You can also listen to the interview in the audio version.
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We can’t make it. And it’s not because some of the raw materials are missing, as is the case in the automotive industry in terms of chips. We have raw materials, yet we are forced to reject customers or limit their supplies, according to cement plants in the Czech Republic.
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“Cement plants are one hundred percent, it has been going on for the second year. Some may say it’s a great condition to be constantly sold out. But to be honest, we can’t do all the maintenance we need. It’s like a car you drive at 160 kilometers per hour and the car eats 8 liters. I would rather drive slower with lower consumption and be able to play with the production a bit, “admits Miroslav Kratochvíl, CEO of the Lafarge cement plant belonging to the Holcim Group, which is the largest cement producer in the world, in the SZ Byznys Agenda.
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According to him, neglected preventive maintenance can mean an unplanned production outage that they can no longer afford. He can stop them for a week or a month, admits Kratochvíl. In their case, a monthly outage means not delivering 80,000 tons of cement to the market for hundreds of millions of crowns.
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Cement plants in the Czech Republic
1. Českomoravský cement, as
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2. Cement Hranice, as
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3. CEMEX Czech Republic, s. r. o.
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4. Lafarge Cement, a. s.
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- According to the Association of Cement Producers, production in the Czech Republic fell by 1.2% year on year in 2020 to 4.51 million tonnes. This is the second highest value since 2008. Domestic sales in 2020 rose by 2.7% to 4.4 million tons. Data for 2021 will not be available until the second half of 2022.
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The situation is also confirmed by the market leader, Českomoravský cement from the HeidelbergCement group. “We have raw materials such as fly ash or slag. Availability is poor for only one component, coal, although this is normal in the case of pre-negotiation well in advance. We follow the contracts set at the beginning of the year, we keep it, but we no longer accept new customers, “says Marek Tláskal, director of the company’s communication and sustainability department, for SZ Byznys.
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Another leading player, Cement Hranice, says the same. “We are in a situation where we have to limit the quantity of our long-term and loyal customers. Unfortunately. And those reasons came together. It was, of course, increased demand last year, which continues this year. But also unexpected failures of production equipment and long delivery times for spare parts, “describes the situation Aleš Šturala, Member of the Board of Directors and Sales Director of Cement Hranice.
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“One such, really big breakdown hit us at the beginning of December 2021 and the result was that we did not have enough to replenish the clinker and cement reserves before the planned several-week winter maintenance. And this is a really big problem, which we have been facing since the beginning of this year, “he adds for SZ Byznys.
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Mild winter, more buildings. A cement
Especially the beginning of the year surprised the manufacturer. Due to the mild winter, sales were higher than expected. “For this reason, we sold out in January and February, so we did not have enough supplies during the winter shutdown. We rely a little on the fact that construction production will fall over the summer months, which is a common seasonal trend, and we will pre-stock a little for the main construction season, which will come in September and October, “hopes Miroslav Kratochvíl and adds that our construction industry is struggling in general. with a lack of cement on the market.
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However, he admits that due to high inflation, and thus worse planning and pricing of buildings, a slight cooling of the construction industry could come. Their customers are mainly concrete plants, manufacturers of concrete products, such as structures or interlocking paving, but also manufacturers of dry mortar mixtures and wholesalers of packaged cement.
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“We have to realize that only the ‘Czech’ cement market does not actually exist. If you look at the map, there are two other production plants in Slovakia at a distance of 100 kilometers from our cement plant. If we go even further, we will come across Polish cement plants. And they are all within reasonable driving distance. So if there is a shortage of cement on the Czech market, then we are talking about a shortage in Central Europe, “says Aleš Šturala from Cement Hranice.
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Endless price increases
All cement producers became more expensive at the beginning of the year. And they agree that another revaluation will come this year. “In general, the increase in prices from last year was reflected in this; at the beginning of this year, there was an increase in prices. In April, we were a bit confused by the emission allowances that we have to buy, and we think that in the second half of the year cement prices will probably increase, because the materials are still going up, “is convinced Marek Tláskal, the Czech market leader. He does not want to speculate by how much, but according to him it will be more single-digit values.
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Lafarge Cement
- 2019: CZK 1.44 billion
- 2020: CZK 1.55 billion
- 2021: CZK 1.7 billion
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The annual production for 2021 of Lafarge Cement, as, is less than 1 million tons of cement and limestone.
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Turnover of the whole Holcim group:
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- 2019: 26.7 mld. CHF
- 2020: 23.1 mld. CHF
- 2021: 26.8 mld. CHF
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“I must say that we have renegotiated the contracts because what we agreed at the beginning of the year no longer applies. We see a rocket increase in the price of inputs, which we must pass on, and at the moment we are moving at a 20% price increase, “calculates the head of Lafarge and assumes that his company in the Czech Republic will attack sales of two billion crowns this year.
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“It simply came to our notice then. We thought that when the covid ended, it would be better, but the war in Ukraine came. The worst thing for us is the uncertainty about the prices of the input materials we use in production and the price of energy. Our operation is relatively energy-intensive, “says the head of the Lafarge cement plant.
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For industrial enterprises of their type, electricity has risen up to fourfold in price. It’s the same with gas. “When a furnace raid cost us half a million crowns two years ago, it now costs us two million,” Miroslav Kratochvíl calculates the extra costs.
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Green has green
Hand in hand with the fact that cement is the second most sought-after commodity in the world is the fact that its producers are the second largest polluters of the environment. Therefore, they have decided to significantly reduce their carbon footprint globally by 2050. In the Čížkovice factory alone, they produce 850,000 tons of cement per year and the production of one tonne of cement produces half a tonne of carbon dioxide.
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“In the case of our group, the carbon footprint will be zero in 2050. We have to use other materials and we already use alternative fuels today. Simply put, we can use everything we don’t use from the yellow bins, as fuel. To give you an idea – this way we can replace 150,000 tons of coal with one hundred and thirty tons of waste from yellow bins, ”explains the head of the cement plant.
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Green cement
● In 2022, Lafarge Cement expanded production with an ecological range of green cement, which produces 30% less carbon dioxide emissions.
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● By the end of 2025, it plans to increase the share of ecological cement to 40% of all sales.
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● Within the circular economy, it wants to increase the processing of waste raw materials used for cement processing from 277 thousand tons to 390 thousand tons. The production process will also increase the volume of construction and demolition waste from 0 to 110 tons and reduce the consumption of domestic water in production from 147 liters to 82 liters per tonne of cement.
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● By 2025, it plans to reduce carbon dioxide emissions from 461 kilograms to 408 kilograms per tonne of cement.
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● The total investment in the greening of production should reach up to one billion crowns in the coming years.
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“Most energy-intensive industries buy allowances, but from 2025 to 2030, their allocation will fall sharply and we must be prepared for that. Because if we projected the entire price of the allowance and we didn’t get one for free, today a ton of cement would cost 2,000 crowns more, “he warns.
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Watch the whole interview with Miroslav Kratochvíl in the introductory video or on Podcasty.cz.
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Agenda
A quarter of a first-hand business. Interviews with top leaders in Czech business, company founders, experts.
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Every weekday at SZ Business and in all podcast applications.
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