Displaying items by tag: Mozambique

China: Huaxin Cement grew its revenue and profit in 2023 by growing its concrete market domestically and increasing its international business. Its revenue rose by 11% year-on-year to US$4.67bn in 2023 from US$4.21bn in 2022. However its operating revenue from cement and clinker declined. The group’s net profit increased by 2% to US$382m from US$373m. Its cement sales volumes grew by 2% to 76.8Mt from 75.3Mt. Concrete sales volumes mounted by 66% to 27.3Mm³.

The share of its international business grew by 16% in 2023 from 13% in 2022. Notable acquisitions in 2023 included the purchases of Oman Cement and InterCement’s assets in Sub-Saharan Africa.

InterCement confirmed this week that it is accepting bids for its sale. The local financial press had been covering InterCement’s progress towards this since the autumn when it was reported that it appointed BTG Pactual to manage the sale.

The Valor Econômico newspaper then revealed this week that Companhia Siderúrgica Nacional (CSN), Votorantim and China-based Huaxin Cement had all submitted bids. InterCement admitted that it had received offers but didn’t say from who, and pointed out that no deal had been signed yet. Valor said that Votorantim was part of a consortium including Polimix (parent company of Mizu Cimentos) and Buzzi. However, Votorantim issued a statement affirming its involvement but pointing out that it was acting alone and not part of a consortium. Finally, Valor reported that InterCement is looking to raise at least US$1.2bn from the sale of its business in Brazil. In Argentina, Loma Negra confirmed what its parent company, InterCement, was doing. La Nación newspaper also reckoned that the parent company might be looking for over US$700m for the subsidiary.

Rumours that InterCement was looking to sell assets have swirled around since the early 2010s when InterCement picked up the Brazil-based assets of Cimpor and Votorantim bought the international ones. The local market then collapsed giving InterCement a hard time, although when it started to rally in the late 2010s the talk turned to a potential initial public offering. More recently the focus has been on InterCement’s high level of debt and pending maturation dates. It publicly said it was working towards a new capital structure in May 2023 and various debt negotiations followed. By the end of the third quarter of 2023 it reported debts in debentures and senior notes of just under US$1.6bn. It signed a deal to sell its subsidiary in Egypt in January 2023 to an unspecified buyer and then divested its operations in Mozambique and South Africa to Huaxin Cement for just over US$230m in December 2023.

It is noteworthy that InterCement has gone public about its divestment intentions now, given previous coverage in the local press and the poor state of its finances in 2023. In November 2023, for example, Valor reported that CSN had hired Morgan Stanley to represent it in a dispute over the sale. At this time Huaxin Cement plus Titan, Buzzi, Polimix and Vicat were all said to be interested. CSN was also said to be waiting until the results of the presidential election in Argentina first before committing to any deal. Yet InterCement said nothing about what was going on at this time.

The other issue is whether InterCement wants to sell its assets in one big piece or in sections. This would be of particular interest to Votorantim, and CSN to a lesser extent, since they control 30% and 20% of the cement market respectively, according to Valor. Data based on cement production capacity data from the Global Cement Directory makes the gap between the two companies wider since Votorantim holds 46% compared to CSN’s 9%. The point here is that the local competition regulator, the Administrative Court of the Brazilian Administrative Council of Economic Defence (CADE), would be more likely to intervene if it determined that one company might be about to distort the market. Clearly this could happen if Votorantim struck a deal to buy InterCement but there might also be issues regionally with CSN or indeed some of the other local cement producers. Alternatively, Votorantim might be interested in buying Loma Negra instead. All InterCement has said on the matter is that it is “evaluating strategic alternatives, such as private placement, merger, or partnership with a strategic player, or even a potential divestment.”

Any potential sales of InterCement would be the biggest adjustment to the Brazilian cement sector since CSN bought Holcim Brazil for just over US$1bn in mid-2022. There appear to be plenty of potential vendors for both the businesses in Brazil and Argentina but whether InterCement sells its assets in one big lump or in separate pieces may be an issue almost as important as the price, given the competition concerns. Finally, could this be the first major China-based acquisition in the cement sector in South America? Huaxin Cement demonstrated willingness to buy plants from InterCement in Africa in 2023 and it has been linked in the current auction. Unlike previous talk of InterCement selling up, this time it seems serious given the divestments in Africa and the scale of the debt. An outcome seems likely in the coming months.

Mozambique/South Africa: China-based Huaxin Cement has agreed to buy the Africa-based business of InterCement for US$265m. The deal includes the Brazil-based company’s assets in Mozambique and South Africa. It follows InterCement’s sale of its business in Egypt earlier in 2023 to an unnamed buyer. The company will use the latest proposed sale to reduce its debts. The transaction will be subject to approval from regulators in China, Mozambique and South Africa. InterCement appointed JP Morgan as its financial advisor to the sale of its operations in Egypt, Mozambique and South Africa.

InterCement operates two integrated cement plants and three grinding plants in Mozambique under its Cimentos de Moçambique subsidiary and one integrated plant and two grinding plants in South Africa under its Natal Portland Cement subsidiary. Huaxin Cement’s operations in Africa include subsidiaries in Malawi, Tanzania and Zambia.

Mozambique/South Africa: InterCement, a Brazil-based cement producer controlled by Mover (formerly Camargo Corrêa), has started to receive offers for its assets in South Africa and Mozambique. The US-based bank JP Morgan is advising the company on structuring the group’s business in Africa. The value of the deal has been estimated at around US$300m.

The company previously announced the sale of its Egyptian unit in January 2023, undertaken to reduce its debt, which has come under pressure from rising global interest rates. The company must refinance US$548m in senior notes by May 2024, which were previously raised when InterCement acquired Portugal’s Cimpor through Camargo Corrêa in 2010.

InterCement sold 17.8Mt of cement in 2022 excluding the Egyptian unit.

China: West China Cement recorded US$1.23bn in sales in 2022, up by 6% year-on-year from US$1.16bn in 2021. The producer's profit dropped by 23% to US$176m from US$230m.

Looking to the 2023 full year, West China Cement said that it expects demand in Guizhou and Xinjiang Provinces to 'remain subdued.' It noted upcoming infrastructure projects in Shaanxi Province as a source of substantial demand, but overall does not expect significant demand growth there. Meanwhile in Mozambique, the group expects its performance to remain unchanged.

Mozambique: Dugongo Cimentos plans to build a US$192m, 6000t/day cement plant at Nacala-Porto in Nampula Province. The Macao News has reported that the producer expects the plant to create 600 new jobs locally.

Dugongo Cimentos previously inaugurated its 2500t/day Matutuine cement and clinker plant in Maputo Province following a total investment of US$330m in 2021. The company is jointly owned by state-owned SPI Gestão e Investimentos and China-based West International Holding.

China/Zimbabwe: A cement producer in China has imported 20,000t of coal from Zimbabwe. The Zimbabwean Coal Producers Association said that the Port of Beira, Mozambique, despatched the order. Mining News has reported that the shipment is a trial, with other orders also anticipated.

Mozambique: West China Cement has signed a memorandum of understanding with the Mozambique government for four upcoming ‘industrial investment and development’ projects including a cement plant worth a total of US$800m. Local press has reported that another of the projects will be the construction of a power plant.

President Zhang Jimin said Zhang thanked the government for its past support of subsidiary Dugong Cimentos. He added “Due to this support we have, we are confident to continue the implementation of the development projects in Mozambique, as the government shows its concern to improve the investment conditions and environment.”

Mozambique: Adil Cement, África Cement Factory, Maputo Cement, National Cement, Limak Cement Factory, Royal Cement and Suneira Cement Fonte have written a letter to the Ministry of Industry and Commerce complaining about ‘unfair’ pricing by Dugongo Cement. They allege that the pricing of their Chinese-backed rival breaks local competition law and has caused harm to their businesses, according to Moçambique Media Online. The price of cement has reportedly dropped by as much as 70% since Dugongo Cement’s new plant opened in May 2021.

Mozambique: Carlos Mesquita, the Minister of Industry and Trade, has said that the government was expecting the price of cement to fall following the opening of the Chinese-backed Dugongo Cement plant at Matutuine in Maputo province. He made the comment in response to a letter by other cement companies asking for government intervention to keep the price high, according to the Journal Notícias newspaper. They alleged that the newcomer is breaking competition legislation. The price of cement has reportedly dropped by as much as 70% since the new plant opened in May 2021.

“We, as a government, know what we’re doing,” said Mesquita. “We have been saying, with regard to cement and to other industries, that we have to assess the costs of production in order to arrive at adequate profit margins and a reliable final price.” He added that Dugongo Cement is the only cement producer currently producing clinker locally.