Introduction to the Global Aggregates Information Network (GAIN)
Many readers will already know that the Global Aggregates Information Network (GAIN) is a unique voluntary coalition of aggregates associations with the express purpose of openly sharing best practices for the greater good and sustainability of the industry globally. GAIN members share valuable experiences in quarterly conference calls and meet physically every few years, the next such meeting being planned for New Zealand in July 2023.
An update on global production
Recently, GAIN members kindly provided updated estimates of aggregates production in their respective regions, as shown in Figure 1. For the pre-pandemic year of 2019, the GAIN total was just on 34 billion tonnes (bnt). Quite surprisingly, the year 2020 showed only a 3% decline, thanks to great industry resilience throughout the pandemic lockdowns. The year 2021 saw modest recovery, which is continuing into 2022. If the momentum can be maintained into 2023, GAIN member production will surpass the 2019 level of 34bnt. Adding in the figures for the rest of the world (estimated from populations by tonnes/capita ) shows that the 2019 global total was just on 44bnt; it will probably be 2024 before this total is achieved again, as these typically less-developed countries are having a slower recovery.
The regional breakdown clearly depicts China continuing as world leader, with 46% of global aggregates production. India follows in second place with just 12% of global production for a population soon to be greater than that of China, hinting at enormous growth potential for India. Europe and the US follow with 7% and 6% of global production respectively, with these top four locations together representing some 71% of global production.
At 14.5t/c (boosted by its exports), the UAE leads for 2021 aggregates production tonnes per capita (t/c) for the various GAIN countries. Next is China at 13.6t/c, with the smallest being Argentina at only 1.6t/c. The GAIN average was 7.4t/c, while the global average was 5.3t/c. Clearly the developing world has enormous growth potential.
Commentaries on country trends
It is interesting to view the data in Figure 1 in terms of the trend by region compared to 2019.
In China, the world’s largest aggregates market, growth in 2021 had been fuelled by its 14th Five-Year Plan 2021-25. However, January to May 2022 saw a 12% decline on prior year, mainly because of renewed COVID-19 lockdowns and the weak real estate market. The second half of the year is expected to see a recovery through the central government commitment to ongoing infrastructure investment, as well as stimulating real estate and introducing policies to help enterprises to stabilize growth. China is massively investing in coal to alleviate power shortages, and energy cost inflation has hit aggregates producers. Overall Chinese production may be declining somewhat from its 20bnt peak but continues to be very strong with government support.
India, the world’s second-largest aggregates market, suffered a significant decline of over 18% in 2020, due to the COVID-19 pandemic, with steady recovery envisaged in 2021 and 2022, driven by its major infrastructural projects including airports, roads, tunnels, and metro rail in both Tier 1 and Tier 2 cities. However, aggregates demand for residential/commercial complexes is slow, and development has also been stalled by electricity power disruptions in some states, due to low stocks of coal at many thermal power plants. There is also some disruption in the supply chain of imported spare parts, compounded by soaring energy costs and weakening of the Indian rupee . Despite these headwinds, aggregates industry sentiment remains positive, with huge potential for growth beyond its estimated 5.3bnt, particularly as its population size is now overtaking that of China.
Aggregates demand remains strong in Korea, driven mainly by new housing needs. COVID restrictions have been lifted, and there is a determination in the new administration to drive the economy forward. Access to aggregates resources is an ongoing challenge and marine aggregates are seen as a significant opportunity.
Aggregates demand fell by over 40% in 2020, and the continuing difficult economic situation has led to a severe recession in the building sector, with both existing and new projects curtailed. Other challenges include ongoing COVID cases, power deficits due to coal shortages, a shortage of overseas labour and surging diesel costs for aggregates producers. Despite all this, the outlook still remains positive because of the nation’s infrastructural needs.
The economic situation remains very difficult, exacerbated by continuing impacts of the pandemic, frequent power outages and high unemployment. However, it is hoped that the government will re-focus on much-needed infrastructural spend to stimulate the economy and thereby assist the medium - to longer-term growth of the aggregates industry. Very little data is available for the rest of Africa, the “forgotten continent”, with its growing population of 1.3bn.
The year 2021 saw continued growth in aggregates markets, which has continued into H1/2022. However, the outlook is somewhat challenged by the wider impacts of the war in Ukraine. Strong inflation in energy and other costs are now compounded by security-of-supply concerns about natural gas in the coming winter. The geopolitical situation has had a positive effect in putting a strong new focus on independence in the supply of all resources, as well as on upgrades in infrastructural spend from both security and climate adaptation perspectives. Consequently, the overall outlook, despite these headwinds, remains positive in Europe.
The US aggregates market has moved ahead positively in H1/2022, thanks to the implementation of the first phase of the 2021 Infrastructure Investment Bill. There are some concerns about labour shortages and energy futures, which later can be resolved provided the current Administration awards new drilling permits. While the midterm elections later this year may see a political shift in power, it is hoped that bipartisan cooperation will continue to provide infrastructural funding authorisation. The construction outlook and aggregates demand both, therefore, look set to remain positive through to 2026.
Aggregates demand in H1/2022 continued in positive territory, despite labour shortages, fuel price hikes, some supply chain disruption and a new COVID wave in the Eastern Provinces. There were also some challenges from an unusually cold winter and high rainfall in some provinces, compounded by unusually hot summer weather in others. However, overall industry sentiment remains positive.
The H1/2022 recovery has been tempered by very high energy inflation, supply chain delivery and cost challenges, compounded by a COVID resurgence. However, it is hoped that the strong US market may also help stimulate the Mexican aggregates sector.
Central and South America:
Colombia is the shining star, anticipating that double-digit growth in aggregates demand will continue to be driven by major infrastructural investment in railways, tunnels, and roads. It is also hoped that the recent presidential election result will positively stimulate the Colombian economy. Argentina continues to suffer from severe economic turbulence, having experienced a precipitous decline in aggregates demand of almost 50% in 2020 . However, it is hoped that presidential elections next year will provide a growth stimulus. The Brazilian economy continues to move in positive territory. Reports from Chile, Peru and Ecuador unfortunately indicate slowing economies due to social unrest, with the exception of Costa Rica, which is benefitting from the exports from its mining sector. More general regional challenges have been unusual weather patterns and a marked deterioration in local exchange rates versus the US dollar. However, the potential for growth in demand for aggregates in Latin America remains huge with its rapidly growing 500 million population.
In Australia, there continues to be a strong pipeline of public infrastructure projects which is supporting aggregates demand. However, there are significant labour shortages and supply chain challenges. Despite an unusually cold winter which has fostered continued COVID and influenza outbreaks, the overall construction industry outlook remains very positive. Likewise in New Zealand, the outlook remains very positive, the main challenges being a post-pandemic lack of immigrant labour. Aggregates producers there are currently unable to meet the pent-up construction demand, exacerbated by delays in permitting consents for new quarries. Variable weather patterns across Oceania have presented both challenges and opportunities to the aggregates industry.
The global aggregates industry has proven itself amazingly resilient in overcoming challenges that would have been unthinkable only three years ago. Developed economies have now come through the COVID pandemic successfully, with their governments having the resources to stimulate economic recovery. However, the pandemic and post-pandemic impacts still linger in many developing countries, slowing their economic recovery. Other headwinds include severe energy shortages, price hikes, supply chain challenges and post-pandemic labour dislocations, compounded by unusual weather patterns in both the northern and southern hemispheres.
Despite all these challenges, the medium- and longer-term demand for the aggregates industry remains fundamentally strong, driven by a growing global population, increasing urbanization, varying levels of economic growth and climate adaptation measures. Consequently, global aggregates demand is anticipated to recover to the 2019 level of 44bnt by 2024, likely climbing towards 50bnt by 2030, assuming continued current patterns of global economic growth.