On 28
April IM published the below article but
with incorrect information which suggested that Imerys supplies
calcium carbonate through its Filtration and Performance
Additives business, rather than through its Energy Solutions
and Specialities business. We at IM pride
ourselves on being factually correct at all times, but on this
occasion we fell short. We apologise for the error and any
inconvenience it may have caused. Please find a correct version
of the article below.
Calcium carbonate is a naturally occurring rock which accounts
for around 4% of the Earth’s crust, and can be found in
several forms depending on the rock forming process, which
supplies the rock with various properties useful in different
filler applications. Depending on whether a filler is derived
from chalk, limestone, or marble determines what industrial use
it will have, for example in plastics, rubber, paper, or
construction.
Limestone and chalk are formed in
the first stage of the calcium carbonate sedimentation
process.
Chalk is classed as a poorly
compacted sedimentary calcium carbonate rock with incomplete
diagenesis, meaning the conversion of sediment to a sedimentary
rock. Limestone is the result of a completed sedimentation
process, and marble is the result of recrystallised limestone
under high pressure and temperature.
Dolomitisation, the formation of
calcium magnesium carbonate from calcium carbonate rock, may
also occur if the process takes place in magnesium-containing
water, as calcium ions are replaced by magnesium ions, leading
to the formation of dolomite.
The main use of calcium carbonate
is in the construction industry, either as a building material
or limestone aggregate for road building, as an ingredient of
cement or as the starting material for the preparation of
builder’s lime.
The various forms of calcium
carbonate, depending on purity, whiteness and particle size
distribution, lend themselves to a variety of applications in
the construction industry as a raw material used in concrete,
asphalt, roofing, tiles and bricks.
Construction applications
Calcium carbonate is used as a high
quality filler in the concrete market for paving stones, tubes
and sewage tanks, as well as in ready-mixed and pre-cast
concrete. In cement, the mineral speeds up the hydration of the
cement matrix and increases durability of the product through
better permeability, while calcium carbonate’s light
colour makes it ideal for applications in architecture.
In concrete roofing tiles, which
must conform to standards such as water permeability,
freeze-thaw performance and strength, calcium carbonate
increases the density of the concrete matrix, while iron oxide
pigments are added for colour.
The growth of the clay tile and
brick market has also led to growth in calcium carbonate’s
use as a filler for its chemical properties and as a pigment.
Advantages of adding calcium carbonate to clay mixtures include
lightening the colour of the natural clay, decreasing
shrinkages, and decreasing air contamination during the clay
burn process.
The mineral also finds applications
in asphalt, manufactured from a blend of bitmen, calcium
carbonate filler, gravel and sand. Calcium carbonate improves
the workability of the mixture as well as its mechanical
resistance by acting as a sand modifier.
Increasing production
costs
Leading producer, Mineral
Technologies Inc. (MTI), supplies both precipitated calcium
carbonate (PCC) and ground calcium carbonate (GCC).
Approximately 60% of the company’s GCC output is sold into
the construction industry, which the company said is a major
driver of limestone demand.
“Regional dynamics due to
product usage and acceptance, as well as customer plant
expansions or closures, can have significant impact on
demand,” the company told IM.
“Certain segments also face
offshore competitive issues. In addition, customers are always
challenging producers to improve their competitiveness by
improving product performance or lowering their total
formulation costs,” it added.
In terms of specific applications
for GCC, MTI told IM it is always looking for
adjacencies in its markets and new demand drivers. In the
Middle East for example, the construction industries in hot
climates have found the reflective nature of GCC can help to
reduce heating and cooling costs. The company adds that the
unique particle size distribution in GCC production can also
help to lower the cost of manufacturing without giving up
strength properties.
In paint and coatings, the company
said its GCC titanium dioxide (TiO2) extenders also
help to lower manufacturing costs without compromising optical
and toughness characteristics.
However, though demand for calcium
carbonate in construction remains stable, with MTI predicting a
5% to 10% increase of the mineral in construction if economic
growth does not retreat, a key issue affecting the industry is
the cost of production.
“Prices are regionally
affected primarily by competitive market dynamics. In all
cases, the overall costs involved in mining, manufacturing,
regulatory compliance, energy, and business related expenses
are all key drivers,” MTI told IM.
“We also see the cost of
transportation, lack of infrastructure investment, and in some
regions lack of trucks as key future issues facing our
industry,” the company added.
The increasing costs of production
have led to the majority of major producers, Imerys and Huber
for example, to hike prices by between 3-10% in the last six
months, with further price increases potentially
anticipated.
Other key concerns for the industry
are, according to MTI, increased regulation in terms of GCC
manufacturing, energy costs, the pressure of urban sprawl and
sustainable transportation infrastructure.
North American construction growth
Calcium carbonate producer Imerys
raised prices for the mineral in December 2013. The company
said that: “The price increase supports continual
investments and increasing costs in environmental compliance,
manufacturing, quality systems, maintenance and new product
development.”
Imerys also imposed surcharges in
addition to the price increases for unique packaging
configurations, which the company explained were necessary to
minimise increased packaging and shipping costs it has been
experiencing.
Imerys’ Energy Solutions and
Specialities business group supplies to the agricultural and
food industries as well as in plastics, paint, rubber and,
driven by demand for new buildings and renovation materials, in
the construction industry.
The company supplies calcium
carbonate to a variety of markets and has reported that over
the course of 2013 carbonates activity saw significant growth
thanks to a resilient consumer goods sector and an upturn in
the construction industry in North America. Activity in
carbonates also benefited from an increase in markets and
geographical developments.
Imerys added that 2013 was marked
by the gradual stabilisation of the economic environment in
Europe, which has led to a greater stability in the
construction industry.
“Activity levels in the second
half of 2013 were on the whole, comparable with the same period
of 2012. The construction and industrial equipment industries
are still however at a low level,” Imerys said.
“In North America, strong
demand was particularly perceptible in the construction and
consumer durables sectors. The growth rate was more moderate in
emerging countries,” the company added.
Though the business group benefited
from the upturn in construction and the very firm automotive
sector in North America, activity remained low in Europe, and
Imerys additionally saw a domestic drop in the new housing
market.
“The sustained decline in
sales of new individual housing over the last 12 months
continues to be reflected by a drop of 5.7% in construction of
new single family housing (approximately 156,700 units begun in
2013 according to the French Ministry of the Ecology,
Sustainable development and Energy),” the company
said.
European construction
stabilises
According to Adrian Malleson, RIBA
Enterprises Head of Research, Analysis and Forecasting, the
European Economic Area has been in a state of crisis,
uncertainty and contraction since the start of the recession in
2007.
However, at the end of 2007, the
region experienced a greater degree of stability, supporting
optimism for growth in the construction industry from 2014
onwards.
In his construction industry
outlook for the coming years, Malleson predicts growth in
Europe, with potentially higher levels of growth in the UK.
“The UK is the third largest
construction market in Europe (after Germany and France), but
it accounts for only 13% of European construction output,”
Malleson said. “A pick-up in the UK doesn’t always
mean increased demand for construction products across
Europe.”
Although construction output in
Europe is predicted to expand between 2014 and 2016, growth is
not expected to be equal across the continent due to the
political and economic complexity of the construction
sector.
Malleson divides the region into
four areas, each with a different outlook in construction over
the next few years.
Steady growth is expected in
Western Europe, which includes the UK, Netherlands, Switzerland
and Austria, with the largest economy, Germany, expected to
have an average growth in the construction industry of 1.2%.
Malleson predicts France will have the slowest growth in
Western Europe, while Ireland, which experienced the largest
decline following the crisis in 2007, is anticipated to see
large growth.
Underlying growth is expected to
continue in the Scandinavian countries; Norway, Denmark, Sweden
and Finland.
Significant growth is expected in
Central and Eastern Europe, with Poland accounting for 60% of
construction output in the region. Though the country
experienced a small dip between 2012 and 2013, growth is
expected to resume over the next year, while the other counties
in the region are returning to either stability or
growth.
Underlying European issues
However southern European
countries, which, Malleson said, will have lost a large amount
of construction output between 2007 and 2015, are still
struggling. This includes Spain, which lost 80% of its annual
construction output, as well as Portugal and Italy, which lost
a quarter of its output.
“The next few years look set
to be more about stabilisation, a halting of the rapid decline,
rather than a return to growth. But after the past five years,
this is to be welcome,” Malleson added.
According to figures from the
construction forecast group, Euroconstruct, 2013 marked the
lowest point of development in terms of construction volumes.
The European research group, which consists of 19 European
countries (EC19), also predicts that construction output will
begin to increase, although growth is expected at a slow pace
from 2014.
“If we compare the volume of
construction output in 2007 with the forecast volume at the end
of 2013, we can see a decline by more than 26% (in constant
prices). The forecast for further development for 2014
estimates growth by +1.4%, by +2.2% in 2015, and by +2.3% in
2016,” Euroconstruct said.
As construction output in
inextricably tied to the state of the economy, the standstill
in GDP growth after 2007 and 2011 was reflected in a rapid
decline in construction output across all three sectors;
residential, non-residential and civil engineering.
“The total volume of
construction in Euroconstruct countries decreased from 2007 to
the present year by 22% (Û360bn). In the group of Western
European countries (EC15), this drop in production is very
significant, the current value (Û1,214bn) comparable with
the level in the middle of the 1990s,” Euroconstruct
said.
It added that 60% of the decline is
attributed to Spain, while Central and Eastern European
countries (EC4) have been more successful in staving off a
decline. According to Euroconstruct, the construction value of
EC4, which includes the Czech Republic, Hungry, Poland, and the
Slovak Republic, was at Û70bn at the end of 2013,
comparable with the 2006-2007 period when the region was still
undergoing rapid growth.
However, the research group has an
optimistic outlook for construction growth in Europe, noting
that the period of turbulence accompanying European residential
construction since 2007 came to an end at the end of 2013.
Both residential and
non-residential construction in EC19 countries is expected to
see a resurgence, set to continue on into 2016, with up to 2.3%
growth expected. Civil engineering construction on the other
hand is predicted a smaller rate of growth at between 1.2%-1.7%
from 2014 to 2016.
Figures from Euroconstruct indicate
that civil engineering construction projects in the majority of
EC19 countries were delayed, downsized or completely cancelled
due to lack of funds. Though GDP is expected to gradually
increase, debt and budget deficit problems are still likely to
hinder significant investments.
Despite positive growth forecasts
for Europe, Malleson concludes with a cautionary note that both
Europe and the UK are facing issues that are unlikely to be
resolved in the next few years. Should the economy fail due to
factors such as the decreasing share of Europe’s global
GDP, the increasing total of European debt, poor productivity
in some countries or high banking insolvency risk, the
construction sector will inevitably be heavily impacted.
“But it’s fair to say
that European economies are more stable now than they have been
since the recession started. We have no compelling reason to
expect the worst,” he added.
Opportunities in China and
India
According to AECOM’s 2013 Asia
construction outlook, the region is predicted to be the fastest
growing market between 2013 and 2020. The Asian construction
market has maintained growth while Western economies have
slowed, accounting for around 40% of global construction
spending in 2012 and resulting in the largest regional
construction market worldwide.
As Asian countries become
increasingly dependent on domestic demand, driven by increasing
affluence and urbanisation, AECOM expects the construction
industry to shift from non-residential structures to
infrastructure and eventually towards residential projects.
China, which accounts for 41% of
the Asia Pacific total construction spend, is expected to lead
growth based on its size and growth potential with increases in
construction spending followed by India, Indonesia and
Vietnam.
AECOM’s report draws attention
to the opportunities in the construction market presented by
India, stating that, “despite having a population
comparable in size to that of China, its construction sector is
only about one third the size of the Chinese market.”
However the report adds that growth will depend on India’s
ability to attract private finance.
“Overall (É)
Asia’s construction market offers excellent prospects for
growth and profitability over the short-, medium- and
long-term,” AECOM said.
Future growth in the region is
expected at a higher rate than other major regional markets,
with AECOM predicting above average construction spending
growth in Bangladesh, China, India, and Japan out to 2018
(see figure 4).
Growth is expected to be led by China and India longer-term,
although at slightly slower rates than current increases.
However growth in the Japanese construction market is expected
to be short lived as currently growth in construction spending
is being driven by efforts following the Japanese tsunami and
earthquake in 2011.
Fox Marble
UK-listed Fox Marble, a natural stone building materials
company, has eight marble quarries under license with four
quarries open in Kosovo and in commercial production.
With production up and running, Fox
is now focusing on distribution and marketing of its products.
Marble from these locations is now being sold, with six types
of marble being commercially extracted and sold to the US, UK,
Greece and Asia through distributors to the UK and North
America, Fox’s sales office in Italy and newly established
distributors in China and Dubai.
The marble extracted by Fox occurs
very close to the surface so there is not much of an overburden
before it is then sent for processing. Large blocks of marble
are extracted, cut into slabs and pushed through the polishing
line. The company takes care to cut specifically at this point
to get the best visual effect for use in building.
“The target is to build a
processing plant in Kosovo which the company is doing, as
marble is currently sent to Italy for processing where
it’s cut and polished,” Chris Gilbert, Fox’s
CEO, told IM. “The marble that we produce
competes with other premium marble from Italy and
Spain.”
Gilbert explained that man-made
stone, used in kitchen tops for example, is a market that Fox
directly competes with other suppliers in. However, Gilbert
told IM that the company has the upperhand
wherever there is demand for natural stone, this is in retail,
bathrooms and living spaces, which is viewed as being of a
higher quality to man-made stone.
“You can’t replicate
natural onyx Ñ which is honey yellow produced from one
of the quarries Ñ and onyx is expensive,” Gilbert
said.
The grey marble sold by Fox,
composed of dolomite and limestone, is priced lower than some
of the other types produced by the company and is easy to sell
thanks to demand for the product.
Fox has had its marble products
tested by Pisani, an international authority on the use of
stone in the construction industry, with geophysical tests
demonstrating that the product had features found in the top
quarter of all desirable qualities; heat resistance being one
of these qualities.
“The marble produced at the
quarry in Kosovo is ideal for the market because of its heat
resistant properties. Fox however faces direct competition from
the ceramic market, though marble is more-high end,”
Gilbert told IM.
“The company is now pitching
for its big signature project,” Gilbert added.
“The project in Kosovo has not
been without its challenges. In November 2012 the
company’s licences were held to contention - this was well
documented - but the situation was very quickly
rectified,” Gilbert said. At the end of 2012, Fox was told
the licences for four of its five quarries in Kosovo had been
revoked for legal reasons. The company was resolute that the
licences were legal and, at the start of 2013, had all four
licences restored subject to compliance.
As a large employer, and the first
British company to invest in Kosovo, Fox has strong local
support from those it provides jobs for and the government
hoping for investment in the region.
Once the processing plant is up and
running, Fox will be targeting the local market in H2 2014. The
company also plans to announce more distribution channels over
the next year as so far there has been an absence of markets in
China, the Middle East and India. This presents the Fox with
exciting market opportunities as the construction sectors in
these regions continue to grow at a steady rate.
“China has a lot of local
marble, however, it buys 60% of the global market from Turkey,
Greece and Italy,” Gilbert said.
Fox believes it is a natural
supplier to the Chinese market where urbanisation continues to
drive demand.
“Cities in China are expanding
and demand there is increasing; once one city buys a certain
type of marble, it is often taken up by others,” Gilbert
told IM.
“Not all marble is created
equally,” he added. “There is marble that has unique
properties, and there is only one quarry currently producing
white sivec for Chinese customers.”
Gilbert expects demand for marble
to continue, as between 2009 and 2010 world production
increased from 105m to 111m tonnes, and growth has been at a
similar rate since then.
“The marble industry is a fragmented industry though
there is plenty of opportunity for a new type of company,
particularly one that is publically listed which can access the
corporate market. Fox is also the first publically licenced
company in Kosovo,” he said.