Global Cement News

Botswana: Cheetah Cement Botswana aims to achieve a cement production capacity of 900,000t/yr by June 2023. Cheetah Cement Botswana currently has a capacity of 36,000t/yr since commissioning its US$40m Francistown cement plant in February 2022. Botswana Investment and Trade Centre CEO Keletsositse Olebile said that the expansion will create 200 new direct jobs.

Xinhua News has reported that the move will turn Botswana, which consumes 620,000t/yr of cement, into a regional cement exporter and reduce its net imports by US$90m/yr.

UAE: Lafarge Emirates Cement plans to install an organic Rankine cycle (ORC) waste heat recovery (WHR) plant at its Fujairah cement plant. Gulf News has reported that the producer will fund the upgrade through a transition trade facility provided by UK-based bank Standard Chartered. The facility is part of the bank’s planned US$300bn-worth of green finance funding up to 2030.

Lafarge Emirates Cement general manager Olivier Milhaud said “This is one of the major milestones in our journey towards sustainability. The WHR project encourages the use of clean and environmentally friendly energy in our operations and also supports our global mission to build a Net Zero world.”

Pakistan: The Pakistan National Forum of Environment and Health (NFEH) has recognised Lucky Cement’s sustainability successes with a prize at the 19th Annual Environment Excellence Awards 2022. The company’s comprehensive environmental management and monitoring plan covers its solid waste, noise pollution and emissions, including particulates. It says that this is essential to preserving the ecosystem in which it operates.

Chief operating officer Amin Ganny said “We believe in environment-friendly practices and are committed to conserving the environment. Implementation of sustainability into our core business operations has always been one of our main objectives.”

Fuels procurement and costs have been weighing on the minds of Indian cement producers since the start of the Russian invasion of Ukraine in February 2022. Two news stories this week show some of this. The first concerns recent imports of petcoke from Venezuela. The second covers the closure of captive power plants due to domestic shortages of coal.

At the same time, as the financial results for cement companies for the first quarter of the Indian 2023 financial year have been released, one constant has been hefty hikes in power and fuel costs. Graph 1 below gives a rough idea of the jump in costs major producers have been contending with. One point to note is that, possibly, the larger cement companies may have been better at slowing down the cost inflation from fuel. However, the prevalence of waste heat recovery installations and alternative fuels usage may also be a factor here. Finally, the company approved to buy Ambuja Cement and ACC, Adani Group, also runs India’s biggest coal trader. It will be interesting to see in the medium term how this might affect the fuel costs for its new cement division.

Graph 1: Comparison of Power & Fuel costs for selected Indian cement producers in first quarter of 2022 and 2023 financial years. Source: Company financial reports.

The Venezuelan story demonstrates the greater lengths that Indian cement producers are now going to secure fuel supplies. Reuters reports that cement companies imported at least 160,000t of petcoke from the South American country between April and June 2022 and that more was on the way. JSW Cement, Ramco Cements and Orient Cement are among them. The Venezuelan oil industry has been under US economic sanctions since 2019 but byproducts such as petcoke are not covered by this. Its petcoke has apparently been discounted by 5 - 10% below the price of US alternatives.

Indian cement producers have been prepared to risk US sanctions further by importing coal from Russia. The Business Standard newspaper, using data from Coalmint, reported that Russia became India’s third largest source of coal imports, at 2.06Mt, in July 2022. Before the war it was the sixth-largest source of coal to the country. Again, Reuters covered how cement companies were doing this in July 2022, when it revealed that UltraTech Cement had used India-based HDFC Bank to purchase coal using Chinese Renminbi, not the US Dollar as is more common for international purchases of commodities. In a conference call for the release of its first quarter results, UltraTech Cement’s chief financial officer Atul Daga confirmed the purchase and described it as “opportunistic.” He added that, “If something more surfaces, we will pick it up.” As the data for July 2022 shows, it may or may not be UltraTech Cement that is buying Russian coal right now but other parties in India certainly are.

Some of the wider economic implications about India buying Russian coal in the face of US and European sanctions include whether any retaliation might be forthcoming and a general sign that the dominance of the US Dollar as the world’s reserve currency is not guaranteed. The former seems doubtful given the size of India’s markets. Yet if the sanctions against Russia drag on then a shift in the global economic status quo becomes more likely, especially if opportunistic purchases become regular ones.

The situation facing captive power plants illustrates one more turn of the screw on energy costs for industrial manufacturers. 30% of captive power plants in India are reportedly closed due to the high cost of coal or an inability to even import it. Although it is worth noting that it is unclear whether, proportionally, more or less of these are serving cement plants. As N Srinivasan, the vice-chairman and managing director of India Cements told the Business Standard newspaper, “Most of our plants have coal based captive power generation. The cost of captive generation is now more than the grid cost. Hence, we shut down all captive power units and resorted to grid power.”

The International Energy Agency (IEA) forecast in July 2022 that Indian coal demand would grow by 3% year-on-year to 1.16Bnt in 2023 due to expanded electrification and economic growth. In its view, global coal demand will be driven principally by China but also by India to a lesser extent. However, unhelpfully, it added that uncertainty was also rising with ongoing developments in the war in Ukraine having a prominent effect. This is unlikely to assist Indian cement producers and their fuel buyers who will be asking themselves: how long will the current situation last and can the prices be passed on to consumers? There is one small silver lining in the current group of economic storm clouds hanging over cement producers at least. The second quarter of the Indian financial year is monsoon season, when economic activity slows down. It won’t slow the trend down but it may reduce the fuel bill a little.

Saudi Arabia: Al Jouf Cement has appointed Abdul Karim bin Muhammad Al Nuhair as its chief executive officer. He succeeds Jamal bin Salem Al Amer in the post who has resigned for personal reasons. Al Amer has now been appointed as president ex-executive advisor to the company.

Al-Nuhair holds a bachelor’s degree in Industrial Management and a master’s of Executive Directors from King Fahd University of Petroleum and Minerals. He holds both management and board-level experience in a number of private and public companies.