Login

Focus on the worldwide cementitious materials trade, supply & demand: Gareth Ward, ZAG International (US)

Filmed at Cemtech MEA 2015, 8-11 February, Grand Hyatt Dubai, UAE

Already a subscriber? Login

Subscribe to get access to all News, Articles and Video sections of the CemNet.com website.

Subscribe

Thanks very much Keith. This afternoon what I'm going to talk about, I'm going to give an introduction first of all to our company, ZAG International, who we are and what we do, and then cover the cementatious materials supply and demand trends doing forward in the world. Now, there are a couple of deliberate mistakes in this presentation.

The first one being on this opening slide it says February the 10th, is actually February the ninth. So, that's just a test if you're still awake after lunch. Alright, going forward, here we are, we are a global marketing, sales and materials supply company, focused entirely on the cement industry, which is why I'm here.

With that also overlaps with the steel industry, and also with the power generation industry. The two main materials that we move around the world are granulated blast furnash slug and fly ash, but we so supply intermediate products such as clinker and finished goods such as cement. And being associated with the cement industry we also can supply all the raw material associated with the cement industry such as limestone and gypsum.

What we also have within the company is an internal freight brokering system so whatever material we do supply, can supply are delivered on safer basis, and we're also not a spot sale, or spot trade company. All our business is generally a long term. So, a typical contract with our company would be three to five years. I think the shortest contract we have is a single year contract.

Our business model is to work with partners whether they'd be suppliers, customers, or shipping companies, and our model is that we only win if our business partners win. So, we try and grow our company by growing the business of our business partners, whether you are a supplier, or and end use customer.

So, that's who we are, that's what we stand for and that's our business model. We're founded in 2001 in the US, originally as a consulting company to the Petra Chemical industry, but quickly moved on to cementatious materials, and then in 2006, moved away from just US focused, and the became a global business.

I should join the company in early 2012, as Keith said earlier, and since 2006, we have had steady growth along with the industry globally. We've now got offices in North America, Europe, Asia and Oceanian, the Oceanian being Australia which is where I am coming from. So, this is our approach to business, we call it, coal industrial ecology.

We basically, take the raised or co-products or bi-products from one industry, be it still or power generation, and use it as a raw material in the cement industry, and we ship it around the world. We like to think of it as industry inter-connectivity. Cementing klinker, SCMs, freight right and fuel. Just to give you an example about that works, I will give you an example of a customer in Australia, started in business 67 years ago, we have had now three consecutive three year contracts with them. Initially, starting out just supplying clinker but as the business grew, so we've got a long term freight contract and a long term clinker supply contract out of China, so revenue off that, we started bringing down GGBFS in jumbo bags, so they entered a new sector in the market, and gradually over a period of time as that grew we started supplying GBFS in single bookshop out of Japan.

So, that enabled them to enter a new sector of the market and us to grow our business. The materials we put on the same ship from different sources in China would be limestone, FGD gypsum and hydrated line. So, as our customary is growing, we are also growing our own business. The key with freight rates is to pick a time when the freight rates are low which is now, and then forward locking the freight rates. So, as a cement manufacturer you know that your rates are going to be this year, you know what they are going to be next year, and you know what they are going to be the following year.

So, it's a very good tool for managing your cost base, and managing your business going forward. Fuels using that self same example in Australia, as we are bringing the clinker down from China. The Chinese cement manufacturer is asked about bringing Australian coal back. In China, there are some significant environmental issues, and the Chinese government is trying to reduce the sulfur level impose limits on the sulfur levels in coal.

So, a lot of Australian coal has quite a lot of sulfur level so what we are looking at doing is not just bringing clinker one way, but bringing in taking loss of an Australian coal back up to China. So, we looking it as industry into connectivity. A number of speaker this morning have told about the dramatic changes within the industry in the last decade.

Talk about the growth through acquisition of the big four Cement, Heidelberg, Holcim and LaFarge, and then following the GFC, the struggle to service and then reissue their debts. And then more recently we've seen the LaFarge merger, and then there's going to be a lot of flow on MNA activity in the industry.

So, it's quite a an exciting time to be part of the cement industry. But, what I'm going to focus on is, I think when a step on a [xx] change in the use of cementitious materials, and especially the use of sludge. Historically, they've been in ready supply, and they've struggled to get established in the cement industry but going forward I think they'll be a strategic resource.

This is another slide, a variation of what you've seen earlier this morning on global cement demand. The industry itself has been around fro 2000 years, but's a compound annual growth of roughly 5% so it is an old industry, it's damn good industry to be part of. China, risen from 595 million tons a year from 2000to 2.2 billions tons a year now.

I think, it was nearly one of the earliest speakers said that that consumption of 1.6 tons per capita in China is going to fall away dramatically, and I think if I remember Riley[sp?] said now the normal number for a developed economy is about 350 kilograms per capita. So, you're going to see a massive drop in the consumption within China.

I think the number he said that was going to hit the external market could be as much as 1.7 billion tons of cement. The US is recovering, and it's recovering very strongly and steadily, we believe those are the figures from the PCA, but we believe the US recovery is in full swing and will continue.

China is slowing, but it's still doing 5% to 6% growth. Which is something which a lot of countries will die for. Emerging countries are all moving along steadily, and we only see western, or southern Europe in particular is not moving at all. This is the slide I Just referred to about the US recovery, you can see the big drop off in the GFC around 2008, but since that point in time, there has been steady growth in the US.

This are figures from the PCA, that's the Portland Cement Association in the US. So, they're fairly confident, and we reiterate that confidence in the recovery and sustained recovery in the US market. Now, why is that of interest? Because the US used to be a net importer of about 30 Million tons of cement price of GSE. Since, then you will see there has been a substantial reduction in terms of utilization of cement plants bottoming out in 2010 at 62 %.

There has also been a number of plants closure in the US due to environmental regulatory changes. So, as we see going forward towards 90 and 92%, this year 2015, there'll be imports of about 10 million tons into the US. Now, that's a big disguise because majority of those imports come across the boarder from Canada, or across the great lakes, but with us still seeing substantial volumes moving into the US for the first time in 2015.

We believe by 2018, there will be 20 million tones. In the past in the US, all the imports were pure cement, but we believe more and more the imports will become GGBFS, and dry fliers. So, what are the trends and what are the implications global capacities imbalances is one of them, and a number of speakers addressed those whether it be in Africa, or the minor countries this morning.

What will happen in Europe? Will it do like Japan did and rationalize its capacity to a sustainable level? What will happen will they to the 1.6 metric tons of per capita consumption in China? Where were 1.7 billion tons go? If what you said is correct, and it will bottom out at 350 kilos per capita.

What will happen in Africa? Tony spoke earlier about different opportunities, and I think the word he used several times was, certain countries were interesting, as many, as much increased capacity comes on line. One thing you can say about Africa, it is going to be an interesting market going forward.

There is insufficient capacity in the US that was underlined in the previous slides. S, the US is going to be sustained importer somewhere between to 20 to 40 million metric tons per annum. The difference is going to be determined by the number of plants shut down as a result of environmental regulations.

Now, within those general trends, there's going to be annual rise trends, or sudden changes within a particular year, such as we saw last year in Egypt where I think is in the first half of the year nearly five million tons tankers was imported. And then in West Africa there was the Ebola crisis which suddenly stopped imports into that region, and then the instability in Libya.

So, within the old role trends of incapacity, there's going to be some year by year changes which we can't predict. One thing we can be fairly certain about the climate change and regulatory action as a result of climate change, is going to have an impact on the cement industry. Co2 emissions have increased 3% over the last ten years, year on year, and regulators in various countries plus social awareness and anger out the changes causing governments to act. So, what we can say as an industry, they are going to be more environmental regulation and restrictions.

As, I said earlier on about the Chinese Government limit on the calls of the content. There is going to be an increased demand SCMs, that is mainly what we're taking about is blast, slag and fly ash. Better economics they're coal products by products so they are cheaper than clean care, but it also does that improves property a standard blend of a blending cement with slag or fly ash, it should be 25 to 30%.

Now, with slag it generally produces 3 to 4 MPA improves strength on 28 days on concrete, so they are actually some significant performance benefits, apart taking the cost out of it, performance benefits of using SCMs in concrete fly ash of 25% improves the pump-ability of the mix. So, rather than just use SCMs as they have been traditionally as a lower coast alternative to clean care they should be reviewed more and more as offering embedded performance in concrete. The CO2 emission effective by adding slag, or fly ash in the easiest way to reduce your seal to impact.

What it also do is as well retain your raw materials which is limestone and shell for future generation, so it's all a good story. From the other points of view with the power generation industry, or the steel industry, it reduces their recycling or dumping cost, so everything about FCM is a good news story.

At this point in time, we see a convergence of these needs, and we are ready to move to the next stage in SCM usage. Within this locality, I think it was the Dubai government in December the 12th last year, issued a new circular specifying the increase use of GGBFS on fly ash and concrete for so and super structure.

They cited the geo ability in green benefiting and a 50 year life. So, clearly this government here along with other governments around the world are recognizing the benefits and undertaking regulatory actions to increase the use of ACMs. This will only accelerate around in the world we see going forward.

Now, this is going to have a major strategic impact on the demand and supply of this materials. So, the time is now to think about your company's future usage of this materials. Next few slides look at the supply and origins of those supplementary cementatious materials I've just been talking about. So, all GBFS comes from blast furnace iron, and this slide here shows where all the blast furnaces are around the world.

38 countries in the world produce blast furnace iron, but ten produce 96% of it and one country, China, produces 60% of it. So, you can see how the production has evolved, where the country where that used to produce it over the last 35 years or so, you can see where it is now and this is the total of the worlds production around 1.2 billion tons of blast furnace iron. So, translating that into granulated blast furnace slug. So, here we've countries producing the blast furnace iron converted into blast furnace slug and not all the blast furnace slug is granulated and converted into granulated blast furnace slug. Part of it is left as [xx]. So, we're talking about stone age of 273 millions tons of availability in the world of granulated blast furnace slug. These are the same figure represented in pie-chart, so 1.2 billion metric tons of blast furnace iron 30% converted into blast furnace slug and 75% is granulated. Globally, there is capacity in steel, so there is a slow down in blast furnace iron production. Basically, we don't see any more being produce. All new capacities and [xx], and steels are like not cementitious. So, if you're looking today's world global capacity of 270 million, we don't see any significant increase in that if at all. Now, slags are slags there are varying qualities and different types of slags around the world.

If you look at slags coming out of typical slag out of Turkey, for example we have a 85% blast content compared to a 99% blast content coming out of Japan. Very ability which is the key issue to the cement industry, you get your raw materials consistent, and you make a consistent quality clean, current, consistent quality cement.

Slags that come out of India are quite variable. They'll have two, or three content, those vary so consistency in your reliability of your suppliers slag, is absolutely critical. Switching on to fly ash, a bit of a different story with fly ash, these pie charts here show Europe and the US and how much of fly ash is a cold combustion product how much is converted into bottom ash and fly ash. So, in Europe you are looking at about 74% and in the US that comes to about 61%. Bottom ash and fly ash are usually the coal combustion products that have ever used in cement and concrete industry.

This pie chart here, looks at that percentage and say how much is taken into Clinkers cement and concrete at 61%. Fly ash supply as opposed to usage, it's quite different to slug, we see there are more opportunities for fly ash to be produced. They are produced utilization globally is 54%, but in Japan 96% of fly ash produced is re-utilized in the industry.

But going forward there will be more coal fire power station built particularly in China and India, but even in Germany which is switched away from the nuclear power, new qualifying power stations are coming online this year and next year. So, there's going to be more and more availability of fly ash, but the question is where and what is the quality of that ash? Because ash unlike slag has more variability. So, in summary this is what the global cement demand is currently, about 4.4 Billion currently rising to one of the previous slides 6 Billion by 2025.

Current supplier of GBFS is 270 million tons, and the fly ash currently sits at 230 million although more fly ash will enter the market. So, that gives a total FCM availability of 500 million metric tons, compared to 4.4 billion current demand for cement, and so it's roughly 11%. Now, most standard mix designs are around 25% ash, or 30% slug.

So, someone's going to miss out, so that's why we believe it's a strategic issue going forward, if you want to use SCM's you need to be taking a strategic view as a supplier of a resource, not just a short term cost down opportunity. Sea borne trade saw lots of 270 million tones of GBFS produced only as of 2015 only 21 million tons of it is moved around the globe.

But even that, is nearly 10 times the amount of fly ash that is moved around the globe, nearly 2.5 million tons. So, GBFS is a much bigger global trade than that of fly ash. Why is that? It's more easily moved in bulk, it's safe and easy to handle in grabs, and you can use outdoor storage. More typically around the world, it's classified as a product or a by product.

The granulation process is consistent, so generally, usually you get a consistent product when you're making glass furnace like, or granulated glass furnace like. Fly ash on the other hand is typically supplied locally often in jumbo bags, and it is possible to ship it, and it is possible to go long distances.

It is a lot more challenging to handle whether it's in conditioned form that is about 15-17% moisture, or if it's dry. Sometimes you can take it in a bull cargo carrier, sometimes you can put it in a dirty catted pneumatic carrier, but it is more difficult to handle, and more typically in certain regulatory environment is classified as a waste.

Bottom point there, inconsistent manufacturing process is got the fly ash from the different zones of an ASP. You can collect in a bag filter and classify it, or in fact you can put it through a mill and grind it. So, there are a number of different manufacturing process for producing fine ground ash, so it's got more variability, and it does change when you change coal source.

So, a power station, a power generator will change coal sources from time to time, that does the affect the performance and the consistency, and the quality of your ash. Which more so than when you make using granulated blast-furnace slag. So, what we see it's a strategic business requiring a global perspective, and a global presence. And that's a nice segway[sp?] into this slide which shows a company which is strategic and as a global presence with results.

The red dots on this global map here show where we are ZAG personnel in different parts of the world, and the flags along the bottom of this slide here show the nationality of all the people with in our company. So, though a small company, we've got a global spread, and we're very, very multinational.

Now, this is another slide with the delivery mistake and I've got a colleague in India called Sanjay, and for those who're from India you'll notice the Indian flag is missing, so I apologize about that. That's the second delivery mistake in the presentation. Our business motto as I said at the start is to create dedicated and sustainable relationships with our customers, suppliers and service providers, and we want our suppliers, and we want our customers to succeed in business, and that's the only way we succeed.

So, it's a win win win. As I referred to earlier, we are all in business to make money, we want to make money, we want to be successful, but we want our business partners to be successful as well. That's a little bit about the culture of our company, but I do need to think strategically about your supplementary cementitious materials going forward. I will say that again, supplementary cementitious materials going forward. Thanks for very much your time.

I'd like to take any questions.

Cemtech Europe 2024

Cemtech ASIA 2024

Cemtech MEA 2024

Cemtech Europe 2023

Cemtech Asia 2023

Cemtech MEA 2023

Cemtech Webinar 2022

Cemtech MEA 2022

Cemtech Americas 2021

Cemtech Asia 2021

Cemtech Webinar 2021

Cemtech Webinar 2020

Cemtech MEA 2021

Cemtech Virtual 2020

Cemtech Europe 2019

Cemtech Asia 2019

Cemtech MEA 2019

Cemtech Europe 2018

Cemtech Asia 2018

Cemtech MEA 2018

Cemtech Europe 2017

Cemtech Asia 2017

Cemtech MEA 2017

Cemtech Europe 2016

Cemtech Asia 2016

Cemtech MEA 2016

Cemtech Americas 2015

Cemtech Europe 2015

Cemtech Asia 2015

Cemtech MEA 2015

Cemtech Europe 2014

Cemtech MEA 2014

Cemtech Europe 2013

Cemtech Asia 2013

Cemtech Jakarta 2012

Cemtech MEA 2013

Cemtech Geneva 2012

Cemtech MEA 2012

Cemtech Europe 2011

Cemtech Europe 2010

Cemtech Middle East 2010

Cemtech Europe 2009

Cemtech Dubai 2009

Cemtech Florida 2008

Cemtech London 2008

Cemtech Singapore 2008

Cemtech Dubai 2008

Cemtech Florida 2007

Cemtech Prague 2007

Cemtech Abu Dhabi 2007

cemtech florida 2006

Cemtech Rome 2006

Cemtech Barcelona 2005