Global Cement Newsletter

Issue: GCW630 / 18 October 2023

Headlines


Heidelberg Materials reversed the prevailing wisdom for western multinational cement companies this week when it said it was preparing to buy a cement plant in Indonesia. It announced on 17 October 2023 that its Indonesia-based subsidiary Indocement had signed a deal to acquire all the shares of Semen Grobogan’s integrated cement plant in Central Java for an undisclosed sum. This challenges the trend since the mid 2010s of the likes of Holcim and CRH selling up in the developing world and concentrating instead in markets in North America and Europe.

The decision to buy a cement plant in Indonesia raises eyebrows because the country can produce far more cement than it needs at present. Its cement capacity utilisation rate has been below 60% since 2020 and Central Java has the most plants out of all the nation’s regions. Indocement’s own investor relations presentation for the first half of 2023 laid out data from the Ministry of Industry and internal sources forecasting that the utilisation rate would only reach 57% in 2025. National production capacity meanwhile is around 117Mt/yr at present and expected to reach just below 120Mt/yr in 2025.

Before this latest agreement, Indocement operated four integrated plants in the country and it was the country’s second largest cement producer after Semen Indonesia. Heidelberg Materials bought the company in 2001 and currently owns a 55% share in it. Three of these plants it owns directly, with a capacity of around 25Mt/yr across 14 production lines. One of these is the 18Mt/yr Citeureup plant, one of the world’s largest cement plants. However, in 2022 the company leased the Maros integrated cement plant in South Sulawesi, the Banyuwangi grinding plant in East Java and several cement terminals owned by Bosowa Group, including terminals in Makassar, Barru and Garongkong, via production facility lease agreements. It said this was part of a plan to reduce logistics costs and target the east of the country better. The integrated plant has been leased for three years from March 2022 and the grinding plant and terminals for five years from September 2022.

Semen Grobogan’s plant started commercial production in 2022, has a cement production capacity of 2.5Mt/yr and limestone reserves of over 50 years. Germany-based Heidelberg Materials was keen to point out that the acquisition would reward it with “significant synergies with Indocement’s existing plants in Indonesia” such as in logistics, alternative fuels, and transfer of technical and sustainability knowledge.

It is worth noting financially that Indocement suffered a couple of bad years during the Covid-19 pandemic with revenue and profit down. However, the situation improved in 2022 with both net revenue and earnings before interest, taxation, depreciation and amortisation (EBITDA) for the year up by 11% year-on-year to US$1.04bn and 4% to US$220m respectively. Despite the company’s sales volumes falling by 2% to 17.6% and energy prices increasing it was able to raise its prices. The first half of 2023 has seen the improvements accelerate with more price rises, higher domestic sales volumes from the new leased operations and increased clinker exports to Bangladesh and Brunei.

The improving financial outlook for Indocement and the new condition of many of its clinker production lines may help to explain what is going on here. The Citeureup plant started up in late 2016 and, combined with the Semen Grobogan plant that started up in 2022, both plants cover three-quarters of the company’s production capacity. In a highly competitive market such as Java this may make a significant difference. Consider also the leased plant at Maros, in the less well-served Sulawesi region, and that focus on terminals elsewhere. Here one might be able to view another approach to coping with overcapacity, by targeting different markets either directly or via exports.

It won’t be clear how well Heidelberg Material’s strategy in Indonesia is working until like-for-like financial figures start to be released. The company itself has warned of various risks such as the country’s impending ban on overloaded trucks and the potential effects of a proposed carbon tax on electricity prices. Another thing to consider are last week’s rumours in the press about Heidelberg Materials selling up in India. If this did happen then the proceeds might well help advance the company’s plans in Indonesia. All of this goes to show that one doesn’t always have to copy one’s corporate peers. The retreat by the western multinationals to safer havens has slowed… for now at least.


UK: Fernando Gonzalez has been appointed as the president of the Global Cement and Concrete Association (GCCA). He has been the association’s vice-president since 2018 and succeeds outgoing president Jan Jenisch.

Gonzalez has called for industry and governments around the world to establish a "robust regulatory framework" that can further accelerate the cement and concrete sector's decarbonisation efforts. He said "It is a great honour to be president of the GCCA - cement and concrete are the world's essential building materials. As an industry, we've gone beyond the commitment phase to taking decisive action today to reduce our CO2 emissions."

Gonzalez is the chief executive officer (CEO) of Cemex. He has worked for the company since 1998. On the operational side, he has led various regions of Cemex, including Europe, Asia and South Central America and the Caribbean, and has held corporate positions in strategy, planning, business development and human resources. He was appointed Executive Vice President of Planning and Development in 2009, chief financial officer in 2011, and has been the company's CEO since 2014.


Zimbabwe: PPC Zimbabwe has appointed Albert Sigei as its managing director from the start of 2024. He succeeds Kelibone Masiyane in the post, according to the Chronicle newspaper. Masiyane was appointed as the managing director of the subsidiary of South-Africa based PPC in 2016, having joined the company in 1994 as a trainee electrical engineer at the Colleen Bawn Plant.

Sigei is currently PPC’s Head of Strategic Initiatives, a post he has held since February 2023. Before this he was the chief executive officer (CEO) of Cimerwa PPC in Rwanda from 2000. He worked for over 17 years for LafargeHolcim and its subsidiaries becoming the CEO of LafargeHolcim Malawi from 2016 to 2019 and the chief operations officer of the East African Portland Cement Company (EAPCC) in Kenya in 2015. Earlier in his career he worked for PriceWaterhousCoopers. A graduate in mechanical engineering from the University of Nairobi, Sigei holds a number of qualifications in accountancy and business.


Azerbaijan: Norm has appointed Ülkü Özcan and Stephan Sollberger to its board of directors, according to the Trend News Agency.

Ülkü Özcan holds over 20 years of experience in the cement industry. She has held various positions in Cimsa and held the position of its chief executive officer from 2018 to 2020. Since then she has been working in the energy & telecommunication cable business in Türkiye. Additionally, she has held various roles at Afyon Cement, including a member of the board of directors, a representative for the Global Cement and Concrete Association and a member in the Audit Committee of the Cement Manufacturers Association of Türkiye. She has also worked for Lafarge Turkey previously. Özcan is a business graduate from Marmara University and has completed the Advanced Industrial Marketing and Strategy Program at INSEAD Business School in Paris.

Stephan Sollberger holds over 30 years of experience in cement and concrete manufacturing companies. From 1992 to 2001, he occupied various positions at Holderbank Cement und Beton. Until 2006, he worked as the manager of the technical centre of Holcim Switzerland and later as a plant director, also in Switzerland. He also holds managerial experience at Jura Group. Since 2020, he has held the role of Chief Operations Director at Landqart. Sollberger is a graduate from the University of Applied Sciences Zurich and the University of Applied Sciences Bern.


Indonesia: Heidelberg Materials subsidiary Indocement has bought the 1.8Mt/yr integrated Grobogan cement plant in Central Java from Semen Grobogan. The plant commands sufficient limestone reserves for the next 50 years and has 700,000t/yr of additional cement grinding capacity.

Heidelberg Materials chair Dominik von Achten said “As part of our ongoing portfolio optimisation, we are making an exciting step in the growth market of Indonesia. Heidelberg Materials has been active in Indonesia for more than 20 years. With this investment, we are now strengthening our presence in one of the most populated regions in Indonesia, where we expect further market growth driven by the growing retail market, developing industrial areas and major infrastructure projects. As frontrunners of decarbonisation in emerging markets, we continue to drive our ambitious CO2 reduction targets at all our sites in Indonesia, including the new cement plant.”


Bulgaria: Heidelberg Materials subsidiary Devnya Cement has commenced construction of the ANRAV.beta carbon capture pilot unit at its Devnya cement plant near Varna. Construction will take ‘a few months,’ followed by a pilot trial lasting 12 – 24 months. The ANRAV system will rely on OxyCal oxygen-enriched burner technology to eventually capture 800,000t/yr of CO2 from 3Mt/yr of plant flue emissions. The project has Euro190m in grants from the EU Innovation Fund and is scheduled for delivery in 2028.

Heidelberg Materials’ Northern and Eastern Europe-Central Asia regional director Ernest Jelito said “The OxyCal technology we will be trialling in Devnya is a crucial addition to our portfolio of capture technologies. Obtaining solid operational data from industrial pilots like this is essential to ensure the successful implementation of projects under our comprehensive CCUS investment programme. At the same time, we can demonstrate an economically feasible way to decarbonise carbon-intensive industries in Eastern Europe.”


India: CK Birla Group has approached Adani Group as a possible buyer for its 38% stake in Orient Cement. Mint News has reported that CK Birla Group has previously rejected offers from other local cement producers for the stake. The group is reportedly seeking ‘double’ its market value of US$466m.

Orient Cement plans to make capital expenditure investments worth US$120m/yr up to the end of the 2025 financial year on 31 March 2023.


Malaysia: YTL Cement has awarded a US$210,000 grant to the Construction Research Institute of Malaysia (CREAM). CREAM will use the funding for three main initiatives: the development of reduced-CO2 cement alternatives, research into more sustainable construction practices and training.

YTL Cement managing director Dato Sri Michael Yeoh said “As a company that has been assisting with the development of Malaysia for over 70 years, we know the importance of investing in our nation’s progress, while simultaneously addressing our construction needs in a sustainable manner.”


China: China National Building Material (CNBM) has warned of an anticipated year-on-year decline in its profit during the first nine months of 2023. Reuters has reported that the group forecast a drop of 70% from nine-month 2022 levels. Declining cement prices contributed to the anticipated drop.


US: The US Department of Energy has awarded C-Crete Technologies US$2m in funding. C-Crete Technologies is developing a method for using CO2 captured at industrial sources or from the air as an ingredient in its cement-free concrete. The binder will produce almost no CO2 and continue to absorb more CO2 from the air over time. It offers scalability and cost-parity with conventional cement for concrete producers, according to the developer.

C-Crete Technologies president Rouzbeh Savary said “We are committed to crafting a cement-free, carbon-negative ready-mix concrete that doesn’t just mitigate CO2 emissions but actively contributes to reversing climate change. Our aim is nothing short of revolutionising this hard-to-abate, carbon-heavy sector.”


UAE: Emirates Cement (Arkan) has appointed Oman and Etihad Rail Company (OER) to provide train transport for imported Omani limestone to its 1Mt/yr Al Ain cement plant.

Saeed Khalfan Al Ghafri, CEO of Emirates Cement (Arkan)’s parent company, Emirates Steel Arkan Group, said “Our collaboration with OER enhances our supply chain capabilities by leveraging the railway network that connects both countries. This agreement paves the way for integrated logistics solutions for transporting raw materials to and from our cement plant in Al Ain, boosting operational efficiencies and cost-effectiveness and reducing environmental impact.”


Kenya: East African Portland Cement Company (EAPCC) plans to sell land in Machakos County close to its Athi River plant, KBC News has reported. During the sale, offers submitted by people currently residing on the land will have priority. Demolition of illegal homes on the land is currently underway.


Spain: Cementos Molins inaugurated its new Euro6.6m headquarters in Sant Vicenç dels Horts, Catalonia. The facilities include a 3250m2 solar power plant, which will supply 100% of the energy consumed in the building’s operations. The solar power plant consists of an array of 1455 photovoltaic panels. Cementos Molins says that it also used recycled materials where possible in building its new headquarters.

CEO Julio Rodríguez said “We celebrate 95 years of life and we feel proud to contribute to the development of the country and its social evolution. In our DNA is the will to collaborate with our environment.”


India: Grasim Industries has secured board approval for an issuance to raise up to US$480m. Local press has reported that the producer will use the proceeds for planned capital expenditure investments, including in the paints sector, as well as to repay existing borrowings and for ‘general corporate’ purposes.


India: Dalmia Bharat sold 13.2Mt of cement during the first half of the 2024 financial year (1 April 2023 – 30 September 2023), up by 9.6% year-on-year 12Mt in the first half of the 2023 financial year. This contributed towards a 24% year-on-year rise in the producer’s earnings before interest, taxation, depreciation and amortisation (EBITDA) to US$144m from US$116m in the previous first half. During the first half of the current financial year, Dalmia Bharat commenced commercial production from its new 500,000t/yr Ariyalur clinker plant and 2Mt/yr Sattur grinding plant, both in Tamil Nadu. The former commissioning raised the company’s clinker capacity to 22.2Mt/yr.

Group managing director and CEO Puneet Dalmia said “We see a multi-year-strong cement demand trend continuing, as India is undergoing a large-scale metamorphosis. We were one of the first ones to foresee this upcycle and started building our capacity ahead of time. In the past 3.5 years, we have added 17.2Mt/yr-worth of cement capacity, which is 65% growth over 2020 financial year capacity. In line with our vision to reach 110 – 130Mt/yr by 2031, we are continuing to make consistent strides in that direction and capitalise upon the huge opportunity ahead of us.”

The company’s cement managing director and CEO, Mahendra Singhi, noted the effects of a ‘reduction in fuel prices, increased usage of renewable power and improvement in key performance indicators.’ He added “We continue to demonstrate our commitment towards the environment, as we have further brought down our CO2 footprint to 456kg/t of cement, which is one of the lowest in the global cement sector.”


Bulgaria: Titan Cement subsidiary Zlatna Panega Cement plans to invest Euro11m in sustainability-enhancing upgrades to its Zlatnopanegki cement plant in Lovech Province. The work centres around a Euro7m alternative fuels (AF) upgrade, to raise the plant’s AF substitution rate to 70% from 50% in 2022. Besides this, the producer will also invest Euro4m in the construction of a solar power plant at the facility. The solar power plant is scheduled for commissioning in March 2024. General manager Adamantios Frantzis said that the plant will subsequently move on to its ‘next big project,’ consisting of a Euro35 – 50m upgrade, in 2026 – 2028.

Zlatna Panega Cement invested Euro5.7m in capital expenditure throughout 2022, more than double its investments of Euro2.6m in 2021. It is committed to interim CO2 reduction targets of 5000t/yr (Scope 1) and 3000t/yr (Scope 2 and 3), and net zero CO2 emissions by 2050.


India: Dalmia Bharat has announced a planned investment of US$10.9m in a grinding unit expansion at its 1Mt/yr Banjari cement plant in Bihar. The expansion will raise the plant’s capacity by 500,000t/yr and conclude before 31 March 2025.


Italy: Colacem has selected US-based Armis’ Armis Centrix AI-based cyber exposure management platform to protect online assets in its cement plants. Italian Industry News has reported that protected assets include IT equipment, operational technologies and internet of things (IoT) devices.

Colacem security manager Luca Salemmi said “We requested support from Armis because we realised that we did not have visibility on all devices. What we immediately liked about Armis Centrix is its ability to evaluate the level of vulnerability of each device and to provide a priority order for immediate intervention so that it resolves the most critical risks.”


India: Dalmia Bharat says that it will complete its acquisition of Jaiprakash Associates’ cement business, Jaypee Cement, towards the end of the 2024 financial year on 31 March 2024. Informist EquityWire News has reported that the deal is ‘taking more time’ than expected to conclude.

Jaypee Cement’s Madhya Pradesh-based subsidiary Jaybee Bhilai Cement is subject to an on-going shareholder dispute, due to which a court has frozen the company’s 74% shareholding in the unit.


China: China Resources Building Materials Technology (CRMBT) has issued a profit warning for the first nine months of 2023. The producer expects the profit attributable to its owners to drop by 59 – 63% year-on-year. This is partly due to its previous one-off gain from a divestment worth US$239m in the corresponding period in 2022.


Afghanistan: Qatar-based Al-Falah Global and International Task Group has won a government contract to expand Jabal Siraj cement plant. Local engineering firm Awfi Bahram will also collaborate on the project. BBC Monitoring South Asia has reported that the work will increase the plant’s capacity by a factor of 50 to 1.5Mt/yr from 30,000t/yr. The total cost of the project is US$220m.


Ghana: CIMPOR has appointed Germany-based ThyssenKrupp Polysius to build a 1280t/day flash activator for clay. The activator will supply calcined clay for use in the production of cement with a clinker factor as low as 50%. This can reduce the cement’s CO2 emissions by 40% compared with ordinary Portland cement (OPC). The supplier’s contract covers engineering, supply of core equipment and supervision of the project. The equipment includes parts for clay handling, a hammer mill, a flash dryer and preheating and cooling equipment, as well as storage silos. The activator will be natural gas-fired.

Polysius Activated Clay product owner Leo Fit said "Our technology is not only more environmentally friendly, but also creates cost benefits for our customers like CIMPOR. In many regions, limestone is scarce and clinker has to be imported at high cost. At the same time, suitable clay sources are available. The increasing pressure to reduce greenhouse gas emissions is leading cement manufacturers to rethink. They need an alternative that is cost-efficient and at the same time provides high-quality cement. This is exactly what Polysius activated clay offers."


India: Adani Group has entered into a US$3.7bn refinance agreement with multiple banks to refinance the loan it took to acquire Holcim’s Indian business. Live Mint News has reported that the consortium of banks includes Deutsche Bank, Standard Chartered, Barclays, Citibank, MUFG Bank and Sumitomo Mitsui Banking Corporation. Sources ‘with direct knowledge of the matter’ reported that the refinance agreement will have a tenure of 36 months.


India: A report by the Council on Energy, Environment and Water (CEEW), funded by power provider BP, has estimated that India’s cement and steel sectors will require capital expenditure (CAPEX) investments of US$627bn in order to reach net zero CO2 emissions. The report stated that waste heat recovery (WHR) and other efficiency-enhancing upgrades to cement plants can immediately reduce the industry’s emissions by 32%.

United News of India has reported that CEEW CEO Arunabha Ghosh said "Incentivising renewable energy will play a pivotal role in decarbonisation, through lower or no transmission charges at central and state levels. The government of India should develop a policy for and expedite the establishment of a carbon capture, utilisation and storage ecosystem to abate more than half of the emissions from the existing steel and cement plants.” Ghosh added “Since hydrogen will play a key role in its implementation, the next phase of the National Green Hydrogen Mission should focus on this agenda."


India: BK Birla Group subsidiary Kesoram Industries sold 3.73Mt of cement during the first half of its 2024 financial year (1 April 2023 – 30 September 2023). This corresponds to a rise of 17% year-on-year from 3.19Mt in the first half of the previous financial year. The producer’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 57% to US$26m from US$16.6m.


Colombia: A court has ordered Grupo Argos to hand over 490 hectares of land in Sucre. The El Colombiano newspaper has reported that the land’s original owners sold their land to Grupo Argos between 2005 and 2007, amid civil conflict. The company argued that it had made the purchase in good faith, however the court rejected this, given that paramilitary violence in the area was a matter of public knowledge. Grupo Argos subsidiary Tekia subsequently planted teak trees on the land as part of the group’s carbon offsetting efforts. The Colombian Land Restitution Unit will now use the land to generate funding for repatriation programmes for people who fled the war.


UK: First Graphene and Breedon Group have entered into a development and commercialisation agreement. Together, the companies aim to enhance Breedon Cement’s CEM II Portland limestone cement (PLC) through the use of First Graphene’s graphene enhanced grinding aids and cement admixtures. Breedon will provide increased access to cement production lines in order to optimise the understanding of the processing environment and operating conditions.

Breedon Group’s Hope cement plant in Derbyshire previously conducted a 24-hour graphene-enhanced cement production trial on 28 June 2023.


Kazakhstan: Steppe Cement reported sales of US$65.2m during the first nine months of 2023. This corresponds to a year-on-year decline of 4.8% from US$68.5m in the corresponding period of 2022. Steppe Cement forecast a year-on-year decline in its earnings before interest, tax, depreciation and amortisation (EBITDA) in full-year 2023 from US$30.9m in 2022, due partly to the impact of inflation on costs, including energy costs.

CEO Javier del Ser Perez said "Despite a slightly smaller domestic cement market so far in 2023, we remain confident that the company will continue to deliver strong sales figures going forward."


West Africa: Ciments de l'Afrique (CIMAF) plans to produce limestone calcined clay cement (LC3) at cement plants in West Africa. Parent company Omnium des Industries et de la Promotion (OIP) plans to build a calcined clay production facility in Burkina Faso to supply the material. Gulf Oil & Gas News has reported that OIP secured a Euro45m loan from World Bank Group’s International Finance Corporation on 10 October 2023. It will invest Euro32.4m in construction of its upcoming calcined clay production facility and Euro12.6m in
construction of solar power plants for three CIMAF subsidiaries in Burkina Faso, Chad and Mali.

CIMAF CEO Anas Sefrioui said "IFC's green loan provides essential long-term financing for our projects in Africa. Through the green loan structure, we are bringing the best practices in financing decarbonisation initiatives in the region. We look forward to reducing our carbon footprint and replicating these best practices in our African operations.”


Kenya: East African Portland Cement Company (EAPCC) has won a legal dispute for the right to evict squatters from 1740 hectares of limestone-bearing land in Machakos County. Nation News has reported that the court struck out the case after claimants failed to produce requested documents. It also ordered the claimants to pay EAPCC’s legal costs.


Australia/New Zealand: Belgium-based Etex has signed an agreement with building materials company BGC to acquire the latter’s gypsum and fibre cement businesses. The fibre cement business includes the Canning Vale fibre cement boards plant in Western Australia. BGC also operates nine warehouses across Australia and New Zealand. Etex says that the deal expands its activities in the ‘attractive’ local market, with significant growth opportunities. Finalisation is expected in early 2024.

Etex CEO Bernard Delvaux said “This deal is a strategic opportunity for Etex to complement our footprint in Australia and further increase the accessibility of our products and services for customers. This will both reinforce our gypsum wallboard offering and position us well in the growing fibre cement activities through a broad product range and good channel access.”