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In this episode of the World Cement Podcast, David Bizley is joined by Martin Casey Senior Director for Cement & Lime at the Mineral Products Association (MPA) to explore the challenges and opportunities facing UK cement producers.
Topics covered in this episode include:
- The State of the UK Cement sector
- The energy price challenge
- CBAM – what’s in store for UK producers?
- The impact of imports
- The future of CCS in the UK
[Note: This episode was recorded in September, so some statements regarding policy, etc., may no longer be 100% accurate.]
If you enjoyed this episode of the World Cement Podcast, please like it, leave a review, and subscribe if you haven’t already!
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What is World Cement Podcast?
The World Cement podcast: a podcast series for professionals in the cement industry.
Hello, everyone, and welcome back to the World Cement Podcast with me, Bizley, senior editor of World Cement. The last few years have been fairly tumultuous for The UK, to put it mildly, with Brexit, a seemingly never ending supply of new prime ministers, COVID, the war in Ukraine, Trump's tariffs, and now a new forever war in The Middle East and the inevitable impact on energy prices all rocking the once stable boat that is The United Kingdom. And the British cement industry has been facing more than its fair share of challenges along the way as well, as high energy prices and an increasing reliance on imports threatens domestic production. To guide us through all of those things and more is Martin Casey, senior director for Cement and Lime at the MPA. I just wanted to take a moment to remind you to register for World Cement.
David Bizley:It's free of charge and gives you access to the latest issues of World Cement, both in print and online. Every issue comes packed full of regional analysis, technical articles, project case studies, and the latest industry news. Simply head over to worldcement.com, click the magazine tab, and register today. It's as simple as that. Happy reading!
David Bizley:So, Martin, welcome to the World Cement Podcast. Delighted to have you with us.
Martin Casey:Thanks very much indeed, David. I'm delighted to be here and appreciate the invitation.
David Bizley:Great. So briefly, before we really get into the content of today's podcast, for our listeners outside of The UK, can you give us an introduction to the MPA? What is it that you guys do?
Martin Casey:Yeah. MPA XL stands for mineral products association, and it's the trade association for aggregates, asphalt, cement, concrete, dimension stone, lime, mortar, industrial sands. So it's a really broad church across the the material sector, and my role within that is looking after cement and lime.
David Bizley:K. Fantastic. So we touched on this topic in the interview you provided back in the May issue of World Cement, but I think it's a good starting point again. So given the fairly recent announcement that UK cement production had fallen to levels last seen in the 1950s, How would you characterize the health of the cement sector in The UK?
Martin Casey:I think we should be under no misapprehension that the sector is currently under a bit of stress and threat. As you say, The UK production is at its lowest level since the 1950s and over that period as well we've seen increasing level of imports to The UK, especially over the last twenty years or so. And while there's not an issue with imports per se, when that's displacing domestic production then that obviously becomes a challenge for the British cement sector.
David Bizley:Okay. Yeah. We'll get on to some of those topics in a bit. So back in May, the NPA called for urgent action on cement to address the underlying competitiveness issues facing British cement manufacturers. Can you summarize for us what those issues are exactly?
Martin Casey:Yeah, of course, David. Broadly speaking, this is a competitiveness challenge, so British manufacturers, simply struggling to compete against manufacturers from overseas and in particular those who are exporting to Britain. And as you will be aware, if an industry loses domestic momentum then it's really difficult to rebuild that capacity, especially when it's capital intensive sector like cement. So the challenge really is to restore the competitiveness of the British cement industry. The core elements of the challenge are, and hopefully this is not a surprise, David, is industrial electricity prices.
Martin Casey:You're not surprised to hear me say that, but industrial electricity prices are amongst the very highest in the developed world, and alongside that you have carbon and other climate costs on top. So it's that combination of energy and climate costs which impinge upon the ability of domestic manufacturers to be competitive, and so it's that cumulative burden. And just as by way of an example, David, policy compliance for the British cement sector is around about £80,000,000 annually, which is almost double what it was just ten years ago. So that compliance cost increasing significantly, and it's that cumulative burden which poses the fundamental challenge to competitiveness. Maybe your listeners aren't, you know, are five manufacturers here in UK, all of whom are operating in countries outside of Britain, and despite the challenges, they are committed to their British operations.
Martin Casey:But the case ongoing investment, especially in decarbonization, is becoming increasingly difficult to make when some of the fundamentals, the cost of production is just going up and up.
David Bizley:Okay. So sticking with energy prices for now, how exactly do they compare with what producers elsewhere are paying? You know, how much for premium are UK producers having to pay?
Martin Casey:Yeah, I think we should be under no misapprehension that in the developed world these are the highest prices. It depends, it varies from place to place, but generally they are at least double of what competitors or even the same companies are paying in Europe and four times as much as places like The United States. So that's a huge difference in terms of core costs that British manufacturers are facing. And this is at a time when The UK is significantly investing in renewable energy generation, and renewables are becoming the dominant input to the grid. Yet many industrial users, including cement, just aren't seeing the benefits of that change in the structure of the energy input, but not a change in the structure of the energy cost.
David Bizley:Right, okay. So, and of course these high energy costs are prices and making imports, as we touched on already, increasingly attractive option. I think it was NPA data showing that in 2004, imports accounted for 11% of cement used in The UK, but this figure had risen to 32% by 2023. Then looking at energy specifically then, what kind of support would you be looking for from government to level the playing field with producers elsewhere?
Martin Casey:Yeah, those figures are correct, as I said a little earlier. Imports themselves aren't a problem if they are supplementing domestic production and we're operating at capacity, but we're not. It's actually displacing domestic production, and that's where the challenge comes. And that differential is basically down to things like energy and carbon cost, as as I've said. One of the immediate things that could happen to help British manufacturers is to have access to a thing called the energy intensive industries compensation scheme.
Martin Casey:So sorry to get long and technical, but the the shorthand is the e r... EII compensation scheme, energy intensive industries compensation. And this is where government helps energy intensive industries with that significant differential in cost to help them become a little bit more competitive. Now the real issue here is that cement sector is currently excluded from that compensation scheme despite the government's own information showing that we are the most carbon exposed sectors to... Most exposed potentially to carbon leakage.
Martin Casey:The last time the government looked at this was 2022, and they set their criteria for qualifying for this compensation, and the cement sector got over that bar. However, and it's always in a however when it comes to policy in Britain, the treasury decided that there were too many people qualifying for the compensation that had been proposed and a large sector therefore had to be dropped out in order for the amount of money they'd allocated to go round. And so they raised the bar, cement dropped out, and so other sectors, steel for example, benefit from this. The really interesting thing here though is that one, we were due overdue a review of the scheme, and secondly, that, and I'm sure we'll come on to this in a while, the carbon border adjustment mechanism, the CBAM. Cement is one of only two sectors that will be included in the CBAM that is excluded from this energy compensation scheme, energy intensive industries compensation scheme.
Martin Casey:So I'll point to the government is it doesn't make sense when we are going to be included in the c bound to be excluded from this, and by the way, you are now overdue for reviewing this policy. Now if you allow me David, that policy was that policy was due to be reviewed with a consultation by the end of May twenty twenty six, earlier this year, but, and your listeners might be aware, there's been a little local political difficulty for the government over the recent months, if I could put it like that, and the previous prime minister running through some difficulties. But what that did, and it's really important, is that it basically put a stranglehold on decision making within government. And so the consultation was not issued. I understand conflicts within government that it is currently before the new set of ministers and we're awaiting sign off so it can be issued.
Martin Casey:Our plea is that this is done as soon as possible because this is one of the key ways in which we can help restore a little bit of competitiveness to British manufacture.
David Bizley:Okay, interesting. Yeah, it sounds much more like a political decision than a practical one in that sense.
Martin Casey:Absolutely. Yeah. And combined with that and an effective CBAM, we're hopeful that that can at least start to help British manufacture become more competitive.
David Bizley:Okay. On the topic of CBAM then, and we again touched on carbon costs, carbon leakage and things like that, The UK's version of CBAM or carbon border adjustment mechanism that is due to start in January next year, does it look set, at least as it stands on its own, to solve the challenges facing cement producers? And if not, how would you like to see it adapted?
Martin Casey:It's a key element in helping to restore that competitive stiffness. It's not a panacea that is gonna be once it's there, all the problems will go away, but it is very significant, and we do need an effective UK CBAM, gun border adjustment, in place. Now on the positive side, the government is committed to introducing it and in fact there is some of the enabling legislation currently before the houses of parliament to ensure it does come in on the first of January next year. That can't come soon enough, to be honest, because of the differentiation between The UK and the European Union where their CBAM obviously came into force fully first of Jan this year, 2026, and had been running in the background in shadow form for a couple of years before that. We're pleased that the government is going to introduce it.
Martin Casey:We've been talking to them and to Revenue and Customs who are actually handling the introduction about how it will operate. It's somewhat different from the European version in that The UK CBAM really is a border tax, so it will operate as a border tax. So basically people who import to The UK will have to pay a supplement for the privilege of doing that based upon on carbon content. But, and this is a very significant book, at the moment, we don't have the information on what the c band rate will be, what those backup figures that enable us as a British industry to do the calculations to understand its impact and how it will work, and that's the challenge we have. We're recording this in September and so we're only four months away from the introduction and yet we still don't have core information about how it will operate, although we have information in terms of its structure and the the timing of its introduction.
Martin Casey:And this is where the challenge lies. And my members are basically unbelievably keen to see this information from government, and that's the big conversation that we're having with treasury and with, Revenue and Customs and with Department for business saying, look, we need this. We have been promised it in q four. Talking to government, they revised that to autumn. That's a marginal gain, but in UK political terms, autumn is a very flexible concept and possibly could run beyond what we might think of as autumn ordinarily.
Martin Casey:So that uncertainty is causing is causing problems. Government have listened to some of the things we've been saying. They have moved a little, especially on one of the metrics on on traded weights. So that's helpful, but this core information is essential for us to really understand. We've also spoken with ministers and they have basically said, look, this is a minimal viable product approach to a C band when we introduced it, and they are committed to improving its operation going forward.
Martin Casey:Now we would much have preferred to have had a really robust watertight c band from the off, but governments have recognized that it won't be that, and it certainly isn't as robust as the EU version, but at least we're encouraged that they're committed to improving as we operate it, let's say, but how quickly that happens and what the mechanism for doing that, we don't currently know. So there are still significant challenges there, but to go back to your core question, yes, it will make a difference all being well, but two, it needs to be watertight to be truly effective.
David Bizley:Okay. Understood. Sticking on the topic of imports, I mean, you touched on yourself earlier. There's a point at which failing to reduce sort of dependency on imports can become something of a risk. Obviously, aren't bad per se, but if they're undercutting domestic production, they pose a challenge.
David Bizley:Do you think part of why the cement industry is where it is today in The UK is because there's not enough understanding amongst policymakers about the importance of a domestic cement industry and cement as a foundational material? And is there more that producers could be doing to raise awareness amongst policymakers?
Martin Casey:The short answer to the question, David, is yes. I think there is a distinct lack of understanding of its importance and its strategic importance, not just for cement but more broadly across those what you describe as foundational sectors, all of those key materials upon which society and industry, other industries rely, of which cement is one. And I think that the challenge that the industry has had is that there's always been an assumption, not just for cement but for other mineral products, even construction products more broadly, that the supply will always be there. And while that may have been a reasonable, if somewhat misguided view previously in a... An increasingly uncertain geopolitical world that we are in now undoubtedly, you will have heard this...
Martin Casey:Possibly heard this phrase come up about sovereign capacity. And what that's talking about is is have you got the ability to make the key stuff that you need in your own country? And are you too much exposed to relying upon international trade to supply you? So imports have increased and domestic production has declined, and that trade off has been at the expense of of domestic production. However, for governments and for society more broadly, if we want the houses and the infrastructure that we require and government is very clear that we need both of these things, they have targets, then being able to guarantee the supply of cement, concrete, and other construction materials surely becomes a fundamental part of that calculation, and it isn't.
Martin Casey:Now for many, many years, the NPA has been running a campaign called Make the Link, which is really fundamental to sort of like, you like a new school, you like a hospital, you like these bridges, you like these houses, we need them. You've got to understand how we get to that finished product, make the link with where the materials to make these things come from, as well as the skills of people deliver them. So I don't think it's a lack of trying on behalf of the industry to try and ensure that this is understood, but I think it's been a lack of urgency or importance to those on the receiving end of those messages in government and policy makers more generally to understand the vitality of this stuff and its importance in delivery. That is definitely changing, and it's part of the reason why MPA, Cement has a campaign that's been running for twelve months now to make known better these things directly to governments and policymakers, and it is making... Is getting some traction.
Martin Casey:And some of our members as well, if not all of our members, are also putting in increasing efforts to ensure that this is more broadly understood because it is it's critical. It is critical.
David Bizley:Absolutely. Okay. We've talked a lot about carbon costs and leakage and things like that today, which inevitably draws us towards decarbonization and in The UK, the topic of CCS. Since we last spoke, we now, as you mentioned earlier, have a new government after the previous one came in through some difficulties, one that has already hinted that it might be taking a slightly different approach to decarbonization with firms bidding for public contracts, now having to prove job creation rather than meeting decarbonisation targets, as an example of approaches. So with that in mind, and given the long term nature of these projects, how confident are you that The UK will be able to develop the much needed CO2 infrastructure, pipelines and so on, that will enable UK producers to adopt things like carbon capture.
Martin Casey:Yeah, it's an interesting one, David. I mean, the fundamental point is that policy consistency is absolutely key in order to deliver these sorts of high level capital intensive projects, which not only take a long time to deliver, but need to be in place for a long time in order to pay back for the significant investment that is required to to put them in place in the first place. So, yeah, absolutely. So I don't think that there is a fundamental shift in terms of the current government's commitment to, decarbonization, albeit there might be a change in emphasis, and we can come back to that bit if that's okay. I'm more concerned in a way by the breakdown in the broader political consensus on these things where you have some parties and actively opposed to these types of things like carbon capture and net zero.
Martin Casey:Now whether you agree or disagree, the fact is that beyond The UK, both my members and international level are committed to decarbonization, that other parts of the world are decarbonizing, and that in The UK, we are already on this trajectory, and indeed, one of my members, Heidelberger, is actually in the construction phase of a carbon capture plant, Peytonwood in North Wales, which actually puts The UK right up there in the vanguard of countries that are actually delivering. So there's an opportunity here for the British cement sector and British industry and The UK more broadly in this space in terms of experience, being able to transfer that knowledge, of being able to use that as something to drive growth for The UK. Now we have, as you indicated, opportunities here. There is a a project in development called Peak Cluster, where that brings together four four manufacturers, three cement, one line in and around the Peak District in Britain that could deliver a massive step forward in carbon capture for The UK. However...
Martin Casey:And, obviously, we want to see that succeed, and that's a that's a particular conversation. However, from a government level view, we also need to ensure that those who don't fall into Kernel clusters also have a solution available to them, so those dispersed sites can also decarbonize. As I've said, producers remain committed to this. Government hasn't actually said that it's changing its commitment, albeit it's talking about some other aspects, as you say, some of the social aspects of this. But there is no doubt that if we move towards increasing the use of carbon capture, it will provide new jobs at each of the sites.
Martin Casey:It will require new and different skills, and those skills sitting alongside the existing good jobs that the cement sector provides, which are adding significant... They're highly productive, they're adding significant value predominantly in rural places and certainly outside of the big metropolitan centers like London and the Southeast. So these are important to the structure, societal structure of Britain as well. So I would argue that an emphasis on the social aspect is actually... That's a good thing for the cement sector because we can clearly demonstrate that.
Martin Casey:The bit that I am genuinely concerned about, and there is some background noise on this amongst some in government, is that the requirement for increase in defense spending could be helped by using some of the money that has been allocated to things like carbon capture and net zero policies.
David Bizley:Right. Okay. Interesting.
Martin Casey:So part of my conversations right now with governments and policymakers is that, look, you've made this commitment. In order to secure the investment, you need to stick with this over the long term and not undermine the case either by moving the goalposts or by reducing the available funds from the government side that you're putting into this policy, because you say you are committed to delivering decarbonization and net zero.
David Bizley:Yeah, I suppose moving the goalposts as you say as well would undermine efforts for any future investment, not just in cement as well.
Martin Casey:Indeed. And a lack of commitment to both to specific policies like carbon capture or to broader policies like emissions trading and having a sufficiently robust carbon price undermines the investment case. And make no mistake, cement manufacturers have got options when it comes to these things.
David Bizley:Sure. Okay. As we begin to wrap up things, we're gonna start looking forward.
Martin Casey:Yes.
David Bizley:Yeah. So aside from decarbonization, what other factors, things like digitalization, automation skills, so on, do you think will have the biggest impact in shaping The UK cement industry over the coming years?
Martin Casey:I think I'd start by saying that it is already a highly skilled and highly digitalised industry in The UK. It's on this agenda, absolutely, and we need those skills. We need data analysts just as much as we need quarry operators. So it's a highly skilled sector. It's a sector that has a broad range of career opportunities, and we go all the way from apprenticeships through to graduate schemes in the sector too.
Martin Casey:We have lots of technical roles, so we need skilled people. And as I've just mentioned, when it comes to things like carbon capture, the range of skills is broadening and the type of work is evolving. So it's not that the old stuff is going away, it's that we're adding to the skills that are needed. And inevitably, that comes with increased digitalization, increased automation. But I would say that we're already quite highly automated and quite highly digitized in the sector in any case.
Martin Casey:So that demand for new skills is really important and it's important because of the location of the cement industry, because highly skilled jobs, as I mentioned, that are predominantly in rural areas and outside of the Southeast Of England and London. So that's important in terms of the societal thing and also in terms of politics of the country.
David Bizley:Okay. Interesting. Thank you. Now, as I mentioned a little bit, we always like to end these interviews by asking our guests to look ahead and consider how things might look in ten years. Nice round number.
David Bizley:We've done a bit of looking ahead, so to summarize things, what would a successful thriving UK cement industry look like in 2036?
Martin Casey:If I can make an assumption that some of the stuff that we talked about earlier in the the industry becomes more competitive because of a change in the approach of energy policy that the CBAM is implemented and is successful. And the one thing we haven't really touched on, David, is the demand side of all this, which is on the procurement side. Sure. For listeners outside The UK may not have heard, but a familiar political theme has been about buying British, so that isn't a requirement currently that that pulls through through the marketplace. If we want to have a thriving domestic cement sector for all those strategic reasons we discussed and that sovereign capacity, part of that is a procurement policy which basically says we want to use the materials that are produced in this country.
Martin Casey:And given that a third of total procurement there or thereabouts is from public funding of one form or another direct from government or lower levels of government, counties, councils or public services, then that's entirely possible. So being positive, we restore the competitiveness. There's a higher degree or the market improves because clearly that's a challenge at the moment. We've got a broadly depressed construction market. The market improves.
Martin Casey:We're seeing more use of domestic manufactured materials in that construction, and we are consistent in our approach to decarbonization policy, and we now have a very high level of carbon capture within the sector, then that looks wonderful and it could be world leading in ten years' time given the golden scenario. What worries me is that we're far from the path of the golden scenario at the moment and the job of MPA and working with our members is to get on that path with government, with policymakers, with the people who work in the sector, with our customers, with our communities. That's the aim. So being positive, David, we deliver that. In ten years' time, we'll be talking about having a globally successful UK cement sector.
David Bizley:Fantastic. Yes. And I certainly hope we can achieve that aim. So, Martin, thank you so much for your time today and for joining us on the World Cement Podcast and exploring the state of The UK cement industry.
Martin Casey:Thank you, David. I appreciate the opportunity, and I hope you all listeners enjoy what we've been talking about.
David Bizley:Thank you everyone for joining us for another episode of the World Cement Podcast. I hope you enjoyed. If you did, please leave a review and subscribe if you haven't already done so. Do also make sure to check out our ever growing back catalog of episodes if you haven't heard everything by now, featuring interviews with leaders from across the cement industry. Goodbye for now.
David Bizley:I just wanted to take a moment to remind you to register for World Cement. It's free of charge and gives you access to the latest issues of World Cement, both in print and online. Every issue comes packed regional analysis, technical articles, project case studies, and the latest industry news. Simply head over to worldcement.com, click the Magazine tab, and register today. It's as simple as that.
David Bizley:Happy reading!