AdBri makes positive revenue and environmental progress in 2021

 AdBri makes positive revenue and environmental progress in 2021
04 March 2022

This week AdBri announced earnings of AUD1569.2m (US$1135m) in 2021 and might have performed even better had it not been for variable demand, due to temporary Australian government COVID-19- related lockdowns. Bringing capex projects online and accelerating its decarbonisation programme will now be major goals for the group in 2022.

AdBri has been transforming its operations to be more resilient during the COVID-19 period. Cement sales performed better in 2021 than in 2020, rising by 12 per cent. The group has the advantage of local production compared to imports that face global supply chain issues. In July 2021 Senex Energy signed a fixed-price agreement to supply natural gas to the group's South Australian cement operation. This removed pricing volatility for a tranche of AdBri's natural gas requirements through to 2029.

Last year the Birkenhead plant also commenced a transformational operational efficiency programme. In addition, the once-in-50‑years upgrade to Kiln Line No 4 was undertaken as part of the extended maintenance closure in January 2021. Long-term benefits include increasing clinker and cement production volumes, improving plant reliability and energy efficiency, reducing shipping, and improving the consistency of materials.

"We improved operational efficiency and cost per tonne at Birkenhead by increasing the alternative fuel substitution rate from about 28 per cent in 2020 to about 35 per cent in 2021. We are targeting up to 40 per cent as we increase throughput to 25tph in 2022, in line with our current regulatory approvals," added AdBri.

Group thermal efficiency fell to 4.0GJ/t clinker in FY21 from 4.3GJ/t clinker in FY20, while electrical intensity for the group was reduced to 108kWh/t cement in FY21 against 114kWh/t in FY20.

Domestic market
The domestic market is witnessing a rise in cement demand for construction projects. "Buoyant residential construction will underpin a strong order book until at least the middle of 2022, while multi-residential activity is also beginning to increase," states AdBri MD and CEO, Nick Miller. "Heightened activity in the commercial industrial segment, and our increasing exposure to the pipeline of infrastructure projects will support demand for construction materials, notwithstanding project delays caused by COVID related isolation measures, labour and supply chain challenges." 

Capex projects and Kwinanan upgrade
AdBri will be especially buoyed by the ongoing construction of the Kwinana upgrade project as it plans for future expansion. The Kwinana project will consolidate two existing cement production sites into a single operation serving the western Australia market and increase production capacity to 1.5Mta from 1.1Mta.

In addition, a feasibility study will commence for a new kiln at Kalgoorlie. The study is anticipated to take 12-18 months.

"Excluding business acquisitions, 2022 capex investment in the order of AUD250-AUD300m, including AUD150m for the Kwinana upgrade project, is currently on track to meet mid-2023 schedule," reports AdBri.

Decarbonisation targets
AdBri has achieved successful supplementary cementitious material (SCM) trials that enabled it to file its first patent application in 2021. The company will continue investigating lower-carbon products and work to increase its market penetration in this area. The group has targeted SCMs as a proportion of cementitious materials in final cementitious product to reach 24 per cent by 2024, but it decreased to 20 per cent in 2021 from 21 per cent in 2020. An agreement to receive cementitious materials from OZ Minerals Carrapateena mine was reached in February 2022.

While AdBri continues to increase its use of alternative fuels and has secured a long-term gas supply agreement, it will be more competitive against high-embodied carbon cement imports. The group has a five-year target (to 2024) to achieve 50 per cent kiln fuel to be sourced from alternative fuels in South Australia and achieved 25 per cent in 2020. It also targets a seven per cent decline in greenhouse gas emissions by 2024 and managed to cut emissions by two per cent in 2021 from 2020 levels.

Mr Miller said: “We are progressing the roadmap for our aspiration to achieve net-zero greenhouse gas emissions by 2050. An important element in achieving near term emissions reduction will be increasing the use of alternative fuels, including refuse-derived fuel (RDF) to substitute for gas at our Birkenhead facility in South Australia. In 2021, the group achieved two per cent reduction in emissions compared to 2020.” 

The mood across the group’s divisional operations for 2022 is increasingly positive. Residential projects are expected to drive the recovery. This is also helping sales for the group’s joint ventures, such as Sunstate Cement Ltd, which saw cement volumes increase by 36 per cent in 2021. Independent Cement and Lime Pty Ltd also saw earnings rise 13 per cent in 2021.

While the group still has to make headway in its SCM products, it is making fast progress in its alternative fuel commitments, as well as its thermal efficiency and electrical intensity, and is successfully reducing its fossil fuel usage and lowering its greenhouse gas emissions.

Published under Cement News