Displaying items by tag: LafargeHolcim
Sberbank sells 6.12% LafargeHolcim stake
08 February 2016Russia: Sberbank has sold a 6.12% block of shares in LafargeHolcim Limited it received under a repo deal with Eurocement. The shares have been sold to a group of investors from the UK, Switzerland, the US and other countries. Sberbank's stake, amounting to 37,172,910 votes, was worth roughly Euro1.5bn based on LafargeHolcim share quotations on the Zurich exchange. Sberbank CIB said in a press release previously that the deal was organised to provide financing for Eurocement Holding.
Jordan: Lafarge Jordan has proposed a US$2.8bn plan to replace its Fuheis cement plant with an urban development, according to the Jordan Times. The company sent an official letter to the Investment Commission in October 2015 informing them about the plan but still has not received any response. The Fuheis cement plant has been non-operational since 2011 when it was converted to petcoke but the local community objected.
Russia cement industry reacts to 2015
03 February 2016LafargeHolcim has stopped clinker production at its Voskresenskcement plant in the Moscow region of Russia. The move is part of reorganisation of the company's structure in Russia following market contraction. LafargeHolcim warned of declining cement volumes in its third quarter report for 2015 blaming a 'volatile' economic situation and low oil and gas prices negatively affecting construction activity.
Lafarge, before the merger with Holcim, reported that its cement volumes in Russia grew by 9% in 2014 compared to 2013 owing to the opening of its 2Mt/yr Ferzikovo plant in the Kaluga region in May 2014. It noted at that time that the construction market had slowed down in the fourth quarter of 2014. The Voskresenskcement plant had a Euro5m FLSmidth electrostatic precipitator fitted on one of its kilns in June 2014. This was part of a Euro60m upgrade project on Lafarge Russia's cement plants between 2008 and 2013. Also, in the run-up to the merger Lafarge Holcim sold its UralCement plant in Korkino to Buzzi Unicem.
LafargeHolcim is a relatively small player in the Russian cement industry but its experiences may be symbolic. Eurocement, the Russian market leader with 33% of cement production capacity, forecast that cement consumption in the country might fall by 5 – 10% in 2015. At that time, in June 2015, Eurocement president Mikhail Skorokhod blamed the high cost of borrowing and its effects on slowing new construction projects. Previously, the Russian Cement Association predicted that it expected domestic cement consumption to fall by 15% in 2015.
Unfortunately, it looks like the most pessimistic end of Eurocement's forecast may be correct. CMPRO data shows that cement consumption fell by 9.4% year-on-year to 49Mt in the first nine months of 2015. Data is yet to be publicly released for December 2015 but the cumulative totals for the first eleven months of 2015 hold with that decrease in cement consumption. Prior to this Russian cement production and consumption had been growing annually since 2009.
Particular declines in cement consumption for the first nine months of 2015 have been reported in the Volga Federal District, the Siberian Federal District, the Ural Federal district and the Northwestern Federal District of Russia. However, it should be noted that these regions had all had a production deficit of cement for most of 2010 to 2013 according to EY analysis. These regions all had cement oversupply problems during the boom years of growth and are now suffering even more as the market contracts. The three biggest cement producing regions in Russia are the Central Federal District followed by the Volga Federal District and then the Siberian Federal District.
Alongside all of this, Eurocement planned to sign US$280m of contracts with Sinoma in November 2014 to build new clinker production lines at three plants. This followed an earlier US$580m set of deals with CNBM and Sinoma to build new plants. On 1 February 2016 Rolt Company announced that it had started project development on four power plants for Eurocement.
Eurocement's financial status is unknown but it may now be regretting all that spending. Last week, on 25 January 2016, Sherbank CIB announced that it held 6% of LafargeHolcim's shares following a repurchase deal with Eurocement. This follows a request for a US$634m loan from Sherbank in mid-2015. Unless growth resumes in the construction market it may have paid over US$850m to build new cement plants at the peak of the Russian market. Add in currency exchange effects and 2016 may be a bumpy year for Eurocement and the Russian cement market as a whole.
LafargeHolcim confirms revised sale plan for Lafarge India
04 February 2016India: LafargeHolcim has confirmed that it is considering selling its subsidiary Lafarge India. The sale will require the approval of the Competition Commission of India (CCI) as an alternate remedy for the merger of the Group's legacy companies. Lafarge India has a cement production capacity of 11Mt/yr.
The announcement follows a regulatory filing by Birla Corporation stating that is considering taking legal action against LafargeHolcim for stopping a previous deal. However, LafargeHolcim has not said why it terminated the deal with Birla Corporation.
Originally LafargeHolcim was in discussion with Birla Corporation for the sale of the Jojobera and Sonadih cement plants in Eastern India that was previously announced. Both plants had a combined cement production capacity of 5.1Mt/yr. Due to the current regulatory issues relating to the transfer of mining rights captive and critical to the two plants, LafargeHolcim was obliged to submit an alternate remedy to the CCI to ensure compliance with the order.
LafargeHolcim now says that an 'alternate remedy' is under consideration by the CCI.
Birla Corporation to take legal action against Lafarge India
03 February 2016India: Birla Corporation said it will take legal action against Lafarge India over the firm's 'inability' to go ahead with the deal to sell its Jojobera and Sonadih cement plants. In August 2015 both firms signed an agreement, through which Birla Corporation was to acquire Jojobera and Sonadih cement businesses from Lafarge India for US$734m.
"Lafarge India has since informed its inability to proceed with the agreement. The company has since discussed the matter with its legal advisors and has decided not to accept its contention and is in the process of taking appropriate legal measures in consultation with lawyers," said Birla Corporation in a regulatory filing. The firm did not specify reasons behind Lafarge India expressing its inability to complete the deal.
Birla Corp was to acquire Lafarge India's cement business, which comprises an integrated cement unit at Sonadih, Chhattisgarh, a cement grinding unit at Jojobera, Jharkhand along with Concreto and PSC brands. The acquisition would have added an additional cement capacity of 5.15Mt/yr to Birla Corp and would have helped the firm consolidate its position in the eastern India cement market. The company has a total operational cement capacity of about 10Mt/yr with plants in Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal.
LafargeHolcim stops clinker production at Voskresenskcement plant
01 February 2016Russia: LafargeHolcim has permanently stopped clinker production at its Voskresenskcement plant in the Moscow region due to market constraction and oversupply. The decision is part of a reorganisation its cement production structure in the Central region of Russia to fight the impact of the recession in the construction sector. The new structure includes cement production at the Schurovo (Moscow region) and Ferzikovo (Kaluga region) plants, leveraging their competitive cost structure.
"With the reorganisation of its cement production structure in the Central region of Russia the company ensures its viability and is well positioned in the country to meet customer requirements and make a valuable contribution to the Group," said Guillermo Brusco, CEO of LafargeHolcim Russia.
Staff at Voskresenskcement will be transferred internally where possible. Current customers of Voskresenskcement will be offered products from the Schurovo and Ferzikovo plants.
Zambia: Lafarge Zambia has successfully commissioned a Cemengal Plug & Grind cement grinding plant in Ndola which will produce 100,000t/yr of cement and take the plant's total capacity to 500,000t/yr. It has been constructed on available land within the Ndola plant.
"This project has utilised very minimal amount of land. It is fitted with state-of-the art technology and has bag filters to aid environmental management," said Lafarge Zambia CEO, Emmanuel Rigaux. He added that the plant will produce Supaset Cement. This will be exported to the Democratic Republic of Congo and other neighbouring countries.
Also present at the event was the LafargeHolcim Group Area Manager for East Africa and Indian Ocean, Dominique Drouet who was on a three day visit to Zambia.
Russia: Sberbank CIB, the investment banking arm of Russian lender Sberbank, has announced that it holds 6% of LafargeHolcim following a repurchase deal with Eurocement. Under the terms of the agreement, Sberbank CIB had organised financing for Eurocement Holding AG in return for 37m shares in LafargeHolcim. Eurocement has the right to buy back the shares at a specific price and on a certain date.
The agreement was implemented on 21 January 2016. No further details were disclosed. Before the repurchase deal Eurocement was among the largest shareholders of LafargeHolcim.
Lafarge plans to exit India operations
06 January 2016India: Lafarge India has submitted a revised proposal to the Competition Commission of India (CCI) to sell its entire 11Mt/yr assets in India.
The decision comes after the company's plan to sell its 5.15Mt/yr cement capacity in Chhattisgarh and Jharkhand to Birla Corporation for US$749m ran into trouble. Investment bankers said that Birla Corporation was facing challenges in securing limestone mining rights for the two units.
In order to approve the LafargeHolcim merger in India, the CCI had asked Lafarge India to sell its 5.15Mt/yr of capacity in eastern India by 31 December 2015. In August 2015, Birla Corporation agreed to buy the proposed assets along with brands Concreto and PSC and mineral rights over adequate reserves of limestone. The deal was conditional on Birla Corp being able to secure mining rights that Lafarge had.
"Lafarge India has sought an extension of its deadline from the CCI to complete its divestment," said an unnamed investment banker. "Lafarge India has now put the entire company on the block, as the sale of the entire company will include transfer of mining rights."
LafargeHolcim and CDC Group to scale-up an affordable low-carbon construction solution
18 December 2015Malawi: LafargeHolcim and CDC Group, the UK's development finance institution, have signed a Memorandum of Understanding to set up a company to produce and promote an affordable low-carbon construction solution for developing countries.
The new company aims to scale up production of earth-cement bricks, a simple, reliable, affordable and environmentally-friendly building material that was launched by LafargeHolcim in Malawi in 2013.
Deforestation and forest degradation account for the majority of Malawi's greenhouse gas emissions. The manufacture of burnt bricks, the main building material in Malawi, is a significant contributor as a result of the wood-fired clamp kilns used in the production process.
LafargeHolcim has developed an alternative solution to burnt bricks. Durabric, designed by the Group's research and development centre, is produced from a mixture of earth and cement compressed in a mould and left naturally to cure in the sun without firing. Durabric contributes to a reduction in greenhouse gas emissions and the deforestation associated with wood fuel consumption. The bricks are also more resistant than fired bricks and reduce construction costs.
"Durabric offers many benefits compared to the traditional bricks used for construction in the developing world. It is easy to manufacture, has a smaller environmental footprint, offers more resistance, all at a lower cost," said Gérard Kuperfarb, Member of LafargeHolcim's Executive Committee in charge of Growth and Innovation. "Through the new company we are setting up with CDC, we will accelerate the development of this affordable, low-carbon solution in developing markets where traditional bricks are commonly used."
More than three million of these bricks have already been produced in Malawi and have been used in around 500 buildings. A brick production plant is being built to increase availability of Durabric in Malawi.