Global Cement News

Forgive the poor image quality but our magazine editor Peter Edwards spotted this provocative graphic (above) at the Federación Interamericana del Cemento (FICEM) technical congress that is taking place in the Dominican Republic this week. It came from a presentation given by Yassine Touahri from On Field Investment Research. The reason this slide raises eyebrows is because it seems to inversely link CO₂ emission regulations with cement grinding capacity growth.

One would expect integrated or clinker production capacity addition to decline in the face of various carbon taxes because the majority of emissions in cement production are process emissions. Yet this graphic suggests that it goes further by affecting the supply of clinker in these regions. If correct then it supports the argument that introducing carbon taxes forces related capacity investment to go elsewhere. In other words, if governments try to control industrial CO₂ emissions, then the market will follow the path of least resistance. The world has a clinker production capacity surplus and the countries with no CO₂ regulations are scooping it up.

The counter argument is that capacity growth and CO₂ legislation is unrelated. The regions with flat or falling grinding capacity additions are the places were this trend is occurring anyway for other reasons. These areas have built their houses and infrastructure and so one would expect no or low capacity growth. In this environment it is easier to introduce CO₂ laws because, rightly or wrongly, it is perceived to be less important to the overall economy. Meanwhile, outside of these zones national economies are growing: they want to build things and new grinding plants to take advantage of a global glut of clinker are helping them to do this.

Other issues with this graphic are the widely different reasons for low cement grinding capacity growth in the areas with CO₂ legislation. Europe, for example, has endured the European Union (EU) Emissions Trading Scheme (ETS) for over a decade and it has seen growth in the slag-cement grinding model in some countries in recent years. General trends have also seen a considerable drop in production capacity in Southern Mediterranean countries as their export markets decline. China is actively trying to manage a reduction in production capacity following a period of unparalleled growth. CO₂ legislation is one potential means to do this.

The next step here would be to model the effect of a carbon tax on a developing market, which is genuinely growing its cement consumption, compared to a more mature one. This might help to answer whether economic development can be untangled from carbon emissions. CO₂ regulations are undoubtedly distorting cement markets though. Touahri is right when he says that, “CO₂ management will be the key challenge for the cement industry in the 21st century.” Once it is given a value then it changes the nature of the business.

There will be a full review of the FICEM technical congress 2019 in a future issue of Global Cement Magazine

Philippines: The Department of Trade and Industry (DTI) has introduced a customs duty on imported cement of US$4.81/t. The Manila Times reports that the measure is subject to annual review and will be in place for three years, decreasing by US$0.48/yr.

The government previously imposed a provisional tariff of US$4.02/t, in spite of protests from Vietnam that any executive action would be in contravention of World Trade Organisation rules. Philippine law allows for the imposition of such measures where an appointed advisory body has determined that increased imports ‘threaten to substantially cause injury to the domestic industry.’

The advisory body in question is the Tariff Commission, who in August 2019 recommended a tariff of US$5.68/t. Secretary of Trade and Industry Ramón López stated that the figure aims to address the threat with minimal impact on buyers. Cement prices in the country hit a low in early January 2019 of US$98.6/t, rising to US$108.25/t after the imposition of the provisional tariff.

Vietnamese producers will be the hardest hit by the price hike, with 75% of the Philippines’ imported cement originating in Vietnam. Asian Review reports that a further 18% comes from neighbouring China and 8% from Thailand.

Oman: Raysut Cement is planning the construction of a 1Mt/yr grinding plant in the port town of Duqm. The project has a cost of US$30m, with work set to begin on 19 September 2019. Oman Cement has been building a 1.8Mt/yr integrated cement production plant at Duqm since December 2018. The new grinding plant is Raysut Cement’s first development project since it received US$50.7m in funding from the Omani Bank Nizwa.

Saudi Arabia: Najran Cement has appointed Mohammed Bin Manaa Bin Sultan Aballa as its new chairman. He will be supported by Salah Bin Yassin Bin Khalil Allaf as the deputy chairman. Abdul Salam Bin Abdullah Bin Abdulaziz Alduraibi has also been appointed as a managing director at the cement producer.

Argentina: Loma Negra has converted its 0.2Mt/yr San Juan integrated cement plant to grinding and bagging only. 14 people have resultantly lost their jobs, five of whom have accepted relocation to the company’s Catamarca plant. Catamarca is the largest of Loma Negra’s seven production facilities in Argentina, with a cement production capacity of 1.8Mt/yr.