Displaying items by tag: Finance

Brazil: Companhia Siderúrgica Nacional (CSN) Cimentos plans to resume its initial public offering (IPO) of shares in mid-October 2021. The producer is aiming to raise at least US$478m. It will conclude the offering before 1 January 2022. Parent company CSN previously suspended the IPO in July 2021 due to unfavourable market conditions.

Mexico: Cemex has launched a sustainability-linked financing framework. It says that it is the ‘most comprehensive’ such framework in the building materials sector. The framework further aligns Cemex’s corporate sustainability commitments to its financing strategy, as part of its ‘Future in Action’ program. It establishes Cemex’s guiding principles when issuing new sustainability-linked financing instruments, including public bonds, private placements, loans, derivatives, working capital solutions and other financing instruments. Sustainalytics, an independent company that specialises in providing environmental, social and corporate governance research, ratings and data to institutional investors and companies, validated the framework’s alignment with the Sustainability-Linked Bond Principles, the International Capital Market Association’s Climate Transition Finance Handbook and the Loan Market Association’s Sustainability-Linked Loan Principles.

“Climate change is one of the biggest challenges of our time, and we will continue to address it as a fundamental component of our business strategy,” said Maher Al-Haffar, Cemex's chief financial officer. “Cemex is committed to increasing the role sustainable finance plays in its capital structure by potentially linking the cost of financial instruments to the achievement of targets, directly aligning our corporate finance strategy to sustainability commitments and further contributing to a low-carbon future.”

Cemex has included three key performance indicators in the framework: net CO₂ emissions per tonne of cementitious product, clean electricity consumption and alternative fuels rate. All of them were qualified by Sustainalytics and deemed aligned with the company’s climate action strategy. Cemex currently has a 2030 target of reaching below 475kg/t of CO₂ for cementitious products.

China: BBMG has issued US$464m-worth of short-term fixed-rate bonds. China Knowledge Press News has reported that the company says that the bonds were issued at face value. Their maturity date is 25 March 2022.

Saudi Arabia: Mansour Balghonaim has taken a seat on the board of Saudi Cement, effective retroactively from 30 June 2021. Blaghonaim has 16 years’ experience in banking and is head of business development wholesale banking at Gulf International Bank. He acquired his degree in finance from King Saud University, Riyadh.

Colombia: Argos North America has taken out a US$300m loan where the interest rate is linked to CO₂ emission reduction indicators and the increase in the percentage of women in leadership positions. It will be used to prepay an existing syndicated loan. The loan has been taken out from BNP Paribas Securities, Natixis, Sumitomo Mitsui Banking Corporation and the Bank of Nova Scotia. This loan is the first linked to environmental, social and corporate governance performance that Argos has signed with international banks.

There was good news from the corporate finance sector for cement producers this week in the form of an approving statement by Fitch Ratings. It declared that it expected the sector to be able to pass on the costs of decarbonisation to customers due to a lack of alternatives. It recognised the challenges posed by regulators, investors and societal pressure but, even so, it suggested that cement was still an industry worth backing. Or at least for now. Added to this, it forecast that demand for building materials would grow to support the transition to a low carbon economy and to combat the damage caused by climate change. It did admit that the capital or operating costs required to decarbonise are seen as being potentially large, especially with uncertainty over how much governments will pay or incentivise. Yet the timescales involved are beyond the ratings agency’s ‘horizon’ hence no really disruptive shifts in producer economics are expected anytime soon.

This was obviously a win for the cement industry and its cheerleading associations led by the Global Cement and Concrete Association (GCCA), the World Cement Association and the regional associations. After all, the increasingly convergent message to the wider world has been along the lines of ‘concrete is part of the solution and you need our products because there’s nothing else.’ Good timing then for the GCCA to launch its collaboration with the World Economic Forum, the ‘Concrete Action for Climate’ (CAC) initiative. The collaborative platform is planned to help drive the industry’s journey to carbon neutral concrete by 2050 as part of the wider Mission Possible Partnership, a wider coalition of public and private organisations working on setting the heavy industry and transport sectors towards net-zero. Expect lots more of these kinds of announcements on the road to the 26th UN Climate Change Conference of the Parties (COP26) taking place in Scotland in late October 2021.

Fitch Ratings did point out that societal awareness was likely to accelerate decarbonisation. The sharp end of this trend was experienced by the building materials industry this week when environmental activist group Extinction Rebellion forced operations to stop temporarily at LafargeHolcim’s Port de Javel ready-mixed concrete plant in Paris on 30 June 2021. This followed a similar incident by the same group at a LafargeHolcim subsidiary ready-mix plant in London in mid-2019. Given the share of global CO₂ emissions from the cement-concrete production chain, it is perhaps surprising that climate activists haven’t targeted clinker-producing cement plants directly in the same way that they have gone after coal-fired power stations. Clinker kilns are, after all, the source of the majority of the sector’s emissions. However, blockading a concrete plant in the city may conjure up a more potent media image than doing the same to a factory out in the country.

Instead the battles with cement plants and their quarries tend to be of a ‘not in my back yard’ (Nimby) nature. Or rather ‘not in my monastery (Nimmon?) this week, with the news that a subsidiary of YTL Cement in Malaysia is attempting to evict a group of Buddhist monks and their underground place of worship from a quarry on Mount Kanthan in Perak. In the latest twist of the long running saga, the monks have hit back with an attempt to get their portion of the site recognised as a place of worship and a heritage site. Thankfully a more positive example of how quarries can fit in with the wider community could be found this week in the guise of an archaeological dig at CRH subsidiary Tarmac’s Knobb’s Farm quarry in Cambridgeshire, UK. The discovery of a Roman Britain-era cemetery with a high proportion of decapitated bodies may have been gruesome but the relations between the operator and the archaeologists were much more harmonious. Another recent example was the discovery of what may be a new precursor species of humans, unearthed at a quarry run by Nesher-Israel Cement Enterprises site at Ramla in late June 2021.

The paradox building materials producers pose to environmental activists could be summed up by the record heat wave that hit the north-western region of North America recently. CO₂ emissions, in minor part produced by the cement and concrete industries, are the most likely reason for an increased frequency of extreme weather events such as this. Yet, infrastructure such as pavements and roads were widely reported as having buckled in the heat, principally because they weren’t built for such high temperatures. They will have to be rebuilt to withstand similar temperatures in the future. Building materials can thus be seen as both part of the problem and part of the solution. Yet with net zero targets nearly 30 years away it seems likely that continued extreme weather events and their potentially lethal consequences will speed up the public demand for decarbonisation. It is worth noting here that one of Extinction Rebellion’s demands in the UK is that the country should become net zero by 2025.

Fitch Ratings has cast its vote for now and Extinction Rebellion and its fellows are set to continue to wage their political campaigns. In the meantime it is debatable how much spiritual solace will be found by the monks of Mount Kanthan during blasting hours at the neighbouring quarry.

Mexico: Cemex has concluded the sale of subordinated notes with a value of US$1.0bn. The company says that it will use the proceeds from the bonds sale for various purposes, including debt repayment.

Chief financial officer Maher Al-Haffar said, “The purpose of this transaction is to further Cemex in its pursuit of an investment grade capital structure and a commensurate leverage ratio.”

India: Nirma Group subsidiary Nuvoco Vistas plans to launch a US$677m initial public offering (IPO). The Economic Times newspaper has reported that the IPO consists of a US$190m – US$203m fresh issue and a US$474m offer for sale. The company’s targeted valuation after listing is US$4.74bn, in line with the value of Switzerland-based LafargeHolcim subsidiary ACC.

Nuvoco Vistas first acquired its cement assets from Lafarge India in 2017.

India: Aditya Birla subsidiary Grasim Industries has raised US$136m through fully paid unsecured non-convertible debentures (NCDs). The company has allotted the NCDs on a private placement basis.

Nigeria: BUA Cement has successfully concluded a US$290m Series 1 fixed-rate senior unsecured bond issue. The Punch newspaper has reported that the company utilised US$290m of its US$505m maiden bond issue in line with regulatory guidelines. It was nonetheless oversubscribed by nearly US$350m. The group said that it will apply to dual-list the bond on the relevant exchanges, subject to necessary approvals.