Displaying items by tag: LafargeHolcim
Court annuls information request by European Commission into cement company competition probe
11 March 2016Europe: The European Court of Justice has annulled a request for information by the European Commission into several cement producers in a cartel probe. The judgement could restrict the competition watchdog's investigative powers, according to reporting by the Wall Street Journal.
The commission opened an antitrust investigation in late 2010 looking at the activities of Cemex, Holcim, Lafarge, HeidelbergCement and others. Originally the cement companies were suspected by the commission of colluding with rivals to fix prices and share markets in Austria, Belgium, the Czech Republic, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the UK. However, the investigation was closed in mid-2015 due to insufficient evidence. Since then the cement producers have challenged the commission’s right to ask for the level of detail they requested. The ruling overturns a 2014 decision by the EU's General Court, which said the commission questionnaires were justified.
Lafarge Zambia revenue falls by 6% to US$250,000 in 2015
09 March 2016Zambia: Lafarge Zambia’s revenue has fallen by 6% year-on-year to US$250m in 2015 from US$267m in 2014. Its profit fell by 24% to US$62m from US$82m. The subsidiary of LafareHolcim blamed the results on challenging markets, power costs increase and steep currency depreciation.
“Despite new competition and challenging markets, Lafarge Zambia maintained its market leadership in 2015 both in Zambia and in the Democratic Republic of the Congo, with a marginal reduction versus our record 2014 volume numbers. The second half of 2015 saw a combination of negative factors both in terms of market and in terms of production costs,” said Lafarge Zambia CEO Emmanuel Rigaux.
In 2016 the cement producer expects the market to be challenging for both price and volume. It intends to focus on exports markets in the Democratic Republic of the Congo, Malawi, Zimbabwe and Tanzania. A partnership with the rail authorities including Zambia Railways Limited is also expected to further aid exports.
Vietnam: Only four cement producers have built waste heat recovery (WHR) systems by the end of 2015 despite a request by the Prime Minister Nguyen Tan Dung. Holcim, Chinfon, Ha Tien and Cong Thanh are the only companies to have built the upgrades. The delay has been blamed on the high cost of implementing WHR systems and the market’s poor sales.
According to Nguyen Hoang Cau, secretary general of the Vietnam Cement Association, there are more than 40 cement production lines in the country subject to the requirement. These also include foreign cement producers such as Taiwanese-backed Phuc Son Cement, Hong Kong’s Luks Cement Vietnam Limited, and Japanese-funded Nghi Son Cement. Cement producers have complained to local press about their inability to build WHR systems without financial help.
Ajay Piramal linked to Lafarge India sale
03 March 2016India: Ajay Piramal, the Indian businessman and chairman of Piramal, has started talks with Lafarge India to buy its assets, according to sources quoted by the Economic Times. Speculation has followed Piramal since he sold his pharmaceuticals business for US$3.8bn in 2010. If completed, the move would mark a diversification from Piramal’s healthcare, financial services and information management businesses.
Piramal and Lafarge India separately declined to comment on the issue. Lafarge India is selling all of its assets in India including a cement production capacity of 11Mt/yr.
Looking at the small print
02 March 2016Small print can cause large consequences. Billion US Dollar consequences. Take the 2015 amendment to India’s Mines and Minerals (Development and Regulation) (MMDR) Act from 1957. Ambiguous wording in the legislation may have held up two prominent cement industry acquisitions in 2015. It also hangs over the recently announced purchase by UltraTech Cement of Jaiprakash Associates’ cement plants.
The MMDR was amended in January 2015. As the Times of India explained in mid-2015, a clause in the amendment said, “The transfer of mineral concessions shall be allowed only for concessions which are granted through auction.” However, it was unclear whether this meant historically allocated mines given via nominations or only newly allocated ones. Given the reliance of clinker plants on reliable mineral reserves this caused havoc. Cue confusion and large legal budgets.
LafargeHolcim’s divestment of two cement plants to Birla Corporation was one casualty. As a condition of the merger between Lafarge and Holcim the Competition Commission of India (CCI) required that the Jojobera and Sonadih cement plants in Eastern India be sold in 2015. Together the plants have a combined cement production capacity of 5.1Mt/yr. However the ambiguity over the 2015 MMDR Act clause on transfer of mining rights held the deal up. By February 2016 Birla Corporation had endured enough. It publicly complained about Lafarge India’s ‘inability’ to complete the deal and threatened legal action. LafargeHolcim retorted by asking the CCI if it could sell all of Lafarge India instead. It received the revised clearance and a new buyer is yet to be announced.
Another victim was UltraTech Cement in a previous attempt to buy Jaiprakash Associates’ cement assets. That time it was down to buy two integrated cement plants in Madhya Pradesh with a combined clinker production capacity of 5.2Mt/yr with associated mineral rights. The deal was agreed in December 2014 and then reported delayed in mid-2015. Finally, on 28 February 2016 the Bombay High Court rejected the deal, citing the MMDR Act as the prime cause.
Luckily for UltraTech Cement the story has a happy ending (so far) as it then announced that it was purchasing the majority of Jaiprakash Associates’ 22.4Mt/yr cement portfolio instead for US$2.4bn. It is hoped that the deal will be finalised by June 2017 but this partly depends on the MMDR Act being amended. Although UltraTech Cement have said they are looking at alternative routes to the deal in case the act isn’t amended.
Poor legal wording kiboshed at least two cement industry deals for over 10Mt/yr production capacity. Roughly, at the price UltraTech Cement is paying for its latest deal, that’s over US$1bn worth of Indian cement assets. Given the hard time the Indian cement industry had in 2015 the question should be asked regarding how much damage the MMDR Act amendment has done. One option for the beleaguered industry is to consolidate and cut its costs. This was massively delayed in 2015.
The proposed 2016 amendment to the MMDR Act reads as follows:
“Provided that where a mining lease has been granted otherwise than through auction and where mineral from such mining lease is being used for captive purpose, such mining lease will be permitted to be transferred subject to compliance with the terms and conditions as prescribed by the Central Government in this behalf.”
Let’s hope it does the trick this time.
Philippines: Holcim Philippines has reported a rise in net profit of 58% year-on-year to US$171m in 2015. Its revenue rose by 15% to US$793m. It attributed the gain to increased government spending in infrastructure projects and higher construction activity. Profits also benefited from a US$55m gain from the revaluation of an investment in an affiliate. The LafargeHolcim subsidiary also reported that it is increasing its cement production capacity to 10Mt in 2016 from 8Mt in 2015 to benefit from anticipated infrastructure spending.
Global CemFuels Awards 2016 announces winners
26 February 2016Czech Republic: The Global CemFuels Awards 2016 has announced winners in six categories. The Suez Environnement solid recovered fuel facility at Malpas Farm, Rugby, which supplies the Cemex Rugby cement plant, won Outstanding Alternative Fuels (AF) project. LafargeHolcim won AF-user company of the year. N+P, Netherlands received the award for AF-supplier company of the year for the second consecutive year. Linder-Recyclingtech won the award for innovative technology for AF use. Frederico Contente, Masias Recycling was awarded project manager of the year. Jan Theulen, HeidelbergCement was awarded CemFuels Personality of the Year.
The Global CemFuels Awards 2016 took place as part of the Global CemFuels Conference and Exhibition. The awards are nominated and voted for across the alternative fuels industry. The specialised annual alternative fuels conference for the cement and lime industries took place on 22 – 23 February 2016 in Prague.
Featured image: Jan Theulen, HeidelbergCement (right) and Robert McCaffrey, Global Cement (left)
Holcim New Zealand opens 30,000t Timaru cement terminal
26 February 2016New Zealand: Holcim Zealand has officially opened its 30,000t cement terminal at Timaru port. Economic Development Minister Steven Joyce and Rangitata MP Jo Goodhew attended the opening. The US$34m project is intended to serve South Island and lower North Island, according to local press.
The terminal has unloaded two ships since December 2015. The cement producer aim’s for 18 inbound ships a year to Timaru, with the Holcim-owned Milburn Carrier II shipping outbound orders from its berth at the reconstructed No 2 wharf. Another cement terminal is being built in Auckland and is planned for opening in mid-2016.
Azerbaijan Investment Company sells 10% stake in Holcim Azerbaijan
25 February 2016Azerbaijan: The Azerbaijan Investment Company (AIC) sold its 10% stake in Holcim Azerbaijan to Holcim on 18 November 2015, according to a government source quoted by Azer-Press. AIC and Holcim signed a memorandum of understanding in December 2007 allowing AIC to gain 10% of shares in local Holcim cement plant following the completion of certain conditions. These included increasing the plants cement production capacity from 1.3Mt/yr to 1.7Mt/yr of cement and its clinker production capacity from 0.8Mt/yr to 1.2Mt/yr of clinker.
Strike ends at LafargeHolcim South Africa
23 February 2016South Africa: Striking Lafarge South Africa employees affiliated to the National Union of Mineworkers (NUM) have returned to work after a 12-day strike, according to Lafarge South Africa. The industrial action involved disputes on several issues, including a salary increase.
"We are pleased that we have been able to negotiate solutions that benefit our employees. While our operations were not grossly impacted, we are happy to announce that we are running at full capacity," said Unathi Batyashe-Fillis, Country Manager for Communications and Public Affairs at Lafarge South Africa.
Lafarge reported that an agreement had been reached on an 8% salary increase effective from 1 January 2016, a commitment to tighten salary gaps per job category by the end of April 2016 and a one-off fixed housing grant of US$4640 per employee to acquire or build a house. The grant would, after two years of implementation, be increased by a sum equal to the annual average inflationary rate for workers.
Around 800 NUM affiliated employees demanding initially a 13% raise and a US$3310 housing grant, according to Reuters. The union has confirmed that the deal has been accepted.