Global Cement News

Ireland: The Irish cement industry stands to make windfall profits of up to Euro50m 'at the taxpayers' expense,' according to sources familiar with the EU's emissions trading scheme (ETS). The sources estimate that companies such as CRH, Quinn Cement and Lagan Cement have made Euro26m over the past five years from the over-allocation of carbon credits by the government.

The sources estimate that the cement industry stands to make a further Euro25m when the next round of carbon credits is allocated under the ETS. The government allocates a certain amount of emission permits to companies for free. The idea is that polluting companies would buy credits in the market if they exceeded the permitted amount of emissions.

This system is known as 'cap-and-trade' but an initial over-allocation arose, partly because of the construction bust which meant that firms did not produce as much cement as expected. The sources said the transfer was a waste of public funds at a time when the exchequer was financially stressed. They also argued that the effect was to distort the market in favour of making cement.

The estimate of the scale of the subsidy comes after the Economic and Social Research Institute (ESRI) noted earlier in 2011 that the current EU ETS provided potentially large windfall gains for certain industries, such as electricity generation and cement production. The ESRI argued that such windfall gains should be recaptured by society through the tax system.

A spokesman for Cement Manufacturers Ireland did not dispute the figures, saying that the industry had invested millions of Euros in new technology upgrades to become one of the most efficient in Europe. "The current recession was not predicted when allowances were allocated under rules proposed by the Commission," he said.

China: China National Building Material Group Corp (CNBM), China's largest building materials manufacturer, invested about USD131m in energy saving and emission reductions in 2010, according to the company's 2010 corporate social responsibility report. The construction industry has long been known for its heavy pollution and high energy use.

The Beijing-based, state-owned company gave top priority to fulfilling its corporate social responsibility (CSR) in terms of energy saving. "The company has dedicated itself to energy conservation by investing in clean technology," said Song Zhiping, chairman of CNBM. According to Liu Baoying, vice-president of CNBM, the cement sector is a major contributor to the company's energy consumption, accounting for more than 90% of the total.

"The company's energy consumption in the cement sector was down by 23% during the period of the country's 11th Five-Year Plan (2006-2010), mainly because of our efforts to eliminate poor production methods and upgrade technology," said Liu. CNBM has disposed of 51 energy-inefficient cement operations with a total capacity of 6.8Mt/yr over the past five years, according to its CSR report.

The country as a whole has also attached great importance to decreasing its carbon footprint with the government targeting reductions in CO₂ emissions for every unit of gross domestic product by between 40-45% by 2020 compared with 2005 levels. In addition, CNBM has made substantial efforts in developing new building materials in a bid to reduce energy consumption.

Beijing New Building Material (Group) Co Ltd (BNBM), a subsidiary of CNBM, mainly focused on manufacturing houses made of new building materials that can save electricity, water and materials during construction. They can also reduce by 60-90% the energy used when the buildings are functional, said Cui Lijun, general manager of BNBM.

Poland: On 5 July 2011 Gorazdze launched its newly completed investment, which will enable it to become the 'biggest cement producer in Europe.' The project consumed nearly Euro125m, which makes it the biggest investment in the company's history.

The project was initiated in May 2010, which Gorazdze helmsman Andrzej Balcerek considers to have been the best possible moment. "At that time, the demand for cement was slightly lower, with the whole economy slowing down. At present, it is sky-rocketing; in May 2011 growth was the highest in the last 100 years," he says.

Bernd Scheifele from HeidelbergCement, which is the owner of Gorazdze, sees the investment as a major step forward not only for the Polish firm but for its mother company too and a perfect example of Polish-German economic co-operation. He underlined the fact that over the last 17 years HeidelbergCement has invested around Euro450m in Gorazdze.

US: A Duke University study prepared for the US Environmental Protection Agency (EPA) has reported that the cement industry reduced its energy intensity by 13% between 1997 and 2007, averaging improvements of more than 1%/yr. These energy savings equate to a reduction of almost 1.5Mt of energy-related carbon. The study showed the gap between the best-performing cement plants and others narrowed and the performance of the industry as a whole improved.

"The decade studied by Duke was one of unprecedented growth for the cement industry, yet Portland Cement Association (PCA) members demonstrated their commitment to environmental stewardship by building sound strategies for energy management and investing in their facilities with state-of-the-art technologies that significantly improved the industry's energy-efficiency and reduced emissions," said Brian McCarthy, PCA CEO and president. "The US cement industry was among the first major industries to tackle the issue of climate change and this study illustrates that it has remained at the forefront of developing policies and improving the manufacturing process."

The study was commissioned by the EPA to measure the change in the cement industry's energy efficiency curve. The energy management approach promoted by the EPA's 'Energy Star' programme, which benchmarks plant energy performance against peers over time and certifies plants that achieve the best enviornmental performance, was an important factor in enabling the industry to improve its energy performance.

The Energy Performance Indicator (EPI) scores the energy efficiency of a single cement plant and allows the plant to compare its performance to that of the entire industry. The tool is intended to help cement plant operators identify opportunities to improve energy efficiency, reduce greenhouse gas emissions, conserve conventional energy supplies and reduce production costs.

US: Inaction by Congress to raise the federal debt ceiling could result in a second recession, adversely impacting cement consumption, according to a recent report by the Portland Cement Association (PCA).

The report says that inaction on the debt ceiling could cause derailment of the fragile US economic recovery. A federal default would have a severe impact on business, consumer and bank confidence, leading to a rise in interest rates. In addition, forced government austerity spending measures are likely. This could depress highway and other government construction programs at the federal and state level. This possibility could cause a great deal of further pain to the cement industry, because public construction projects account for 50% of total cement consumption in the US.

"In this scenario, cement consumption would record a 5.6% retraction in 2011 followed by a 7.5% drop in 2012," said Ed Sullivan, PCA chief economist. "In fact the debt crisis may already be exerting adverse influence on near-term cement consumption due to suspension of state and local treasury bonds as well as an overall uncertainty that has been injected into the economic landscape."

The PCA estimates that the cyclical downturn caused by the Great Recession has reduced federal revenues by USD1.9tn and raised income security payments like unemployment insurance by USD600bn. Aside from revenue and tax assessments, part of the increase in debt has been recorded due to necessary countercyclical spending such as the stimulus package. Defence spending in the Middle East has also contributed to the recent large deficits. The report says that finally (and perhaps most worryingly) deficits have come from increases in entitlement spending fuelled by demographic changes. The Congressional Budget Office expects entitlement spending on social security and the Medicare and Medicaid schemes will rise from USD1.5tn in 2010 to USD2.6tn in 2020.

The debt accumulation during the past four years actually exceeds the total debt accumulated since the country's inception.