Swiss multinational cement maker Holcim plans to increase its use of alternative fuels to combat rising energy costs.
Holcim reported that its energy costs rose by 24pc in 2021. The company's total cost of energy was 1.5bn Swiss francs ($1.6bn), 55pc of which came from coal and petroleum coke. This energy cost inflation was even more significant in the fourth quarter, with a 38pc increase that represented about SFr230mn.
In response to this increase, the company is accelerating investments to allow it to use more alternative fuels, such as biomass and waste products, as well as renewable energy like wind and solar.
"At the moment, we see alternative fuel as highly attractive and we are investing a lot" to boost consumption, Holcim's chief executive Jan Jenisch said.
While it was previously challenging to achieve a high return on investment for renewable energy projects, "with the current energy prices, this has totally changed," Jenisch said.
Petroleum coke prices reached record highs last year on reduced supply from refineries and strong demand from the cement sector. Some coal prices, such as Argus' daily cif Amsterdam-Rotterdam-Antwerp index, also hit record highs last year.
The high cost for traditional fuels has made alternative fuels especially cost effective in Europe. Alternative fuels' competitiveness is more muted in India and North America, where there is lower availability of these fuels.
There is also stronger demand in Europe for carbon neutral products. Holcim rolled out its green cement product, ECOPact, in 2021 and sold 1mn m3 of the product last year. The company also ramped up its circular construction efforts, recycling 54mn t of waste and using it as alternative fuel or as raw material.
Holcim expects that prices for fossil fuels will continue to increase this year. But the company believes that it has made the necessary adjustments with both pricing increases and cost mitigation.
"Our net sales were up by more than 11pc on a like-for-like basis, driven by both volume and price rises. Also boosted by a strong pricing and cost control," Jenisch said.
Holcim's cement volumes grew in all of its regions, with an overall increase of 5pc on the year on a like-for-like basis. This was particularly driven by India, which was bouncing back from the severe lockdowns of 2020, and strong demand from Latin America.
Holcim is significantly growing its cement production in India, with two new plants about to be completed there. The company forecasts that demand for cement products will double in India over the next 12 years.
Holcim acquired two companies in the North American market, Firestone Building Products and Malarkey Roofing, and with that grew its business by $3bn in revenue. This move grew the solutions and products segment to the largest share of the company's North American market, surpassing cement. The segment now makes up 42pc of North American sales, up from 10pc in 2020. Cement now makes up 34pc of sales in North America down from the 53pc share it held in 2020. This reduction in cement as a proportion of its business helped to mitigate increases in energy costs.
Holcim is optimistic about North America with demand rising steadily. "The US market is the single most attractive market for building materials," Jenisch said.
