Displaying items by tag: Argentina
How to sell InterCement in Brazil
28 February 2024InterCement confirmed this week that it is accepting bids for its sale. The local financial press had been covering InterCement’s progress towards this since the autumn when it was reported that it appointed BTG Pactual to manage the sale.
The Valor Econômico newspaper then revealed this week that Companhia Siderúrgica Nacional (CSN), Votorantim and China-based Huaxin Cement had all submitted bids. InterCement admitted that it had received offers but didn’t say from who, and pointed out that no deal had been signed yet. Valor said that Votorantim was part of a consortium including Polimix (parent company of Mizu Cimentos) and Buzzi. However, Votorantim issued a statement affirming its involvement but pointing out that it was acting alone and not part of a consortium. Finally, Valor reported that InterCement is looking to raise at least US$1.2bn from the sale of its business in Brazil. In Argentina, Loma Negra confirmed what its parent company, InterCement, was doing. La Nación newspaper also reckoned that the parent company might be looking for over US$700m for the subsidiary.
Rumours that InterCement was looking to sell assets have swirled around since the early 2010s when InterCement picked up the Brazil-based assets of Cimpor and Votorantim bought the international ones. The local market then collapsed giving InterCement a hard time, although when it started to rally in the late 2010s the talk turned to a potential initial public offering. More recently the focus has been on InterCement’s high level of debt and pending maturation dates. It publicly said it was working towards a new capital structure in May 2023 and various debt negotiations followed. By the end of the third quarter of 2023 it reported debts in debentures and senior notes of just under US$1.6bn. It signed a deal to sell its subsidiary in Egypt in January 2023 to an unspecified buyer and then divested its operations in Mozambique and South Africa to Huaxin Cement for just over US$230m in December 2023.
It is noteworthy that InterCement has gone public about its divestment intentions now, given previous coverage in the local press and the poor state of its finances in 2023. In November 2023, for example, Valor reported that CSN had hired Morgan Stanley to represent it in a dispute over the sale. At this time Huaxin Cement plus Titan, Buzzi, Polimix and Vicat were all said to be interested. CSN was also said to be waiting until the results of the presidential election in Argentina first before committing to any deal. Yet InterCement said nothing about what was going on at this time.
The other issue is whether InterCement wants to sell its assets in one big piece or in sections. This would be of particular interest to Votorantim, and CSN to a lesser extent, since they control 30% and 20% of the cement market respectively, according to Valor. Data based on cement production capacity data from the Global Cement Directory makes the gap between the two companies wider since Votorantim holds 46% compared to CSN’s 9%. The point here is that the local competition regulator, the Administrative Court of the Brazilian Administrative Council of Economic Defence (CADE), would be more likely to intervene if it determined that one company might be about to distort the market. Clearly this could happen if Votorantim struck a deal to buy InterCement but there might also be issues regionally with CSN or indeed some of the other local cement producers. Alternatively, Votorantim might be interested in buying Loma Negra instead. All InterCement has said on the matter is that it is “evaluating strategic alternatives, such as private placement, merger, or partnership with a strategic player, or even a potential divestment.”
Any potential sales of InterCement would be the biggest adjustment to the Brazilian cement sector since CSN bought Holcim Brazil for just over US$1bn in mid-2022. There appear to be plenty of potential vendors for both the businesses in Brazil and Argentina but whether InterCement sells its assets in one big lump or in separate pieces may be an issue almost as important as the price, given the competition concerns. Finally, could this be the first major China-based acquisition in the cement sector in South America? Huaxin Cement demonstrated willingness to buy plants from InterCement in Africa in 2023 and it has been linked in the current auction. Unlike previous talk of InterCement selling up, this time it seems serious given the divestments in Africa and the scale of the debt. An outcome seems likely in the coming months.
Marcelo Mindlin and Daniel Sielecki to contend with international bidders in Loma Negra auction
22 February 2024Argentina: Camargo Correa Group’s auctioneer JP Morgan will receive offers from bidders for Loma Negra later in February 2024. The La Nación newspaper has reported that Loma Negra may attract a price of over US$700m. Private investors Marcelo Mindlin and Daniel Sielecki will bid together, against anticipated corporate bidders from Brazil and China. Mindlin and Sielecki are joint owners of utilities provider Transportadora Gas del Sur.
BTG Pactual expects to start receiving bids for InterCement assets in February 2024
02 February 2024Brazil: Investment banking and management company BTG Pactual will start receiving ‘binding proposals’ for prospective buyers of assets belonging to InterCement before the end of February 2024, Valor Online News has reported. These will reportedly include InterCement's stake in Argentina-based Loma Negra, as well as its Brazilian business. The latter may involve an outright divestment or the enlistment of a new significant partner. Companhia Siderúrgica Nacional (CSN) previously hired Morgan Stanley for negotiations with InterCement, and China-based Huaxin Cement has reportedly showed interest in its assets. While an outright acquisition might face challenges on grounds of competition, Brazilian market leader Votorantim Cimentos is nonetheless also ‘interested’ in a partial takeover. Continuing plant closures and debt-related asset disposals also potentially further complicate any deal. On the basis of CSN’s previous US$1bn acquisition of (10.3Mt/yr-capacity) LafargeHolcim Brazil, Valor Online News has estimated the sale price of InterCement’s Brazil business as US$1.6bn.
Argentinian cement demand drops in 2023
16 January 2024Argentina: Cement shipments across Argentina totalled 12.6Mt nationally in 2023, down by 3.2% year-on-year from 13Mt in 2022. Central de Noticias News has reported that the Portland Cement Manufacturers Association (AFCP) attributed this to the continuing ‘paralysis’ of private and public construction projects. The Construction Index dropped by 7.9% year-on-year in 2023.
Holcim Argentina achieves 75% renewable energy use
25 December 2023Argentina: Throughout the second half of 2023, Holcim Argentina estimates that it will use 75% renewable energy. The milestone is the outcome of an agreement signed with 360 Energy in April 2023, under which the renewable power provider contributes to the energy mix at all of Holcim Argentina’s cement production facilities. Holcim Argentina says that the deal will help to eliminate 68,600t/yr of CO2 from its operations. The producer said that it also invested in upgrades to help reduce its water consumption by 6% throughout 2023.
Holcim Argentina has invested US$1m in on-going and planned upgrades to its facilities, and plans to invest a further US$4.9m.
Argentina: Holcim Argentina has awarded a contract to 360Energy to supply 30,000MWh/yr of electricity from its solar power plants. La Voz del Interior newspaper has reported that 360Energy will supply the energy from its 200MW network via the Renewable Energy Term Market (MATER). This will cover 75% of Holcim Argentina’s power consumption, corresponding to the production of 2.7Mt of cement. This will eliminate 68,600t/yr of CO2.
Holcim Argentina chief executive officer Christian Dedeu said “I am very happy because we are taking a new step in our commitment to zero emissions in Holcim's operations, and we will continue working every day to build progress for people and the planet.”
Argentine capital posts best first seven months since 2012 despite national malaise
06 September 2023Argentina: Cement production in the province of Buenos Aires rose by 11% year-on-year between January and July 2023, to reach 4.18Mt. This was the highest first seven-month figure since 2012.
However, the capital was not representative of the wider national picture. Across Argentina, consumption fell by 0.3% year-on-year over the seven months to 7.22Mt. Production fell by 0.7Mt to 7.25Mt over the same timeframe.
Loma Negra publishes first-half 2023 results
11 August 2023Argentina: Loma Negra’s sales dropped by 2.1% year-on-year to US$353m in the first half of 2023, from US$361m in the first half of 2022. The company’s cement and lime sales were 3.15Mt, in line with first-half 2022 volumes. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 23% to US$86.8m, while its net profit dropped by 32% to US$31.1m from US$45.9m.
Spain: Cementos Molins’ sales totaled Euro705m in the first half of 2023, up by 16% year-on-year from first-half 2022 levels. The producer said that increased cement volumes and prices across all regions contributed to the growth. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 36% to Euro179m, while its net profit rose by 40% to Euro80m. The company noted the favourable impact of the comparison with the first half of 2023, which was marked by market slowdown, high inflation and supply chain disruptions.
Chief executive officer Julio Rodríguez said "We have continued on the path of sustainable and profitable growth throughout the first half of 2023. It has been a truly positive second quarter in terms of our economic results, but also very encouraging thanks to the progress we are making in terms of sustainability. We have achieved important milestones in our Sustainability Roadmap 2030, including the launch of new low-carbon footprint cements and concretes. Furthermore, we inaugurated a new solar park in San Luis, Argentina."
Argentina: Cementos Avellaneda has inaugurated its 22MW La Calera solar power plant in San Luis Province. Forbes has reported that the power plant will supply electricity to the producer's 1.1Mt/yr San Luis cement plant. As a result, operations at the plant will henceforth be 55% renewably powered. In total, the new solar power plant will eliminate 22,600t/yr-worth of CO2 emissions. Engineering company Industrias Juan F Secco supported the installation of the US$25m plant, which took 16 months to build.
Cementos Avellaneda's general director José Luis Maestri said "It was key to the success of this project to have been able to find a strategic partner such as Industrias Juan F Secco, an Argentine company with more than 80 years of history and experience in the energy sector, which provided us with all its professionalism and commitment."