Displaying items by tag: Nicaragua

Holcim Mexico has been promoting itself as the lynchpin of the group’s growth in Latin America this week. The move makes sense following the spin-off of Holcim’s North America business in late June 2025. The company says that Mexico has a housing deficit, has the highest profitability margin in Latin America and it is leading the transformation toward circular and low-carbon construction.

The bullseye on Latin America was first planted by Holcim in the group’s NextGen Growth 2030 strategy that was released in March 2025. With the company preparing to separate off its most profitable section in the US, it decided to highlight new reasons for investors to stay interested. The summary was ‘focused investment’ in attractive markets in Latin America, Europe, North Africa and Australia, sustainability-driven growth with demolition materials singled out and an emphasis on the building solutions division. Although the Latin America division supplied the smallest geographical share of new group net sales in 2024 (US$3.9bn, 19%), the profitability metric presented, recurring earnings before interest and taxation (EBIT) margin, gave the region the highest result. Or in other words, Holcim is telling investors that it may have divested North America but it still has business south of the Rio Grande… and it looks promising. It then said that it has the ‘best’ geographical coverage and vertical integration in the region and the largest construction materials retail franchise in the form of Disensa.

Understandably, the likes of Cemex, Cementos Argos, Votorantim and others might take exception to some of this. For example, Cemex reported net sales in excess of US$6bn in Latin America and the Caribbean, and Votorantim reported net sales of around US$4.8bn in 2024. Yet, Holcim’s claim of regional spread does carry some weight. It purchased Comacsa and Mixercon in Peru and assets from Cemex in Guatemala in 2024. At the end of the year the group owned integrated cement plants in Argentina, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico and Peru. Plus it held grinding plants in the French Antilles and Nicaragua. All of these are majority-owned subsidiaries, often also with aggregate, ready-mixed concrete and building systems businesses. Holcim may have sold up in Brazil in 2022 but it still holds a relatively intact network in Latin America.

Graph 1: Grey cement production in Mexico, 2020 - April 2025, rolling 12 months. Source: National Institute of Statistics and Geography (INEGI).

As for the market, Holcim reported modest but growing net sales in Latin America in 2024, despite lower sales volumes plus elections in Mexico, economic issues in Argentina and political instability in Ecuador. Focusing on Mexico, local cement volumes were said to be stable, aided by a recovery in bagged cement in spite of bulk sales falling on the back of fewer infrastructure projects. Holcim Mexico also spent US$55m on building a new grinding unit at its integrated Macuspana plant in Tabasco. Once complete, the update will increase the site’s capacity by 0.5Mt/yr to 1.5Mt/yr.

Cemex, the market leader in Mexico, released more direct information. It saw its sales and operating earnings fall in 2024. This was blamed on a poor second half to the year following the presidential election in June 2024. GCC’s sales fell more sharply in 2024 and this was blamed on “energy infrastructure limitations and permitting delays in Juarez.” So far in 2025, in the first quarter, the pain in Mexico for the construction sector has continued, with both Cemex and GCC noting strong falls in cement volumes and sales due to a slowdown in industrial demand. Holcim has not reported on Mexico directly so far in 2025 only saying that sales have risen in local currencies in Latin America as a whole in the first quarter. Cemex started a cost cutting exercise in February 2025 in response to the situation. Graph 1 above shows Mexican cement production. Although it should be noted that Cemex and GCC still run subsidiaries in the US. Holcim now does not. Rolling 12-month cement production figures in Mexico started falling in September 2024 and continued to do so until April 2025, the date of the latest data provided by the National Institute of Statistics and Geography.

Despite falling volumes though, the price of cement in Mexico remains high by international standards. At the start of July 2025 the National Association of Independent Businessmen (ANEI) raised the alarm that distributors had warned of an 8% price rise on the way. It’s in this environment that news stories such as Bolivia-based Empresa Pública de Cementos Bolivia (ECEBOL), a producer in a landlocked and mountainous country, preparing to export clinker to Mexico from July 2025 start to sound credible. Sales may have been down in Mexico in 2024 but earnings and margins remain high. In the medium-to-longer term the country looks even more promising, with plenty of scope for development and building products. Ditto the rest of Latin America.

One way a multinational heavy building materials company with a presence in sustainability-obsessed Europe might gain an advantage in the region is by using its knowledge to capture the easier decarbonisation routes first. This is exactly the route Holcim and Holcim Mexico seem to be taking by promoting lower carbon cement and concrete products, and by growing the recycling of demolition materials. Another option, of course, is that Holcim is bolstering its Latin America division ahead of a potential divestment. Either way, Holcim is presenting a plan for growth in its new form, shorn of North America. It’s all to play for.

Colombia: Cemex subsidiary Cemex Latam Holdings (CLH) recorded net sales of US$571m in the first nine months of 2020 were down by 24% year-on-year from US$752m in the corresponding period of 2019. Operating earnings fell by 14% to US$69.0m from US$87.0m, while consolidated cement volumes fell by 20% to 3.92Mt from 4.89Mt.

Jesus Gonzalez, chief executive officer (CEO) of CLH said, “Our operations could run relatively normally during the third quarter in Colombia, Guatemala, Nicaragua and El Salvador, while restrictions impacted in Panama and to a lesser degree in Costa Rica.” He added that the company improved its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) by 19% on a like-for-like basis to US$51m in the third quarter of 2020.

Colombia: Cemex Latam Holdings (CLH)’s net sales in the first quarter of 2020 were US$214m, down by 11% year-on-year compared to sales of US$240m in the same period of 2019. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) throughout the quarter declined by 12% year-on-year to US$46.0m from US$52.3m. Cement volumes over the period were 11% below their first-quarter 2019 level, however prices were 3% higher. Total debt decreased by 8% year-over-year, reaching US$766m as of March 2020.

Cemex Latam Holdings CEO Jesus Gonzalez 
said, “We came into 2020 with favourable demand momentum in Colombia, Nicaragua, Guatemala and El Salvador, and a stabilising trend in Costa Rica. The coronavirus outbreak began to impact on this in March 2020. With respect to capex, US$20.0m has been postponed until 2021. Also, members of CLH’s Board and senior leadership have agreed to voluntarily waive a percentage of their second quarter salaries. Other employees voluntarily deferred a percentage of their salaries for the period. I would like to thank my colleagues for their support in these challenging times.”

Bulgaria/Panama: Germany’s Venti Oelde has increased its sales presence in Europe and Central America. Its has appointed a new sales representative in Bulgaria, as well as one in Panama to cover countries including Mexico, Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. The company manufactures industrial products including fans and filters.

Central America: The value of Chinese imports of cement grew by 2% year-on-year to US$77.1m in the first half of 2018 from US$75.6m in the same period in 2017. Nicaragua imported around US$28m, Guatemala US$18m, El Salvador US$12m, Honduras US$7m, Panama US$6m and Costa Rica imported around US$5m, according to CentralAmericaData.

After a couple of weeks looking at the capacity-rich cement markets of Angola and Vietnam, we turn our attention this week to some of those countries on the receiving end of overcapacity.

Costa Rica is an unlikely place to start but it came to our attention this week due to a short but significant news item. In summary, the amount of cement imported into Costa Rica increased by a factor of 10 between 2014 and 2016, from around 10,000t to over 100,000t. This is around 5% of its 2Mt/yr domesitic capacity, so the change is already fairly big news. The fact that an incredible 97% of this came from just one country, China, makes the story far more interesting as it shows the effects that Chinese overcapacity can have on smaller markets.

But when we look at how the value of the cement imports has changed over time, we see an even more dynamic shift. While the amount of cement imported into the country increased by nearly 10-fold, the value of the same imports only increased by around half as much between 2014 and 2016. If these figures can be taken at face value, the implication is stark. Taking the very low base as effectively ‘zero,’ each tonne of cement imported must cost around half as much as it used to.

Digging a little deeper and the picture gets more complicated. While they have fallen, Costa Rican cement prices have not fallen by 50% and why the sudden deluge of imports anyway? In 2015 the country changed its rules on cement imports to facilitate more flexible imports and lower prices for consumers. It did this by changing a regulation relating to how long cement can be stored, previously set at just 45 days, with the aim of allowing cement to come from further afield and, crucially, in bulk rather than bags.

The effects on price were immediate. Previously as high as US$13/bag (50kg) in December 2014, fairly high by global standards, Sinocem, the first Chinese importer, immediately sold its first shipment at US$10/bag. This effect of lower prices has now forced the average sales prices down to around US$10/bag across the country by 2017. This is good for consumers but not necessarily the local plants.

Back in 2015, the two local integrated plants operated by Cemex and Holcim warned that cement quality would suffer if cement bags were not used within 45 days. This apparently self-serving ‘warning’ went unheeded by the Ministry of Economy, Industry and Trade (MEIC), which pointed out that other countries in South America, as well as the European Union and United States, had no analogous short use-by dates for cement bags.

The rule remains in place, although discontent rumbles on. Indeed LafargeHolcim noted in its third quarter results for 2016 that ‘Costa Rica was adversely affected by increased foreign imports.’  This may well be a little bit of posturing and it doesn’t square with the fact that Costa Rica exported three times more cement that it imported in 2016. Of total exports of 0.34Mt, over 95% went to neighbouring Nicaragua, which has a single 0.6Mt/yr wet process plant owned by Cemex. It seems that the two Costa Rican plants have found a way to keep a little bit of the Chinese producers’ margin for themselves.

Of course, Chinese cement overcapacity doesn’t only affect the Central American market. It has been rippling all around the Pacific Rim. In July 2017, this column looked at the decision by Cementos Bío Bío to stop making clinker at its Talcahuano plant in Chile. It now favours grinding imported clinker from Asia. Before that, Holcim New Zealand closed its Westport cement plant in 2016, finally admitting that domestic clinker was not viable.

In the grand scheme of things, this all makes sense. The market has forced those operating on thin margins to adjust. Ultimately, the end consumer is likely to benefit from lower prices, at least for as long as reliable low-cost imports can be secured. What happens, however, if China actually gets round to curtailing its rampant cement capacity, or simply decides to charge more for its cement? Flexible imports, the main aim of the Costa Rican rule change, may then prove vital, as long as there is more than one international supplier of cement.

This week saw the announcement that Cemex and Holcim are both upping their stakes in Nicaragua to increase production. The companies have stated that they expect cement demand to grow significantly in the near future.

Holcim has started work on a US$10m project to increase production by 30% to 400,000t/yr at its Nagarote grinding plant. A second expansion phase will see production raised another 30%. Cemex, for its part, is building a US$55m, 440,000t/yr grinding plant in Ciudad Sandino. Completion is expected by 2017.

These new developments will make significant additions to Nicaragua's cement industry. Currently, it consists of one Cemex-owned 600,000t/yr integrated plant and one Holcim-owned 300,000t/yr grinding plant.

Nicargua has the dubious honour of being Central America's least developed economy and one of the poorest among all of the Americas. In recent years, however, its economy has grown dramatically, with significant expansion in the construction and mining sectors, indicating that Holcim and Cemex are right to bet on Nicargua. Indeed, late in 2014 president of the High Council of Private Enterprise, José Adán Aguerri said that the country had a significant cement shortage and was currently importing from Mexico and Colombia to meet its needs.

Driving cement demand in Nicaragua is the residential housing sector boosted by the growing population, much-needed infrastructure projects and the country's most controversial project, the Nicaragua Grand Canal. The canal will be, according to local media, a 'commercial waterway that will reshape commercial shipping, reap a windfall for investors and haul one of the hemisphere's poorest nations out of poverty.' Heavily backed by Chinese investors, it is deeply unpopular with industry experts and locals alike. There have been lots of questions as to whether there is enough demand for the canal, while its construction will divert scant resources, particularly water, away from agriculture, the country's main industry. The project will, however, contribute significantly to cement demand until its completion, which is expected in 2019.

So is Nicaragua the place to be? Its near-future economic and construction sector outlooks certainly look strong, but the cement industry relies heavily on long-term infrastructure plans, which are sorely lacking. Additionally, none of Nicaragua's neighbouring countries have noteworthy cement deficits. This means that export market opportunities from Nicaragua are in short supply. Nicaragua's future depends overwhelmingly on its leaders' long term-planning abilities...