Global Cement News

Water conservation is on the agenda this week with two water-related news stories from the multinational cement producers.

First came a story that Lafarge Canada is preparing to run a trial using waste water from hydraulic fracking at its Brookfield cement plant in Nova Scotia. Currently the plant uses 35ML/yr of fresh water from a nearby lake to control temperatures of its rotary cement kiln. Potentially some of this water could be replaced with water produced during the fracking process. This water would then evaporate and be emitted from the stack.

The background to this pilot project is that the Nova Scotia regional government introduced a two-year moratorium on fracking in 2012 while it reviews the situation. Given the high level of public debate on fracking, any process using waste products from it is going to receive a high level of attention. One of the major arguments against fracking concerns the toxicity of the fluids used. Hence Lafarge stressed in their statement how safe the waste water would be before it would even be used in the plant. Safe enough to drink apparently.

Focusing on the industrial aspects of the pilot for cement production, it will be fascinating to see what effects the fracking waste water might have even just as a coolant on plant equipment. Among other contaminants, fracking waste water often contains high levels of salt. Managing a transition from a fresh water coolant source to a saltier more corrosive one may pose the first of many challenges.

Later in the week Cemex announced the latest stage in its work on water conservation with the implementation of a corporate water policy. The policy aims to focus on resource availability, resource quality, and ecosystem integrity. It continues Cemex's Water Project, developed in partnership with the International Union for Conservation of Nature.

Notably Cemex's water policy aims to maximise efficiency by managing water consumption with increased captured recycled or captured water usage given as an example. How Cemex might use recycled water from a contentious industrial process such as hydraulic fracking is not specified. However, the policy does aim to actively reduce pollution and limit the effects of discharge upon water ecosystems from its operations.

Water policies such as a Cemex's are great for an industry that often has an image problem in the eyes of environmentalists. Linking cement production to fracking runoff will not improve this image. Yet placing science before lobbying is the way to go. Bring on the results of the pilot.

Kenya: Savannah Cement has appointed Ronald Ndegwa as its first Chief Executive Officer on 9 December 2013. The company was commissioned in July 2012 as Kenya's sixth cement manufacturer and has been operating without a substantive CEO since that time.

Savannah Cement board chairman, Benson Ndeta, disclosed that Ndegwa, who previously served as the director of supply chain at Tata Chemicals Magadi (Magadi Soda), has joined the firm with a clear brief to spearhead the business development agenda. Savannah Cement currently operates a state of the art, eco-friendly cement grinding plant with a capacity of 1.5Mt/yr.

"By retaining Ndegwa, a seasoned manufacturing and business management professional, Savannah Cement is making a bold statement that we intend to play a very key role in Kenya's, and indeed East Africa's, development agenda," said Ndeta.

India: Holcim Group, which is under the process of restructuring its holdings in India, has appointed Bernard Terver as additional director on the board of ACC and Ambuja Cements with effect from 4 December 2013.

Terver graduated from Ecole Polytechnique, Paris, in 1976 and has worked in the cement industry for more than 35 years. He has been in the service of Holcim since 1994, holding senior positions including that of CEO of Holcim Colombia and Holcim US.

The board also re-appointed Kuldip Kaura as the CEO and MD for one year with effect from 1 January 2014.

In late November 2013 Guangdong province in China announced that it will be launching its carbon emissions trading scheme (ETS) in December 2013. Together with six other pilot projects in China the scheme will be the second largest carbon market in the world after the European Union (EU) when fully operational. Yet with the EU ETS floundering from excess carbon permits, with a resulting low price of permits and large cement producers such as a Lafarge reported as stockpiling permits, what are the Chinese schemes planning to do differently to avoid these pitfalls?

Overall, China has announced that it intends to cut its carbon dioxide emissions per unit of GDP by up to 45% by 2020 compared to 2005. In Guangdong, emissions from 202 companies will be capped at 350Mt for 2013, according to the local Development and Reform Commission. As shown in an article in the December 2013 issue of Global Cement Magazine, Guangdong province has a cement production capacity of 132.7Mt/yr, the second highest in the country after Anhui province.

From the perspective of the cement industry, Chunfang Wang from Huaxin Cement spoke about the importance of monitoring, reporting and verification (MRV) at an International Emissions Trading Association (IETA) workshop that took place in Guangzhou, Guangdong in early 2013. From Wang's perspective, emission assessment standards were at a 'developmental' stage in China and 'smooth' carbon trading would depend on consistent standards being adopted everywhere. Although at the time the particulars of the Guangdong scheme were unknown, participants at the IETA event advised cooperation with scheme planners to ensure emission producers and purchasers remained part of the decision process. Sliding carbon prices in the EU ETS may have been beneficial for permit buyers but once the government planners become involved to revive the market they might lose out.

As the Economist pointed out the summer of 2013, an ETS is a cap-and-trade scheme. Since China appears to have no definite cap to carbon emissions, how can the trading work? The Chinese schemes cap carbon per unit of Gross Domestic Product (GDP). Yet since GDP is dependent on production, any ETS run in this way would have to include adjustments at the end of trading. This would give central planners of the scheme plenty of wiggle room to rig the scheme. Worse yet, analysts Thomson Reuters Point Carbon have pointed out that the Chinese schemes face over-allocation of permits, the same issue that sank EU carbon prices. Additionally, one of the criticisms of the Guangdong Emissions Trading Scheme (GETS) pilot scheme was that the carbon prices may have been higher than expected due to market collusion.

The Chinese ETS projects face issues over their openness. If traders don't know accurately how much carbon dioxide is being produced by industry, such as cement production, then the scheme may be undermined. Similarly, over-allocating carbon permits may make it easier for producers to meet targets but it will cause problems in the trading price of carbon. However, given that a carbon emissions cap is an artificial mechanism to encourage markets to cut emissions, should any of these concerns really matter? The main question for Chinese citizens is whether or not China can cut its overall emissions and clear the air in its smog filled mega-cities.

Specifically for cement producers, it seems likely that large producers will be able to cope with the scheme best, from having more carbon permits to sell, to rolling out unified emissions assessment protocols, to liaising better with scheme planners. In Europe smaller cement producers, like Ecocem, have criticised the EU ETS for slowing a transition to a low carbon economy by subsidising the larger producers' emissions through over-allocation. In China, with its self-declared intention to consolidate an over-producing cement industry, whatever else happens it seems likely that smaller cement producers may become lost in the haze.

India: UltraTech Cement has appointed Arun Adhikari as an Additional Independent Director on the Board with effect from 3 December 2013.