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Eagle Materials announced this week that it had completed the acquisition of Martin Marietta’s cement import business in the north of California. A key part of the deal includes the sale of a cement terminal at Stockton. No value for the transaction has been disclosed.

The agreement prompts discussion for two immediate reasons. Firstly, it continues the enlargement of Eagle Materials’ cement business with its second terminal in California. The company operates its cement business in a band running almost right across the US. It runs seven cement plants in seven different states and jointly operates, with Heidelberg Materials, a plant in Texas too. It also runs a network of 25 cement terminals, including the new acquisition, stretching from California in the west to Pennsylvania in the east.

Eagle Materials’ focus on the cement sector also harks back to its previous plans to separate its various businesses. In 2019 it approved a plan to split its heavy materials and light materials businesses into two publicly-traded entities. The decision was made in response to pressure by shareholder Sachem Head Capital Management to make the company, in its view, more valuable. A strategic portfolio review followed but the planned separation was subsequently delayed due to the Covid-19 pandemic and poor market conditions, amongst other reasons. The board of the company then cancelled the proposed separation in 2021 citing the financial benefits of a diversified business, opportunities for strategic growth and the divestment of its oil and gas proppants business.

The other talking point is that the Eagle Materials transaction follows a positive response by the Federal Trade Commission (FTC) in response to the abandonment of CalPortland’s attempt to buy the Tehachapi cement plant in southern California and two related terminals from Martin Marietta. CalPortland’s parent company Taiheiyo Cement said in late April 2023 that it had terminated the acquisition agreement originally announced in mid-2022 due to its inability to obtain approval from the FTC in a timely manner. Whilst the FTC did not say if it had directly tried to block the proposed deal it did say, “The abandonment is a victory for consumers and preserves competition for a key component of Southern California’s construction and infrastructure industries.”

The FTC argued that the transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market, and was “presumptively illegal.” It noted that the Tehachapi plant was only about 20km away from CalPortland’s Mojave cement plant. It went on to say that, if the deal had gone ahead, CalPortland was poised to own half of the cement plants serving the Southern California market. It added that it would have been well-placed to raise its prices and that, “the transaction would have also increased the likelihood for coordinated action between the remaining competitors in this concentrated market.”

The de-facto block by the FTC of the Tehachapi sale now opens up the question of who Martin Marietta might try to sell it to next. Cemex, Mitsubishi Cement and National Cement (Vicat) are the obvious contenders given that they each also run integrated plants in the state. Of course another company, especially one with some form of existing distribution network, may express interest. Given its enlarged presence in Northern California, Eagle Materials springs to mind. Other potential buyers are, of course, available.

Brazil: Votorantim Cimentos has appointed Osvaldo Ayres Filho as its global chief executive officer (CEO). He succeeds Marcelo Castelli in the post, who is becoming a member of the board of directors.

Ayres Filho holds over 25 years of professional experience working for companies such as Avon, Fibria and Ciba Chemicals. He joined Votorantim Cimentos in 2012 and has held the positions of financial director for the Europe, Asia and Africa region, operations director for the Southeast region in Brazil, financial director for the Brazilian business and global chief financial officer and Investor Relations Officer, with additional responsibility for the areas of strategy, information technology, mergers and acquisitions and global procurement. He became the company’s chief operations officer in 2021 with responsibility for cement, logistics and adjacent businesses. Ayres Filho holds a degree in business administration from Mackenzie Presbyterian University and a postgraduate degree in administration from the Getulio Vargas Foundation.

Germany: Heidelberg Materials recorded sales of Euro4.9bn during the first quarter of 2023, up by 13% year-on-year. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 42% to Euro557m from Euro394m. The producer said that energy prices in the quarter eased slightly, but remained ‘volatile’ and were still well above previous years. Heidelberg Materials upgraded its outlook for 2023 to a ‘moderate’ rise in sales, with earnings of Euro2.5 - 2.65bn, compared to Euro2.35bn - 2.65bn in its previous outlook.

During the quarter under review, Heidelberg Materials expanded its circularity offering through the acquisition of demolition waste recycling company SER Group in Germany and of fly ash recycling company SEFA Group in the US. It linked its financing to its climate targets through the issue of a sustainability-linked loan in January 2023.

Chair Dominik von Achten said “We have had a good start into 2023. In the first quarter, we were able to achieve a strong increase in revenue and results. Our operations in North America and Europe made a particular contribution to this success –we can keep building on this during the rest of the year. We are optimistic about the full year 2023.”

India: Birla Corporation recorded sales of US$1.06bn throughout the 2023 financial year, up by 16% year-on-year from 2022 financial year levels. The company’s cement segment contributed US$1bn in sales, up by 17% and corresponding to 95% of group sales. Group net profit was US$4.94m, down by 90% year-on-year from the previous financial year.

India: Nuvoco Vistas’ sales rose by 14% year-on-year during the 2023 financial year, to US$1.29bn. The group’s cement sales volumes were 18.8Mt, up by 5%. It recorded a profit after tax of US$1.95bn.

In 2023, Nuvoco Vistas achieved a cement alternative fuel (AF) substitution rate of 12%. Its emphasis on developing blended cements enabled it to achieve an industry-leading cement to clinker factor of 55%. It operations during the year relied on over 20% renewable energy.

India: Jaiprakash Associates has defaulted on loans worth US$482m, which were due for repayment on 30 April 2023. The producer has total borrowings of US$3.57bn, repayable by 2037. It informed the National Stock Exchange of India (NSE) that the outstanding debt is subject to on-going restructuring, but will reduce by US$2.21bn upon transfer of property belonging to Jaiprakash Associates to a shareholder-approved special purpose vehicle (SPV).

Iraq: Pakistan-based Attock Cement has scheduled an extraordinary general meeting in late May 2023 to approve the sale of a cement grinding plant at Khor Al-Zubair in Basra for around US$23m. It is preparing to sell a 60% share in the unit to a joint venture comprising Abdul Lateef Mohsin Al Geetan, an Iraqi national, and Lamassu Babylon General Trading Company, an organisation based in Dubai, UAE.

Nigeria: Lafarge Africa has opened a bag manufacturing unit at its Ewekoro cement plant in Ogun State. It has a bag production capacity of 105m/yr. The company says it is the first of its kind in the country. It is intended to increase the availability of bags through large-scale production locally. The project is a joint-venture run with MDV Industries.

Khaled El Dokani, the country chief executive officer for Lafarge Africa, said “We are using the best technology that produces the most efficient and durable bag in Nigeria. It is a very great day for us at Lafarge Africa.”

Tanzania: The government has defended its support for the acquisition of a majority stake in Tanga Cement by a subsidiary of Heidelberg Materials. In 2021 Scancem International, a subsidiary of Heidelberg Materials, agreed to buy a 68% share of Tanga Cement from AfriSam for around US$59m. The Fair Competition Commission (FCC) provisionally approved the deal but the Fair Competition Tribunal (FCT) blocked it in late 2022 following lobbying by Chalinze Cement and the Tanzania Consumer Advocacy Society on the grounds that it would potentially reduce market competition, according to the Citizen newspaper. However, Scancem International applied again to the FCC in December 2022 to push through the agreement. This motion was then approved in February 2023.

During a parliamentary debate on the issue in early May 2023 Ashatu Kijaji, the Minister for Industry and Trade, defended the decision to re-approve the deal on the grounds that the approved merger application was different from the one rejected by the FCT. However, other members of parliament were sceptical about the decision.

Cape Verde: Portugal-based Cimpor has signed a deal with the government of Cape Verde to develop and exploit a pozzolan deposit over the next 30 years. Exploration of the site is expected to begin by late 2024. The immediate location has reserves of around 0.5Mt in an area of 108 hectares. However, the scheme also has the option to expand the site to 790 hectares, increasing the estimated pozzolan reserves to 4Mt. The project has an investment of Euro3m and is expected to create around 80 jobs.

Cimpor’s parent company OYAK Cement previously said in 2019 that it was planning to invest in pozzolan extraction in Cape Verde.