Global Cement News

LafargeHolcim’s investigation into its conduct in Syria claimed its biggest scalp so far this week with the shock resignation of chief executive officer (CEO) Eric Olsen. His decision landed with the publication of the group’s investigation into the conduct of the legacy Lafarge operations in the country in 2013 and 2014. As per the initial findings of the investigation that were released in March 2017, it confirmed that selected personnel had engaged in dealings with terrorists in connection to one of its cement plants in the country during 2013 until the unit closed in September 2014. The board decided that Olsen had no connection or even awareness of the misconduct. However, he decided to quit anyway in order to restore ‘serenity’ to the company.

In its latest public statement on the investigation, LafargeHolcim outlines five weaknesses with its compliance led by improper payments related to Lafarge Syria’s security and supply chain. It then goes on to list a failure of line management, inadequate controls over expenses and a failure to detect improper payments and improperly recorded payments. It’s all presented as ‘chaos reigned’ or wayward staff in tough circumstances trying to do their muddled best for the company. Unfortunately for this narrative, selected members of group management were aware of the situation and appeared to have done nothing about it. This then begs the question: who knew what when?

Olsen may have been exonerated by the board on his departure but he was Lafarge’s Executive Vice-President of Operations for Lafarge in 2014. If he didn’t know what was going on in Syria during his watch then he wasn’t doing his job properly or it was being hidden from him. The head of Lafarge itself at the time, Bruno Lafont, might also have been a viable target for discipline but he decided to stand down from the board of LafargeHolcim in early April 2017. No doubt other former members of the Lafarge management team may bear more responsibility. LafargeHolcim’s implementation of its remedial measures may turn up more culprits, as may the on-going criminal complaints process continues in France.

French newspaper Le Monde, the newspaper that originally broke the story, is probably on the money with its assessment that Olsen’s departure is actually the continuation of the boardroom battle between the board and its shareholders that has raged since before Lafarge and Holcim formally merged. Bruno Lafont was originally lined up to become the CEO of the new company until Lafarge’s worsening financial position compared to Holcim’s prompted a backlash from Holcim shareholders. Le Monde describes how LafargeHolcim’s shareholders include four prominent billionaires: Switzerland’s Thomas Schmidheiny, Belgium’s Albert Frère, Canada’s Paul Desmarais and Egypt’s Nassef Sawiris. Schmidheiny, readers may remember, was one of the principal actors who sunk Lafont’s bid to be CEO back in early 2015.

Placed in this context, Olsen’s departure might seem forced, especially if he had no connection to the debacle in Syria. LafargeHolcim has faced a tough couple of years following its formation with consistently falling sales revenue. Asset divestments and cuts have been the cure as the group struggled to find its new size. Yet, the group saw its adjusted operating earning before interest, taxation, depreciation and amortisation (EBITDA) start to rise in 2016 suggesting that the remedial action was starting to work. LafargeHolcim’s management and shareholders will be acutely aware of its performance so far in 2017 ahead of the public release of its first quarter results in early May 2017. Under these circumstances it seems unlikely that serenity will be restored to the upper echelons of LafargeHolcim any time soon.

Norway: Norcem, part of HeidelbergCement Group, has awarded a contract for a concept study of carbon capture at its Brevik cement plant to Aker Solutions. It previously carried out testing with a pilot capture plant at Brevik. Norcem subsequently selected Aker Solutions' technology to be used for a potential facility at the cement plant. The oil and gas engineering company has also won a carbon capture contract from Yara to run a study at its Herøya ammonia plant.

"Aker Solutions can now offer carbon capture plants at lower costs and with less energy demand using a new non-corrosive and environmentally-friendly solvent that has very low degradation," said Oscar Graff, head of carbon capture and storage (CCS) at Aker Solutions. "The solvent is very robust and can be used for various types of flue gases and gives minimum emissions and waste products."

The study for Norcem will design a carbon capture plant that's integrated with the cement factory, including a process to turn the CO₂ into liquid and storage facilities that can be used before shipping. The plant will have a capacity of about 400,000t/yr of CO₂. The Yara study will design and develop a capture plant for the reformer flue gas and will also include liquefaction. Both concept studies are set to be completed in September 2017.

In April 2017 Gassnova, a state-run company for carbon capture and storage, announced the start of the concept studies as part of a goal to establish a complete CCS chain, including capture, transport and permanent storage, by 2022. The concept phase will also seek to establish more accurate cost estimates. The next phase in the process will involve front-end engineering design (FEED) work until around mid-2018 before an investment decision is made by the Norwegian government in the first half of 2019.

Aker Solutions has developed and qualified an improved carbon capture technology since 2008, investing in research and development, testing and operations. The company has gathered experience through design, construction and two years of operations of an amine plant at Technology Centre Mongstad and carried out tests in the US, the UK and Norway using its mobile carbon capture pilot plant.

India: Orient Cement, part of CK Birla Group, has joined the Cement Sustainability Initiative (CSI). The CSI is a voluntary chief executive officer led business initiative operating under the umbrella of World Business Council for Sustainable Development (WBCSD) and a global effort by major cement producers towards sustainable development. Orient Cement expects membership of this initiative to give it impetus in its efforts to create a safe and ecologically favourable environment where it operates.

“We are delighted to be a part of the global mission to make our industry shoulder the responsibility for global sustainability. We thank the WBCSD and the CSI for partnering with us in our journey. We expect to contribute to and benefit from our participation in the various working groups of this initiative and look forward to a very engaging and fulfilling journey ahead,” said Deepak Khetrapal, the managing director and chief executive officer of Orient Cement.

Ethiopia: Messebo Cement has purchased 200 trucks from Germany’s Man for US$30m. The cement producer has expanded its fleet to reduce its transportation costs, according to the Ethiopian Reporter newspaper. The trucks have been assembled locally by Mesfin Industrial Engineering, a sister company to Massebo, after shipping. 25 of the trucks are silo trucks for transporting bulk cement and 50 are dump trucks.

Ivory Coast: The government has decided to import 150,000t of cement from April to July 2017 to cope with a local shortage. Cement will be imported in a strict agenda including 61,000t in May 2017, 64,000t in June 2017 and 25,000t in July 2017, according to the La Afrique Tribune newspaper. The government is also hoping that on-going cement plant projects will meet local demand when they are commissioned. The country previously imported cement to meet local shortages in 2015 when 300,000t was imported in three phases.