Displaying items by tag: Cemex
Croatian competition
12 October 2016The European Commission’s decision to investigate Duna-Dráva Cement’s (DDC) purchase of Cemex Croatia sticks out in a busy news week. There have been a few noteworthy news stories this week from the Indonesian government making preparations to fight overcapacity, LafargeHolcim retreating from Chile, Cemex restructuring its management in Colombia after investigations into a land deal and the announcement of merger plans between two of the larger refractory manufacturers. Yet the commission’s probe is a response to what may be in effect a ‘land grab’ by DDC. How on earth did HeidelbergCement and Schwenk, the joint-owners of DDC, think they were going to pass this one past the relevant competition bodies?!
As the commissions describes it, the “proposed transaction would combine Cemex Croatia, the largest producer in the area, and DDC, the largest importer.” So far, so bad. Then add the observation that Cemex Croatia and LafargeHolcim control all the cement terminals in ports along the Croatian coast. Cemex has three cement plants in the south of the country with no nearby competition. Giving the owners of DDC those assets ties up the market southern Croatia nicely. Understandably, the European Commission has concerns.
Croatia has five cement plants. LafargeHolcim runs a 0.45Mt/yr plant at Koromačno and Nasicecement run a 0.6Mt/yr plant at Nasice. Cemex’s three plants are all in the south near Split within about 10km of each other. When Global Cement visited in late 2014 Cemex Croatia told us that the plants were so close together that the company considered them as one plant. The sites also share one quarry for their raw materials. Only one of three plants, Sv Juraj the largest, has a bagging unit and Sv 10 Kolovoz was mothballed due to poor market demand. Together the plants have a cement production capacity of 1.92Mt/yr. This gives Cemex 65% of the market by production capacity.
Describing the three plants as one certainly makes sense for a company that might have been considering selling them. However, it is a fair comment given the close proximity of the plants to each other and the joint-capacity below that of some of the larger single site multi-kiln plants around the world. In this sense, the real questions for the European Commission will be how much of a dent to competition will it make to hand over the area’s main importer to the area’s main producer?
Graph 1: Cement consumption in Croatia, 2011 - 2015 (Mt). Source: Croatian Bureau of Statistics.
Looking at the national cement market since 2011 in Graph 1 using data from the Croatian Bureau of Statistics, sales volumes fell to a low in 2013 and have picked up since then, although not to the same levels. Prior to this cement sales halved from 2008 to 2013. Under these kinds of conditions Nexe Grupa, the owner of Nasicecement, filed with pre-bankruptcy settlements in 2013. HeidelbergCement expressed interest in the cement assets around this time, although nothing eventually happened. Imports of cement grew by 11% year-on-year to 312,000t in 2015 from 280,000t in 2014. This compares to a 1% increase to 2.36Mt in domestic cement sales in 2015.
As the commission suggests, combining the region’s biggest producer and its biggest importer seems like a recipe for reduced competition and inflated prices. This could be mitigated, in theory, if DDC decided to flood the region with imports from HeidelbergCement’s new assets from Italcementi once it completes its purchase of that company. Although a dominant player in a region undercutting its own prices seems far fetched. Theoreticals aside, it seems very unlikely that the European Commission will let the purchase go ahead without taking some sort of action.
European Commission starts investigation into HeidelbergCement and Schwenk's joint acquisition of Cemex Croatia
11 October 2016Croatia: The European Commission has opened an investigation to check whether the proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk is in line with the European Union (EU) Merger Regulation. The commission has concerns that the proposed takeover may reduce competition for grey cement in Croatia. It will make its decision by 23 February 2017.
"The construction sector, like any other sector, needs competition. As cement is an essential part of the sector we need to make sure that consolidation does not lead to higher prices for construction companies and ultimately consumers in Croatia," said commissioner Margrethe Vestager.
The commission has concerns regarding the supply of grey cement in southern Croatia, including Dalmatia in particular, where Cemex Croatia operates three cement plants in Split and faces competition from DDC's imports from Bosnia and Herzegovina, which is not an EU member. The proposed transaction would combine Cemex Croatia, the largest producer in the area, and DDC, the largest importer. The commission's initial investigation indicates that the proposed transaction may remove a significant competitor from an already concentrated regional market.
The remaining actual or potential suppliers may exercise only limited competitive pressure on the merged entity because of the transport costs to reach southern Croatia. Additionally, the domestic cement suppliers Cemex Croatia and LafargeHolcim control all the cement terminals in ports along the Croatian coast. The commission has preliminary concerns that the transaction may strengthen the market power of Cemex Croatia in southern Croatia and result in price increases for grey cement.
HeidelbergCement and Schwenk plan to acquire, via their joint subsidiary DDC, assets in Croatia and Hungary that currently belonging to Cemex. The Hungarian part of the transaction as been referred to the Hungarian competition authority, so the commission's investigation will focuses on the acquisition of Cemex's Croatian assets.
Cemex makes management changes in Cemex LatAm and Cemex Colombia following Maceo scandal
06 October 2016Colombia: Cemex has made organisational changes at Cemex LatAm and Cemex Colombia following senior management dismissals and the resignation of the unit’s chief executive officer in connection to investigations into a land deal in Maceo. The cement producer said the changes would ‘enhance the level of leadership, administration and corporate governance practices.’
The board of directors of Cemex LatAm has decided to split the roles of chairman of the board of directors of Cemex LatAm, chief executive officer of Cemex LatAm and director of Cemex Colombia. Additionally, a new chairman of the board of directors of Cemex LatAm, director of Cemex Colombia, and director of planning of Cemex LatAm have been appointed. The new appointments are effective immediately.
Juan Pablo San Agustin has been appointed chairman of the board of directors of Cemex LatAm. He will also remain as executive vice president of strategic planning and new business development of Cemex. He is a member of Cemex’s executive committee.
Jaime Muguiro Domínguez has been confirmed as chief executive officer of Cemex LatAm. He will also remain as president of Cemex South, Central America and the Caribbean and is also a member of Cemex’s executive committee.
Ricardo Naya Barba has been appointed director of Cemex Colombia.
Francisco Aguilera Mendoza has been appointed director of planning of Cemex LatAm, and will be appointed director of planning of Cemex Colombia in the coming days.
Cemex added that all of the newly appointed executives have ‘significant’ international operating management experience and on average have each close to 20 years of working experience within Cemex.
Cemex Latam clears interim land rights for Maceo project
04 October 2016Colombia: Cemex Latam has secured an interim contract with the government for its cement plant project in Maceo, Antioquia. The temporary solution will last until the end of an investigation into the irregular acquisition of the land, tax-free area and mining rights for the factory by Cemex Latam Holdings in 2012, according to the El Espectador newspaper. The company also intends to negotiate an extension of the lease contract, as per its original plans, in order to commence operation of the plant in early 2017.
An internal probe into the land deal found that irregular payments of US$20.5m had been made to Eugenio Diaz Correa, an individual connected to the deal. Cemex has fired Edgar Ramirez, vice president of planning, and Camilo Gonzalez, head of legal department, as part of the investigation and Carlos Jacks, the company's regional director, resigned. Cemex Latam has hired an external audit team and legal representatives in the case that was passed on to the Attorney General's Office of Colombia.
Cemex to sell 23% stake in Grupo Cementos de Chihuahua
03 October 2016Mexico: Cemex wants to sell its 23% stake in Grupo Cementos de Chihuahua through a secondary public offering. Cemex has asked the Comisión Nacional Bancaria y de Valores, Mexico's banking and securities regulator (CNBV), to approve the planned transaction, under which the Mexican building materials company will offer the shares to domestic and foreign investors in a concurrent private placement. The sale will be part of Cemex’s previously announced asset disposal plan. The company wants to sell up to US$2bn worth of assets to reduce its debts.
Colombia: Cemex Latam has dismissed its Vice President for Planning and the General Attorney for its Latin American and Colombian units following an investigation into US$20m payments related to a cement plant being built in Maceo, Antioquia Province, Colombia. In addition, the unit’s chief executive officer has resigned in connection to the probe, according to Bloomberg.
The South American subsidiary of Cemex found payments of about US$20m had been made to a non-government individual for land and mining rights, and benefits related to a tax-free area where the Maceo cement plant is being constructed, according to a regulatory filing released by the Colombian financial regulator. Cemex has informed the Colombian prosecutors of the results of its internal probe.
Cemex sells Fairborn cement plant to Eagle Materials
13 September 2016US: Cemex has signed a definitive agreement for the sale of its 1Mt/yr Fairborn, Ohio cement plant, a cement terminal in Columbus, Ohio and a cement bagging operation to Eagle Materials for US$400m. Cemex will use the proceeds of the sale to reduce its debts and for general corporate purposes. The closing of the deal is subject to regulatory approval. The divestiture is expected to be completed during the fourth quarter of 2016.
"Our strategy has been to grow the cement side of our business. The Fairborn plant extends our US cement system and connects but does not overlap with the market reach of our existing plants. This high-quality cement plant is a compelling fit with our strategic objectives and our criteria for new investment. These assets will allow us to participate more fully in the US construction industry and further positions the company in target US heartland growth markets," said Dave Powers, Eagle Materials President and Chief Executive Officer.
Spanish regulator issues Euro29.2m fine to cement companies
13 September 2016Spain: The National Commission for Markets and Competition (CNMC) has issued total fines of Euro29.2m to 23 cement companies for involvement in a cartel between 1999 and 2014. Among the companies are Cementos Portland Valderrivas, with a Euro10.2m fine, Cemex Spain with a Euro5.8m fine and Holcim Spain, with a Euro4.4m fine, according to the Cinco Días newspaper.
The CNMC’s investigations have shown that the companies coordinated the exchange of commercial information, market sharing and price fixing between 1999 and 2014 in three distinct geographical areas in the north, centre and south of the country. Notably, the southern region examined the companies used email and WhatsApp mobile phone application to share sensitive information.
PCA issues award to Cemex Lyons cement plant
08 September 2016US: The Cemex Lyons Cement Plant has been recognised by the Portland Cement Association (PCA) with its 2016 Energy and Environment Award for Land Stewardship. Representatives from the Lyons, Colorado unit accepted the award on 31 August 2016 at the PCA’s annual Fall Congress meeting in Chicago.
The Lyons plant’s land-stewardship program for 2015 included limiting invasive plants and weeds and cultivating native plants to attract local wildlife and migrating birds, an effort that was launched at the facility in 2008. The plant also optimised its quarry roads to limit fugitive dust emissions and improve energy efficiency and employee productivity. The plant has previously been recognised by the Wildlife Habitat Council for its diverse environmental programs, including increasing areas dedicated to pollinator plantings and native species to 2.33 acres. On Earth Day, plant employees installed bee boards, bat houses and bird nests.
“Cemex is committed to sustainable practices throughout our operations and to building a better future for our communities through environmental initiatives. We are very proud of our Lyons team and their commitment to land stewardship, and it’s truly an honour to be recognized by the PCA for those efforts,” said Cemex USA president Ignacio Madridejos.
The PCA created the Energy & Environmental awards program in 2000. The PCA awards are given annually to recognise environmental and community relations efforts by cement plants throughout North America. The program is open to any cement manufacturing plant in the region.
Mexico: Cemex has announced that Mexico’s Secretariat of Environment and Natural Resources has granted the company an Honourable Mention for the 2016 National Award of Ecological Merit. This award is the country’s most important environmental recognition and was presented to CEMEX for its conservation and restoration efforts under the company’s El Carmen Conservation Program.
Cemex earned this recognition in the Business Category for its contribution to the restoration, conservation, and increased population of endangered species such as the bighorn sheep, the pronghorn antelope, and the golden eagle. Thanks to El Carmen’s preservation initiatives, other species with considerably increased populations include the desert mule deer, the white-tailed deer, and the black bear — the largest population of this species of bear in Mexico.
“We are very proud to receive this recognition. It encourages us to continue our work to preserve the extraordinary biodiversity of our planet,” said Fernando A. Gonzalez, CEO of Cemex. “Our 15 years of continuous commitment to El Carmen underscores the key role that sustainability plays in our company’s strategy.”
Cemex’s El Carmen Conservation Program celebrates 15 years of work conserving the unique biodiversity of the border region within the states of Coahuila, Mexico, and Texas, USA. Comprising over 140,000 hectares, the El Carmen ecological reserve is one of the most biodiversity rich areas in North America and one of the five great wilderness ecosystems in the world.