Cemtech Asia 2021

INTERNATIONAL BUSINESS
AND
EXPANSION STRATEGIES

Hiroyuki Egawa
Senior Manager, Business Planning Department, International Business Division.
21st June 2021

1
Contents

Key Strategy for Business Expansion

and
Investment in Southeastern Asia
“South Down Shift”
I. Introduction (company profile)
II. International business and expansion strategies
III. Sustainable Development and the Environment
- Recycling & Treatment of wastes
- Contributing to Asia's low-carbon transition

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I. Introduction

Taiheiyo Cement at a glance

Sales by Segment
Number of Operating Countries 9
Building Materials,
Construction Others 9%
Number of Cement Plants 17 8%
Environment Business
(Waste Treatment,
Recycling) 9% Cement
History 140 years 66%
Mineral Resources
(Aggregates etc.)
Cement Sales Volume 36 Million tons 8%

Waste Materials Input for 410 kg waste/ton cement

Cement Production
Sales by Area
Sales Revenue US$ 8,113 Million Other Asia,
Pacific
7%
United States
Operating Income US$ 560 Million 15%

Japan
78%
Number of Employees 13,119

* Consolidated, as of Mar 31, 2020

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I. Introduction

Cement Operations

China

Hong Kong
Taiwan
Vietnam
Philippines
Singapore
Papua New Guinea Clinker production capacity (Mta)

Japan 17.7
U.S.A 4.7
Cement Plant
Asia 4.4
Cement Terminal
China 2.5
Grinding Plant
Holding Company Total 29.3
*Except domestic operations
Map data: Google 4
I. Introduction

Domestic cement plants

Taiheiyo : 6 locations
Subsidiary : 3 locations

Kamiiso
3,624
Myojo Ofunato
1,655 2,034
Tsuruga
Kumagaya
646
1,747
Fujiwara
Saitama
1,733
1,396
Oita
4,105 D.C.
779

Total
*Figures show the production capacity
17,719 of clinker (thousand tons in 2020）
Map data: Google 5
I. Introduction

Oita Plant
Main Plant for Export
Established 1919
Production capacity / Clinker 4,105 K tpa
Export Volume Clinker 1,773 K tpa
(2019)
Cement 333 K tpa

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I. Introduction

Trading business
Alaska

United States

UAE Taiwan
HK
India
Philippines

Singapore Malaysia
Africa
PNG
South America

New Caledonia
Australia
Trading volume in 2019 Mt
Cement/Clinker Export from Japan 3.8
Off-shore Trade 3.0
Cementitious Material Trade 1.5

Cement/Clinker Export Offshore Trade Cementitious Material Trade

Map data: Google 7
II. International business and expansion strategies

Business expansion in Southeastern Asia

Shifting asset portfolio from Eastern Asia to Southeastern Asia
2010 2030

Eastern Asia
(inc. China, Korea)
Southeastern Asia
(inc. Vietnam,
South Indonesia,
Down Philippines)

Shift

Map data: Google 8

II. International business and expansion strategies

“South Down Shift”

U.S.A.
Growing market
<Population & GDP increase>
Japan
Mature market
China, Korea
Saturated market

South Down Shift

Southeastern Asia
Emerging market
(Population & GDP increase)
<Synergy with partners>

Oceania
Environmentally advanced
Indian Ocean Islands countries
Tourism Nation Isolated market
(Environmental regulations) <Higher price & quality>
Isolated Market
Map data: Google 9
II. International business and expansion strategies

Market in Southeastern Asia Cumulative cement consumption per capita

(Index for the continuous growth of cement consumption)

▲
The growth of cement
demand stops around
the range of 20 to 30 MT
per capita (cumulative)
and may then decline
▲
Brunei ◆
Singapore

Vietnam

Philippines ▲
Indonesia Estimated year
over 20 MT

2029 2046 2047

GDP Per Capita[US$]

Source: Global Cement Report, Japan Cement Association, IMF, World Bank)
Cement consumption per capita Cumulative cement consumption per capita
Philippines: 296 kg, Indonesia: 258 kg Philippines: 7 MT, Indonesia: 5.5 MT
(Lower in Southeastern Asian countries) (Level in Malaysia 20 years before)

Expected cement demand increases

in proportion to the economic growth
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II. International business and expansion strategies

Movement for South Down Shift

Countries Items
U.S.A. Purchase Oro Grande Plant (US$420 million) in 2015
Comprehensive business partnership by capital
Indonesia alliance (US$220 million) with PT Semen Indonesia
Tbk and PT Solusi Bangun Indonesia Tbk in 2021
Expansion project – new production line (JPY 30
Philippines
billion, approx. US$275 million)
Vietnam Planning expansion of cement distribution silo
Sale of entire equity interest in subsidiary
China
Qinhuangdao Asano Cement Co., Ltd.
Trading Volume (Fiscal year of 2019)
Export from Japan 3.8 Mt (Clinker & Cement)
Offshore 3.0 Mt (Clinker & Cement)
Export from Japan
1.5 Mt (Substitutional cementitious material)
/Offshore
Total 8.3 Mt
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II. International business and expansion strategies

Operations in Southeastern Asia

Taiheiyo Cement Philippines, Inc. (TCPI)

(1) Company Profile

Shareholder: Taiheiyo Cement
Employees: 371 (As of Dec 2019)
Factory: San Fernando, Cebu

(2) Designed capacity

Cement: 2.2 Mta

(3) History & Expansion

1989 Established Grand Cement
1993 Starting operation of Grand Cement
2003 Taiheiyo Cement Corporation holds 100% of equity interest
2021 Expansion project installing a new JPY 30 billion (approx. US$ 275 million)
production line

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II. International business and expansion strategies

Operations in Southeastern Asia

Comprehensive business partnership with Semen Indonesia Group
Capital alliance (US$220 million) with PT Semen Indonesia Tbk and PT Solusi Bangun
Indonesia Tbk in 2021
(1) Creating business chance by participating in Indonesia's large-scale growing cement market
(2) Expanding business opportunities in each related business segment by developing a strong
partnership with Indonesia's largest state-owned cement enterprise group
(3) Establishment of a strategic partnership for cement trading business

SBI (Rokna）

Semen
Padang
13
13
SBI (Tuban)
Semen
Gresik
SBI Semen
(Narogong) Tonasa
SBI (Cilacp)

Map data: Google 13

III. Sustainable Development and the Environment

Utilization of waste by the cement industry

Amount of wastes and by-products used in The Environment
cement production in Japan (kg/t cement)
（Mt） （kg/t-cement）
Cement Production (Mt)
Wastes and by-products used in
cement production (Mt)

Specific amount of wastes and by-products

used in cement production

Fiscal year
Source: Japan Cement Association 14
III. Sustainable Development and the Environment

Utilization of waste by the cement industry

Wastes and by-products used in the Japanese The Environment
cement industry

Source: Japan Cement Association 15

III. Sustainable Development and the Environment

Utilization of waste by the cement industry

Specific thermal energy consumption for cement The Environment
production in Japan
(MJ/t-cement)

Fiscal year
Source: Japan Cement Association 16
III. Sustainable Development and the Environment

Recycling municipal wastes

The Environment

AK System at Saitama Plant Waste receiving facility

Pulverizing
Classification
Selection

Waste recycling
kiln

Receiving
facility

Rotary kiln for

clinker production

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III. Sustainable Development and the Environment

Recycling municipal wastes

The Environment

AK System
A system for recycling household waste and general business waste as alternative
raw materials and fuels for cement manufacture. The wastes are pre-processed
through biological breakdown (fermentation) using a waste recycling kiln.
Wastes, including garbage bags, can be directly fed into the waste recycling
kiln. The introduction of the AK system at Saitama plant meant that the
municipal government, Hidaka City, could close all the incinerators.

Taiheiyo recycles 15,000t of municipal wastes discharged by the 54,000

Municipal population of the city for utilization as alternative raw materials and fuel.
waste
Recycled
Day 1
raw materials
Day 2
Day 3

Breakage of
Accelerated
garbage bag Recycled to alternative raw
fermentation
material and fuel via fermentation
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III. Sustainable Development and the Environment

Recycling municipal wastes

The Environment
Waste tires (Kumagaya Plant)

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III. Sustainable Development and the Environment

Recycling municipal wastes

The Environment

Waste Plastic (Oita Plant) Crushing Process (Oita Plant)

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III. Sustainable Development and the Environment

Regional treatment of disaster wastes

The Environment

Live in our hometown and protect the Environment Ofunato Plant

All of the group’s cement plants in Japan accept

waste and by-products for recycling.
In FY2020, Taiheiyo recycled approx. 6.4 million
tons of waste and by-products, which is equal to
recycling 410 kg of waste and byproducts per
tons of cement produced.

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III. Sustainable Development and the Environment

Contributing to Asia’s low-carbon transition

CO₂ Emissions Reduction Roadmap for achieving our Long-term Vision
Reduced specific net CO2 emissions Contributing to avoided CO2 emissions
in cement production through the value chain

80% reduction
By 2050
Avoided emissions
equivalent to 20% CO2 emissions
By 2050

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III. Sustainable Development and the Environment

Contributing to Asia’s low-carbon transition

Project
Development of Carbon Circulation Technology for the Cement Industry supported by
NEDO (“New Energy and Industrial Technology Development Organization”)
Purpose
Develop carbon circulation technology for the cement industry
CO2 sequestration in Manufacturing carbon-cured precast
Concept of the Project Ready-mixed concrete concrete using low-CO2 cement

CO2 Sequestration
Utilization as
in concrete sludge
construction materials

Separation of CO2 Sequestration

cement paste in demolished
Utilization as raw from demolished concrete
material for cement concrete

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