I’m a subscriber to the value investing newsletter, The Intelligent Investor (II). In their 2 Jul 2010 podcast, the II team briefly discussed Adelaide Brighton Cement Limited (ASX:ABC), a building materials company that manufactures cement and clinker. It turns out the team didn’t know anything about clinker and there was interest in the broader macro issues in the industry, including sustainability. I didn’t know anything about these topics but thought the II discussion discussion was interesting to follow up with some quick Googling to find out more. I didn’t have much time, but this is what I stumbled upon for those specific issues. There’s much more to do…

Clinker != Clinkers

Clinker (

!=

Clinkers (

The first point to note is that clinker is not equal (i.e. !=) to Pascall® Clinkers – there’s little of the Mystery, Suspense or Drama one can expect from Clinkers in clinker.

Clinker is an input to cement

To the lay person, ABC manufactures cement. There are (apparently) different kinds of cement, so to be more precise, ABC manufactures Portland Ordinary Cement. understanding-cement.com says “during the cement manufacturing process, raw materials are blended then heated in kiln. The product from the kiln is clinker – a dark grey nodular material made by heating ground limestone and clay at a temperature of about 1400 C-1500 C. The nodules are ground up to a fine powder to produce cement, with a small amount of gypsum added to control the setting properties (more here). The cement is siloed before distribution to wholesalers – the ABC web site has a nice graphic of the cement manufacture process.

Cement manufacture and sustainability

It appears that sustainability of cement manufacture is a big enough issue to warrant the Commonwealth government to develop a cement industry task force and for the cement industry to form the Cement Industry Federation. There are also sustainability efforts occurring in other parts of the world, suggesting cement manufacturing sustainability is a global issue:

• World Business Council for Sustainable Development – Cement
• UK Cement Industry
• Cement Association of Canada

The New York Times article Cement Industry Is at Center of Climate Change Debate is a useful overview on the sustainability of cement manufacture and the industry’s efforts to get ahead of the regulatory curve.