Concrete is the literal building block of all developed societies. When concrete is present, let’s say, in a nicely paved road, or a towering skyrise; it’s an indication of a sophisticated civilisation. There’s a reason New York City is famously referred to as the “concrete jungle.” The catch-22 in this story: As countries start to industrialise and advance, the output of environmentally perilous pollutants begins to increase rapidly. This has been the case since the Industrial Revolution. The UN predicts that more than 6.7 billion people will live in urban areas by 2050, which will create a host of housing and environmental issues. Producing concrete with cement is responsible for 8% of the world’s global output of GHGs. As you can probably infer, with the steady growth of urbanisation, the demand for concrete will grow at an exponential pace. It’s predicted that concrete will become a $800b industry by 2027. To give context, the amount of GHGs produced by cement production is the equivalent of the global car fleet. Regardless of how many electric vehicles roll out, if cement remains the primary construction material, developed countries like Australia will struggle to meet its carbon reduction targets (Australia has a net 2030 emissions target of 43% reduction below 2005 levels by the year 2030.)
SUVO is a mineral company that owns Australia’s only hydrous kaolin operation. At first glance, they appear to be an unlikely candidate to tackle the emissions problem in construction. However, it’s a relatively young company, formed in 2020. Recently, SUVO was able to commission the Pittong operations and increase capacity from 20kt per annum up to 60kt per annum. To give context, the entire continent of Australia uses around 18ktpa, and SUVO supplies around 90% of that. SUVO plans to expand its clientele to the Asian Pacific market, which has a 5 million tonne potential. A portion of the cash flow from these new Asia Pacific deals will be used to fund green innovations like green concrete.
The green concrete idea was Bank’s brainchild. He saw an opportunity to make a difference in one of the largest polluting industries in the world— cement production. In late 2022, SUVO partnered with Perth-based, Murdoch University to research and develop a greener alternative to cement, made with fly ash and waste-derived materials. Not only did the finished product in the lab measure a whopping 50% decrease in GHGs (with a potential for 85% to 90% reduction) compared to Ordinary Portland Cement (OPC); but they were simultaneously cleaning up their environment by using waste-derived materials. SUVO and Murdoch have entered into a worldwide IP agreement over Colliecrete.
News of this reached the Sustainability Waste Alliance (SWA), and on Jan 16, 2024, they officially invited SUVO to pour their proprietary “Colliecrete” at the Bunbury Road Project, the largest infrastructure project to date in West Australia. If the demonstration is successful, it could expedite IP commercialisation and allow SUVO to test its green concrete on other government infrastructure projects. From an investment perspective, SUVO’s 100% owned kaolin operations produce a reliable, long-term return. They also have sufficient kaolin resources and applicable mining licences to continue for the next 20 years. On the other hand, the green concrete project is still an unknown entity, but with basically unlimited scaling potential if it works.
“It’s still in its infancy, but I think what makes this project so exciting is that the sky is the limit. We already have customers across Australia who have a high demand for metakaolin and would prefer to buy it at a lower price from a local company like us, than an American company. Unlike other ‘green’ transitions like EVs, producing metakaolin-based formulation doesn’t use any additional resources or equipment and doesn’t add to the final balance sheet. It’s like replacing butter with margin, a mere, inexpensive substitution we’re hoping to have a large environmental impact” (Aaron Banks, Chairman, SUVO).
If the cement industry is valued at around $400 billion today, one can only imagine the interest in adopting low-carbon, waste-derived concrete considering the mounting societal and political pressures to reduce carbon emissions. As SUVO and Murdoch solidify Colliecrete’s practicality, use case, and pricing— the world goes on its usual ways. At the break of dawn, a construction worker slowly hums his tune while another stack of grey concrete piles on top of the other, forming something that resembles a big Jenga tower by noon.