Energy costs

Holcim energy cost per tonne of cement produced compared to market prices

1 Energy espenses stated quarterly.
2 Free on board – shipping point (excluding freight cost)

Energy expenses comprise costs related to both fuel and electricity. In absolute terms, the Group’s energy costs had followed a slight declining trend over recent years, particularly visible since 2012, which was partly explained by improvements in energy efficiency that contributed to reduce energy consumption. Initiatives in the areas of electrical energy management, grinding and fuel-mix optimization and productivity improvements were key to reduce costs. Strategic sourcing, implementation of hedging and long-term contracts contributed further.

Holcim’s energy prices are subject to much less, and sometimes delayed volatility as compared to market prices since 60 percent of the fuel consumed in the cement production is coal, of which about half is purchased on the international market while the remaining portion is bought locally by Group companies and is therefore less subject to volatility. In addition, fuel stocks result in time lags. Thus, changes in market prices do not immediately impact the expenses recorded in the statement of income.