rather pocket the money domestically than see it go to a foreign entity. A relative CBAM Exposure Index put together by the World Bank by June 2023 suggested that Türkiye would actually benefit slightly in comparison to some of its cement exporting rivals as the CO2 emissions intensity of its cement exports was 4.85kg CO2eq/US$. This study’s pivot point was 4.97kg CO2eq/US$, putting Türkiye just across the line for increased competitiveness.

Cement export data for Algeria is harder to find but state-owned Groupe des Ciments d'Algérie (GICA) has been regularly issuing bulletins since 2018 detailing its cement exports. It previously had an export target of 2Mt for 2023 with destinations in Africa, Europe and South and Central America. Looking more widely, research by the African Climate Foundation (ACF) and the Firoz Lalji Institute for Africa at the London School of Economics and Political Science estimated that 12% of Africa’s cement exports ended up in the EU. It reckoned that the introduction of the CBAM and an EU ETS price of Euro87/t would reduce total African exports of cement to the EU by 3 - 5% if the EU ended its ETS free allowance. The World Bank CBAM Exposure study found that Egypt and Morocco were likely to become more competitive for cement exports but Tunisia less so. Unfortunately this analysis did not cover Algeria.

The third largest individual source of imports into the EU in the first half of 2023 was Ukraine. Research from the Kiev School of Economics estimated that the start of the CBAM would reduce the export volume of cement to the EU by 2 - 5%/yr. The World Bank study found that Ukraine would become less competitive as the emissions intensity of its cement exports was 7.62kg CO2eq/US$. This would be compounded by the fact that more than 90% of the country’s cement exports ended up in the EU. However, since the EU backed the country when Russia invaded in early 2022, imposing the CBAM on exports has acquired geopolitical consequences. There has been lobbying on this issue from various sources, so this situation might be one to watch to gain a sense of how the EU might react when its sustainability aims clash with its political imperatives.

One major risk for the cement exporting countries soon to be affected by the CBAM is if other countries start to do the same in a domino effect before the exporters introduce their own carbon pricing schemes. Türkiye is clearly alert to this. Other countries are thinking the same way. The US, for example, has had senators discuss the merits of setting up its own version. It is also wise to using sustainability legislation to further its own economic ends as the Inflation Reduction Act in 2022 showed. At the moment the US needs lots of cement imports but were this to change then the case to enact a US CBAM might grow.

Finally, one should never discount the sheer amount of bureaucracy involved when dealing with the EU. The UK discovered this when it voted to leave the EU and now the rest of the world gets to enjoy it too! Christian Alexander Müller of Evonik told the Die Welt newspaper this week that Brussels had created a bureaucratic ‘Godzilla.' Another commentator noted that the European Commission only published its guidance document for importers on CBAM in mid-August 2023 and that helping export partners would be like teaching them Latin in just a few weeks. Bona fortuna!


Germany: Heidelberg Materials has announced several senior-level changes to its corporate structure, with the establishment of some new roles. Jon Morrish, currently responsible for Western & Southern Europe, will take on responsibility for the newly established group area of Europe as of January 2024. This will follow the retirement of Ernest Jelito, currently responsible for Northern & Eastern Europe-Central Asia and the Competence Center Cement of Heidelberg Materials, at the end of December 2023.

Elsewhere, Roberto Callieri, General Manager Italy, will be promoted to the Heidelberg Materials Managing Board and take on responsibility for Asia as of January 2024. Incumbent Kevin Gluskie’s term will end at the end of January 2024. As part of the change, René Aldach, chief financial officer, will assume additional responsibility for Australia as of January 2024. Axel Conrads, currently President of the Midwest Region in the US, will be promoted to the Heidelberg Materials Managing Board, taking over the new role of chief technical officer as of February 2024.


India: Orient Cement has commissioned a waste heat recovery (WHR) plant at its Chittapur cement plant in Karnataka. Reuters has reported that the producer plans to subsequently scale up the WHR plant in a second construction phase.


Mexico: Cemex debuted on the sustainability-linked bonds market with an issuance of US$331m on 3 October 2023. The group said that it will use the funds to fully or partly amortise the outstanding balance of its debt instruments.

Cemex is committed to achieving net zero CO2 emissions by 2050.


India: HeidelbergCement India has clarified that it is ‘unaware’ of reported discussions between its parent company Heidelberg Materials and JSW Cement over the possible transfer of the former’s Indian assets, Reuters has reported.

Heidelberg Materials owns 13.4Mt/yr-worth of cement capacity in India, of which HeidelbergCement India comprises 6.3Mt (47%).


Vietnam: Exports of cement and clinker from Vietnam totalled 23.9Mt during the first nine months of 2023, down by 0.4% from nine-month 2022 levels. Việt Nam News has reported that the value of the country’s cement exports dropped by 2.6% year-on-year to US$1.03bn.

Throughout 2022, Vietnam exported 31.1Mt of cement, for US$1.36bn.


Pakistan: Cement producers increased their sales volumes by 23% year-on-year during the first quarter of the 2024 financial year, which began on 1 July 2023. They recorded despatches of 11.9Mt during the quarter, compared to 9.62Mt during the first quarter of the previous financial year. The Express Tribune newspaper has reported that exports grew by 72% year-on-year to 1.75Mt from 1.02Mt.


UK: The Cement 2 Zero project has successfully concluded its first trial melt of recovered cement paste in an electric arc furnace at the Materials Processing Institute’s Teesside campus. The project uses the paste as flux for electric steel recycling. Cambridge Electric Cement (CEC) has demonstrated that the ‘slag’ from this process can be ground into fine clinker that, when mixed with gypsum and supplementary cementitious materials (SCMs), produces net zero CO2 cement. The Cement 2 Zero project to produce CEC’s cement at an industrial scale launched in March 2023, with US$7.85m in funding from UK Research and Innovation. Tarmac will grind the clinker from the project’s trial melts for testing in order to obtain certification and specification as a usable cement product.


UAE: Cemex UAE and UltraTech Cement UAE have signed an agreement to collaborate on the development of waste concrete recycling in the UAE, according to Dow Jones Institutional News. The cement producers say that their partnership will help to reduce CO2 emissions from construction, in line with the UAE’s 2050 net zero commitment.


Egypt: Misr Beni Suef Cement has secured board approval for a reduction in its issued capital. Arab Finance News has reported that the company plans to reduce its capital by 10% to US$19.8m.


Central Europe: Austria-based RHI Magnesita has acquired P-D Refractories from Germany-based Preiss-Daimler Group for Euro45m. P-D Refractories produces refractories in the Czech Republic and Germany, and operates other sites in the Czech Republic and Slovenia.

RHI-Magnesita’s CEO Stefan Borgas said “The production capabilities and vertical integration of P-D Refractories, combined with RHI Magnesita’s know-how and renowned research and development capabilities, will complement our product portfolio and enlarge our production footprint and sales channels on a global scale. This acquisition is our sixth transaction to close in the year to date and marks a major milestone for both companies in the process industries sector. Together we look forward to expanding our footprint and strengthening our market presence by offering high-grade refractory products and solutions to an enlarged customer base.”


Uzbekistan: China Energy International Group Samarkand Cement has installed a 3Mt/yr kiln at its upcoming Samarkand cement plant. Local press has reported that the kiln is the largest at a cement plant in Uzbekistan. The Samarkand plant will cost US$313m to build. Parent company China Energy and the government of Uzbekistan previously indicated that construction would conclude in 2024. The plant will produce ordinary Portland cement (OPC) of the local designations M-400 and M-500. It will use coal as fuel in its cement production and directly employ 500 people.


EU: The EU launched the transitional phase of its carbon border adjustment mechanism (CBAM) on 1 October 2023. Parties that import cement - and five other commodities - into the EU must now show the embodied CO2 emissions of their products.

The transition comes ahead of the full implementation of the CBAM in January 2026. At this point, those importing cement into the region will have to pay for the embodied CO2 of their products in order for them to enter the EU Common Market. Producers within the EU already pay for a proportion of emissions under the auspices of the EU Emissions Trading Scheme (ETS).

The intention of the CBAM is to reduce the risk of 'carbon leakage' as the costs of making cement rise in the EU due to changes in the ETS. While cement producers, as heavy CO2 emitters, are currently shielded from the full cost of their emissions, the number of free allowances they receive is set to fall substantially by 2026. At the same time, the cost of emitting a tonne of CO2 under the ETS, currently Euro80-90/t on the open market, is widely expected to rise.


India: JSW Cement is conducting a pilot project in the use of electric vehicles for cement transportation. The producer has introduced five Murugappa electric cement trucks into its fleet in Andhra Pradesh and Karnataka. It expects these to eliminate 150t/yr of CO2 emissions from its logistics operations.

Daijiworld News has reported that CEO Nilesh Narwekar said “The pilot project is an important milestone in making our future much greener and more purposeful.” He added “Based on the success of these pilot trials, we will scale-up the integration of these trucks across our cement operations in India.”


Democratic Republic of Congo: The government banned new imports of cement into the country on 30 September 2023. Local press has reported that the measure aims to protect local cement production and to move the country away from its dependence on imports.

Kongo-Central provincial government spokesperson Anne-Marie Tsasa said “Despite this ban, the circulation and sale of said products is noted in Kongo-Central province. The services working at the borders are invited to fight against this fraudulent practice.”


UK: Germany-based Heidelberg Materials has introduced customers and investors to Heidelberg Materials UK, its UK subsidiary formerly known as Hanson UK. The latest rebrand signifies increasing collaboration across the group’s geographies as a global business with one voice. Heidelberg Materials UK will launch rebranded packaging for its cement and other products in early 2024 and transition its branding across its sites and vehicles by October 2025.

Heidelberg Materials UK CEO Simon Willis said “The construction sector faces global challenges such as climate change and the digitalisation of our industry; challenges we are better placed to meet as a strong, united group. Having a single brand name and identity sends a clear and consistent message to our increasingly global customers.” Willis added “It will allow us to work together to lead the field in driving down carbon emissions; promote the circular economy by recycling and reusing construction waste; develop digital solutions to provide added value to our customers and develop sustainable and innovative building materials.”


Uzbekistan/Qatar: Qatar National Cement has been named among businesses that have attended meetings with the Uzbekistan Minister of Investment, Industry and Trade. UzDaily News has reported that the minister is visiting Qatar for talks with his Qatari counterpart, as well as ‘large companies’ from the heavy industry, energy and food sectors. The Uzbekistan government is reportedly evaluating the prospects for joint implementation of large investment projects in priority sectors of the economy.


India: UltraTech Cement sold 26.7Mt of cement during the second quarter of the 2024 financial year (1 July – 30 September 2023). This corresponds to year-on-year growth of 16% from 23.1Mt in the second quarter of the previous financial year. Sales in India accounted for 25.7Mt (96%) of total volumes, while overseas sales accounted for 1.18Mt (4%).

UltraTech Cement has a cement capacity of 138Mt/yr across its 23 cement plants and 29 grinding units.


India: A 25-year-old man died after becoming trapped in a belt conveyor at a cement plant in Madhya Pradesh’s Satna District. The Free Press Journal newspaper has reported that the man had been working alone in the plant’s packing plant at the time of the disaster.

Multiple producers, including Birla Corporation, Century Cement, Jaypee Cements and Prism Cement, operate integrated cement plants in Satna.


US: Shipments of Portland and blended cement, including imports, in the US and Puerto Rico in July 2023 came to an estimated 9.3Mt, according to the United States Geological Survey (USGS). The figure was 2.1% lower than in July 2022, when 9.5Mt of cement was shipped. Of the total blended volume reported in July 2023, 4.9Mt (98%) was estimated to be Portland-limestone cement.

US-wide shipments for the January 2023 to July 2023 period came to 60.4Mt, a 2% decrease from 61.7Mt reported in the same period of 2022. The leading producing states for Portland and blended cement in July 2023 were, in descending order: Texas; Missouri; California; Florida; and Michigan. Together these five states accounted for 39% of all cement produced in the country during the month. The leading cement-consuming states were, in descending order: Texas; California; Florida; Georgia; and Ohio. Together these states jointly received 38% of all shipments in July 2023.


Nigeria: Dangote Group has described online reports that it would halve the price of its 50kg bags of cement as ‘fake news.’ Anthony Chiejine, Spokesperson for Dangote Group, was responding to apparently unfounded reports that prices would tumble on 1 October 2023.

Earlier, Bahir Ahmad, a media aide to former Nigerian President Muhammadu Buhari, saying on X (formerly Twitter) “The Dangote Group has denied the trending reports that it has reduced the price of cement.”

The online rumour is thought to have gained traction after Dangote’s rival BUA Group chair Abdul Samad Rabiu disclosed that he had discussed a substantial potential price reduction with current President Bola Ahmed Tinubu earlier in September 2023.

The prospect of lower cement prices in Nigeria is often reported, but prices remain stubbornly high. On 28 September 2023, the regional monarch of Idjerhe Kingdom, King Udurhie I, called on the new national President Bola Ahmed Tinbu to reopen the mothballed Madewell Cement Factory in Idjerhe, and five others like it throughout Nigeria, in an effort to increase supply and introduce competition to a market dominated by two or three major players.

King Udurhie toured the Madewell facility with regional chiefs, stating “It is 15 years ago that this project was brought down by cabals in the cement industry. As a King of this land, I see pain and I believe that, with the coming in of President Tinubu, a man who is business-oriented, he knows the importance of the cement sector to the Nigerian economy. The cement industry is too large for one man or one company to deal in, no individual can do this.”


Vietnam: Vietnam is estimated to have produced 89.8Mt of cement in the first nine months of 2023, a year-on-year fall of 4% according to the state-run General Statistics Office (GSO). In September 2023, the country’s cement output is projected to have reached 10.2Mt, a year-on-year rise of 5%.


Peru: Cemento Yura has announced plans to expand its cement plant in Arequipa. Luis Diaz, vice-president of the Cement, Concrete and Lime Division of Gloria Group, the parent company of Cemento Yura, announced the plans during the Perumin 36 Mining Convention, which also took place in Arequipa on 26 - 29 September 2023.

Speaking to the Gestión newspaper, Diaz revealed that Yura is finalising a project to double its capacity. The plant currently has a capacity of 3Mt/yr, most of which is produced by its largest line, Line 3. The new line will cost US$132m and have a capacity of 3Mt/yr.

Diaz reported that engineering studies were complete and that environmental impact permits were in the process of being acquired. No additional area will be required for the new line, which is expected to be operational in 2027.


Germany: Mexico-based Cemex has agreed to buy Kiesel, a manufacturer of mortars and adhesives, for an undisclosed sum. The deal is intended to grow Cemex’s Urbanization Solution business through bolt-on acquisitions. The acquisition will be subject to conditions including regulatory approval. The transaction is expected to be competed from the fourth quarter of 2023.

Sergio Menéndez, president of Cemex Europe, Middle East, Africa & Asia said “This acquisition will enhance our Urbanization Solutions business and allow us to serve our customers better.” He continued, “We remain committed to increasing our capacity to serve growing urban markets with more sustainable and innovative solutions.”

Kiesel was originally founded in 1959 and serves markets in Germany, France, Poland and the Czech Republic. Its portfolio includes a range of products to ensure efficient installation of all types of floors or wall coverings, as well as mortars for the installation of ceramic and natural stone tiles.


Pakistan: Dewan Cement’s turnover rose by 22% year-on-year to US$69.8m in the year to 30 June 2023 from US$57.1m in the same period that ended in 2022. Its cost of sales increased by 29% to US$68.3m from US$52.8m. It reported a loss of US$2.03m compared to US$2.43m previously.


Kenya: East African Portland Cement (EAPCC) has raised the price of its 50kg bags of cement by around 3%. It said that it made the decision due to higher input costs, according to the Standard newspaper. In a statement David Kilonzo, acting head of commercial at EAPCC, said “Due to the continuous surge in raw materials prices, operating overheads and our commitment to maintain the premium brand quality that our customers have enjoyed over the years, we will be revising our prices upwards.”

Switzerland-based Holcim holds a 42% stake in EAPC through its subsidiaries, the National Social Security Fund (NSSF) holds a 27% stake and the Kenyan government, through the National Treasury, holds a 25% share in the company.


Denmark: FLSmidth has signed a deal with Australia-based FCT ACTech to provide a new product for the online analysis of raw materials. Under the agreement, FLSmidth will incorporate FCT ACTech’s X-ray fluorescence (XRF) and X-Ray diffraction analysis (XRD) analysers in its new QCX Cube products. The partnership was formalised in August 2023.

Jens Asbjørn Pedersen, Global Product Manager for Sampling, Preparation and Analysis at FLSmidth, said “We are very pleased to be able to integrate FCT ACTech analyser units in our new QCX Cube analysis solutions for cement plants.” He continued, “We are starting with the launch of QCX Cube X10, which primarily targets raw meal applications, but it is our ambition to utilise FCT ACTech's innovative range of analyser units to also deliver advanced online XRD analysis solutions for clinker and cement.” He added that the company believes that such integrated solutions will provide ‘critical’ support for cement plants during the green transition, as alternative fuels and new secondary cementitious materials drive a need for further process and chemistry optimisation.

The QCX Cube X10 online elemental analyser is FLSmidth's newest analysis product for cement raw meal. Offering plug-and-play functionality, it includes sampling components, an energy dispersive X-ray fluorescence (EDXRF) analyser and a fully programmed local control system that are delivered pre-assembled in an air-conditioned container. Analysis results for calcium, silicon, aluminium and iron are provided as standard. Sodium and magnesium analysis can be provided with the addition of a helium purge, while other elements are available on request after a site-specific evaluation. The product is designed to be integrated with FLSmidth’s optimisation software QCX/BlendExpert.

FCT ACTech is the analytical instruments division of FCT International. It has developed and supplied a continuous on-stream analyser for more than two decades with products now covering raw mix, clinker quality and cement blend control.


US: Buzzi Unicem USA’s Maryneal cement plant in Texas hit a production record of 1.03Mt of clinker and 1.18Mt of cement in 2022. The figures were more than 4% over the year’s budgeted figures. The plant says it achieved the result through consistent communication and a positive culture. Managers at the unit also shared updated production figures at daily meetings, kept all employees actively engaged and created an encouraging atmosphere. The plant has set new goals for 2023.

Antonio Corea Cruz, Operations Manager at the plant, said, “We’ve implemented strategies to keep reliable assets which allow the team members to work on continuous improvement. This affects the efficiency and productivity of all aspects of the plant.”


US: Lhoist North America says it intends to add lime production capacity in Texas. It stated that population growth in the south of the country had created increased demand for its calcium-based products, with customers having announced new steel mills, liquefied natural gas (LNG) export facilities, lithium hydroxide production plants and water treatment facilities. In its view these expansions in multiple markets require lime both in the initial infrastructure build and in longer-term production processes.

The subsidiary of Belgium-based Lhoist said in mid-September 2023 that it was expecting to file permits for the expansion in the coming weeks and the location for the new production capacity will be revealed at a later date.


US: The Portland Cement Association (PCA) has announced the winners of its 2023 Safety Innovation and Chairman's Safety Performance Awards.

The Safety Innovation Award Program recognises companies that have developed innovative practices, projects and programs that improve safety at cement plants in the US. Entries are judged in five areas: innovation, ease of use and ease of construction, effectiveness and risk prevention. The recipients were:

  • Distribution: Continental Cement, Continental Port Allen Terminal, Chesterfield, Missouri
  • Quarry: CalPortland Company, CalPortland Oro Grande Plant, Oro Grande, California
  • Pyroprocessing: GCC of America, GCC Tijeras Plant, Tijeras, New Mexio
  • General Facility: Mitsubishi Cement Corporation, Mitsubishi Cushenbury Plant, Lucerne Valley, California

The Chairman’s Safety Performance Awards are given to member cement plants that did not have a reportable injury or illness during the year. Fifteen plants achieved this in 2023, which represented more than 10% of all active cement facilities in the US and its territories. The recipients were:

  • Argos USA, Atlanta, Georgia
  • Argos USA, Newberry, Florida
  • Argos Puerto Rico Corp, Dorado, Puerto Rico
  • Ash Grove Cement Company (CRH), Durkee, Oregon
  • Ash Grove Cement Company (CRH), Midlothian, Texas
  • Buzzi Unicem USA, Chattanooga, Tennessee
  • Buzzi Unicem USA, Maryneal, Texas
  • CalPortland Company, Rillito, Arizona
  • GCC of America, Odessa, Texas
  • Heidelberg Materials, Bellingham, Washington
  • Martin Marietta Materials, New Braunfels, Texas
  • Martin Marietta Materials, Midlothian, Texas
  • Martin Marietta Materials, Tehachapi, California
  • National Cement Company of California, Kern, California
  • St Marys Cement (Votorantim), Detroit, Michigan