Old Cement Manufacturing Plants Expendable in Down Market

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Researched by Industrial Info Resources (Sugar Land, Texas)--"Another one bites the dust," so the song goes, and unfortunately that's what happened to a 100-year-old cement manufacturing plant in Fredonia, Kansas, which closed its doors this month. The plant's owner, Lafarge North America, a subsidiary of Lafarge SA (PINK:LFRGY) (Paris, France) announced the closure last year. The combination of a prolonged period of poor cement demand and mandated environmental retrofits have combined to shut down about 15 cement manufacturing plants in North America since 2009.

Demand has been due to a lack of reduced demand from the construction sector, including residential housing. According to the U.S. Geological Survey (USGS) cement production in the U.S. has declined 29% since 2007, mainly due to the idling and closing of cement production lines. U.S. cement production was about 95.6 million tons in 2007 and was about 67.7 million tons in 2011. It's not all bad news though: Cement production is up slightly from the 64 million-ton low of 2009.

Poor market conditions are not the only cause of plant closures. Increased environmental pressure from the EPA and state regulators to reduce SOx, NOx, particulates and mercury emissions are also contributing to the closures. At the Fredonia plant, Lafarge had been studying a mandated environmental retrofit of the emissions system at the 490,000-ton-per-year cement plant, which would have required an upgrade and installation of new pollution control equipment to reduce SO2 and NOx emissions. The 100-year old plant operated two 400-foot0-long rotary kilns, utilizing old wet process technology that was in need of upgrading. The environmental upgrade would have required at least a $10 million investment, and at least a $75 million investment would have been needed to upgrade the pyroprocessing lines to newer dry-process technology.

Another future retrofit would have been required to reduce mercury emissions. In 2010, the EPA finalized the National Emissions Standards for Hazardous Air Pollutant (NESHAP) for mercury. The rule would have required an estimated $1 billion to $3 billion investment by U.S. cement makers to comply. The rule was appealed in 2011, as cement makers argued that the rule jeopardizes 27% of the remaining operational cement plants, which number about 103 in the U.S.

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