Why the Mexican cement industry is optimistic for 2022
The Mexican cement industry has remained standing during the pandemic because cement is a national product, according to the president of the chamber of industry Canacem, Yanina Navarro.
This strong position should strengthen this year, as issues such as sustainability become more important.
BNamericas spoke with Navarro about the challenges facing the industry and sustainability, among other topics.
Numerical: Cement prices are at an all-time high. Will this situation continue or are reductions in sight?
Navarra: The chamber is considered an economic agent under competition law, so we do not deal with prices, nor request information, nor publish information.
Everything that has to do with the market itself is the subject of every company.
Numerical: So how will Canacem deal with rising energy prices, the global supply chain crisis and logistics, among other challenges?
Navarra: I can tell you that these costs constitute the price of an input, but I cannot say by how much, how or where.
Cement follows the same cycle as other products. So rising energy costs, well [it affects] us and the entire industry, it’s all about logistics. These are very transversal costs.
Numerical: What is the chamber’s growth outlook for this year?
Navarra: the [growth] trend which has been maintained in particular in the cement sector since 2018-19 with the same dynamic.
In 2020, we were declared an essential industry. This allowed cement production to continue in the [pandemic] year. This did not have an impact, as in other industrial sectors, because the factories were kept in operation.
Numerical: The pandemic has had no impact?
Navarra: No. When we all got home there was an increase in the sale of [cement] bags, so we reversed the situation. In recent years, the greatest consumption of cement was in bulk.
Cement is needed to make concrete, and there was much more demand for concrete in the market. At the time of confinement, everyone started to repair their house. With the [help] remittances, people were able to do that… [and] this arrangement greatly favored the sale of bags, which allowed [annual] production to show the same behavior as in 2019 and 2018.
Numerical: How will this year go?
Navarra: It will follow the same trend; this is the behavior of recent years. All the information we have is public and comes mainly from [statistics agency] Inegi, so you can see the production and what happened from 2016 to date and you will see that the trend is very similar for all the years.
For 2022, it is expected that this behavior will be maintained.
Numerical: What type of relationship does Canacem have with the infrastructure sector?
Navarra: The infrastructure sector is very large. It’s very basic and very spacious at the same time. The cement sector directly impacts 32 branches of the production industry and indirectly 66, thus cement, after water, is the most consumed product in the world… due to its resistance characteristics.
Everything else is like flour for a cake; cement goes hand in hand with infrastructure problems.
Numerical: What is the main reason for the crisis in the construction sector?
Navarra: Construction and housing have slowed. But in that downturn, what’s happened to us is that the sale of bagged cement has gone up, so that’s compensated.
The construction sector has slowed down, but it is expected that this year, being already more accustomed to the behavior of the pandemic and the opening of the market, on a global level, the production supply chains will be open. And little by little, it is gaining momentum despite the pandemic.
Numerical: Why has the cement industry been more stable during the pandemic, unlike the steel industry, for example?
Navarra: Steel is a commodity, so its price is subject to other conditions. The price of cement… is very national because transport [requires] very special conditions, because it is perishable.
You have to be careful with the cement; it cannot be wet, it cannot be moistened. That’s why it tends to be very local and it tends to be very national and the concrete is even trickier because it [is useful] for a few hours only.
Numerical: What challenges do you anticipate this year?
Navarra: Without a doubt, the economic recovery, and what we expect with the openings, the vaccines… everything that [enables market re-opening].
Another issue we have outstanding is the environment. We are a sector very committed to sustainability. We work on products, on innovation, on everything responsible for sustainability, on circular economy issues.
We are about to launch a roadmap for the entire sector and [aim] to know, for example, what can be done by 2030 in terms of emissions and the commitment that each company achieves this 2030 objective in accordance with international agreements [like] the Paris Agreement.
Numerical: Could you be more specific?
Navarra: Concrete is one of the best allies of sustainability. It has a very long life cycle, so you don’t have to keep changing, reconditioning or rebuilding. There is also a methodology with which it can capture CO2, greenhouse gases and they can be injected into concrete. This is proof that concrete is a durable element.
Concrete is one of the most visual examples in terms of a sustainability system, which is also global. We belong to the Global Cement and Concrete Association [GCCA]which [concentrates] all the cement and concrete companies leading these efforts, working on pillars so that the cement sector around the world can have this impact on the environment.
Numerical: Is this CO2 capture technology already applied in Mexico?
Navarra: It is already applied. An example is co-processing, [which enables] find alternative elements that are not fossil fuels and can provide energy in the oven. A co-processing process is to use tires from landfills. So instead of burning these very polluting fires with methane gas, you can take the tires, shred them and use them as energy in the furnace. They do not burn, it is not incineration because the heat is so high that they are converted into pure energy.
And as for the products, you can find several that are already on the market with characteristics that, due to their production, generate a lower environmental impact.
Numerical: What are your other goals?
Navarra: The idea is to work on projects that can define legislative issues, ie propose certain works and initiatives.
For example, the environment and the distribution of garbage [dumps] are very particular, so we also need to approach states and municipalities. Garbage collection is up to the municipality, so we have to approach them to take this route, which this year will be very focused on the environment and generate these types of synergies so that… the industry here in Mexico can be reactivated .
Numerical: What kind of legislation is needed?
Navarra: It’s not that it’s missing, but maybe it needs some tweaking. For example, this life cycle of materials is something that must be completed by a work law… [which allows project analysis in terms of possible] tender conditions if something is built with a longer life cycle, because [it doesn’t require] repairs, and it allows you to use a budget for other work.
We also have the complement for the circular economy law which has already left the senate and is in the lower house and this loop can be closed in order to obtain better circulation.
This law really allows you to recycle. [It enables] everything that the circular economy represents, resulting in better waste recovery, better integration into the industrial sector and [a higher] percentage of alternative energy use.
Currently we have a limit on the use of alternative fuel, so we will be looking to increase this limit.
Numerical: Sustainability is the main focus?
Navarra: This year yes. Now everything [revolves around the] sustainability issue, which we believe is one of the most relevant we are working on.