The global market for construction aggregates is expected to increase 5.2%/year to 2015 to 48.3 billion tonnes. While this represents a slower rate of growth than during 2005-2010, reflecting a moderation in aggregates-intensive non-building construction activity, demand for construction aggregates will still post solid gains from 2010-2015. Patrick Smith reports.
China alone will account for half of all new aggregates demand worldwide during the period but the Asia Pacific region, and particularly India, will register the largest increases in product sales, as construction activity rises rapidly in the world’s two most populous countries. These and other trends are presented in World Construction Aggregates, a new study from The
Further analysis by Freedonia shows that in 2010 the Indian market for construction aggregates was 2.2 billion tonnes, the second largest national market in the world
behind China.
Between 2005-2010 sales of construction aggregates products in India grew 9.3%, spurred by high levels of construction activity. Especially strong was non-building and non-residential building spending, due to rapid infrastructure expansion and business capital investment. Nevertheless, intensity of aggregates use relative to India’s population is low (well below regional and world averages) reflecting its severe infrastructural needs.
Indeed, it is noted by the organisers of
With the National Highways Authority of India (NHAI) awarding new projects under the public-private partnership (PPP) programmes and project execution picking up from 2011, the Indian construction industry is “looking at making up for lost time with a flow of funds and EPC (engineering, procurement and construction) contracts in 2012.”
The NHAI awarded about 4,375km of roads in the first nine months of 2012, as against 4,553km during 2011; 3,338km during 2010 and 643km in 2009. The third quarter of 2012 itself saw about 1,898km of projects being awarded.
Notably, the new road projects are part of the Rs. 3 lakh crore (US$70 billion) National Highways Development Program (NHDP) aimed at developing 50,000km of national highways in seven phases by 2015. However, the private sector is expected to contribute 44% of the total projected spend of $100 billion on roads and highways over India’s 12th Five-Year Plan (2012-17).
Under the NHDP, Phases I and II comprise 14,145km of connecting and upgrading of the highways between the four metropolitan cities of Mumbai, New Delhi, Chennai and Kolkata (the 5,800km Golden Quadrilateral); connecting the tourist destination of Srinagar in northern India with Kanyakumari in the far south; Silchar with orbandar, and 12 major ports and several other important national highways.
“During the past five years we have significantly strengthened our presence in Asia, particularly in India, and our ability to serve our customers locally. The investment will also significantly improve our competitiveness not only in India, but in the entire Asia Pacific market area. In terms of our image, Metso Park is an integral complement to our supply and manufacturing network,” says Matti Kähkönen, president of Metso’s Mining and Construction Technology.
The company has embarked on manufacturing a version of its Lokotrack in India with the prototype of the Lokotrack C1000, which was manufactured in just 11 months and
which is adjusted for the Indian market.
Sudhir Srivastava, senior vice president, Asia Pacific, Mining and Construction Technology, says: “The first prototype is a marvellous example of knowledge sharing, continuous development and a true collaboration demonstrated by our teams in India and Finland respectively.”
Phase III of the NHDP involves upgrading 12,109km of national highways between state capitals, important tourist places, and economically important areas, while Phase IV comprises two-laning of 20,000km of single/intermediate/ two-lane national highways. Phase V comprises upgrading 6,500km of existing four-lane highways and other selected stretches.
Phase VI develops 1,000km of fully access-controlled expressways, and Phase VII will see the construction of stand-alone ring roads, bypasses, grade separators, flyovers, elevated roads, tunnels, road overbridges, underpasses, and service roads across the country.
“As the market gears up to the sudden surge of new road projects, EPC [engineering, procurement and construction] contractors and construction equipment companies are struggling to maintain their order book growth. Many prefer to enter the PPP format by undertaking projects on build-operate-transfer (BOT) basis and several are forming special purpose vehicles (SPVs) to execute projects.
| ITEM | 2000 | 2005 | 2010 | 2015 | 2020 |
|---|---|---|---|---|---|
| CONSTRUCTION AGGREGATES DEMAND | 1010 | 1415 | 2210 | 3330 | 5075 |
| By Type: | |||||
| Sand | 300 | 400 | 630 | 950 | 1430 |
| Crushed Stone | 400 | 560 | 880 | 1310 | 2050 |
| Gravel | 300 | 405 | 630 | 950 | 1450 |
| Other | 10 | 50 | 70 | 120 | 145 |
| By Market: | |||||
| Nonbuilding Construction | 670 | 965 | 1510 | 2300 | 3520 |
| Nonresidential Building Construction | 190 | 270 | 430 | 640 | 970 |
| Residential Building Construction | 150 | 180 | 270 | 390 | 585 |
“Hectic project management, equipment hiring and sub-contraction are leading construction companies to look for technological advanced and efficient solutions for project execution. The sector is showing increased interest in ready-made platforms that share technology updates in construction equipment from across the world. Indian and international construction equipment players hence exhibit at bC India 2013 to showcase their equipment and attract buyers from the Indian construction industry,” observe the organisers.
All this is good news for quarry operations and equipment manufacturers in or supplying India, whose GDP is increasing at 6-8% annually, particularly as demand for construction aggregates is expected to increase 8.5%/year to 3.3 billion tonnes up to 2015, which will represent the fastest pace of any nation worldwide.
“This growth in sales will be fuelled by a significant expansion in non-building activity, which comprises 70% of aggregates demand by volume. This infrastructural expansion will also be reflected in a sizable increase in intensity of aggregate use from 2010-2015, as spending on both new structures and maintenance of existing structures will expand,” says the study.
Building construction will post solid gains as well, further boosting aggregates demand in India.
Representing two-fifths of all aggregates sales in India, crushed stone is the most commonly utilised type of construction aggregate, followed by sand and gravel, each of which accounted for 29% of demand in 2010.
Recycled, secondary and other aggregates represented only 3% of all aggregates sales in the same year, but this segment is growing at a rapid pace, increasing 7%/year from 2005-2010.
The majority of aggregates production in India is in the hands of small and medium-sized companies, which include such companies as Blue Aggregates and SRS Group.
India’s Geneva cement pact
Indian cement majors, including
The pact was signed in Geneva, Switzerland, with member companies of the World Business Council for Sustainable Development’s (WBCSD)
“This will be the first roadmap to focus on one specific industrial sector in a single country,” says the WBCSD.
The India roadmap is being developed by the WBCSD’s CSI and the
The technical consultancy will be provided by the Confederation of Indian Industry and the National Council for Cement and Building Materials.
Under the pact, a low carbon technology roadmap for the Indian cement industry is being released in the early part of 2013, and will provide a possible transition path for the cement industry to reduce its direct emissions by 18% by 2050.
“While public policy responses are critical in addressing climate change, the private sector also plays a leading role in providing innovative business solutions.
We view the roadmap project as an initiative to share best practices in sustainability,” says Ramesh Ramanathan, manager, (manufacturing, agri business and services), IFC South Asia.
CSI member companies represent over 65% of the country’s cement production, and others involved with the roadmap include Dalmia Bharat Cement; Heidelberg Cement India; Jaypee Cements; Lafarge India Private; My Home Industries; CRH; Shree Digvijay Cement (Cimpor Group), and Zuari Cement.According to the study, French group
This acquisition was followed by the purchase of the Raymond Cement facility in 2001. Lafarge currently has four cement plants in India: two plants in the state of Chhattisgarh and grinding units in Jharkhand and West Bengal.
In recent years, Lafarge has significantly enlarged its operations across its three business divisions (cement, aggregates and concrete), and an established presence across all the major cities and towns in India. Lafarge is today the market leader in the ready-mix concrete business with over 80 plants, following its acquisition of L&T/Larsen & Toubro Concrete.
“To make advances in building materials, Lafarge places the customer at the heart of its concerns. It offers the construction industry and the general public innovative solutions bringing greater safety, comfort and quality to their everyday surroundings while leaving lighter trace on the world,” says the group. “Safety is the cornerstone of the company’s performance culture and long-standing people-centric tradition. All Lafarge India plants have an innate culture of safety consciousness and assured best-in-class health and safety standards.”
Cement production is also an industry that plays a major part in India’s economy, the country being the world’s second largest producer of quality cement.
“India is a fast-growing and developing market for Sandvik,” says Ajay Sambrani, managing director at Sandvik Asia.
“We are investing heavily in expanding and strengthening all ve of our business verticals such as mining equipment; construction equipment; machining carbide tools for automobile and energy; material technology and ventures, and aterial handling equipment for oil re neries.”
He said mining, construction and machining tools division were the key drivers of growth for the company in India.
According to the Indian Cement Manufacturers Association, there are nearly 140 large cement plants; over 360 mini cement plants, and 40 players in the industry, which depends mainly on industrial activities; housing/of ces; construction activities and investment in the infrastructure sector.
This means there is a huge demand for cement in India with its ever-increasing requirement for infrastructure, which also includes the expanding Special Economic Zones (SEZs) being developed across the country. Since 2006, of the 585 SEZs approved, 381 have been noti ed of which 143 SEZs are already exporting.
Indeed, SEZs now export in excess of Rs. 3,00,000 crore ($55.28 billion) accounting for over 28% of the country’s total exports, and provide direct employment to over 700,000 people.
India’s 330 million tonne cement industry grew by 6.4% in 2012 following an increase in demand in the second six months.
“India’s cement market is expected to see demand growth rate double and pricing power improve in FY13-14,” says a research report by financial investment group Anand Rathi.
“It is anticipated that the cement industry players will continue to increase their annual cement output in coming years and the country’s cement production will grow at a compound annual growth rate (CAGR) of around 12% during 2011-12 and 2013-14 to reach 303 million tonnes,” according to the Indian Cement Industry Forecast to 2012 report from industry research group RNCOS.
By entering India in 2006,
In India, the German-based group HeidelbergCement operates two cement plants and three grinding facilities in the south and west as well as in central India, while Swiss-based group
