Displaying items by tag: Lafarge

Spain: LafargeHolcim España has appointed Carmen Díaz appointed as its director general. She succeeds Isidoro Miranda in the position and will report to Miljan Gutovic, Region Head EMEA at Holcim Group.

Díaz trained as a chemical engineer from the University of Oviedo and has taken the General Management Program (PDG) from the IESE Business School. She started working for Lafarge in 2002 as the head of its concrete business in Spain. She held the position of VP Commercial Performance in 2014 with responsibility for 30 countries. Later she became the Head of Ready-Mix Commercial and then the General Manager for the ReadySet Mix Digital Venture. Most recently she was worked as the Commercial Director of Spain for LafargeHolcim.

Greece: Titan Cement has appointed Marcel Cobuz as the chair of its executive committee. He will succeed Dimitri Papalexopoulos in the post from 15 October 2022. Papalexopoulos, in turn, will become the chair of the board of directors, succeeding Efstratios-Georgios Arapoglou.

Cobuz, a French and Romanian national, has worked for Holcim and its associated companies for over 20 years. He joined Lafarge Group in 2000 and has held various leadership roles in Europe, Asia, the Middle East and Africa. He later became the Europe Region Head for LafargeHolcim from 2018 to 2021. Prior to his time at Lafarge, Cobuz started his career in investment banking at Creditanstalt Investment Bank and worked as an entrepreneur in Romania. He studied law and economics in Bucharest, completed an Advanced Management Program at Harvard Business School and has attended executive programs at INSEAD, the IMD Business School and Singularity Group.

France: The Court of Appeals has confirmed a charge of complicity in crimes against humanity against Lafarge, now part of Holcim. The company will now appeal the decision to the Supreme Court. The confirmation establishes the scope of the charges that Lafarge will face, if unsuccessful in its appeal.

Global Cement previously reported that Lafarge allegedly made indirect payments to terror organisation ISIS between 2011 and 2014 in order to keep its Jalabiya cement plant operational during the Syrian Civil War. French prosecutors opened an investigation into the company’s activities in the country in June 2017, leading to its indictment for complicity in crimes against humanity on 28 June 2018.

Holcim agreed to sell its Indian assets to Adani Group this week for US$6.37bn. These include Holcim’s stakes in its local subsidiaries Ambuja Cement and ACC. The deal, if approved by the local competition body, should complete in the second half of 2022. This is one of the larger sales of cement company assets over the last decade. Adani Group, an Indian-based conglomerate with businesses across energy, transport and more, is now poised to become the second largest cement producer in India.

Global Cement Weekly previously covered a potential sale of Ambuja Cement and ACC in April 2022 when the story that Holcim was looking for a buyer first emerged in the Indian press. At the time local press speculated that the sale could generate as much as US$15bn for Holcim. So it is interesting to see that a figure of US$6.37bn has been agreed upon instead, less than half of the speculative figure. Roughly, as ever, this places a value of a little below US$100/t of cement production capacity. This seems like a relatively low pricing for these plants by international standards over the last decade. However, this doesn’t take into account many factors such as, for example, the condition of the plants, Holcim’s desire to change its business, the ease of selling up in India all in one go, other non-cement assets and so on. For Adani Group though, buying into heavy building materials production in a large market like India clearly seemed attractive. It is also worth noting that, similar to other cement sector acquisitions recently, here again is a buyer with a background in another carbon-heavy industry buying into another heavy emitter.

Table 1: Selected large scale acquisitions of controlling shares in non-Chinese cement production assets since 2012. Source: Global Cement news and company releases. Italcementi acquisition value reported by Reuters.

Table 1 above provides some historical context to Adani Group’s agreed acquisition by comparing it to other large completed deals in the cement sector over the last decade. Don’t forget that it is only looking at this from the cement sector. This list excludes changes in ownership in the Chinese cement companies in this period because, generally, there has been a government-driven consolidation in the industry through mergers rather than large-scale acquisitions. So, for example, the world’s current biggest cement producer CNBM had a reported production capacity of 350Mt/yr in 2012 and this rose to 514Mt/yr in 2020 as it absorbed other state-owned companies. The big merger it underwent during this time was with China National Materials (Sinoma) in 2018, primarily an engineering company that also produced cement.

The most obvious trend in Table 1 is the journey of Lafarge and Holcim from their merger in 2015 and the gradual realignment of the business subsequently. During this time the company has sold up in large markets outside of its core regions in Europe and North America. Latterly, it has also started to diversify away from heavy into lightweight building materials. One notable ‘nearly happened’ was LafargeHolcim’s attempt to sell its business in the Philippines to San Miguel Corporation for US$2.15bn in 2019. That deal collapsed when the Philippines Competition Authority failed to approve it within a year of its proposal. CRH enlarged itself from assets sold during the creation of LafargeHolcim and then picked up Ash Grove in the US in 2018. CRH’s head Albert Manifold memorably said in 2018 that his company was focusing on markets in developed countries and CRH’s large-scale acquisitions have largely followed this.

As for the others, HeidelbergCement’s purchase of Italcementi in 2016 almost appeared as a riposte to the formation of LafargeHolcim, albeit on a slightly smaller scale. It confirmed HeidelbergCement’s place as the world’s second largest non-Chinese cement producer. It is also one of the minority of truly multinational acquisitions on this list. Unlike LafargeHolcim and now Holcim though, HeidelbergCement hasn’t exhibited a desire to downsize or diversify at quite the same speed. UltraTech Cement’s acquisition of Jaiprakash Associates in 2017 confirmed its place as the largest Indian producer. That deal was publicly one of the longer lasting one as it originally started out in at least 2014 on a smaller scale and was later slowed down by the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act. Smikon’s purchase of Eurocement in 2021 almost looks like part of the isolation of the Russian economy, especially with the benefit of hindsight given by the invasion of the Ukraine in early 2022.

Mega-deals have lots of moving parts but two of the most tangible to broader audiences are the price and the timing. Cemex infamously got both of these wrong with its acquisition of Rinker in 2007 as it paid high just as the US subprime mortgage crisis started a wider global financial one. This was despite Cemex’s emergence over the previous 15 years as a multinational force to be reckoned with due in part to the so-called ‘Cemex Way’ approach to management, acquisitions and integration. Clear winners from the big acquisitions over the last decade are harder to spot but CRH and UltraTech Cement look strong so far. Adani Group has certainly picked a lively time to make a purchase on this scale following a global pandemic with ongoing global supply chain issues and disruptions to energy and food markets.

Nigeria: Joseph Oyeyani Makoju, former managing director of Dangote Cement and advisor to Aliko Dangote, died in hospital in Abuja on 11 April 2022 whilst suffering from a heart condition. He was 73 years old, according to the Daily Independent newspaper. Makoju, an engineer by training, also served as a Special Advisor for Electrical Power under the former Nigerian President Goodluck Jonathan.

Following a career in the Nigerian power sector, Makoju worked internationally for Shell-BP, Blue Circle Cement in the UK and for West Africa Portland Cement Company (WAPCO), part of Lafarge. He joined Dangote Cement in 2009 as Special Advisor to Aliko Dangote and was subsequently promoted to chief executive officer / Group Managing Director in April 2018. He retired from the company in January 2020.

The economic fallout from the war in Ukraine continued this week with the news that Holcim plans to leave the Russian market. It said that it took the decision based on its “values to operate in the most responsible manner.” The company’s Russian subsidiary added that all of its plants would continue to operate as normal while it considered its divestment options.

Holcim’s road to withdrawal has been staggered. In February 2022 at the start of the war it pronounced its sympathy for any affected colleagues and their families and made a Euro1m donation to the Red Cross. Later it said that it would continue operating its business in Russia by following all regulations and supplying the local market. However, at this time it said it would suspend further capital investments in Russia and that it would “not benefit from our presence in this market.”

It’s unknown what prompted Holcim to take the plunge with Russia one month after the war started. At the very least, making decisions over assets valued this highly takes time. CM Pro has reported that the Russian government has considered introducing reference prices for building materials for infrastructure projects and that the Federal Antimonopoly Service (FAS) has been monitoring prices for ‘unreasonable’ growth over the last month. This follows grumbling by the Ministry of Industry and Trade in late 2021 about an apparent low capacity utilisation rate in the country despite shortages in the Central Federal District.

CRH said that it was leaving its Russian concrete business in early March 2022. Yet the decision by Holcim makes it the first of the three western multinational cement producers with large-scale operations in Russia to publicly say it’s pulling out. Holcim, HeidelbergCement and Buzzi Unicem each operate at least two integrated cement plants in the region.

Lafarge entered the Russian market in 1996. Its successor Holcim runs plants at Voskresensk and Kolomna in the Moscow region, at Ferzikovo in the Kaluga region and Volsk in the Saratov region. Together the plants have a production capacity of around 9Mt/yr. Over the last decade Holcim and its predecessor has invested at least a reported Euro1.3bn in three of the plants. The dry-production line Ferzikovo plant was built in 2015. The Shchurovsky plant in Kolomna was originally founded in 1870 and claims to be the oldest in the country. In 2011 it started commissioned a new dry production line. The Volsk plant started a modernisation project in 2017. The fourth, the Voskresensk plant, was mothballed in 2016. However, in early February 2022 LafargeHolcim Russia said it was aiming to spend Euro23m towards restarting production at the site. This was likely due to a boom in construction in 2021. The subsidiary also owns three aggregate quarries in the Republic of Karelia region of the country, near the border with Finland.

Selling up in Russia looks set to be difficult for Holcim. This is principally due to the European and American economic sanctions and the Russian government’s stated intention to nationalise the assets of any company trying to leave. This is clearly why Holcim has worded its plans so vaguely. If or when a peace deal is reached between Russia and Ukraine, the business environment could change significantly, depending on the terms, complicating any existing sale process. Determining how much Holcim might want to get from such a sale in these conditions is complex. Smikom bought Eurocement from Sberbank for Euro2.1bn in 2021 giving it 10 plants. Could Holcim realistically expect to sell its plants for around Euro200m each in the current environment? As for the hit Holcim might take, in its annual report for 2021 it said that the group’s Russian operations represented around 1% of the 2021 consolidated net sales. This would have been around Euro260m. Its Russian cement production capacity was reported as being 9Mt/yr in 2021 or 3% of the group’s global figure of 293Mt/yr.

Finally, it is worth noting though that Lafarge’s charges of ‘complicity in crimes against humanity’ also continued to be tested in the French courts this week. The legal case relates to the conduct of Lafarge in Syria between 2011 and 2014. This is totally separate from the situation in Russia but it does highlight the issue of corporate ethics for the group once again. Following proceedings in December 2021, Beat Hess, chair of the board of Holcim said, “The described events concerning Lafarge SA were concealed from the Holcim board at the time of the merger in 2015 and go completely against the values of our company.” Consider that use of ‘values’ again. Holcim may be about to find out how much it is prepared to pay for its values as it departs Russia.

France/US: Fortera has appointed Thierry Legrand as the president of its European region. The company said that the addition of a president in Europe was the first step in creating a broader presence allowing for Fortera's carbon reducing cement to be deployed on a global scale.

Legrand previously worked for Lafarge and Holcim for over 25 years in European, Asian and African markets. During this time he became the country chief executive officer (CEO) in South Africa and Malaysia before finally becoming the Project Director Logistic Europe for LafargeHolcim between 2018 and 2020. Legrand follows former LafargeHolcim CEO Eric Olsen in joining Fortera. Olsen was appointed to Fortera’s board of directors in June 2021.

Read more about Fortera in the October 2021 issue of Global Cement Magazine

Nigeria: Dangote Cement has appointed Philip Mathew as its deputy group managing director and chief executive officer with effect from 15 September 2021.

Following his training at the Indian Institute of Technology in Madras, Matthew has worked for cement companies since the mid-1980s when he started out as a process engineer for ACC. He later worked for Lafarge in a number of roles and countries, eventually becoming its Director - Performance and Progress for Asia based in Kuala Lumpur in the early 2010s. He held the post of Chief Manufacturing Officer for ACC in India from 2016 to 2019 before becoming LafargeHolcim’s Head of Cement Excellence Manufacturing for the Asia-Pacific region subsequently.

France: The Court of Cassation has denied Lafarge’s appeals against the charge of complicity in crimes against humanity in Syria. The court of last resort has reversed the decision by the Paris Court of Appeal in 2019, according to the Agence France Presse. The case has now been referred back to investigating magistrates for reconsideration along with another charge of ‘endangering the lives of others.’ In a statement Lafarge said that the decision by the Court of Cassation did not in any way presume any guilt on its part and that it would continue to cooperate fully.

The legal case relates to the conduct of Lafarge in Syria between 2011 and 2014. Lafarge and Holcim later merged in 2015 becoming LafargeHolcim. LafargeHolcim’s shareholders voted to change the company’s name to Holcim in May 2021.

US: Fortera has appointed Eric Olsen to its board of directors. Olsen is the former chief executive officer (CEO) of LafargeHolcim.

He started his career in the field of mergers and acquisitions at Deloitte & Touche, Banque Paribas and was one of the managing partners of Trinity Associates for six years. He studied business at the University of Colorado and holds a Master of Business Administration (MBA) from HEC international business school in Paris. He joined Lafarge Group in 1999 and was a member of its executive committee from 2007 until its merger with Holcim in 2015 to form LafargeHolcim. He then worked as the CEO of LafargeHolcim until April 2017 when he resigned following a review into a conduct of a cement plant in Syria. Legal charges of financing a terrorist organisation were dropped by French authorities in 2019.

Fortera is a materials technology company that has developed a recarbonation process that uses captured CO2 and mineralises it into a secondary cementitious material. In March 2021 it signed a collaboration agreement with Lehigh Hanson to build a carbon capture and storage (CCS) system at the producer’s 0.8Mt/yr integrated Redding Cement plant in California.