Global Cement News

Mexico: Cemex has received validation from the Science-Based Targets Initiative (SBTi) for its 2030 global CO₂ emissions reduction targets. The validation attests that the targets conform with the Paris Agreement’s well-below 2°C global warming limit. Under its Future in Action programme, Cemex aims to reduce its cement’s carbon footprint to 40% compared to 1990 levels and achieve 55% renewable energy use by 2030. The company says that it has the global cement industry’s most ambitious 2030 targets.

CEO Fernando Gonzalez said “Climate action is the biggest challenge of our times. Cemex is taking decisive action to address it by defining ambitious emissions reduction targets in line with the SBTi, and executing against those targets.” He added “We commit to continue leading the industry in climate action not only because it creates value, but more importantly because it is the right thing to do. Cemex is building a better future, and that future must be sustainable.”

There have been a couple of news stories worth noting in the Turkish market this week. First, it was revealed that Medcem had chosen Sintek Group to build a new production line at its integrated plant in Mersin. Second, Çimko Çimento agreed to buy two integrated plants and a grinding plant from Çimsa.

The Medcem upgrade project will see the subsidiary of Eren Holding add a second production line, with a clinker capacity of 9000t/day. Sintek Group reportedly has agreed to do this for US$128m. This follows an announcement from Medcem in late May 2021 that it was intending to invest over US$200m towards increasing its plant’s overall production capacity to 6.5Mt/yr from 3.5Mt/yr. The plan at this point was to start construction work in August 2021 with eventual commissioning of the second line in the first quarter of 2023. In addition the cement producer said at the time that it was going to open a new terminal in the US shortly. This was intended to join the company’s existing grinding plants in Cameroon and Tunisia and terminals in Russia and Northern Cyprus. On a side note, Medcem likes to point out that the 11,500t/day clinker production capacity on its existing line at its plant is the biggest in Turkey and Europe.

The Çimko Çimento deal with Çimsa was for US$127m. It includes the Nigde Kayseri integrated plants, the Ankara grinding plant and seven ready-mix concrete plants. As would be expected, the transaction is subject to the approval of the local competition authority.

Graph 1: Domestic and export cement sales in Turkey, January – June 2017 – 2021. Source: Türk Çimento.

Graph 1 above gives an idea why some cement producers might have decided that it’s time to expand either through upgrades or acquisitions. The general Turkish economy suffered a jolt in mid-2018 when the value of the Turkish Lira dropped and interest rates rose. The coronavirus pandemic hit in 2020 but after a slowdown at the start of that year the economy managed to grow. The growth has continued so far in 2021 but inflation rates have also soared. In the cement sector, annual domestic sales fell consecutively from 2017 to 2019. They started to recover in 2020 and so far in 2021 it looks like they are continuing to grow. As domestic sales fell the sector focused on exports and they have grown steadily on an annual and half-year basis since 2018. Annual exports hit a high of 16Mt in 2020 or 23% of total sales.

Despite this, in June 2021 the Turkish Cement Manufacturers' Association, Türk Çimento, was warning that input costs were mounting, particularly in the last year. It reported that the price of petcoke had nearly tripled in this period. It also warned of mounting production overcapacity, estimated at over 20Mt/yr in 2019 although down to 7Mt/yr in 2020. Coupled with a fall in annual domestic sales from 2017 to 2019, in its words, “The contraction in domestic consumption during that period steered our companies toward exports.” Some of the larger cement producers, including Oyak, Akçansa and Çimsa all reported healthy rises year-on-year in revenue and operating profit in the first half of 2021. They also reported mounting costs which have risen by 35 – 80%.

The other recent stories from Turkey to note are a two week strike organised by the Building Contractors Confederation (IMKON) in September 2021 due to high costs, particularly cement. The confederation claimed that the price of cement had tripled over the last year. Earlier, in late April 2021, the Turkish competition authority Rekabat Kurumu launched a probe into alleged collusion by nine cement producers including Oyak, Çimsa and Limak. We are not saying these two stories are connected. The current state of the Turkish economy is more than enough to cause input costs for cement producers to spike. Yet headlines like this cannot be reassuring to builders wondering why the cost of cement is going up.

In summary, it’s an uncertain time for the Turkish cement industry. Sales are recovering but this has been achieved by pushing exports more than a rally at home. Alongside this, currency instability and high inflation rates are raising costs for cement producers and end-users. This hasn’t been enough though to stop growth activity from a couple of producers in the last week.

For more on the Turkish cement sector read ‘Cement in Turkey’ in the October 2021 issue of Global Cement Magazine

Spain: Oficemen, the Spanish cement association, has elected José Manuel Cascajero Rodríguez as its president. He succeeded Víctor García Brosa, general director deputy to the chief executive officer (CEO) of the Cementos Portland Valderrivas Group, in the role. Cascajero Rodríguez has been in post since July 2021.

Cascajero Rodríguez has worked for Cemex for over 20 years in a variety of roles. His international career began in 2005 in the UK, as the Director of Treasury for Europe and Asia, and in 2012 he was appointed Corporate Treasurer of Cemex in Mexico. Since 2016, he has been responsible for Strategic Planning for Europe, the Middle East and Asia, a position he combines with the presidency of Cemex’s Spanish operations. He holds a degree in Business Administration and Management from the Complutense University of Madrid, and a Master of Business Administration degree from ESCP Europe in France.

France: Fives Pillard has appointed Fabien Illy as an executive director. His main role will be to drive the business strategy, the international development of the company and boost its growth.

Illy first started his career at Air Liquide where he worked in its research and development department for combustion and cryogenics. He joined Fives Group in 2015 and has held various positions from sales and business development to management. He holds a master’s degree in thermal engineering from the CentraleSupélec graduate engineering school of Paris-Saclay University in Gif-sur-Yvette, France.

Fives Pillard designs and manufactures burners for the mineral and energy sectors.

Madagascar: Kolos Madagascar has begun importing cement to Madagascar with the aim of staking out a claim in the country’s growing cement demand, which was 1Mt/yr in 2020. The producer says that this figure represents 7% decade-on-decade growth from 935,000t in 2010.In 2020, full-year domestic cement production stood at 150,000t. The L’Express newspaper has reported that the producer intends to establish its own grinding plant in the country. It expects to complete the plant’s feasibility study andnecessary research and obtain environmental and operating permits by April 2023 in order to commission it before 2024.

Kolos Madagascar general manager Tsiry Rasolonjatovo said that ‘quintupled’ sea freight costs were the primary cost of a rise in Madagascan cement prices. He explained “International cement prices haven't budged that much.”Rasolonjatovo added “Madagascar spends US$76m/yr to serve its cementneeds, and another US$7.6m/yr is swallowed up by additional transport costs." He estimated that, along with the realisation of other companies’ planned projects, Kolos Madagascar’s upcoming grinding plantwill increase Madagascan-produced cement’s share of domestic deliveries to 80% from 16%.

Kolos Madagascar is a subsidiary of Mauritius-based construction company Gamma Civic.