Global Cement Newsletter

Issue: GCW629 / 11 October 2023

Headlines


The Indian corporate rumour mill ramped up this week with speculation that UltraTech Cement and Adani Group might possibly be interested in buying Heidelberg Materials' assets in India. This follows the story broken by the Economist newspaper last week that JSW Cement had made an unsolicited offer to buy them. However, when HeidelbergCement India was asked by the Bombay Stock Exchange what exactly was going on, it replied that it was unaware of any such development and that it did not comment on market speculation.

A week later though and now another related story has popped up. In this case it is unclear exactly what the Hindu newspaper actually knew. The country’s two largest cement producers are locked in a battle for capacity expansion and any opportunity is likely to be of interest to them both. Yet the newspaper did quote a source who said that any divestment by HeidelbergCement India (HCI) would involve a “full-fledged bidding process,” implying that something may be going on.

Germany-based Heidelberg Materials operates four main subsidiaries in India: Gulbarga Cement; HC Trading (India); HCI; and Zuari Cement. HCI and Zuari Cement are the main two in terms of cement production. Heidelberg Materials entered the market in 2006 via a number of purchases and a joint-venture. It then acquired Zuari Cement via its takeover of Italcementi in 2016. Between them the two subsidiaries operate four integrated plants, three grinding plants and one terminal in Central and Southern India. Altogether the company says it has a total cement production capacity of 14Mt/yr. Gulbarga Cement, meanwhile, is a long running project via Zuari Cement to build a new integrated plant at Gulbarga in Karnataka. As of mid-2021 at least the company was still finalising planning and permitting requirements.

HCI’s income fell by 3% year-on-year to US$275m in the financial year to the end of March 2023 from US$282m in the same period that ended in 2022. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 39% to US$35.4m from US$58.2m, its lowest figure since at least its 2017 financial year. The company blamed this on higher fuel prices, although it has been trying to offset this by optimising its fuel and power mix. Unfortunately, it was not able to pass these costs on to its customers through price rises due to competition and new cement plants being commissioned in its market areas. Its revenue and profits improved somewhat in the quarter to July 2023. Recent financial data on Zuari Cement appears to be unavailable, possibly in part due to the company changing the dates of its financial year in 2020. However, it reported revenue of US$249m in its 2021 financial year, a broadly comparable figure to HCI’s. When asked during the company’s earnings call in July 2023, HCI’s managing director Joydeep Mukherjee did confirm that the company was looking at a potential merger with Zuari Cement. However, the company was waiting for the right time before it would consider actually doing it.

The Indian cement market has been consolidating in recent years. Companies have been increasing their production capacity, competition has been intensifying and the spike in fuel prices in 2022 battered profits. Adani Group’s acquisition of Holcim’s businesses in 2022 has probably been the most visible example of this trend towards mergers and acquisitions. It follows UltraTech Cement’s acquisition of Jaiprakash Associates in 2017. Heidelberg Materials has been steadily selling off bits and pieces of its cement business since the mid 2010s but at a slower pace than Holcim. Selected sales have occurred in Italy, Spain, Georgia, Ukraine and various countries in Africa, but the biggest was the sale of its US West region to Martin Marietta Materials for US$2.3bn in 2021. It reinforced this process with its ‘Beyond 2020’ strategy with the stated aim to simplify its country portfolio and prioritise its strongest market positions. A large-scale divestment of its operations in India would certainly fit with this plan. Whether the current reporting is accurate or not, Heidelberg Materials’ intentions for its Indian operations are certainly worth keeping an eye on.


China: Anhui Conch has nominated He Chengfa as the chair of its Supervisory Committee in anticipation of the retirement of Wu Xiaoming. His nomination will be submitted to the company’s shareholders at a future extraordinary general meeting. The Supervisory Committee is the monitoring body of the company, accountable to the shareholders at its general meetings.

He Chengfa, aged 57 years, is a senior engineer. He graduated from Wuhan Industrial University specialising in mechanical design and manufacturing and joined Anhui Conch in 1990. Notable positions he has held include that of deputy engineer-in-chief of the Ningguo cement plant, head of the equipment department and deputy general manager of the company. He is currently a deputy general manager, executive deputy officer of the technology centre of Anhui Conch Holdings Company, a director and executive deputy general manager of Santan (Anhui) Institute of Science and Technology and chair of the board of directors of Anhui Conch Construction Materials Design Institute.


Germany: Schade Lagertechnik appointed Jan Weckes as its managing director from the start of September 2023. Weckes previously worked as the managing director for IAS. Prior to this he had managerial sales and marketing roles with MBE Coal & Minerals Technology and worked for Outotec for a decade. He holds a PhD in metallurgy and materials engineering from RWTH Aachen University.


India: The Odisha State Pollution Control Board has granted Shiva Cement consent to operate its Sundergarh cement plant up to production volumes of 1.5Mt/yr, Reuters has reported. The producer commissioned the plant’s 1.36Mt/yr-capacity clinker line in June 2023. At that time, the plant had consent to operate with clinker production volumes of up to 660,000t/yr.


India: The Satna District Office of Collector (Mining) has fined Birla Corporation US$1m for its excess extraction of limestone between 2001 and 2007.

Birla Corporation said “The company did not take environment clearance due to the ambiguity in the provisions of Environmental Impact Assessment Notification 1994, which was only clarified subsequently by the principles laid down in the common cause judgement of the Supreme Court dated 2 August 2017. However, the company had valid consent to operate the mines from State Pollution Control Board. The company remains committed to ensure compliance with all applicable laws. The company is reviewing the order and evaluating the next steps in this matter.”


El Salvador: Holcim El Salvador says that its first electric cement truck will enter operation at its El Ronco cement plant later in 2023. Local press has reported that this will reduce the plant’s carbon footprint by 560t/yr. The El Ronco plant is the subject of an investment in renewable energy infrastructure to cover 21% of its electricity consumption. The company is also investing in circular economic practices with a view to achieving net zero CO2 emissions.

Holcim El Salvador chief executive officer Rodrigo Gallardo said "We are building more with less, incorporating recycled materials into our production processes, giving them a second life in order to use only what is necessary and thus contribute to preserving our planet." He added “We are building progress for people and the planet, with the vision of making sustainable construction affordable for everyone. The future of construction in El Salvador is being transformed, and we are proud to be leading the way, as we have done for the past 74 years."


Pakistan: The Ministry of Energy (Petroleum Division) is preparing a proposal for a ‘significant’ rise in gas tariffs in Pakistan. The Energy Update newspaper has reported that the rise will affect gas prices in the cement sector, besides other industries. The government aims to reduce the natural gas sector’s debts from US$10.5bn as part of a deal with the International Monetary Fund.


France: Lafarge France has hired Leclanché to upgrade its pusher tugboat Marsouin to a diesel and electric hybrid propulsion system. The supplier will install a 766kWh 65 Ah Navius MRS-3 battery system in the vessel, which operates mostly on the River Seine.

Lafarge France river operations manager Kevin Audegond said "The retrofit of our Marsouin pusher is the first stage in an ambitious programme to modernise our entire fleet by 2030, which will make it possible to transport our materials more ecologically and reduce our environmental impact in the long term.”


US: Ash Grove Cement plans to build a new cement mill at its cement plant in Durkee, Oregon. The project is scheduled to be completed by the end of 2024. The upgrade is intended to allow the plant to manufacture low-carbon cement products.

Serge Schmidt, the president of Ash Grove Cement, said "The transition to low carbon cement production and reducing our environmental footprint is a top priority for Ash Grove Cement. We are always seeking new ways to improve our sustainability performance while providing high-quality cement solutions to our customers. This state-of-the-art finish mill at our Durkee plant will strengthen Ash Grove's position as a leader in low-carbon cement across the Western US."


Australia: Boral has been halting production at its various production plants when the cost of electricity becomes too high. “At a certain point during the day, when the price goes up to a certain level, our manufacturing stops,” Chief executive officer Vik Bansal told the Australian Financial Review energy and climate summit. He added that the company had assessed that it was cheaper to have “thousands of people waiting idle for the prices to come down than actually do the work.” Additional reporting by the Sydney Morning Herald newspaper revealed that Boral’s staff had been working overtime and in night shifts to manage energy costs and to maintain the supply of building material products to its customers. Bansal told the summit that the company’s electricity costs rose by 54% in the 12 months to the end of June 2023.

However, Bansal was not clear whether all or just some of Boral’s plants have been stopping production temporarily due to peak daily electricity prices. The company produces cement, lime, concrete, asphalt and aggregates at 360 locations.

Boral has signed a fixed-price, 10-year power purchase agreement that will cover 19% of its renewable electricity needs to 2035, but is reportedly struggling to find other cost-effective options. In August 2023 it also reduced its emissions reduction target to 2025 from 2019 figures to up to 14% from 19% previously. It blamed this on “external factors” such as delays in securing the required regulatory approvals for the next phases of an alternative fuel program.


Australia: Cement Australia has signed a new three-year rail haulage agreement with Pacific National to transport shipping containers of cement, sand, fly ash, slag and lime. This will also includes the interstate and inter-city transport of cement and supplementary cementitious materials between large cities and throughout North Queensland. Cement Australia and Pacific National have a partnership that dates back over five years.

Pacific National is Australia’s largest private rail freight operator.


Algeria: Amouda Cement plans to start exporting cement to the European Union (EU) by end of 2023. It obtained a certificate of conformity to EU standards in March 2023, according to the Algeria Press Service. Djarmoun Fatimé, the cement producer’s Marketing and Communications Director, made the announcement at the Batiwest 2023 trade show taking place in Oran. The company has exported nearly 200,000t of cement and clinker to Mali and Niger since 2021. It is also hoping to target countries in West Africa such as Mauritania and Senegal.

The company operates a 2.5Mt/yr integrated cement plant with two production lines at El Beïda in Laghouat province.


India: JK Cement has agreed a partnership with Vakrangee to sell cement through the Vakrangee Kendra network. The franchise provides a range of services including banking, insurance, commerce and government services from over 21,000 locations in 32 states and union territories. Many of the outlets provide digital services in so-called ‘underserved’ rural, semi-urban and urban locales.


Croatia: Nexe Group has ordered a suite of software products from US-based Rockwell Automation to digitise production processes, reduce energy usage and increase production. It will use the FactoryTalk Analytics Pavilion8 software together with performance-management dashboards based on the ThingWorx IIoT platform, part of the FactoryTalk InnovationSuite, supplied by PTC

The software architecture to be deployed at Nexe was formulated by data science teams from Rockwell Automation and subsidiary Kalypso. The Pavilion8 model predictive control (MPC) product sits on top of automation systems and continuously assesses current and predicted operational data. It then compares this data to desired results, and drives new control targets to reduce process variability, improve performance and boost efficiency.

Danijel Koren, plant manager at Nexe’s integrated cement plant at Našice said “This is a push forward on this important journey for the whole group. We are looking to link all systems together and put operational data in the hands of people who can make a difference. Early results point to real success in terms of savings and efficiency; indeed, we are predicting a payback period of less than a year.”


Romania: Holcim Romania has committed to an investment of over Euro25m to increase the production capacity of its cement plant in Campulung by approximately 20%. This would represent an expansion from 0.76Mt/yr to 0.9Mt/yr, according to the Argeşul newspaper. The company says that the investment will address both the existing need for more cement in the domestic construction market. It will also enhance the sustainability of the plant’s operation, streamline logistics and reduce the volume of CO2 emissions from the long-distance transport of building materials constructions.


UAE: Dubai Municipality has launched the world's first system for certification and conformity marks in the field of 3D printing in the construction industry. The Municipality says that this will serve as a proactive measure to streamline procedures and improve the quality of concrete mixes used in factories licensed and operating in the Emirate and that it will play a ‘pivotal role’ to advance Dubai’s leading position for cutting-edge and sustainable construction technology.

Dawoud Al Hajri, Director General of Dubai Municipality, said “The certification and conformity mark system for factories and entities operating in the field of 3D printing for construction has been comprehensively established in alignment with Dubai Municipality’s proactive vision. This system embraces international best practices to provide exceptional services to both individuals and the community, thereby enhancing Dubai's global reputation and aligning with Dubai Municipality’s strategic objectives outlined in Dubai's 2030 Plan. Additionally, the system supports Dubai’s 3D printing strategy, launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The strategy aims to utilise technology for the advancement of humanity and position the UAE and Dubai as prominent regional and global hubs for 3D printing technology.”

Alia Al Harmoodi, chief executive officer of the Environment, Health, and Safety Agency at Dubai Municipality, highlighted that the main focus of the new system includes assessing product and raw material quality, ensuring the efficiency of manufacturing equipment and machinery, defining technical standards of manufacturing operations at every stage of production, and ensuring efficiency of management systems within factories.


Moldova: The Ministry of Economic Development and Digitalisation has announced that Ukraine will cancel an existing anti-dumping duty on imports of Moldovan cement until 31 December 2023. Ukraine announced the move following constructive discussions held during a meeting of the co-chairs of the Moldovan-Ukrainian intergovernmental commission on trade and economic cooperation held in Odesa, according to Interfax-Ukraine.

Moldovan Minister of Economic Development and Digitalisation Vadim Humene insisted that Ukraine cancel the anti-dumping duty so that Moldova did not have to ‘initiate trade defence processes’ regarding products that Moldova imports from Ukraine.

In addition to the temporary removal of the anti-dumping duty, the two countries expressed their readiness to help remove barriers to trade and simplify border controls to optimise the flow of goods, review environmental duties and ensure transparent, uniform application of legislation by both countries.


Algeria: The Chlef Cement and Derivatives Company, a subsidiary of GICA, has obtained the certificate of conformity to European standards (CE) for its GICA-Béton CEM I 42.5R cement product. It adds the CE mark to four other types of cement that already hold the same conformity certification, according to L’Expression newspaper. GICA- Béton CEM I 42.5.R is a high-performance Portland cement for concrete with rapid short-term strength, intended for cold areas, particularly in harsh winters, a season during which the formwork stripping period must be short. Its two day compressive strength is 20MPa.


India: Adani Group's cement businesses are looking to cut their reliance on distributors and wholesalers as the country's second-largest cement maker looks to boost its profitability. As part of a pilot project, Ambuja Cements and ACC have reduced the number of distributors from 12 to three in the south Gujarat region, which is home to half of the state's small and medium industries and a fifth of the state's population, according to the Mint newspaper. Both firms are expected to reduce the number of distributors across the wider country in the coming months.

"The profitability of the distributors is more than some of the cement manufacturers," said an executive privy to the development. "This needs to change. Once you have fewer distributors, they can continue making more money on volumes, provided they aggressively seek discounts. Both Ambuja and ACC are very strong brands and can do even better if we build an even better engagement with retailers. Additionally, all institutional sales will be done by ACC or Ambuja. So, if there is a large requirement for, say, a flyover project, instead of a wholesaler seeking a bulk order, the cement manufacturer will directly provide to the needs of the contractor."

Adani Group became India's second-biggest cement maker in May 2022 when it paid US$10.5bn to Holcim to buy Ambuja Cements and its subsidiary ACC.


Philippines: The Cement Manufacturers Association of the Philippines (CMAP) is working with the government to attract both domestic and foreign investment to the sector to expand domestic production at low cost. Alongside the Philippine Iron Steel Institute (PISI), CMAP also renewed calls for the promotion of locally produced construction materials with the help of the Department of Trade and Industry (DTI), according to the Manila Bulletin newspaper.

CMAP President Reiner Dizon said “If you buy locally and if there is a problem, it's easy to chase or ask the manufacturer because it's here in the Philippines. Imagine if there is a problem with the cement but it comes from another country, it's quite a complicated process.” Dizon further stressed that enjoying local produce also benefits the economy and fellow Filipinos by creating a circular advantage where profits are shared among the community.

DTI Assistant Secretary Mary Jean Pacheco said that the DTI promotes local construction products and demonstrates confidence that local suppliers provide quality products. Pacheco assured CMAP and PISI that the DTI will strive to advocate standardised products to ensure safety and quality when using construction materials.


Pakistan: Fauji Cement sold 4.9Mt of cement during Pakistan’s 2023 financial year (FY2023), which ended on 30 June 2023. This generated revenues of US$244m, up by 25% year-on-year from US$194m in FY2022. The producer’s earnings before interest, taxation, depreciation and amortisation (EBITDA) also rose, by 29% to US$72.3m from US$56.2m.

Managing director and CEO Qamar Haris Manzoor said “The transformation journey which started in 2020 on capacity enhancement, cost reduction initiatives and increasing captive green energy has now started to pay dividends, despite unpreceded economic challenges.” He continued “FY2023 has been challenging for businesses due to all-time high inflation and interest rates, which saw a drop in consumer demand, negatively affecting the industry. The cement industry saw a demand decline of 16% as construction activities decreased in both the northern and southern regions of the country. Despite the tough environment, Fauji Cement remained committed to its growth strategy, and successfully commissioned its 6500t/day expansion project at its Nizampur site.”


Brazil: InterCement has hired BTG Pactual to help explore ‘capitalisation alternatives’ as part of a proposed restructuring, possibly involving the sale of the group’s Brazilian business. Valor International News has reported that Companhia Siderúrgica Nacional (CSN) Cimentos has signalled its interest in acquiring the business, while Votorantim Cimentos may group together with other cement companies to make a bid. This would entail a division of the assets in order to conform to Brazilian competition laws.

InterCement successfully secured a postponement for payment of its outstanding bank debt in September 2023. It owes net debt of US$1.5bn up to 2027, including a senior note of US$548m due in May 2024. InterCement operates 12.2Mt/yr worth of cement capacity, and produced 8.7Mt of cement in 2022.


Canada: Lafarge Canada has engaged Canadian Utilities on a virtual power purchase agreement (VPPA) basis to supply solar energy for its Exshaw cement plant in Alberta. Under the agreement, the Exshaw cement plant will receive 100% of energy generated at the 38.5MW Empress solar power plant in Cypress County. The VPPA lasts until 2036, and covers 34% of the Exshaw plant’s energy consumption up to that time.

Lafarge Canada (West) president and CEO Brad Kohl said "We're continually assessing ways we can reduce our environmental impact while actively pursuing sustainable solutions within our operations." He concluded "Our collaboration with Atco underscores our commitment to adopting renewable energy at our plants and sites, which is key to reducing our reliance on fossil fuels."


Asia/Middle East: South Korea-based Samsung Engineering and Canada-based Svante have signed a new memorandum of understanding (MoU). Under the MoU, the companies will collaborate on the development and deployment of carbon capture technology in cement and other industries in Asia and the Middle East.

Svante President and CEO Claude Letourneau said “Samsung Engineering’s more than 50 years of experience in the energy and industrial sectors will be invaluable as we continue to rapidly expand our operations and filter production capabilities.”


UK: Holcim subsidiary Aggregate Industries has installed Driver Status Monitoring Systems supplied by Spillard Vehicle Safety Systems in the cabins of its Cauldon cement plant truck fleet. The systems use cameras and AI software to detect signs of tiredness, as well as mobile phone use, lane deviation, not wearing a seatbelt and smoking. In the case of tiredness, this triggers an alarm which continues to sound until the vehicle comes to a stop.

Cement supply chain manager Matt Owen said “Health and safety is a massive priority for us as a company and the industry, so anything that can serve to continuously improve our approach to it is very welcome. Driver fatigue is always a potential issue across any business involved in transport and fleet, so we’re delighted to be utilising the latest technology with our partners to ensure that everyone gets safely home from work.”


Austria: Alpacem inaugurated its new headquarters in Wietersdorf, Carinthia, on 6 October 2023. The project demonstrated the first construction application of the group’s reduced-CO2 CEM-II/C Portland composite cement.

Managing director Lutz Weber said “With the most modern technologies for decarbonisation and our extensive building materials expertise, we have succeeded in reducing the ecological footprint of our Alpacem headquarters to a minimum.”


Poland: Górażdże Cement has announced an investment of Euro261m in planned sustainability upgrades to its Górażdże cement plant in Opole Voivodeship, the Polish News Bulletin newspaper has reported. The Heidelberg Materials subsidiary plans to build a carbon capture installation, a green energy source and a facility to recycle construction and demolition waste for use in its cement production.


Colombia: Cemento País has commissioned its Aguas Prietas grinding plant in Turbaco, Bolívar. The El Tiempo newspaper has reported that the plant is situated in Turbaco’s Cristalina Free Trade Zone

Cement commercial manager Carlos Espinosa Osorio said that the company opted to install cutting edge equipment. “This ensures that each type of cement meets the most rigorous quality and safety standards. Likewise, it translates into a comprehensive value proposition for clients, generating the necessary confidence in the durability and performance of their projects in the region.”


India: The Hindu newspaper has reported that Adani Cement and UltraTech Cement may submit offers for Heidelberg Materials’ Indian business. This follows the news that parent company Heidelberg Materials has reportedly entered into talks with JSW Cement over the possible sale of the business. It consists of cement plants in Andhra Pradesh, Madhya Pradesh, Karnataka and Telangana, in addition to a cement terminal and four grinding plants across India.

Global Cement reported on 4 October 2023 that Heidelberg Materials’ Indian subsidiary HeidelbergCement India had said it was ‘unaware’ of any discussions between its parent company and JSW Cement.


China: China Resources Cement (CRC) has rebranded to China Resources Building Materials Technology (CRBMT). The producer says that this reflects its business positioning and development strategy, and marks the launch of its transformation into a building materials group around its existing cement business.


EU/UK: EUROSLAG says that the use of ground granulated blast furnace slag (GGBFS) in cement production in the EU and UK between 2000 and 2022 has generated a cumulative reduction in CO2 emissions of 408Mt. GGBFS replaced 716Mt-worth of raw materials over the period.

EUROSLAG Chair Thomas Reiche said "Resource conservation through secondary raw materials, especially in the construction sector, and lower emissions of climate-damaging CO2, are of outstanding ecological and economic importance. The use of ferrous slags makes an important contribution to this. EUROSLAG is working multilaterally to master the enormous challenges in the coming years, above all the transformation of the steel industry, through research and adjustments to national and European regulations.”