Global Cement Newsletter

Issue: GCW636 / 29 November 2023

Headlines


Taiwan Cement Corporation (TCC) has struck a deal to take control of the Türkiye and Portugal-based parts of OYAK’s cement business. The arrangement will see TCC grow its share of the joint-venture business in Türkiye to 60% from 40% at present and it will fully take over the Cimpor joint-venture in Portugal by purchasing OYAK’s 60% stake. Overall TCC is expected to pay around Euro740m for its acquisitions. A final agreement on the deal is expected to be signed in early December 2023.

The proposed deal follows on from when TCC originally spent US$1.1bn towards setting up joint-ventures as a junior partner with OYAK back in 2018. The situation now appears to have reversed with TCC becoming the main owner of the cement business in Türkiye and the sole owner of Cimpor in Portugal. In Türkiye this gives TCC control over the largest cement producer with seven integrated plants, three grinding plants, 47 ready-mixed concrete (RMX) plants, three aggregate quarries and one paper packaging plant. In Portugal (and Cape Verde) this puts TCC in charge of three integrated plants, two inactive grinding plants, 42 RMX plants, 15 quarries, two mortar plants and a cement bag unit.

This contrasts with last week’s news that CRH is buying one cement plant in Texas (with associated assets) for US$2.1bn. TCC is taking control of 10 plants in Türkiye and Portugal for Euro740m. It is not a fair comparison given the woes of the Turkish economy in recent years, prior joint-venture business ownership and so on. Yet it is one more example of the changing nature of cement company ownership around the world since the mid-2010s.

The state of the economy in Türkiye may well be a factor for the change in ownership at OYAK and Cimpor as well as negative exchange rate trends. High inflation has caused problems in recent years, although the government changed its stance on avoiding putting up interest rates following the elections in May 2023. Yet, in a statement about the OYAK deal, chair Nelson Chang said that “companies that do not understand carbon will not survive in the future.” His company is about to spend Euro740m and become the fifth largest cement producer in the world on the assertion that it does understand carbon. Good luck!

Accordingly, the language in the press releases both OYAK and TCC have released is all about sustainable growth and reducing carbon emissions. However, the detail on how exactly they intend to do this is vague. What is clearer though is that OYAK is hoping that TCC invests in energy storage and related industries such as lithium-ion battery additive carbon black in Türkiye. To this end a TCC subsidiary and OYAK are collaborating on a carbon black plant in Iskenderun and further investments may be in the pipeline. TCC and OYAK are also responsible for a couple of calcined clay projects in Sub-Saharan Africa.

Readers may recall that the chair of Chang pronounced in June 2023 that TCC was aiming to diversify the business towards over 50% sales from non-cement sectors by 2025. However, the share from the cement business was around 68% in 2022 and this latest deal with OYAK will likely send it in the ‘wrong’ direction. The company already has a production capacity of around 77Mt/yr from its cement plants in China and Taiwan. Majority ownership of OYAK Çimento and Cimpor Portugal will bump this up to 99Mt/yr and put the company into the top five of the world’s largest cement producers by capacity.

The final question here is what kind of owner TCC intends to be to its growing cement businesses in West Asia and Europe. Publicly at least, it has come across as a backseat investor since 2018 although it has been a minority owner. This has now changed but it will be interesting to observe whether the subsidiaries in the west will be run at arm’s length or more closely and if TCC unifies its global branding and so on. Watch this space.


Jamaica: Caribbean Cement has appointed Jorge Alejandro Martinez Mora as its managing director with effect from 1 December 2023. He succeeds Yago Castro Izaguirre in the post. Castro Izaguirre has been the head of Caribbean Cement since late 2020. He will take up another role in Cemex Group.

Martinez Mora is a civil engineer with knowledge and experience in commercial, corporate and operational fields. He has worked for Cemex and its subsidiaries since 2004 and, most recently, held the position of Builders Segment Regional Director for the Cemex Group's Central Region in Mexico, based in Mexico City.


South Africa: Matias Cardarelli has been issued a work permit by the government and will formally become the chief executive officer (CEO) of PPC from 1 December 2023. He will succeed Roland van Wijnen in the post. The appointment of Cardarelli was announced in September 2023 with a start date at some point in the final quarter of 2023. Wan Wijnen’s contract as CEO was extended from August 2023 to the end of December 2023 to allow for a handover and transition period.


Austria: Untha has appointed Katie Mallinson as its global marketing director. She has worked as the marketing director for Untha UK since 2021. She was previously the managing director of global communications firm UK-based Scriba PR, which she founded in 2013. As part of her new role she will be based in the UK, with a visiting role to Untha’s different global teams.


Thailand: Siam Cement Group (SCG) recorded sales of US$3.62bn during the third quarter of 2023. This represents a fall of 12% year-on-year. Business World News has reported that the producer attributes the decline to the on-going ‘slow economic revival’ in Southeast Asia. Nonetheless, chief executive officer Roongrote Rangsiyopash said that he expects growth to accelerate, especially in Indonesia, where construction of the new capital city, Nusantara, is underway in East Kalimantan. SCG reported a third-quarter operating profit of US$86.9m, up by 26% year-on-year.

Rangsiyopash said “SCG has continuously adjusted its business strategy and has operated with caution and prudence, thereby maintaining financial stability.”


Ethiopia: Lemi National Cement Factory’s construction of its upcoming Lemi cement plant is 70% complete and will conclude in time for inauguration of the plant on schedule in early 2024. Ethiopian News Agency has reported that construction of the 8Mt/yr plant’s preheater frames and rotary kilns finished on 28 November 2023. China-based Sinoma International Engineering is carrying out the project, which has a total cost of US$600m. Lemi National Cement Factory is a joint venture of local conglomerate East African Holding and West China Cement subsidiary West International Holding.


Saudi Arabia: Riyadh Cement Company awarded a US$34.8m contract to China-based Sinoma Energy Conservation to install a waste heat recovery (WHR) plant at its 3.7Mt/yr Riyadh cement plant. The installation will have a power generation capacity of 12.6MW.


India: JK Lakshmi Cement has obtained environmental clearance to mine up to 2.5Mt/yr of limestone from it Kachchh mine in Gujarat. The producer says that it plans to invest US$24m in expanding its operations at the site.


Germany: Schaeffler and Vitesco Technologies Group have agreed to combine their businesses through the merger of Vitesco Technologies Group into Schaeffler. Following the completion of the transaction before the end of 2024, the equipment suppliers will create a new motion technology company to continue to serve their customers across four divisions.

Schaeffler chief executive officer Klaus Rosenfeld said “At Schaeffler, we are fully convinced that both companies ideally complement each other and will thus be stronger together. We are pleased that, after intense and, in part, for both sides, challenging discussions, we came to a business combination agreement, which now lays the ground for a swift and effective integration.”


Bolivia: The Permanent Court of Arbitration has found itself ‘without jurisdiction’ to resolve a claim by Consorcio Cementero del Sur, Grupo de Inversiones Gloria Bolivia, SOBOCE and Yura Inversiones Bolivia against the Bolivian government over the nationalisation of a stake in FANCESA. Local press has reported that Bolivian Attorney General’s Office welcomed the finding as a ‘resolution of the case in favour of the Bolivian state.’


Vietnam: Cement plants produced 110Mt of cement during the 11-month period up to the end of November 2023, Việt Nam News has reported. The government’s General Statistics Office recorded a 4.5% year-on-year drop in national production volumes of cement in the year to date.


Australia/UAE: Industrial CO2 emissions reduction research body Heavy Industry Low-carbon Transition Cooperative Research Centre (HILT CRC) has received an invitation to attend COP28. HILT CRC said that the invitation reflects the importance of collaborative research for the decarbonisation of Australia’s heavy industries, including cement.

Chief executive officer Jenny Selway said “Decarbonising heavy industries is a core aspect of cutting down on global emissions to limit global warming to well below 2°C. The low-carbon technology transition in heavy industry is vital for our future: it will ensure we build sustainable industries and create new opportunities for Australia’s economy.”


France: Refractories supplier Calderys has announced the launch of its new brand platform following its integration of HWI (formerly HarbisonWalker International) earlier in 2023. The platform is comprised of four values, reflecting the personality of Calderys’ company culture, namely accountability, authenticity, multiculturalism and tenacity.

Chief people officer Melissa Bihary and global vice president communications Aurélie de Chassey-Hayot said “These new values and the overall platform have been developed through an employee-led exercise. Therefore, they truly define the essence of who we are and how we do business. They guide our actions and behaviors and help us make the best decisions for the benefit of our customers.”


Türkiye: Taiwan-based Taiwan Cement Corporation (TCC) has signed a preliminary memorandum of understanding (MoU) with OYAK Çimento. Under the MOU, the parties will enter into negotiations over the transfer of a further 20% stake in OYAK Denizli Çimento to TCC. This will raise TCC’s stake in the company to 60%. Reuters has reported the total enterprise value of OYAK Denizli Çimento as US$1.42bn.


Europe: Germany-based Heidelberg Materials has announced the launch of EvoZero carbon captured net zero cement. The company produces EvoZero cement at its Brevik cement plant in Norway. It says that this is the first cement to achieve net zero CO2 emissions through the use of carbon capture and storage (CCUS), without relying on other methods of compensation in its carbon accounting.

Heidelberg Materials chair Dominik von Achten said “The launch of our unique EvoZero products is a paradigm shift in the decarbonisation of our sector. Carbon capture and storage is a breakthrough technology for the building materials industry and we are frontrunners in deploying it at scale. With EvoZero, we are offering the industry’s most innovative, globally unique product for our customers, enabling them to drive cutting-edge, environmentally friendly construction projects. I am very proud of the dedication and passion of everyone involved in our pioneering project in Brevik.”


Taiwan: Asia Cement Corporation tested its waste wind turbine blade processing capacities using 12t of blades earlier in November 2023. The cement producer had previously processed 9t of waste turbine blades for use in its plants up to the end of October 2023. Asia Cement Corporation says that the waste consists of fibre-reinforced plastic (FRP), which is 60% silicon dioxide, calcium oxide and aluminium oxide and 40% polyester. The polyester can replace fossil fuels as alternative fuel (AF) for cement plants, while the other chemical compounds can serve as supplementary cementitious materials (SCMs).


Vietnam/Australia: Vietnam exported 412,000t of cement to Australia during the first 10 months of 2023. Việt Nam News has reported that this is more than double the 10-month 2022 figure of 157,000t. The total value of the shipments also more than doubled year-on-year, to US$20.5m from US$8.37m.


Germany: Flender claimed the German Sustainability Award 2024 for mechanical engineering at a ceremony in Düsseldorf on 23 November 2023. The award recognises the outstanding contribution of the supplier’s drives for wind energy and industrial applications, including cement, to the German energy transition. Germany is committed to 80% renewable energy use nationally by 2030, and 100% by 2035.

CEO Andreas Evertz said "My sincerest thanks go to the Flender team and our partners. This award is a very special milestone for us. It is a testament to the passion and commitment of our global team in tackling these critical challenges. Furthermore, it serves as additional inspiration and motivation towards our ambitious objectives. Ultimately, the awards themselves are secondary to the meaningful achievements we attain together. The industry has a duty to take the lead in addressing the climate, environmental and social challenges."


Chile/Germany: The governments of Chile and Germany are reportedly preparing to launch a so-called ‘climate club’ to help developing nations invest in technologies to decarbonise sectors such as cement and steel production. The partners will set up a platform to connect countries with funding and technical support from governments and the private sector, according to a draft statement seen by Reuters. The statement is expected to be published at the United Nations’ Conference of the Parties (COP) 28 event on 1 December 2023 set to take place in Dubai.

"On hard-to-abate sectors, starting with steel and cement, we will advance conducive policy frameworks for accelerating decarbonisation," the statement said. It added that this will include attempting to coordinate international green industry standards, such as counting the emissions in industrial products.

A website for the club lists 33 members including the US, Argentina, Australia, Canada, Colombia, Egypt, the European Union (EU), Indonesia, Japan, Kenya, Mozambique, Morocco, Ukraine and the UK. It has been viewed, in part, as an attempt to reconcile countries annoyed by the EU’s Carbon Border Adjustment Mechanism (CBAM), which started in October 2023. However, neither China nor India appears to have joined the ‘climate club’ so far.


Algeria: Amouda Cement is preparing to launch an oil well cement production line at its plant at El Beïda in Laghouat province. L'Expression newspaper reports that the product will be targeted at oil and gas companies in the southern region of the country, particularly those near to the RN 1 highway.


Denmark: Crown Prince Frederik of Denmark will today inaugurate the ConsenCUS CO2 capture pilot unit at Aalborg Portland Cement’s Rørdal plant. Kadri Simson, the European Union (EU) Energy Commissioner, and Lars Aagaard, the Danish Minister for Climate, Energy and Supply Minister, will also attend the event. A European Commission-run carbon capture, utilisation and storage (CCUS) forum will take place in Aalborg at the same time.

Aalborg Portland Cement first established a CCUS pilot project called CORT at its cement plant in 2022 in collaboration with the Technical University of Denmark (DTU) with support from the EU Innovation Fund. This is now being replaced by the ConsenCUS pilot. The new project will test a more energy-efficient CCS technology that can potentially halve the energy consumption compared to traditional CO2 capture methods by driving the process exclusively via electricity. The project partners will also investigate converting the captured CO2 into potassium formate, a valuable resource for the chemical industry. The ConsenCUS project is supported by the EU's Horizon 2020 research and innovation program.


Ghana: Two managers at Kumasi Cement Ghana have been arrested by officials from the Economic and Organised Crime Office (EOCO) and the Ghana Standards Authority (GSA). Huang Guangshun and Fang Yuan were detained for continuing to operate the company despite being requested to stop, according to the Graphic newspaper. Samuel K Frimpong, the Ashanti Regional Manager of the GSA, said “They claimed to have been asked to keep producing by an unnamed top government official, but we acted per the law and got them arrested.”

Kumasi Cement Ghana, Xin An Safe Cement Ghana and Unicem Cement Ghana had their licences revoked by the GSA in mid-November 2023 for using inferior materials in cement production. The closure of the cement plants is part of a government strategy to stop the production of ‘substandard’ cement in the country.

Officials from Xin An Safe Cement Ghana and Unicem Cement Ghana have signed an agreement at the head office of the GSA to “adhere to specified quality standards in cement manufacturing”. They pledged to “comply with all regulatory standards and requirements governing cement manufacturing in Ghana.” However, the GSA is yet to allow the companies to restart their operations.


Kenya: Bamburi Cement reduced its Scope 1 CO2 emissions by 3% year-on-year in 2022. Data from its Sustainability Report for 2022 shows that the subsidiary of Holcim also increased its alternative fuels substitution rate by 6%, according to the Standard newspaper. The company’s managing director Mohit Kapoor attributed the drop in emissions to the increased use of alternative fuels, using alternative raw materials to substitute for clinker, using renewable energy sources and optimisation of the cement manufacturing process. In line with Holcim Group the company has committed to becoming net zero by 2050.


India: UltraTech Cement, India’s largest cement producer has commenced negotiations to acquire promoters’ stakes in Kesoram Industries, which sells cement under the Birla Shakti brand. It has two cement plants: Vasavadatta Cement in Sedam, Karnataka, and Kesoram Cement, located in Basantnagar, Telangana. The two plants have a combined cement capacity of 10.8Mt/yr.


Malaysia: Malayan Cement’s net profit for the first quarter of its current fiscal year, the three months to 30 September 2023, increased to US$20.5m from US$203,000 during the same period of the prior fiscal year. Its revenue also rose, to US$250m from US$183m. This was mainly due to higher sales volumes and stabilisation in the selling prices of domestic cement and ready-mixed concrete.


UK: Thousands of tonnes of waste ceramics from one of the UK’s largest ceramic tile manufacturers will be recycled to make cement as part of a new initiative from Aggregate Industries. The cement producer, owned by Holcim, has agreed a four-year deal with Johnson Tiles to take 20,000t/yr of legacy waste scrap from its Stoke factory in Staffordshire. They will be transported a short distance to Aggregate Industries’ Cauldon cement plant, where they will be crushed and mixed with limestone and the other raw materials prior to entering the kiln.

Andrew Whyatt, Geocycle UK General Manager at Aggregate Industries, said “We are delighted to be working with such a potteries stalwart as Johnson Tiles in order to recycle what would otherwise be a waste product. Materials such as this offer a great alternative to excavating fresh raw materials, preserving our local natural resources, whilst offering a solution whereby 100% of the material will be upcycled into new local cement. Both companies share a drive towards sustainable manufacturing and partnerships like this are vital as Aggregate Industries aims to reclaim or recycle 3Mt/yr of materials by 2025.”


France/Syria: The French Court of Cassation will deliver its decision on the appeal filed in May 2022 by Lafarge, now part of Holcim, in the case relating to its activities in Syria in the 2010s, on 16 January 2024.

The body will rule on the indictments of Lafarge for complicity in crimes against humanity and endangering the lives of its employees in Syria, which were confirmed by the Paris Court of Appeal in 2022, and which the company is still contesting. The group is suspected of having paid in 2013 and 2014, via its Syria-based subsidiary Lafarge Cement Syria several million euros to jihadist groups, including the Islamic State (IS) organisation, and to intermediaries, to maintain the activity of a cement factory in Jalabiya, even as the country plunged into war.


Europe: Mexico-based Cemex says that it will soon have obtained Type III environmental product declaration (EPD) certificates for the cement products it produces across its European network of cement plants. EPDs have been published for selected cements since 2021. Cemex has confirmed the publication of EPDs for all cement types in Poland and the publication of EPDs for its products produced in Croatia and Spain by the end of 2023. Phase Two of the publication process will see EPDs for cements produced in the UK, Germany and Czech Republic in early 2024, which will complete the full roll out in Europe.

Sergio Menéndez, President of Cemex Europe, Middle East, Africa & Asia, said, "EPD certificates enable our customers to make an informed choice about which materials offer the lowest carbon footprint and reduce the environmental impact of their construction projects. We have therefore made securing these objective and reliable documents, which demonstrate that our products meet the requirements of more sustainable construction, a priority across our whole European operation. I am very pleased with the progress made so far and look forward to celebrating the completion of this process."


Germany: ThyssenKrupp has reorganised its cement engineering subsidiary ThyssenKrupp Polysius from the start of October 2023 as part of its new Decarbon Technologies segment. The new division also includes bearings and drive company Rothe Erde, chemical plant supplier Uhde and electrochemical plant supplier ThyssenKrupp Nucera. In its annual report for 2022 – 2023 the group said it had formed the new segment because “we want to systematically access the enormous potential of the green transformation and translate it into value-creating growth.”

The group’s Multi Tracks segment, which ThyssenKrupp Polysius was part of previously, reported growth of 16% on a comparable basis to Euro3.17bn in the year to the end of September 2023 compared to Euro4.10bn in the same period ending in 2022. However its order intake fell by 16% to Euro3.74bn and it reported a negative adjusted earnings before interest and taxation (EBIT) of Euro132m. Overall the group’s order intake, sales and EBIT all fell in the reporting period.

Miguel López, the chief executive officer of ThyssenKrupp said “The figures show that we have made progress with the transformation of ThyssenKrupp, despite the difficult environment, but also that we must continue to work hard at raising the performance of our businesses. We have therefore launched our ‘APEX’ program to speed up improvements to our businesses’ performance. At the same time, we are systematically focusing our businesses on future areas in order to leverage our full potential there, especially in connection with the enormous opportunities that the decarbonisation of industry offers us. We are positioning ThyssenKrupp as an enabler of the green transformation, thereby supporting the transformation of many industries worldwide.”


Germany: Loesche says it has acquired the technical knowledge of hydraulic systems supplier Ruhfus Systemhydraulik following the latter company’s insolvency. The acquisition of Ruhfus’ expertise will expand Loesche's capabilities in the field of hydraulic technology and enable the company to offer spare parts and services outside of the cement sector. In addition, a collaboration with former employees of Ruhfus Systemhydraulik will help it to develop new hydraulic solutions.

Ruhfus Systemhydraulik was originally founded as Rheinisches Kleineisenwerk August Ruhfus in 1907. It originally supplied metal parts for the railway sector before moving into hydraulics in the late 1950s. The company is based in Neuss and has over 100 employees.


UK: Breedon Group grew its sales by 8% year-on-year during the first nine months of 2023. Volumes ‘moderated’ over the period, yet ‘robust’ pricing and operational excellence successfully offset the effects of this on group sales. It generated ‘good’ free cash flow and is on track to deliver a further reduction in covenant leverage at the end of 2023, enabling it to continue its investments in growth. In September 2023, Breedon Group entered the FTSE 250 Index of the London Stock Exchange.

Chief executive officer Rob Wood said “Notwithstanding the market backdrop, the Breedon team continues to deliver and we are delighted to report a trading performance ahead of expectations. Against the uncertain political and economic backdrop, our teams have adapted well to deliver a compelling performance.” He continued “But we never settle – we will continue to seek ways to operate as efficiently and sustainably as possible, invest in our people and grow our business so we are positioned to succeed when the construction materials market returns to growth.”


Canada: The Cement Association of Canada (CAC) says that provisions for investments and supportive measures in the government’s Fall Economic Statement 2023 will help to ensure the successful roll-out of carbon capture, utilisation and storage (CCUS) for industrial decarbonisation. The statement commits the government to advancing a CCUS Investment Tax Credits (ITC) scheme.

CAC president and CEO Adam Auer said “We commend the government’s recognition of the importance of CCUS in achieving our climate objectives. The cement industry is committed to reducing its carbon footprint, and these investments will facilitate the deployment of innovative technologies that are essential for achieving our Concrete Zero sustainability action plan objectives.”


UK: The Mineral Products Association (MPA) has called on the UK government to publish its promised response paper to consultations over a proposed UK carbon border adjustment mechanism (CBAM) for imports of goods produced by heavy industries, including cement. This follows the failure of the government’s latest budget for 2023 to commit to the development of a national CBAM. The MPA said that it was ‘deeply disappointed’ with the outcome.

MPA executive director for energy and climate change Diana Casey said “The delay in committing to a CBAM sends the signal that the UK is not the place to invest. Cement is essential to our everyday lives. The construction of our homes, hospitals, offices and much more depend on it. We cannot take its supply for granted and neither can we put ourselves at risk of unstable international trading markets. Levelling the carbon cost between domestic production and imports is vital to attract the investment required to decarbonise and ensure our long-term security of supply. The UK government must urgently commit to a CBAM on cement.”


Germany: Menzel held the ribbon-cutting ceremony for its new Hennigsdorf motor plant in Berlin earlier in November 2023. From the start of operations there on 2 January 2024, the site will consolidate Menzel’s production and administrative operations.

CEO Mathis Menzel said “This move will ring in a new era in the history of our family business. The new plant is tailored to our requirements in every detail: generously proportioned logistics and production areas, continuous crane accessibility with an 80t lifting capacity. That will enable us to achieve streamlined production processes and schedule and complete customer projects even more flexibly and reliably, and will properly set us up for the future as the international headquarters of our group.”


Europe: The European Parliament voted in favour of multiple amendments to the European Commission’s Packaging and Packaging Waste Regulation (PPWR) on 22 November 2023. The amendments remove, modify or make non-binding the PPWR’s 2040 reuse targets. Meanwhile, 2030 targets were made adjustable to recycling rates. Total packaging volumes are still required to drop by 5% by 2030 and by 15% by 2040 in each member state.

Sustainability lobbying organisation Environmental Coalition on Standards (ECOS) described the introduction of recycling rates into a lower schema of waste targets as ‘comparing apples with pears.’ ECOS attributed the amendments to a ‘barrage’ of false claims, scaremongering and lobbying from industry players.

ECOS programme manager Mathias Falkenberg said “This decision will not sufficiently address rising plastic and packaging waste or the pollution crisis. The European Parliament has just weakened a perfectly feasible solution to tackle throwaway culture without offering an alternative. It is very frustrating that the European Commission’s progressive prevention and reuse agenda has not received full support from the Parliament today.”

ECOS founded the Alliance for Low-Carbon Cement & Concrete (ALCCC), an association of companies focused on alternative building materials production, in May 2023.