Displaying items by tag: LafargeHolcim
Elementia pays remaining US$45m for Cementos Fortaleza
17 December 2015Mexico: Mexican construction group Elementia has paid the final US$45m instalment for the acquisition of a 47% stake in Mexican cement producer Cementos Fortaleza from Switzerland's LafargeHolcim.
Cementos Fortaleza was formed as a joint venture in 2013 by Elementia and Lafarge, prior to its merger with Holcim. In 2014, Lafarge agreed to sell its interest in the venture for a total of US$225m. As part of the deal, Elementia was required to pay 80% of the purchase price, or US$180m, in December 2014 and the remaining 20% in December 2015.
2015 in cement
16 December 2015Here are the major stories from the cement industry in 2015 as the year draws to a close. Remember this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..
Will the year of the mega-mergers pay off?
2015 showed a global cement industry that was consolidating. Amongst the multinational producers Lafarge and Holcim finished their merger and HeidelbergCement announced that it was buying Italcementi. Yet alongside this international trend the large Chinese cement producers, who represent over a quarter of the world's production capacity, have continued their own-government-favoured consolidation. The on-going boardroom scuffles at Shanshui have been a lively example of this.
Where this will leave the cement industry as a whole in 2016 is uncertain but mergers and consolidation are no 'magic bullet' for difficult market conditions. After the fanfare subsided from the launch of LafargeHolcim the first quarterly report emerged in late November 2015 reporting falling net sales, net volumes and profit markers.
BRICing it – growth stalls in Brazil, Russia, India and China
The economies of the BRIC nations – Brazil, Russia, India and China – have all suffered in 2015. Brazil and Russia are enduring recessions. Growth in China and India is slowing down. All of this has a knock on in their respective construction sectors.
Over in China, we report today that production capacity utilisation is estimated to be 65% and that cement companies lost US$2.63bn in the first nine months of 2015. The same source says that at least 500Mt/yr of production capacity needs to be eliminated. That represents nearly a third of Chinese total production capacity or about an eighth of global cement production capacity.
Multinationals African plans accelerate
One consequence of all these international mergers is the transformation of the situation in Africa. Suddenly LafargeHolcim has become the biggest cement producer on the continent, followed by HeidelbergCement, Dangote and PPC. Africa becomes the big hope for the multinationals as established markets continues to flounder and growth in Asian and South American markets slackens. Perversely though, should African development growth slow it may cast a poor light on the mega-mergers of 2015 in the coming years.
Dangote Cement is growing fast and it may overtake HeidlebergCement soon as the second largest cement producer in Africa. Yet it may not be plain sailing for the Nigerian company. As we report today, sources in Gambia say that Dangote's plans to open a cement plant are on hold in part to protect its domestic suppliers.
The Gambian government has denied a licence to Dangote to open a cement plant. Dangote has built its empire in recent years by forcing out cement importers from Nigeria. As it expands in other countries in Africa it may now be facing a backlash to playing the nationalist card at home as other countries too desire 'self-sufficiency' in cement production.
Iran shakes off the sanctions
In July 2015 Iran and the P5+1 countries agreed to lift trade sanctions from Iran. The implications for the local cement industry are immense given that the country was the joint-fourth largest producer in 2014, based on United States Geological Survey data. Remove the sanctions and, in theory, the local economy should boom leading to plenty of construction activity. Notably, at the launch of LafargeHolcim the new CEO Eric Olsen was asked for the new group's position on Iran. It didn't have one but this will change.
China expands along the Silk Road
China's cement industry may be suffering at home but it has been steadily expanding in Central Asia. Notably Huaxin Cement has plants in Kazakhstan and Tajikistan and it has new projects in the pipeline. Business may be down at home but steady advancement abroad may offer the Chinese cement industry the lifeline it needs.
Cop out at COP21?
And finally... The 2015 Paris Climate Conference announced a diplomatic coup d'etat in December 2015. However, it apparently forgot to include any binding targets. The Cement Sustainability Initiative (CSI) pre-empted the decision by announced its aim to reduce CO2 emissions by clinker producers by 20 - 25% by 2030... Provided the entire cement industry follows its lead. Cement plants burning vast swathes of dirty fossil fuels may not have to worry quite yet.
For more a more detailed look at trends in the cement industry check out the Global Cement Top 100 Report in the December 2015 issue of Global Cement Magazine.
Global Cement Weekly will return on 6 January 2016. Enjoy the holidays if you have them.
Ambuja Cements appoints Suresh Joshi as CFO
10 December 2015India: Ambuja Cements, part of LafargeHolcim, has appointed Suresh Joshi as its Chief Financial Officer (CFO) with effect from February 2016. This followed the resignation of Ambuja Cements' former CFO Sanjeev Churiwala in October 2015.
In addition, Christof Haessig was appointed as an Additional Director (Non independent - representing the Promoter Group) on the Board of Directors with effect from 9 December 2015. Haessig, at present, is the Head of Corporate Strategy and Mergers and Acquisitions at LafargeHolcim.
Ambuja Cements reported a 36% decline in its standalone net profit to US$23m for the quarter that ended on 30 September 2015, compared to a net profit of US$35.8m in the same period of 2014. Its total standalone income fell by 4% to US$316m in the July - September 2015 quarter compared to US$330m in the same quarter of 2014.
India: The Competition Appellate Tribunal has set aside a US$945m penalty imposed on 11 cement firms by the Competition Commission of India (CCI) on accusations of cartel behaviour and asked the fair trade regulator to resubmit the case. The Tribunal also allowed the cement manufacturers to withdraw the 10% penalty amount already deposited with the CCI, according to the Press Trust of India.
The judgement follows appeals filed by the cement firms and their industry body, the Cement Manufacturers Association, against the two CCI orders passed in June - July 2012. The cement companies included ACC, Ambuja Cements, Binani Cements, Century Textiles Ltd, India Cements, JK Cements, Lafarge India, Madras Cements, Ultratech, JP Associates and Shree Cements.
The CCI had passed the orders after an investigation into complaints, including from Builders Association of India (BAI), against alleged price collaboration between cement firms.
The orders were later challenged at the Competition Appellate Tribunal, which ordered that 'the impugned order is set aside and the matter is remitted to the CCI for fresh adjudication of the issues relating to alleged violation" of the relevant sections of the Competition Act.'
LafargeHolcim appoints Caroline Hempstead as Head of Communication, Public Affairs and Sustainable Development
07 December 2015Switzerland: Caroline Hempstead has been appointed as Head of Communication, Public Affairs and Sustainable Development of LafargeHolcim, with effect from 1 December 2015, reporting to CEO Eric Olsen.
Since 2007, Caroline Hempstead has been responsible for the global Corporate Affairs team at pharmaceutical company AstraZeneca, where she also chaired the Sustainability Council. Prior to joining AstraZeneca, Caroline Hempstead spent 10 years in the oil industry at Royal Dutch Shell managing the reputation of Shell's global downstream businesses in over 100 countries. Caroline Hempstead has also held corporate affairs roles at Inchcape, the London Stock Exchange and Harrods. Caroline Hempstead is a British national and has a degree in French Studies from Manchester University.
Lafarge moves to reach emissions targets with new kiln in Canada
04 December 2015Canada: Tony Levstik returned to Lafarge to pull the plug on the oldest piece of equipment at the Lafarge cement plant in Exshaw, Alberta, Canada. He was the first operator of the kiln when it was installed in 1975. He said that shutting it down was a lot easier than starting it up.
Kiln 6 is replacing kiln 4 as part of Lafarge's plant expansion project. The new technology will help to control dust and has fewer emissions. It will be approximately 30% cleaner with sulphur dioxide emissions, 75% cleaner with nitrous oxide emissions and have 25% less greenhouse gas emissions caused by combustion. The new kiln will also have better filter technology to help improve dust control. Kiln 4 used the gravel bed filter technology, which was prevalent in the 1980s and 1990s, but kiln 6 will have a state of the art bag house to collect dust.
"You can't make cement without using a lot of energy and these kilns that we're putting in are a lot more energy efficient, so we won't use as much fossil fuel, as much power to run the new plant," said Lafarge Plant Manager Jim Bachmann. "For a lot of reasons this is an exciting day." Kiln 6 will be operational in 2016.
LafargeHolcim finances and rumours down-under
02 December 2015This week we got our first real sense of how things are going at the new global cement leader LafargeHolcim. The group released its first 'combined' results, which cover the third quarter of the year and the nine month period to 30 September 2015.
First impressions are that LafargeHolcim is having a tough time of it, struggling, as many cement industry players are, with an increasingly tricky and uneven global market. It reported a fall in net sales and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first nine months of 2015, compared to the same period of 2014. Cement sales were also down by 1.3%. The group said that lower than expected demand was the reason behind lower sales, particularly in China and Brazil, which continue to struggle economically. It also picked out India as a country where momentum was lacking.
Of course, it's not all bad. While net sales were down, they were only down very slightly, by 0.6% year-on-year in the first nine months. Many a cement producer would love to pull in Euro20.4bn in sales and ship 189Mt of cement in just nine months! And, after a sticky start to the year, the picture is improving in some regions, with third quarter performance buoyed by improving fortunes in Asia, excluding China and India. LafargeHolcim was able to continue banking on the strong recovery in North America and parts of Europe, where some markets, such as the UK, continue to buck the otherwise depressing trend.
While these results will be a concern they are by no means horrific. However, they have already given rise to (or at least sped up) LafargeHolcim's future divestment plans. According to Dow Jones, LafargeHolcim plans to raise Euro3.23bn in 2016 from selling off assets, around half as much as Lafarge and Holcim had to sell to allow the merger to go through. The company has reportedly started discussions with interested parties, including private-equity firms and industry rivals about some of the assets. The proceeds will be returned to shareholders through dividends or share buybacks, according to CEO Eric Olsen.
Which assets will be divested remains to be seen. However, it reportedly won't involve LafargeHolcim's assets in Australia and New Zealand, at least in the short term. In the past week or so local media has reported that LafargeHolcim's assets in the two countries were to be sold off. However, since then Holcim Australia's Chief Executive Mark Campbell said the company was 'not currently being sold.' Campbell also added that he couldn't rule out a possible sale in the future.
So, while being clear that LafargeHolcim has no plans to sell its Australian and New Zealand assets at the moment, what could happen if it did? The starting point is complex, especially in Australia. According to the Global Cement Directory 2016, there are six operational integrated cement plants and 12 grinding plants in the country, which share a combined 13.9Mt/yr of cement capacity. LafargeHolcim has a 50% interest in Cement Australia's 4.0Mt of cement capacity, giving it 2Mt/yr of capacity and around 14% of national capacity. The other 50% of Cement Australia is owned by HeidelbergCement. Other major players include Adelaide Brighton, which has 2.3Mt/yr in its own name and a 50% stake in Independent Cement, and Boral Cement, which owns 2.3Mt/yr of capacity outright and 50% of SunState Cement's 1.5Mt/yr of capacity. In New Zealand there are two integrated plants, one operated by Golden Bay Cement and one by LafargeHolcim. The latter, however, is due to be closed in 2016.
If LafargeHolcim was to leave the mix in Australia, it is possible that neither Adelaide Brighton nor Boral would be able to take over its share, due to their already-large market presences. This may leave the door open for other regional players, perhaps a Chinese player looking to exit that country's rapidly-declining domestic market? Cemex is contracting and still heavily indebted, leaving it out of the running. While it is also possible that assets could be sold to private equity firms, another interested player could be Ireland's CRH, with 'cash to burn' and recent disappointment from its failure to buy Lafarge and Holcim's former assets in India.
Of course, if the assets aren't for sale, it won't be possible to buy them, meaning that for now the above is just speculation. However, the quick analysis above does highlight the relative lack of viable cement industry suitors in this region. If LafargeHolcim does ever decide to sell in this region, it might find the assets hard to shift.
LafargeHolcim says Australasian business is not up for sale
01 December 2015Australasia: LafargeHolcim has said that, despite what has been reported recently in the media, its Australian and New Zealand operations are not for sale.
LafargeHolcim recently announced a plan to divest almost US$5bn of assets in 2016 after posting unexpectedly weak third-quarter results. Speculation had emerged that it might exit from the Australasia region.
However, according to local media, an internal email sent to staff on 30 November 2015, Holcim Australia Chief Executive Mark Campbell said the company was 'not currently being sold,' but could not rule out an exit in the long term.
"I have checked whether the LafargeHolcim group had made a decision to sell the businesses in Australia and New Zealand and started a sale process without my knowledge and the answer I have received is 'no,'" said Campbell. "That said, organisations change focus over time and it is impossible to say that we will always be part of the LafargeHolcim group."
Australian-listed rivals, including Boral, Fletcher Building and Adelaide Brighton, are seen as potential acquirers, should the multinational giant choose to sell off its local arm. Ireland's CRH may also be interested. However, Morgan Stanley said that many of LafargeHolcim's local competitors might run into competition issues, given that the market is concentrated among several large players. "Should Adelaide Brighton fully participate, we cannot rule out that the 50% share in Cement Australia would be divested due to Australian regulations, given Adelaide Brighton's already strong share in cement," said Morgan Stanley Analyst James Rutledge. "While we think Fletcher Building is unlikely to be in a position to participate in industry consolidation, a change in owner that was less integrated into the region may be a positive for Fletcher Building at the margin," said Rutledge. "Given Boral's strong share in aggregates and the concrete market, we believe it will be difficult to participate in industry consolidation."
While Lafarge has a limited local presence in Australia and New Zealand, Holcim bought a string of Australian assets from Mexico's Cemex in 2009 for US$2bn and now boasts more than 350 sites nationwide.
Romania: Holcim Romania, part of LafargeHolcim, has initiated a national road safety programme to raise awareness of the importance of appropriate driving behaviour across the supply chain.
The three-year programme consists of series of valuable projects mainly aimed at reducing the number of human casualties and the number of critical incidents on the roads in Romania.
At global level, every year, road accidents kill over 1.3 million people and injure 20 - 25 million people, with injuries caused by traffic accidents being the main death cause among people between 15 and 29.
The national road safety programme launched by Holcim in Romania will comprise four main action directions, which will take place simultaneously and in which the company has invested over Euro100,000:
1. An education and involvement programme in the local communities;
2. A programme for raising awareness and training the companies providing transport services to Holcim Romania;
3. A series of focus groups for professional drivers;
4. An integrated journey management programme.
As part of the project dedicated to local communities, Holcim Romania introduced the educational project 'Safe Road – the ABC of the road' in 12 schools from four counties (Arges, Bihor, Cluj and Dambovita). The project is based on the road education curriculum developed in 2015 by the Ministry of Education and Scientific Research and helps pupils from the primary level to understand the traffic rules and how they can prevent road accidents.
The team in charge of managing the fleet providing transport services to Holcim Romania will also communicate directly on the importance of road safety, through a training programme that sets to align the road safety standards between Holcim Romania and the partner transport companies, starting from the statistics concerning the road incidents provided by the World Health Organisation.
The third project included in the road safety programme consists in focus groups with 550 professional drivers (employees of the companies that provide transport services for Holcim Romania), in order to encourage their involvement in raising awareness on the importance of road safety. The conclusions will be further processed by Holcim Health and Safety team and will be implemented in the fleet companies.
Through the fourth direction of action of the road safety programme, Holcim Romania aims to implement, in a sustainable manner, several viable measurement tools, which allow for an efficient management and for the diminution of road accidents which can occur in our supply chain.
"Holcim Romania permanently seeks to improve and develop the Health and Safety standards and culture among its employees. This supports our 'Zero harm' vision in all processes and activities. One of our major concerns is to comply with the traffic rules and we wish to contribute with this road safety programme to decreasing the number of fatal and critical accidents. We can do this only by changing the drivers' mentality and raising their awareness with regard to the traffic risks," said François Petry, CEO of Holcim Romania.
Lafarge Algeria cement plant to start production in 2016
26 November 2015Algeria: A US$277m joint venture cement plant between Lafarge Algeria (51%) and Algeria's Souakri (49%) in Biskra will start operations in 2016.
The Director of Public Affairs and Communications at Lafarge Algeria, Serge Dubois, said that the plant, which will produce 2.7Mt/yr of cement, will raise the group's overall production to more than 11Mt/yr. Lafarge Algeria currently has two cement plants in M'sila and Oggaz with 8.7Mt/yr of capacity. It also holds the 1Mt/yr Meftah cement plant in partnership with Algeria (GICA).