[Translator] Current Situation of German Cement Industry

Germany's 33 integrated cement plants currently have a total annual capacity of 33.2 million tons. Each cement plant typically has a small capacity, with a median and average capacity of almost exactly 1 million tons per year. The capacity of the production line ranges from 200,000 tons per year to 2.4 million tons per year. With the exception of LafargeHolcim's 1.5 million tonne L'Lägerdorf line, all are dry process lines. In addition to the integrated cement plant, there are another 18 cement grinding plants in Germany.

Although German cement plants are generally older, with many operating for more than 50 years, Germany's local expertise and equipment suppliers have enabled it to become a global leader in cement processing efficiency. German cement also ranks very high in terms of the use of alternative fuels. In 2018, the overall thermal substitution rate of the German cement industry was 68%. This is equivalent to approximately 3.6 million tons of agricultural fuels, 1.98 million tons (55%) of industrial and commercial waste, 630,000 tons (18%) of sewage sludge, 280,000 tons (7.8%) of unsorted municipal waste, 200,000 tons (5.4%) of tires and 160,000 tons (4.

Germany is also increasingly concerned about alternative raw materials for cement. In 2018, the power station provided about 260000 tons of fuel gas desulfurization gypsum for the German cement industry, while 7.7 million tons of blast furnace slag powder, contaminated ore, iron-containing dust and fly ash were produced in the steel production process. The trend

of

production

in the 21st century From 2002 to 2015, the change of cement shipment volume in Germany is relatively small, about 24-25 million tons. The lowest recent figure was 23 million tonnes in 2010. The overall decline since 2002 is mainly due to a lower backlog of demand in the former East German States than in the 1990s, an unfavourable demographic and tax framework for residential construction projects, and restrictions on government investment in infrastructure construction. However, with the increasing emphasis on infrastructure, cement shipments have also increased. Shipments increased by 1 million tonnes to 26.6 million tonnes in 2017 due to an increase in construction activity, particularly from the public sector, after a decline to 24.8 million tonnes in 2015 from 25.3 million tonnes in 2014. In 2018, the shipment volume was 29 million tons.

Figure 1 shows the seasonal trends for 2018 and the first 11 months of 2019 (with December 2019 data not yet known). Shipments in January 2019 were relatively low compared to January 2018. Shipments rebounded to 4.95 million tons in the first quarter of 2019, compared with 4.51 million tons in the first quarter of 2018, an increase of about 9.2019. Shipments in the second quarter of 2018 were 7.2 million tons, slightly lower than 7.57 million tons. Shipments in the third quarter of 2019 were basically the same as the same period last year (7.64 million tons/7.63 million tons). Part of the shipment volume lagged to October and November, making the total shipment volume of 24.79 million tons in 11 months of 2019 almost the same as the total shipment volume of 24.84 million tons in 2018.

Figure 1:2018/01-2019/11 German cement monthly shipments

Table 1: Combined Cement Production Capacity

in the German States

Eight independent companies each own an integrated cement plant in Germany. Among them, M Märker Cement, Spenner Cement and Thomas Gruppe Cement each operate a grinding plant. The other five independent companies each operate an independent mill.

Table 2: Capacity of

large cement producers Source: Global Cement Company Directory 20201.2019

year, HeidelbergCement's global revenue totaled 18.8 billion euros, of which Germany accounted for only a small part of its total revenue. Recently, HeidelbergCement completed a major upgrade of its facilities in Burglengenfeld, Bavaria.

Founded: 1874

Headquarters: Germany, Baden-Württemberg, Heidelberg

Comprehensive production capacity in Germany: 7.4 million tons/year

2. The company retains its original plant and headquarters. In 2008, the company and its subsidiary Deuna Cement became a wholly owned subsidiary of Buziyannis, seven years after Buziyannis initially acquired a 34% stake.

Founded in 1864 (Dyckerhoff)

Headquarters: Casale Monferrato, Italy Combined production capacity in

Germany: 6.6 million tons/year

3.2015 year, due to competition problems within the European Union. Lahau Group sold Lafarge's assets in Germany and acquired other assets from Cemex. In addition to the integrated production plant, LafargeHolcim operates a clinker grinding plant and a slag grinding plant in Duisburg-Schweigern.

Founded: 1833 (Lafarge)/1912 (Holcim)

Headquarters: Switzerland, Hodbank's combined production capacity in

Germany: 5.3 million tons/year

4. Its Mergelstetten cement plant is the first 100% carbon capture and storage project in Europe, which is part of a partnership with Dyckerhoff, Heidelberg Cement and Vicat. Schwenk is interested in the Baltic and Scandinavian regions, but in January 2020 Schwenk has withdrawn from the Namibian market.

Founded: 1847

Headquarters: Ulm

, Germany Comprehensive production capacity in Germany: 4.1 million tons/year

5. Its subsidiary, Opterra Cement, has two clinker production plants. Its cement plant in Karlsdorf, Saxony-Anhalt, was scheduled to be transferred to Schwenk Cement in March 2017, but it was not finalized. Opterra Cement also operates a 300,000 t/y grinding plant in S Sötenich, North Rhine-Westphalia.

Founded in 1970 (formed by the merger of Cement Ltd and Roadstone Ltd)

Headquarters: Germany, Ulm's

combined production capacity in Germany: 2.1 million tons/year

6. Cemex can also rely on its grinding plant in nearby Eisenhuettenstadt. In May 2019, Cemex sold its aggregates and ready-mixed concrete business in the North and North West to GP G Günter Papenburg for €87 million.

Founded: 1931 (Merger between Cementos Hidalgo and Cementos Portland Monterrey)

Headquarters: Mexico, Monterrey

Combined production capacity in Germany: 1.9 million tonnes/year

Impact

of novel coronavirus Although 2019 was an average year for cement production in Germany, 2020 was not. COVID-19 was first diagnosed in Munich, Germany on January 27, 2020. On 22 March 2020, a number of federal States imposed a total lockdown, including a curfew. From April 2020, the full lockdown was gradually lifted, with shops and workplaces reopening as the size of permitted gatherings gradually increased. As of August 9, 2020, Germany has recorded about 217000 confirmed case, including 9260 deaths. These figures represent a lower death rate in Germany than in many of its European Union neighbors. It may be that more testing has allowed even mild cases to be detected in the wider community. Germany entered a recession in the first quarter of 2020 with a contraction of 2 despite its handling of the COVID-19

epidemic. Since then, the economy contracted by a larger margin of 10 in the second quarter of 2020. This will have a negative impact on German construction companies and cement producers. HDB, the German Construction Association, expects the turnover of the construction industry to decline by 3 in 2020. Among them, the revenue of commercial construction projects will decline by 6.0% and that of residential construction projects will decline by 0.

In the second half of 2020, unless there is a second catastrophic wave of COVID-19. Germany will be one of the EU member States best able to weather the economic shock caused by COVID-19. Its strong and efficient cement industry and many of its suppliers will continue to benefit from rapidly recovering economic and construction demand.