Somebody at HeidelbergCement is brave. Making an investment in a cement market characterised in 2012 by job losses and carbon taxation takes some nerve. Yet this is exactly what HeidelbergCement has done with the announcement that it plans to take joint control of Cement Australia with Holcim.

So what's in it for Holcim and HeidelbergCement?

Opportunity and foreign supply chains to minimise the carbon tax seem to be the main reasons. With Holcim's 2012 financial performance dragged down by Europe and Africa, its cost reduction programme, the 'Holcim Leadership Journey,' continues into 2013. Australia, as one of the few disappointing spots in the producer's Asia-Pacific region, is an obvious asset to sell. By contrast, HeidelbergCement reported growth in its operating income in 2012.

With regards to supply chains, both Boral and Adelaide Brighton – Cement Australia's competitors in Australia – acted to seize foreign clinker supplies in 2012. As they are multinationals, Holcim and HeidelbergCement have ready-built supply chains. Figures from the Global Cement Directory 2013 show that Holcim holds a cement production capacity of 9.7Mt in Indonesia, 5.75Mt in the Philippines and 0.55Mt in New Zealand. HeidelbergCement hold 16.5Mt in Indonesia. Despite regular annual high performance and regular capacity growth in the cement industry in Indonesia and the Philippines, having the option to export excess clinker to nearby Australia must be enticing.

For Holcim, minimising risk may be a key factor in their decision to reduce their share in Cement Australia. Holcim dodged mentioning the country's cement performance in its 2013 outlook although it did report an overall volume decrease across all its business lines in 2012. Boral expects its sales volumes to remain flat in the first six months of 2013, with pricing challenged by the high Australian Dollar and low sea freight prices. Adelaide Brighton expects its demand for cement to continue coming from South Australia, Western Australia and the Northern Territory. Adelaide Brighton also took pains to point out the carbon tax will hit its 2013 profits by US$6m, nearly 4% of its 2012 profit. Going 50-50 with HeidelbergCement shares the risks for Holcim as well as the profits.

Holcim faces the same dilemma that Lafarge faced in mid-2012 when it sold two cement plants in the US. It needs to sell assets to cut costs and raise capital but it also needs to pick assets to sell that won't boost its competitors too much. The on-going recovery in the US building industry suggests at present that Lafarge may have made a poor choice in North America. Holcim's decision suggests that they aren't expecting a recovery in Australia anytime soon.