Asset gains and carbon cuts equal an extraordinary year

By Don Marsh

The close of any other calendar might confine this column to revisiting a merger and acquisition wave across ready mixed and manufactured concrete, but 2021 could be remembered as much for carbon dioxide emissions action as cement, aggregate and concrete production investment.

On the latter front, stock prices for public companies and high valuations for private peers are a backdrop to construction materials market certainty rooted in strong home building volume and Infrastructure Investment and Jobs Act anticipation (note Strategist, page 6). Consider this year’s tremors: 

  • The top two operators in aggregate shipments (>200 million tons/year), Vulcan Materials and Martin Marietta Materials, are approaching similar status in ready mixed production (>10 million yd./year) on the strength of their respective U.S. Concrete Inc. and Lehigh Hanson West Region deals, closed in the third quarter. 
  • Proceeds from the Lehigh Hanson West transaction perhaps contribute to a major investment in Command Alkon that parent company HeidelbergCement AG announced in the fourth quarter. After leading Command Alkon for 16 years, and accelerating a business transformation since the 2014 Five Cubits acquisition, CEO Phil Ramsey has passed the torch to Martin Willoughby (note page 20).
  • Rinker Materials parent Quikrete Holdings will become the undisputed leader in concrete pipe and precast drainage products pending federal regulatory clearance of its proposed Forterra Inc. acquisition—a deal announced in the first quarter and possibly closing by year end. 
  • General Shale consolidated clay brick production leadership with a third quarter closing on Meridian Brick. A new strategy under the General Shale umbrella will see the adoption or resurrection of Canada Brick, Michigan Brick, Red River Brick and Watsontown Brick brands, each strengthened through General Shale and Meridian asset integration announced late last month.
  • Although smaller than the above deals, the sale of one of the top independent operators in non-architectural precast—Lindsay Precast (note page 18), also announced in November—evidences market conditions supporting a premium for infrastructure-entrenched businesses. The transaction also reflects the potential weight of another factor countering returns that Lindsay Precast and peers enjoy from robust demand: White House tax policy schemes unfriendly to family owned businesses.

Investors in 2021 have looked beyond cement, aggregate and concrete margins to emissions of greenhouse gases, primarily carbon dioxide. This year has proved most fruitful for CarbonCure Technologies (note pages 55, 62) and CarbonBuilt, both demonstrating at commercial scale the potential of CO2 capture and use in ready mixed and manufactured concrete. CarbonCure and CarbonBuilt enjoyed strong financing rounds leading into or following the April announcement that they would each receive $7.5 million as NRG Cosia Carbon Xprize competition finalists.

Their processes mark two of the five links in a value chain—Clinker, Cement, Concrete, Construction, Carbonation—noted in last month’s coverage of the Portland Cement Association Roadmap to Carbon Neutrality unveiling. The document boldly outlines cement and concrete producer response to calls from architectural, engineering, construction and project owner interests for low carbon solutions in building and nonbuilding contracts.

The Roadmap makes 2021 as an industry inflection point. Instead of being on the defensive due to media and competitor distortions surrounding clinker formation and finishing CO2 emissions, cement and concrete interests have a science-backed action plan proving their value proposition is part of the climate change solution, not part of the problem. From the cement kiln to the pour-ready concrete form, the stage is set for another year of rapid demonstration or deployment of processes involving technology developers eager to team with producers and A/E/C professionals on board with the PCA Roadmap to Carbon Neutrality.