Nurhan Gürel
CemenTürk Editor-in-Chief
Introduction
The cement sector, as a backbone of modern development, plays a crucial role in meeting the infrastructure needs of economies. This industry stands out not only for its scale and economic impact but also for its influence on achieving environmental sustainability goals. High carbon emissions and energy-intensive production processes have placed the sector at the forefront of global environmental agendas. Türkiye, as Europe’s largest producer and one of the world’s leading exporters in the cement sector, is a key player in this transformation. With geographic advantages, strong production capacity, and innovative approaches, Türkiye has achieved significant economic and environmental successes in the industry. This article examines economic trends in the cement sector from both a global and Turkish perspective.
1. Overview of the Production Based the Global Cement Sector
Global cement demand has undergone significant changes over the past decade, influenced by economic growth, urbanization, and increasing infrastructure projects. Cement, a cornerstone of the construction and infrastructure sectors, is critically important worldwide. Data from 2012 to 2023 clearly illustrates the scale and impacts of these changes.
Figure 1. Changes in Global and Türkiye Cement Production
Between 2012 and 2014, global cement demand showed consistent growth, reaching 4.06 billion tons in 2014. This growth was primarily driven by increasing construction projects and infrastructure investments, particularly in Asia and Africa. Between 2015 and 2020, cement demand remained stable at around 4.10 billion tons. Global economic slowdowns, the impact of the pandemic, and other external factors limited growth during this period. Despite these challenges, demand maintained an overall steady trend. By 2021, cement demand entered a renewed growth trajectory. In 2023, demand surged to 4.60 billion tons, reflecting significant recovery. The main drivers of this growth were large-scale infrastructure projects and rapid urbanization in Asia and Africa.
China, the world’s largest cement consumer, continues to maintain its leadership position in the sector. Although demand peaked at 2.47 billion tons in 2014, it declined to 2.38 billion tons by 2020 due to carbon reduction targets and economic factors. Nevertheless, China still accounts for a significant portion of global cement demand. India has shown consistent growth in cement demand, driven by economic expansion and infrastructure projects. By 2030, India’s demand is expected to increase by 42%, further boosting its share of global demand. Sub-Saharan Africa is the fastest-growing region in terms of cement demand, driven by rapid urbanization and increasing infrastructure investments. Demand in the region is projected to grow by 77% by 2030, necessitating increased investments in cement production facilities and logistics infrastructure.
Türkiye’s cement sector is closely linked to the construction and infrastructure industries and is regarded as a significant indicator of the country’s economy. Over the past decade, cement production has undergone substantial changes due to economic fluctuations, developments in the construction sector, and external demand. Between 2010 and 2017, Türkiye’s cement production showed consistent growth, peaking at 80 million tons in 2017. The main drivers of this growth included expansion in the construction sector, the realization of major infrastructure projects, and urban transformation activities.The years 2018 and 2019 were challenging for Türkiye’s cement sector. Economic stagnation and a slowdown in the construction sector significantly affected production, which declined to 57 million tons in 2019. Reduced housing demand and economic uncertainties during this period led to a contraction in the sector. A recovery process that began in 2020 gained momentum in 2021. Despite the challenges posed by the pandemic, the continuation of infrastructure projects and a resurgence in construction activities brought production to 82 million tons, the highest level in a decade. Over the past two years, Türkiye’s cement production has stabilized at levels between 74-79 million tons. Both domestic market demand and export activities have played a role in maintaining this stability.
The global cement market has demonstrated significant growth over the years. The industry, valued at approximately $355.6 billion in 2016, reached $405.99 billion by 2023. Current projections indicate that this growth trajectory will continue, with the market expected to reach approximately $592.38 billion by 2032. Several key factors have contributed to the growth of the global cement market. Rapid urbanization, increasing infrastructure projects, and rising housing demand in developing countries are among the primary drivers. Economic growth in countries like India and China has led to a consistent rise in cement demand. For instance, India’s real estate sector is projected to reach around $853 billion by 2028, directly supporting cement demand. This growth is further fueled by increasing construction and infrastructure otoinvestments, demand for sustainable production technologies, and digitalization. Additionally, developing regions such as Asia and Africa play a critical role in driving demand growth.
Figure 2. Annual Changes in a) Global Cement Demand – b) Türkiye’s Export Value
Türkiye has become a significant player in global cement markets. Over the past decade, export activities have shown a marked increase, driven by economic growth, infrastructure projects, and international demand. The export values of Türkiye’s cement sector between 2013 and 2023 are illustrated in Figure 2b. From 2013 to 2019, Türkiye’s cement export value increased by an average of 50 million USD annually. This growth was primarily supported by the expansion of infrastructure projects and export markets, strengthening Türkiye’s presence in global markets. The years 2020 and 2021 marked a turning point for Türkiye’s cement exports. Despite the impact of the pandemic on the global construction sector, cement export values reached 1 billion USD in 2020 and 1.2 billion USD in 2021. Increasing international demand was a key factor driving this growth. In 2022, Türkiye’s cement export value peaked at 1.76 billion USD, making it the world’s largest cement exporter during this period. The United States, Israel, and Syria emerged as the primary markets for Turkish cement exports. In 2023, however, adjustments in global market conditions and local dynamics led to a decline in export value to 1.37 billion USD. This underscores the need for the sector to adapt to evolving global demand and market requirements.
2. Evaluation of Investment Expenditures (CapEx)
Between 2017 and 2020, global investment expenditures (CapEx) in the cement industry, excluding China, experienced a significant decline. Investment expenditures, which were approximately $8.6 billion in 2017, fell to $5.1 billion by 2020, marking a 41% decrease. This decline was influenced by factors such as market saturation in developed regions, economic slowdowns in developing markets, and global uncertainties.
In 2021, signs of recovery in investment expenditures were observed, supported by increased spending on infrastructure projects. Large-scale infrastructure developments, particularly in regions such as Asia and Africa, served as key drivers of this recovery. Sustainability-focused investments gained prominence in 2022 and 2023, driven by demand for carbonreduction technologies and energy efficiency projects. Technological advancements, including digitalization and automation, are expected to play a significant role in investment expenditures beginning in 2024 and continuing through 2025, with a projected 47% increase in CapEx during this period.
Figure 3 illustrates the year-over-year changes in CapEx for the global cement industry, excluding China, from 2017 to 2020.
These figures indicate that the global cement sector is being reshaped by shifts in investment expenditures alongside infrastructure projects and sustainability goals. The industry is projected to enhance its growth potential by focusing on technological innovation and environmental compliance.
Figure 3. Changes in Investment Expenditures Between 2017-2020
The COVID-19 pandemic significantly affected the global cement industry, leading to a decline in demand and economic uncertainties that reduced CapEx. However, as economies began to recover, the sector witnessed a resurgence. The increase in mergers and acquisitions (M&A) activities highlighted consolidation and expansion strategies within the industry. Demonstrating extraordinary resilience against the pandemic’s impacts, the global cement industry is reshaping itself through strategic investments, sustainability goals, and growth initiatives. Figure 4 presents the thematic distribution of investment expenditures in the sector.
Figure 4. Thematic Distribution of Investment Costs
Plant Expansion and Modernization
A substantial portion of investment expenditures in the cement industry is directed toward constructing new facilities and modernizing existing plants to meet increasing demand and enhance production efficiency. These investments are particularly critical in rapidly urbanizing and infrastructure-driven regions like Asia and Africa. By integrating next-generation technologies, these investments also enable energy savings and optimize production processes.
Huaxin Cement’s acquisition of Lafarge Africa is a significant indicator of the increasing cement demand driven by rapid urbanization and infrastructure projects in Africa.
In 2021, the $1.2 trillion infrastructure bill passed by the U.S. government led to a substantial increase in construction projects. This legislative support boosted demand for cement and related materials while accelerating companies’ efforts to expand capacity and invest in advanced technologies.
In May 2024, JSW Cement (India) announced a $360 million investment plan to establish new facilities. This investment marks a rebound in spending following a slowdown during periods of economic stagnation and highlights India’s commitment to addressing infrastructure gaps and supporting urbanization.
The Rise of Sustainability Initiatives
The global cement industry is increasingly investing in sustainable production practices to reduce its carbon footprint and comply with environmental regulations. Annual capital expenditures (CapEx) on sustainability initiatives highlight key trends and investments that demonstrate the industry’s commitment:
Achieving net-zero emissions by 2050 will require significant investments in the cement sector. Estimates suggest that approximately $750-900 billion in CapEx will be needed globally to implement sustainable technologies and practices.
In 2023, Holcim, one of the leading producers in the cement sector, invested 402 million Swiss francs (approximately $474 million) in green projects, focusing on low-carbon products and carbon capture initiatives.
In 2024, Melbourne-based KC8 Capture Technologies secured a $10 million investment from industry players such as Woodside Energy and Cemex to advance carbon capture and storage solutions for the cement industry.
Strategic Investments in Research and Development and Digital Technologies
The global cement industry is increasing its investments in research and development (R&D) and digital transformation to enhance efficiency, reduce environmental impacts, and maintain competitiveness. While detailed annual capital expenditure (CapEx) data is limited, some key financial investments and initiatives in the sector are outlined below:
R&D Investments
Taiheiyo Cement: In the 2022 fiscal year, Japan-based Taiheiyo Cement Corporation increased its R&D expenditures to approximately 1.4 billion Japanese yen, up from around 1.25 billion yen in the previous year.
China Railway Construction Corporation (CRCC): In 2023, CRCC invested 26.7 billion Chinese yuan (approximately $3.7 billion) in R&D, representing a 6.9% increase compared to 2022.
Digital Transformation Investments
CEMEX: As part of its “Working Smarter” digital transformation initiative, CEMEX has been investing in digital technologies, operational models, and innovations from leading service providers to reshape its business management services.
Holcim: Through its “Plants of Tomorrow” program, launched in 2019, Holcim aims to digitize cement production processes by investing in automation technologies, artificial intelligence, and digital twin technologies.
General Investment Trends
Increase in R&D Expenditures: Globally, major industrial companies increased their R&D spending by 17.5% in the third quarter of 2021 compared to the previous year.
Growth in Digital Transformation Investments: Global spending on digital transformation is expected to reach $2.8 trillion by 2025.
These investments reflect the global cement industry’s commitment to achieving sustainability goals and improving operational efficiency. However, increasing R&D and digital transformation spending is crucial for companies in the sector to gain a competitive edge and ensure sustainable growth.
Mergers and Acquisitions
During this period, the cement industry has witnessed significant mergers and acquisitions (M&A) activities aimed at regional expansion and market consolidation.
In December 2024, Swiss-based cement giant Holcim announced plans to sell its 84% stake in Lafarge Africa to China’s Huaxin Cement for $1 billion. This sale is seen as part of Holcim’s strategy to streamline its operations and focus on regions with high growth potential. The transaction is expected to be finalized in 2025 following regulatory approvals.
In November 2024, Heidelberg Materials acquired U.S.-based Giant Cement Holding for $600 million, strengthening its presence in the Southeastern and New England regions of the United States. This acquisition is anticipated to be completed in the first quarter of 2025.
At the end of 2024, Quikrete, the largest cement producer in the United States, proposed an $11.5 billion acquisition of Summit Materials Inc. This consolidation is tied to expectations of a construction boom driven by low financing costs and increasing infrastructure expenditures.
Investments in the Turkish Cement Sector
In recent years, Türkiye’s cement sector has made significant investments focusing on increasing production capacity, modernization, sustainability, and digitalization. The main investment areas for the Turkish cement industry are as follows:
1. Production Capacity and Modernization Investments
2. Energy Efficiency and Sustainability Investments
3. Digitalization and Automation
4. Research and Development (R&D) Investments
5. Logistics and Distribution Investments
Key Investments and Sustainability Projects of Leading Players:
Sustainability and Carbon Reduction
OYAK Cement is leading the industry by establishing the world’s first cement plants with integrated calcined clay technology. Calcined clay, which has up to 90% lower carbon footprint compared to Portland clinker, plays a critical role in helping OYAK Cement achieve its low-carbon production goals. This innovation has positioned OYAK Cement as the first cement company in Türkiye to commit to a “Net-Zero” target. By utilizing industrial by-products such as blast furnace slag, the company reduces natural resource consumption and carbon emissions. Additionally, OYAK Cement has developed “Novocem,” a lowcarbon cement product that stands out as a pioneer among environmentally friendly building materials.
In November 2024, Çimsa signed a $70 million green loan agreement with the International Finance Corporation (IFC) and a €25 million loan agreement with the European Bank for Reconstruction and Development (EBRD). These funds are allocated to finance various sustainability projects, primarily focusing on energy efficiency and renewable energy investments. Between 2020 and 2024, Çimsa reduced its clinker usage by 10% and increased its alternative fuel usage rate to 30% by 2023. These steps contribute significantly to reducing carbon emissions and enhancing environmental sustainability. Çimsa has also taken a significant step toward renewable energy with the establishment of a solar power plant (GES) at its Afyon facility, supporting efforts to minimize the environmental impact of energy production processes.
In its 2023 Sustainability Report, Çimko outlined its progress toward achieving Türkiye’s 2053 Net-Zero goals and detailed its sustainability targets for 2026 and 2034. The company aims to reduce clinker usage in cement production to 75% by 2030 and 70% by 2034, achieving both cost savings and carbon emission reductions. In alignment with its environmental sustainability objectives, Çimko has invested 80 million TL in critical areas such as alternative fuel usage, renewable energy transitions, and water consumption reduction. The company also commissioned six solar power plants in Ankara, İzmir, and Manisa with a total investment of $55 million, marking a significant step in its strategy to increase renewable energy production and reduce its carbon footprint.
The Corporate Sustainability and Climate Change Department at Limak Cement carries out comprehensive initiatives to reduce environmental impacts at its plants and ensure compliance with national and international regulations. Limak supports sustainable production goals through innovative solutions aimed at reducing carbon emissions. The company has achieved top technological results in reducing electricity consumption through energy efficiency projects, which also minimize energy costs and environmental impacts.
In 2022, Medcem Cement met 17.83% of its energy needs through green energy production, contributing to the conservation of natural resources and supporting the circular economy. The company’s 9.95 MW solar energy investment, commissioned in 2022, significantly bolstered renewable energy production. Medcem emphasizes energy and material recovery from waste, increasing the use of alternative fuels and raw materials while reducing fossil fuel consumption. This approach contributes to reducing greenhouse gas emissions and combating climate change.
Through its efforts to develop low-carbon cement products, Nuh Cement achieved a reduction of 282,000 tons of carbon emissions in 2020. In collaboration with ABB, the company is converting diesel-powered haul trucks to fully electric vehicles, targeting annual savings of 1 million liters of diesel and a significant reduction in carbon emissions. Nuh Cement also promotes the use of waste as alternative fuel and raw material to conserve natural resources. In 2020, 374,000 tons of waste were reintegrated into the economy. The company’s water recovery rate increased from 37% in 2021 to 53% in 2023.
Strategic Investments and Acquisitions
In 2020, five publicly traded cement companies were merged under the umbrella of OYAK Çimento Fabrikaları A.Ş., and OYAK Beton Sanayi ve Ticaret A.Ş. was integrated into this structure the same year. This consolidation aligned with the company’s growth strategy, reducing operational costs and improving efficiency. In 2023, OYAK sold a 60% stake in Cimpor Portugal Holdings to Taiwan Cement Corporation (TCC) and transferred a 20% stake in OYAK Denizli Cement to TCC. These actions strengthened the company’s international partnerships and financial resources.
With a 1.5 billion TL investment, Çimsa transformed its Mersin plant into the only facility in the world capable of producing gray cement, white cement, and calcium aluminate cement (CAC). This capacity increase doubled the plant’s annual CAC clinker production capacity from 65,000 tons to 131,000 tons, establishing Çimsa as one of the top three global producers in the CAC market. Additionally, in November 2024, the company announced a $31.75 million investment to further expand CAC production capacity by 2026. Çimsa reinforced its leadership in the white cement market with the acquisition of the Buñol White Cement Plant in Spain, boosting its presence in European and other global markets. Furthermore, Çimsa acquired a 94.7% stake in Ireland-based Mannok Holdings for €330 million, enhancing its footprint in the global construction materials market and strengthening its international competitiveness.
3.Operating Costs in the Cement Industry:
Trends and Influencing Factors The global cement industry has experienced significant changes in operating costs over the past decade, influenced by raw material price fluctuations, regional demand differences, and sustainability initiatives. Below is an analysis of the key factors affecting operating costs and trends from 2014 to 2023.
Operating costs in the cement industry have been highly volatile over the past decade due to the combined effects of cost dynamics, regional differences, and changing market conditions. From the stable improvements of the mid-2010s to the pressures brought about by rising costs and global disruptions in recent years, the sector has demonstrated both resilience and adaptability.
In 2014, global cement producers reported an average operating cost of 9.6%. This period provided a stable foundation for profitability, supported by demand from infrastructure and construction projects worldwide. By 2015, operating costs had risen to approximately 10.5%, leading to an improvement in profitability across the sector. This increase was associated with cost optimization efforts and favorable market conditions in key regions.
Between 2016 and 2019, significant regional differences in global operating costs were observed:
Regional Producers: Achieved improved profitability with operating margins increasing by approximately 350 basis points, reaching up to 19%.
Multinational Players: Faced operational inefficiencies and market challenges, resulting in a 250 basis point decline in margins to around 8%.
The COVID-19 pandemic significantly disrupted global construction activities and supply chains, greatly impacting the profitability of the cement industry. While specific global operating cost data for these years is not available, the pandemic’s effects on production and logistics created widespread challenges for manufacturers.
In 2022, the industry faced double-digit increases in fuel, electricity, and international shipping costs. Although rising cement prices helped offset some of these costs, the pressure on operating expenses persisted.
In 2023, operating profit margins declined by 440 to 490 basis points, dropping to approximately 15.9% to 16.4%. This marked the lowest levels in the past seven years, reflecting the impact of high input costs and market fluctuations.
Impact of Input Costs
Operational costs in cement production are heavily influenced by various input expenses, which significantly contribute to the overall cost structure. Key components of these costs include raw materials, energy, labor, maintenance and repair, logistics, environmental compliance, and depreciation and insurance. Efficient management of these costs is crucial for improving production efficiency, optimizing total expenditures, and achieving environmental sustainability goals. Enhancements in energy efficiency and logistics processes can directly contribute to the profitability of the cement sector.
4. Conclusion and Future Outlook
The global cement market has shown steady growth in recent years, a trend that is expected to continue. Increasing infrastructure projects, adoption of sustainable construction techniques, and urbanization dynamics will be the key drivers of this growth.
The market is projected to reach a value of $592.38 billion by 2032, highlighting the growing importance of investments in this sector.
To support future growth potential, the sector must align with environmental sustainability criteria and implement innovative financing models. Infrastructure and housing investments in developing countries will continue to drive cement demand and solidify the industry’s position in the global economic framework.
Türkiye has proven itself to be a strong player in global markets through its export performance in the cement sector. The steady growth observed between 2013 and 2022 culminated in record exports in 2022, positioning Türkiye as a leading exporter. However, the decline in 2023 highlights the need for the industry to become more resilient to dynamic and volatile global market conditions.
In the future, environmental sustainability, innovative technologies, and diversified export strategies will enhance Türkiye’s competitiveness in the cement sector. While the global cement industry operates on a massive scale, Türkiye’s sector occupies a significant position both regionally and globally. Economically, Türkiye’s strategic geographical advantages, robust domestic demand, and export-oriented growth strategy drive the sector forward. However, both the global and Turkish cement industries face pressures from sustainability and decarbonization imperatives.
To maintain and strengthen its competitive edge, Türkiye must invest in innovative technologies and adopt sustainable production methods. For the global sector, balancing economic growth with environmental responsibilities will be crucial for ensuring future success.
Effective management of capital expenditures (CapEx) and operational expenditures (OpEx) is critical for profitability and sustainability in the cement industry. Strategic investments in modern, energy-efficient technologies can reduce long-term operating costs, while careful CapEx planning ensures that expansion projects align with market demand and financial health.
In summary, the cement industry must navigate the complexities of significant investment expenditures and operational costs. Achieving an optimal balance between CapEx and OpEx is essential for maintaining competitiveness in a dynamic global market and ensuring sustainable growth.
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