Nothing says I love you like a white cement plant

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HeidelbergCement made Italy’s Cementir Holding its Valentine last week in the form of a deal for the Italian company to buy up the remaining shares in Lehigh White Cement in the US. Cementir takes control of the former joint venture by upping its share to 63.25% for US$107m and one of the other partners, Cemex, increases its share to 36.75% for US$34m. Despite making the announcement on Valentine’s Day HeidelbergCement then described the sale in fairly unromantic language, “As a niche product with small volumes, the standalone production of white cement does not fit to the strategic focus on efficiency of HeidelbergCement.” Maybe they could just send flowers to each other next year instead!

More seriously, this latest deal by Cementir is yet another intriguing evolution of the Italian multinational building materials producer. The company says it is the largest white cement producer in the world through subsidiaries like Aalborg Portland in Demark, Sinai White Cement in Egypt and Lehigh White Cement in the US. Its plant at El-Arish in Egypt is the largest white cement unit in the world. In 2016 it reported a white cement production capacity of 3.3Mt/yr from six plants in Denmark, Egypt, China, Malaysia and the US. Its volume sales of white cement were 2.2Mt at this time or a capacity utilisation rate of 67%. In the US it operates two white cement plants located in Waco, Texas and York, Pennsylvania with a total capacity of 0.26Mt/yr, as well as a distribution network throughout the country, which is also used to distribute white cement imported from its partners across North America. In 2017 Cementir produced 10.3Mt of Ordinary Portland (grey) Cement and white cement, a rise of 24.6% year-on-year from 8.25Mt in 2016. The boost was delivered by the acquisition of Compagnie des Ciments Belges. Like-for-like sales volumes increased by around 1.7% year-on-year.

Cementir left the Italian market in 2017 when it sold Cementir Italia to HeidelbergCement for Euro315m. As this column commented as the time (GCW320) the deal seemed cheap given that HeidelbergCement paid Euro315m for five integrated cement plants plus extras. However, Cementir appeared to actually make a profit on Sacci which it picked up cheaply in 2016.

Now HeidelbergCement has returned the favour by selling Cementir the controlling stake in Lehigh White Cement. The German cement producer may have grumpily rubbished the sale in its press release but the language makes one wonder whether this was a quiet part of the Cementir Italia deal in 2017. The white cement industry is miniscule compared to the OPC one but HeidelbergCement has just handed even more control of it to Cementir. From Cementir’s perspective this probably seems very efficient.


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