Displaying items by tag: GCW146

A lot has happened since the 4 April 2014 announcement that Lafarge and Holcim intend to become LafargeHolcim. There have been several related announcements from around the global cement industry this week, prompting some interesting discussion with respect to the future look of the industry.

Oyak Group, which operates a number of plants in Turkey, appears to be limbering up for LafargeHolcim-based acquisitions in the UK, the EU or Africa, with aims to become a regional player. Meanwhile, Lafarge has pulled out of talks regarding its proposed acquisition of the Cementos Portland Valderrivas (CPV) plant in Vallcarca, Spain, directly citing the merger as the reason for this. We have also seen Colombia's Cementos Argos purchase a grinding plant in French Guiana, which was jointly-owned by Lafarge and Holcim. Announced just a few days after the merger, this asset was presumably jettisoned in order to avoid future issues with local anti-monopoly authorities. Finally, ACC and Ambuja have announced that they would retain their separate identities in India after the merger.

This flurry of announcements is likely to be just the start of frenzied speculation as the competitors of Lafarge and Holcim work out what assets are most likely to be sold. So what about the multinationals, Cemex and HeidelbergCement?

Cemex certainly has cause for concern, weighed down by the debt that it took on in 2007 with the acquisition of Australia's Rinker. It is in a relatively weak position with respect to acquiring any LafargeHolcim divestments. Could it lose market share? HeidelbergCement, by contrast, has long extoled the virtues of its financial efficiency policies and its diverse and forward-looking geographical spread. It could snap up more strategic assets after the merger. While both of these multinationals will be wary of dealing with an enlarged competitor in LafargeHolcim, they have the opportunity to increase their market shares and both will move up one position in the global cement producer rankings.

It is likely to be the smaller players that have the most to gain from the shedding of LafargeHolcim's various assets, especially those that enjoy strong domestic markets and have cash at the ready. Oyak Group has already entered the ring but what if Nigeria's Dangote, Brazil's Votorantim, Colombia's Cementos Argos or Thailand's SCG go on a spending spree? Could one of these rise to become a new global cement multinational?

However, if we can expect a change anywhere it will be in Spain. Following reports in 2012 that Spanish cement production had crashed to its lowest levels since the 1960s jobs have been shed and profits have evaporated. In 2013 Holcim and Cemex agreed to combine all of their operations in Spain. Roughly, according to the Global Cement Directory 2014, cement production capacity in Spain breaks down as follows: CPV (23%), Cemex (18%), Lafarge (11%) and Holcim (10%). Letting the Cemex-Holcim deal happen, followed by the Lafarge-Holcim merger and the CPV Vallcarca purchase, would have led to a major headache for Spain's competition authorities, creating an entity with 43% production market share! Unsurprisingly the first casualty has been the CPV Vallcarca deal. Whatever happens, the next 18 months will be an interesting period for the global cement industry.

US: Titan Group has announced that after 20 years at the helm of Titan America, Aris Papadopoulos will retire from the position of CEO, effective 1 August 2014. According to a release, he will become Executive Chairman of ST Equipment & Technologies (STET), reporting to the Group CEO and also serve as an advisor.

The company noted that, commencing with a 1994 joint venture with Roanoke Cement, Papadopoulos led Titan America through a growth trajectory that included the acquisition of Tarmac America and Separation Technologies, modernising the company's two cement plants, numerous operational expansions and multiple concrete acquisitions.

"During Aris' tenure, Titan America grew from a cement joint-venture in Roanoke, Virginia, to the pre-eminent East Coast construction materials producer," said Dimitri Papalexopoulos, CEO of Titan Group. "Aris, more than anyone else, has shaped Titan America over two decades."

Bill Zarkalis, Group CFO since 2010, will succeed Papadopoulos. Zarkalis joined the Group in 2008 as Director of Business Development. He previously held executive positions at Dow Chemical. As CEO-designate, he will work closely with Papadopoulos to ensure a smooth transition. Michael Colakides will become Group CFO, effective 16 May 2014. Colakides recently returned to the Group as Senior Strategy Advisor after more than a decade in several banking industry executive roles.

Kuwait: Hilal Cement Company has appointed Muhammad Muhtashem Khan as a board member, effective 10 April 2014. He replaces Yan Mahdi Baqi.

Qatar: Rising government infrastructure spending is predicted to double demand for cement in Qatar by 2017. Dubai-based financial services firm Arqaam Capital has reported that the Qatari government is expected to release up to US$50bn for construction projects in 2014, a rise of 15% compared to 2013.

The move follows the state's plan to invest US$208bn on infrastructure developments in 2013 - 2018, largely linked to the 2022 World Cup. Arqaam has projected that, given that current projects are worth US$70bn and have an average churn rate of 3- 4 years, the expenditure implies that cement demand will double within the next three years. Cement demand is expected to grow to hit 9.4Mt/yr in 2017.

"We expect production capacity and demand levels to reach equilibrium by 2018. Our forecasts are on the conservative side as Qatar's Ministry of development and planning's most recently published survey suggests demand for limestone is set to increase by 131% in 2014 and 127% in 2015," said a report by Arqaam.

Sierra Leone: The Sierra Leone Cement Corporation (LEOCEM), a subsidiary of HeidelbergCement, will start selling a slag-based cement in June 2014. According to Victor John Cole, the laboratory head at LEOCEM, the new slag cement will be high-quality and suitable for under water construction. Cole made the announcement during the 20th anniversary celebrations at the company's grinding plant in Cline Town, Freetown.

Spain: French cement multinational Lafarge has reportedly withdrawn from talks that it was having regarding the acquisition of a Catalonian cement plant from the Spanish sector player Cementos Portland Valderrivas (CPV). The decision was attributed to Lafarge's merger project with Swiss cement maker Holcim, which will most probably lead to the sale of assets in European countries, including Spain.

Lafarge had been negotiating the acquisition of the Vallcarca plant for several months. The plant has a cement capacity of 1.3Mt/yr. Lafarge previously placed a Euro20m offer for the facility, which was rejected by CPV.

China: Huaxin Cement Co Ltd has announced that it anticipates its net profit for the first quarter of 2014 to grow by 350-400% year-on-year, compared to a profit of US$4.14m in the corresponding period of 2013. The Hubei Province-based company attributes its forecasted profit growth to increasing cement product sales and prices.

China: The government of Tianjin in northern China has said that it will not approve any new cement, steel or non-ferrous metals plants in a bid to fight pollution, according to state media. The statement follows a central government plan from 2013 to restrict new manufacturing in key industrial centres.

China has identified the region that includes Beijing, Hebei and Tianjin as one of the key targets of a programme to reduce the emissions of 'heavy' industries including cement, steel and thermal power, according to reports from Reuters. It has promised in policy documents released since 2012 to block the construction of new industrial plants in three major 'low-emission' regions, including Beijing-Hebei-Tianjin, the Yangtze river delta region centring on Shanghai and the Pearl river delta region in southern Guangdong Province. China's environment ministry has said that these regions are responsible for 40% of the country's total cement output despite covering just 8% of the country's total area.

Tajikistan: Tajik President Emomali Rahmon was expected to give the green light for the construction of 0.5Mt/yr cement plant in Vahdat on Wednesday 16 April 2014. The Ministry of Industry and New technologies of Tajikistan (MoINT) says that an estimated budget for construction of the plant is US$81.5m. It will be built by China-based Beijing Uni-Construction Group, which will deliver the plant to Tajik firm Vahdat Cement on a turnkey basis.

Egypt: Arabian Cement Company has announced that its initial public offering (IPO) is expected to take place before the end of the second quarter of 2014, with trading on the Egyptian Stock Exchange to start around 21 May 2014. The company plans to sell a 22.5% stake.

Arabian Cement Company has also invested US$35m to shift from using 100% natural gas to 70% coal and 30% alternative fuels. It expects to use coal within the next three to four months once the government issues the company with the necessary license. The company produced 4Mt of cement in the 2013 fiscal year from a capacity of 5Mt/yr. It expects no growth in the 2014 fiscal year on the back of energy shortages.