Global Cement Newsletter

Issue: GCW634 / 15 November 2023

Headlines


Last week the US General Services Administration (GSA) announced that it was investing US$2bn on over 150 construction projects that use low-embodied carbon (LEC) materials. The funding is intended to support the use of US-manufactured low carbon asphalt, concrete, glass and steel as part of the Inflation Reduction Act. For readers who don’t know, the GSA manages federal government property and provides contracting options for government agencies. As part of this new message, it will spend US$767m on LEC concrete on federal government buildings projects following a pilot that started in May 2023. The full list of the projects can be found here.

This is relevant because the US-based ready-mixed concrete (RMX) market has been valued roughly at around US$60bn/yr. One estimate of how much the US federal government spent on concrete was around US$5bn in 2018. So the government buys a significant minority of RMX in the country, and if it starts specifying LEC products, this will affect the industry. And, at present at least, a key ingredient of all that concrete is cement.

This isn’t the first time that legislators in the US have specified LEC concrete. In 2019 Marin County in California introduced what it said was the world’s first building code that attempted to minimise carbon emissions from concrete production. It did this by setting maximum ordinary Portland cement (OPC) and embodied carbon levels and offering several ways suppliers can achieve this, including increasing the use of supplementary cementitious materials (SCM), using admixtures, optimising concrete mixtures and so on. Unlike the GSA’s approach in November 2023 though, this applies to all plain and reinforced concrete installed in the area, not just a portion of procured concrete via a government agency. Other similar regional schemes in the US include limits on embodied carbon levels in RMX in Denver, Colorado, and a reduction in the cement used in RMX in Berkeley, California. Environmental services company Tangible compiled a wider list of embodied carbon building codes in North America that can be viewed here. This grouping also includes the use of building intensity policies, whole building life cycle assessments (LCA), environmental product declarations (EPD), demolition and deconstruction directives, tax incentives and building reuse plans.

Government-backed procurement codes promoting or requiring the use of LEC building materials for infrastructure projects have been around for a while in various places. The general trend has been to start with measurement via tools such as LCAs and EPDs, move on to government procurement and then start setting embodied carbon limits for buildings. In the US the GSA’s latest pronouncement follows on from the Federal Buy Clean Initiative and from when California introduced its Buy Clean California Act in 2017. Outside of the US similar programmes have been introduced in countries including Canada, Germany, the Netherlands, Sweden and the UK. On the corporate side members of the World Economic Forum’s First Movers’ Coalition have committed to purchasing or specifying volumes of LEC cement and/or concrete by 2030. Examples of whole countries actually setting embodied carbon emissions limits for non-government buildings are rarer, but some are emerging. Both France and Sweden, for example, introduced laws in 2022 that start by analysing life-cycle emissions of buildings and will move on to setting embodied carbon limits in the late 2020s. Denmark, Finland and New Zealand are also in the process of introducing similar schemes. The next big move could be in the EU, where legislators are considering embodied carbon limits for building materials as part of its ongoing revisions to its Energy Performance of Buildings Directive or the Construction Products Regulation legislations. Lobbying, debate and arguing remains ongoing at present.

To finish, Ireland-based Ecocem spent a period in the 2010s attempting to build a slag cement grinding plant at Vallejo, Solano County, in the San Francisco Bay Area of California. The project met with considerable local opposition on environmental grounds and was eventually refused planning permission. The irony is that slag cement is one of those SCM-style cements that Marin County, also in the San Francisco Bay Area, started encouraging the use of just a few years later. Ecocem held its inaugural science symposium in Paris this week. A number of scientists who attended the event called for existing low carbon technologies to be adopted by the cement and concrete sectors as fast as possible. One such approach is to lower the clinker factor in cement through the use of products that Ecocem and other companies sell. A point to consider is, if Marin County’s code or the GSA’s recent procurement directive came earlier, then that slag plant in Vallejo might have been built. Encouraging the use of LEC building materials by governments looks set to proliferate but it may not be a straightforward process. Clear and consistent policies will be key.


Pakistan: Attock Cement has appointed Shuaib A Malik as its chair. He succeeds Laith G Pharaon in the post. Malik has worked for Attock Group for over 40 years becoming the chief executive officer of Attock Oil in 1995 and the head of Attock Group in 2006.


India: JK Cement expressed its heartfelt condolences to the family of Jitendra Singh, who died in Meerut, Uttar Pradesh, on 12 November 2023. Singh was formerly chief information officer at the company. He served from August 2016 to August 2023.

JK Cement said that Singh made an ‘unerasable mark’ on the group. It added “The technology industry has been subjected to loss as it lost a respected leader. The sudden nature of Mr Singh’s demise has left a void that will be challenging to fill. The condolences pour in not only from colleagues and industry peers but from all those who had the privilege of interacting with him.”


Kenya: Peter Kahi of PKF Consulting has been appointed as the administrator of Savannah Cement. This follows the resignation of Harveen Gadhoke, according to the Business Daily newspaper. Gadhoke was appointed as the administrator of the company in November 2022 when Absa and KCB attempted to put it into administration due to combined debts of US$66m. Savannah Cement fought back legally against the attempt to manage it externally but a court rejected this in July 2023.


Tanzania/Uganda: Switzerland-based Holcim has signed agreements to sell Uganda-based Hima Cement and Tanzania-based Mbeya Cement. Local industrial conglomerate Sarrai Group will acquire Hima Cement for US$120m, while local oil importer Amsons Group will acquire Mbeya Cement for an undisclosed sum.

Holcim’s Asia, Middle East & Africa regional head Martin Kriegner said “These divestments advance our strategy to consolidate our leadership in core markets as the global leader in innovative and sustainable building solutions. With the Sarrai Group and Amsons Group, we are pleased to have found strategic and trusted partners who are best positioned to develop these businesses in the long term.”


Colombia: Cementos Argos’ sales of cement declined by 3.4% year-on-year to 11.9Mt during the first nine months of 2023, from 12.3Mt in the first nine months of 2022. Volumes dropped by 0.9% to 4.61Mt in the US, by 3.6% to 4.35Mt in Colombia and by 6.6% to 2.97Mt in Central America and the Caribbean. Nonetheless, its revenues rose by 16% year-on-year, to US$2.47bn from US$2.14bn. This resulted in earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$506m, up by 37% year-on-year.

For the full year 2023, Cementos Argos raised its EBITDA forecast to US$617 – 630m, compared to a previous forecast of US$580 – 605m. It expects to invest US$200 – 220m in capital expenditure throughout the year – US$90 – 99m of it on the construction of new capacity.


Australia: The government has begun consultations with affected parties over the possible implementation of a carbon border tax on imports of goods from heavy industries, including cement production. The Herald Sun newspaper has reported that manufacturers’ associations in Australia have welcomed the possible change to emissions laws.


Brazil: Votorantim Cimentos’ board of directors has approved the issuance of US$180m-worth of non-convertible debentures. The producer says that it will use funds raised thereby as collateral for a financial securitisation operation of real estate receivables.


US: Holcim US has unrolled its Holcim branding in the Atlanta Metropolitan Area in Georgia. The producer operates cement terminals at Cartersville, Duluth and Covington.

Southeast regional sales manager Lee Amick said "The rebrand signifies Holcim’s unwavering commitment to Atlanta construction and building companies, along with the greater community that has come to know us as a trusted partner. We're looking forward to building on our long-standing reputation for reliability, dependability, and assurance, now further rooted in sustainability and a profound dedication to environmental responsibility."


Russia: Soyuzcement has warned the government that the cost of cement could rise by up to 30% year-on-year in 2024 due to mounting energy, logistics and staffing costs. The national cement manufacturing union has informed various departments and agencies - including the Ministry of Economy, the Ministry of Industry and Trade, the Ministry of Construction and the Federal Antimonopoly Service (FAS) - that this price rise will follow a 23 - 30% production cost inflation reported in 2023, according to the Kommersant newspaper. Other contributing factors have included negative currency exchange effects leading to a 20% rise in the cost of certain imported equipment items as well as logistic issues stemming from a shortage of drivers and declining fleet levels. Separate analysis by Kommersant estimates that the rising cost of cement in 2023 led to a 10 - 15% increase in the overall cost of construction in 2023.


US: Martin Marietta Materials recorded sales worth US$5.17bn during the first nine months of 2023, up by 10% year-on-year from US$4.68. Meanwhile, the company’s earnings rose by 30% to US$1.23bn from US$944m. Building materials revenues in its West business rose by 10% to US$2.85bn, while those in its East business rose by 11% to US$2.08bn. Overall, the value of its cement sales rose by 21% to US$565m.


Bolivia: Empresa Publica Productiva Cementos de Bolivia (ECEBOL) commissioned its new 1.3Mt/yr Potosí cement plant at Chiutara on 11 November 2023. Local press has reported that the producer overcame previous issues regarding gas and water supplies.


India: Grasim Industries recorded sales of US$3.63bn during the three-month period up to 30 September 2023. This represents a 10% year-on-year rise from the corresponding quarter of the previous financial year. Its profit rose by 15% year-on-year, but fell by 26% quarter-on-quarter to US$140m.


Brazil: Votorantim Cimentos reported US$1.51bn in sales during the third quarter of 2023. This represents a decline of 3% year-on-year. It raised its total volume of cement sales by 1% year-on-year to 10.3Mt. Meanwhile, the group’s adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 9% to US$1.9bn.

CEO Osvaldo Ayres said “The positive results in both the third quarter and the first nine months of 2023 reinforce our operational leverage and our performance within our strategic mandate, with discipline and resilience. Despite the uncertain global macroeconomic scenario and market challenges, our geographic and product diversification improves the company, to face challenges and be ready to capture good opportunities.”


Italy: Cementir Holding raised its sales by 0.5% year-on-year during the first nine months of 2023, to Euro1.3bn. It sold 7.93Mt of cement, down by 3.1% year-on-year from 8.19Mt in the corresponding period of 2022. Cementir Holding attributed the decline to reduced demand, primarily in Belgium, Denmark, Egypt, Malaysia and the US. This offset an increase in consumption in China and Türkiye. The group’s operating costs dropped by 6.6% to 1.01bn, while its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 33% to Euro321m.


Poland: Cemex Polska awarded an eight-year contract to Statkraft to supply wind and solar energy for its cement plants. The parties signed a corporate power purchase agreement (CPPA), under which Statkraft will meet 30% of Cemex Polska’s plants’ energy consumption, beginning on 1 January 2025.

Cemex Polska director cement operations Tadeusz Radzięciak board member “The concluded contract is important for Cemex on several levels. The contract ensures stable supply of a large volume of electricity, while at the same time securing a guaranteed, predictable level of prices for supplied energy in the long term. This is particularly important in the context of the rapid and unpredictable changes in energy prices on the European and Polish energy markets recorded in the last several months. In addition, the partnership with Statkraft is crucial in the context of achieving the Cemex's sustainability goals. After all, sourcing energy from renewable sources enables a significant reduction in the carbon footprint of our production facilities.”


France: Ireland-based Ecocem hosted a symposium on the application of new materials technologies in cement production on 14 November 2023. Participating materials scientists published a statement calling on the global cement industry to make use of alternative materials to achieve CO2 emissions reductions. In the statement, they said “It is no longer possible to say that we lack the technology or that the costs are prohibitive.”


Greece: Titan Cement reported increased sales during the first nine months of 2023. They grew by 14% year-on-year to Euro1.89bn. Sales rose by 24% in Greece and Western Europe, by 16% in the US and by 13% in Southeast Europe. However, they fell by 5.9% in the Eastern Mediterranean region. Meanwhile, the company’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 72% to Euro397m. Group net profit more than doubled to Euro198m. Titan Cement maintained a level of capital expenditure in line with that in the first nine months of 2022, at Euro158m.

Titan Cement maintained its positive growth outlook for the full year in 2023, but expects to experience the effects of an anticipated ‘temporary cooling’ in global economic activity in 2024. The producer said that Euro8bn-worth of investments in on-going infrastructure projects in Greece will likely help to offset these effects locally.


Albania: The government will raise the tax on coal by a factor of five, to Euro0.15/kg. EmergingMarketWatch News has reported that the measure will bring Albania’s industrial products into line with the International Monetary Fund (IMF)’s recommended minimum emissions tax of Euro55.8/t CO2. Without this, exporters to the EU would have to settle the difference.