The world’s first carbon tax to be levied by the European Union (EU) will not affect India’s cement sector negatively, JK Cement's Deputy Managing Director and CEO Madhav Singhania said.
“Cement is a very local plane. It is not something which has a very large export base. Most cement that is produced in the country is consumed in the country. The carbon border tax will not affect us negatively in any way,” he told Moneycontrol.
The EU is introducing the carbon border adjustment mechanism (CBAM) from October 1 this year, which will translate into a 20-35 percent tax on select imports into the bloc starting January 1, 2026.
Consignments from India of steel, aluminium, cement, fertiliser, hydrogen and electricity stand to get affected by this. Despite concerns, an internal report by the commerce ministry has pointed out that this will impact no more than 1.8 percent or $8 billion of India’s exports, ministry of commerce joint secretary Amitabh Kumar had said at a May 15 press conference.
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“While it may be a challenge for the industry, we personally believe it is a good step in pushing the country to go green. Sustainability is the future,” Singhania said.
According to him, almost all corporations today are already working towards reducing their carbon footprint through reporting mechanisms and ESG (environmental, social and governance) frameworks that are in place.
JK Cement planning to reduce carbon footprint by 30 percent
“We have set our goals for 2030, wherein we are planning to reduce our carbon footprint by about 30 percent from 630kg per tonne of CO2 to about 460 kg per tonne,” said Singhania.
The company has come up with levers to carry on this reduction, including efforts to improve its share of renewable energy, which has already gone up from 10-15 percent a few years ago to 43 percent now, as per the CEO. “The target is to take it up to 75 percent,” he added.
The company also targets using green fuel to improve its thermal substitution rates (TSRs) and replace coal. “Our TSRs have gone up from literally nothing to about 15 percent of coal replacement through municipal solid waste, refuse-derived fuel and other hazardous waste,” said Singhania.
The company is also creating more blended cements, improving consumption of limestone, fly ash, and slag, which will also help it reduce its overall carbon footprint.
“We have a long-term plan to align with a vision of becoming net-zero by 2070. But that would require further tech inventions which the industry is working on,” he added.
Profits to increase Q2 onwards
Stating that the cement industry had shown a massive dip in profit for 2022-23 due to high fuel prices, Singhania hopes to see better number from the second quarter for 2023-24 as prices soften.
“Fuel prices had gone through the roof last year, which had remained the key driver for a dip in profits. Most companies were also sitting on certain inventory levels of high-cost fuel which reflected in Q4 profits and may show up in Q1 profits for 2023-24 as well. But with fuel prices softening, we hope to see better numbers Q2 onwards,” he said.
