Displaying items by tag: Syria

France: The French government reportedly asked the US not to target Lafarge Syria’s Jalabiya cement plant during military operations in 2014. Emails seen and reported upon by Reuters suggest that France's Syria envoy, Franck Gellet, asked the French Foreign Ministry to protect the cement plant while it was in Islamic State controlled territory. The request to ‘not to do anything about this site without checking with us first’ was then passed to US officials. Neither the French Foreign Ministry nor LafargeHolcim commented on the emails when asked by Reuters.

LafargeHolcim is being investigated in France over claims that Lafarge Syria had paid extremist groups to keep a cement plant operational after the outbreak of war in Syria. Six former Lafarge executives have been charged so far with financing a terrorist organisation.

France: Sonia Artinian, Lafarge’s human resources director from 2013 to 2015, has been charged ‘endangering the lives of others’ during operations in Syria. However, she avoided being charged for financing a terrorist organisation instead being granted ‘assisted witness’ status, according to the Agence France Presse. LafargeHolcim is being investigated in France over claims that Lafarge Syria had paid extremist groups to keep its Jalabiya cement plant operational after the outbreak of war in Syria. Six former Lafarge executives have been charged so far with financing a terrorist organisation.

Syria: An investigation by the Agence France Presse has found that one local employee of Lafarge in Syria was killed and another has been missing for five years. According to the news agency, Syrian mechanic Yassin Ismail, who was employed at Lafarge's plant at Jalabiya, was kidnapped by jihadist fighters in 2013. He was subsequently executed, according to relatives and former work colleagues. Another mechanic Abdul al-Homada, was disappeared in Aleppo in 2013 while attempting to collect his salary.

LafargeHolcim is being investigated in France over claims that Lafarge Syria had paid extremist groups to keep its Jalabiya cement plant operational after the outbreak of war in Syria. Six former Lafarge executives have been charged with financing a terrorist organisation. Those managers could also face prosecution for endangering the lives of their local Syrian employees after 11 of them filed their own lawsuit alleging that Lafarge put financial profit before their personal safety.

France: Lafarge Syria’s former director Christian Herrault has claimed that Eric Chevallier, the former ambassador to Syria, knew about payments to armed groups by the cement producer. French investigators questioned Herrault in the presence of Chevallier, according to a source quoted by the Agence France Presse. Herrault allegedly said that he had met Chevallier several times, that he knew about the situation and that he said that the company should stay as, “…these problems won't last long."

Jean-Claude Veillard, the group's former security boss, has said he regularly informed French intelligence services about its operations in the region. Investigators have also found evidence of meetings between Lafarge and diplomats, including a note suggesting that one took place in Paris in January 2013.

The investigation is attempting to determine whether LafargeHolcim’s predecessor company Lafarge Syria paid terrorist groups in Syria and how much managers knew about the situation.

To mark the end of the calendar year we’re going to round up some of the major news stories from the cement industry in 2017. Like last year this piece also complements the corresponding article ‘The global cement industry in 2017’ in the December 2017 issue of Global Cement Magazine. 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..

Recovery in Europe
2017 was the year that the European cement industry finally had something to shout about after a lost decade since the financial crash of 2007. The good news was led by a revival in cement consumption in 2016 that looks set to have continued in 2017. Prospects in Germany and Spain feel similar and a series of mergers and acquisitions have taken place in Italy suggesting that investors believe that the market is about to recover there too. Sure, Brexit is looming but as contacts have told Global Cement staff throughout the year, if the British want to damage their economy, that’s their business.

Renewal and recrimination at LafargeHolcim
Lafarge’s conduct in Syria during the civil war has cost its successor company LafargeHolcim dear, with the loss of its chief executive officer (CEO) Eric Olsen and potential reputational damage if the on-going investigation in Paris finds fault. At the time of writing Olsen, former Lafarge CEO Bruno Lafont and the former deputy managing director for operations Christian Herraul are all being questioned by the inquiry into the affair as it attempts to determine who knew what and when. LafargeHolcim has drawn a line under the debacle by appointing outsider Jan Jenisch as its new CEO in mid-2017. He has made changes to the group’s management structure that were announced this week but has he done enough? If anything truly ‘explosive’ emerges from the investigation, the question for anyone across the world buying LafargeHolcim’s products may be whether or not they want to finance extremism through their purchase.

US doesn’t build wall but does okay anyway
The US Portland Cement Association (PCA) may keep downgrading its forecasts of cement consumption growth but the local industry is doing fairly well anyway. All sorts of cement producers with a presence in the US have benefited from the market, despite extreme weather events like Hurricane Irma. President Donald Trump may not have delivered on his infrastructure development promises or built his fabled wall yet but his recently-approved tax reforms are likely to benefit the profits of cement producers. The decision by Ireland’s CRH to buy Ash Grove Cement in September 2017 may remove the largest domestically-owned producer from US hands but it shows confidence in the market and heralds the continued creeping growth of the building materials company into an international empire.

South America shows promise… just don’t mention Brazil
Countries like Brazil, Colombia and Venezuela may not be performing to expectations but other countries south of the Darian Gap, have been growing their respective cement industries. The leader here is Argentina that is riding a full-scale construction boom with capital investment chasing it from the producers. Bolivia is following a decade of growth although this may be starting to slow somewhat. Chile appears to be realigning itself to take in more exports. And finally, Brazil may also be starting to return to growth too. Although cement sales were continuing to fall year-on-year in the first nine months of 2017 the rate has been slowing. Local producer Votorantim also reported improved market conditions at home.

India stares into the demand gap
UltraTech Cement finally managed to buy six cement plants and five grinding plants from Jaiprakash Associates for US$2.5bn in 2017. The acquisition marked the end of the long-running deal between the companies and what may be a new phase in further integration in the Indian industry. In September 2017 the Cement Manufacturers Association (CMA) complained that the sector had 100Mt/yr of excess production capacity out of a total 425Mt/yr. The government’s demonetisation policy sank cement production growth in late 2016 and production has struggled to improve since then. Some estimates expect growth to return in around 2020 as the demand gap shrivels. Further merger and acquisition activity can only help until then, although the current government flip-flopping over a petcoke ban and import duties may get in the way.

China restructures with an eye on overseas market
As discussed last week the mind-bogglingly massive merger between China National Building Material (CNBM) and China National Materials (Sinoma) is proceeding with the press equivalent of radio silence. If one trusts the company figures then the largest cement producer in the world will get even bigger following completion. Once the big Chinese producers start building lots of overseas plants then the implications of combining a major producer with a major plant builder may become clear outside of China. Alongside this the buzzword on the Chinese cement company balance sheets this year have been a major rollout of co-processing at plants and a policy of ‘peak shifting’ or simply shutting off production at selected plants in the winter months. Somehow despite all of this the official figures suggest that cement production is still growing in China.

The African mega deal that wasn’t
The prospective bidding war for South Africa’s PPC has turned out to be a bust. A low offer was made in September 2017 by a Canadian investment firm with the aim of merging PPC with local rival AfriSam. Vague expressions of interest from the usual suspects followed over the following months before everything fizzled out. What the dickens was going on? A difference of opinion between the board and shareholders? A poor market in South Africa giving everyone the jitters? If any readers know, please get in touch. PPC’s poor showing at home mirrors Dangote Cement’s travails. Both companies have suffered domestically whilst going full tilt elsewhere in Sub-Saharan Africa.

Indonesia about to pick up?
And finally, a report from Fitch Ratings this week suggests that growth in Indonesia is set to pick up once again. The market dragged down HeidelbergCement’s mid-year financial results as cement consumption dropped in the same period. Like India, Indonesia faces a consumption-capacity mismatch. However, with annual consumption poised to grow at over 6%, the time to close that gap will narrow. Some good news to end the year with.

Global Cement Weekly will return on 3 January 2018. In the meantime Merry Christmas and a have Happy New Year!

LafargeHolcim’s investigation into its conduct in Syria claimed its biggest scalp so far this week with the shock resignation of chief executive officer (CEO) Eric Olsen. His decision landed with the publication of the group’s investigation into the conduct of the legacy Lafarge operations in the country in 2013 and 2014. As per the initial findings of the investigation that were released in March 2017, it confirmed that selected personnel had engaged in dealings with terrorists in connection to one of its cement plants in the country during 2013 until the unit closed in September 2014. The board decided that Olsen had no connection or even awareness of the misconduct. However, he decided to quit anyway in order to restore ‘serenity’ to the company.

In its latest public statement on the investigation, LafargeHolcim outlines five weaknesses with its compliance led by improper payments related to Lafarge Syria’s security and supply chain. It then goes on to list a failure of line management, inadequate controls over expenses and a failure to detect improper payments and improperly recorded payments. It’s all presented as ‘chaos reigned’ or wayward staff in tough circumstances trying to do their muddled best for the company. Unfortunately for this narrative, selected members of group management were aware of the situation and appeared to have done nothing about it. This then begs the question: who knew what when?

Olsen may have been exonerated by the board on his departure but he was Lafarge’s Executive Vice-President of Operations for Lafarge in 2014. If he didn’t know what was going on in Syria during his watch then he wasn’t doing his job properly or it was being hidden from him. The head of Lafarge itself at the time, Bruno Lafont, might also have been a viable target for discipline but he decided to stand down from the board of LafargeHolcim in early April 2017. No doubt other former members of the Lafarge management team may bear more responsibility. LafargeHolcim’s implementation of its remedial measures may turn up more culprits, as may the on-going criminal complaints process continues in France.

French newspaper Le Monde, the newspaper that originally broke the story, is probably on the money with its assessment that Olsen’s departure is actually the continuation of the boardroom battle between the board and its shareholders that has raged since before Lafarge and Holcim formally merged. Bruno Lafont was originally lined up to become the CEO of the new company until Lafarge’s worsening financial position compared to Holcim’s prompted a backlash from Holcim shareholders. Le Monde describes how LafargeHolcim’s shareholders include four prominent billionaires: Switzerland’s Thomas Schmidheiny, Belgium’s Albert Frère, Canada’s Paul Desmarais and Egypt’s Nassef Sawiris. Schmidheiny, readers may remember, was one of the principal actors who sunk Lafont’s bid to be CEO back in early 2015.

Placed in this context, Olsen’s departure might seem forced, especially if he had no connection to the debacle in Syria. LafargeHolcim has faced a tough couple of years following its formation with consistently falling sales revenue. Asset divestments and cuts have been the cure as the group struggled to find its new size. Yet, the group saw its adjusted operating earning before interest, taxation, depreciation and amortisation (EBITDA) start to rise in 2016 suggesting that the remedial action was starting to work. LafargeHolcim’s management and shareholders will be acutely aware of its performance so far in 2017 ahead of the public release of its first quarter results in early May 2017. Under these circumstances it seems unlikely that serenity will be restored to the upper echelons of LafargeHolcim any time soon.

As a companion to the trends based article in the December 2016 issue of Global Cement Magazine, here are some of the major news stories from the industry in 2016. 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..

HeidelbergCement buys Italcementi
Undeniably the big story of the year, HeidelbergCement has gradually acquired Italcementi throughout 2016. Notably, unlike the merger of Lafarge and Holcim, the cement producer has not held a party to mark the occasion. Instead each major step of the process has been reported upon incrementally in press releases and other sources throughout the year. The enlarged HeidelbergCement appears to be in a better market position than LafargeHolcim but it will be watched carefully in 2017 for signs of weakness.

LafargeHolcim faces accusations over conduct in Syria
The general theme for LafargeHolcim in 2016 has been one of divestments to shore up its balance sheet. However, one news story could potentially sum up its decline for the wider public. In June 2016 French newspaper Le Monde alleged that Lafarge had struck deals with armed groups in Syria, including so-called Islamic State (IS), to protect its assets in 2013 and 2014. LafargeHolcim didn’t deny the claims directly in June. Then in response to a legal challenge on the issue mounted in November 2016 its language tightened to statements condoning terrorism whilst still allowing some wriggle room. As almost all of the international groups in Syria are opposed to IS, should these allegations prove to be true it will not look good for the world’s largest cement producer.

China and India balance sector restructuring with production growth
Both China and India seem to have turned a corner in 2016 with growing cement production and a generally more upbeat feeling for the industries. Both have also seen some high profile consolidations or mergers underway which will hopefully cut inefficiencies. China’s focus on its ‘One Belt, One Road’ appears to be delivering foreign contracts as CBMI’s recent flurry of orders in Africa attests although Sinoma’s equipment arm was losing money in the first half of 2016. Meanwhile, India may have damaged its own growth in the short term through its demonetisation policy to take high value Indian rupee currency notes out of circulation. In November 2016 cement demand was believed to have dropped by up to half as the real estate sector struggled to adapt. The pain is anticipated to carry on until the end of March 2017.

US industry growth stuck in the slow lane
The US cement industry has failed to take off yet again in 2016 with growth lagging below 5%. The United States Geological Survey (USGS) has reported that clinker production has risen by 1% in the first ten months of 2016 and that it fell in the third quarter of the year. In response, the Portland Cement Association (PCA) lowered its forecasts for both 2016 and 2017. One unknown here has been the election of President-elect Donald Trump and the uncertainty over what his policies might bring. If he ‘goes large,’ as he said he wants to, on infrastructure then the cement industry will benefit. Yet, knock-on effects from other potential policies like restricting migrant labour might have unpredictable consequences upon the general construction industry.

African expansion follows the money
International cement producers have prospered at the expense of local ones in 2016. The big shock this year was when Nigeria’s Dangote announced that it was scaling back its expansion plans in response to problems in Nigeria principally with the devaluation of the Naira. Since then it has also faced local problems in Ghana, Ethiopia and Tanzania. Its sub-Saharan competitor PPC has also had problems too. By contrast, foreign investors from outside the continent, led by China, have scented opportunity and opened their wallets.

Changes in store for the European Union Emissions Trading Scheme
A late entry to this roundup is the proposed amendment to the European Union (EU) Emissions Trading Scheme (ETS). This may entail the introduction of a Border Adjustment Measure (BAM) with the loss of free allowances for the cement sector in Phase IV. Cembureau, the European Cement Association, has slammed the changes as ‘discriminatory’ and raised concerns over how this would affect competitiveness. In opposition the environmental campaign group Sandbag has defended the changes as ones that could put a stop to the ‘cement sector’s windfall profits from the ETS.’

High growth shifts to Philippines and other territories
Indonesia may be lurching towards production overcapacity, but fear not, the Philippines have arrived on the scene to provide high double-digit growth on the back of the Duterte Infrastructure Plan. The Cement Manufacturers Association of the Philippines (CEMAP) has said that cement sales have risen by 10.1% year-on-year to 20.1Mt in the first three quarters of 2016 and lots of new plants and upgrade projects are underway. The other place drawing attention in the second half of the year has been Pakistan with cement sales jumping in response to projects being built by the China-Pakistan Economic Corridor.

Global Cement Weekly will return on 4 January 2016

One fascinating statistic stands out in a study on how the Islamic State of Iraq and Syria (ISIS) pays its bills: cement represented 4% of its revenue in 2015 or around US$100m. The Centre for the Analysis of Terrorism (CAT) came up with this figure as part of its analysis on how the group finances itself. Its data was based on available information such as local sources, internal ISIS documents and reports from governments and institutions.

What’s more, the previous year in 2014, CAT estimated that ISIS brought in US$300m from cement sales. The difference in revenue between 2015 and 2014 came about from the group losing control of territory. In late 2014 it controlled four cement plants: the Lafarge Al-Jalabiya plant in Ayn al-Arabin, the Al-Raqqah Guris Cement plant and Fallujah, Kubaisa and Al-Qa’im plants in Iraq. Altogether it had a cement production capacity of 7.5Mt/yr, a higher capacity than 62% of the cement producing nations that are recognised formally by the United Nations. Briefly it had production parity with countries like Angola, Uzbekistan and Kuwait.

However the loss of the Al-Jalabiya and Kubaisa plants has stifled this revenue stream. At its peak ISIS couldn’t have been selling cement for more than something like US$40/t (capacity / revenue) if the plants were operating at full capacity. Yet it’s much more likely that the plants were chronically under-utilised and prices significantly higher in the heat, dust and confusion of a militant group attempting to form a state in a warzone.

Global Cement Weekly has covered previously the furore that erupted when French media accused Lafarge of cutting deals with ISIS to keep its Jalabiya cement plant during the early stages of the Syrian Civil War. At the time of the revelations in June 2016 LafargeHolcim said that its first priority was the safety and security of its employees at the plant before it eventually closed it, although it did not deny accusations directly.

Since then the plant’s former security manager Jacob Waerness has popped up in an interview with Bloomberg in connection with a book he wrote about the affair. According to Waerness, Lafarge stayed in the country for too long before the plant was finally seized by ISIS in September 2014.

The problem for Lafarge, as other multinational companies left the warzone, was that the US$680m plant had only been operational since late 2010 before hostilities broke out in 2011. Essentially, it tried to wait out the conflict and then got left behind. Pertinent to the start of this column, Waerness says that as the more extreme groups took control of the surrounding area he was offered and declined a meeting with the IS finance chief in Raqqa in the summer of 2013. However else one might describe IS, it was and clearly is well aware of the revenue to be gained from functioning cement plants.

LafargeHolcim has since started an internal review into the reported allegations under the auspices of its Finance & Audit Committee. In September 2016 the Iranian-backed Fars News Agency was reporting that US special forces were using the Jalabiya plant as a base. If and when peace comes to the region it will be intriguing to find out what condition the plant is in. Until then, LafargeHolcim will have to wait and take the loss on its investment.

Back in 2001 a UK government advisor gained infamy for trying to use the terrorist attacks on 11 September 2001 to bury bad news. This week’s column is trying hard NOT to be about the UK vote to leave the European Union (for more on that try our editorial director’s column in the latest issue of Global Cement Magazine). They’ll be plenty of time for that later on when the repercussions for the cement and construction industries sink in. However, it has inadvertently buried some bad news coverage for LafargeHolcim.

The French newspaper Le Monde reported on 21 June 2016 that Lafarge’s Syrian subsidiary paid money to Islamic State (IS) militants in order to keep its Jalabiya cement plant in operation in 2013 and 2014. The paper said that the plant was kept in operation until September 2014 as the result of ‘agreements with local armed groups, including the Islamic State.’ It added, that Lafarge ‘indirectly financed the jihadist organisation.’

LafargeHolcim issued a statement on the story on same day. However, it didn’t deny the accusations. It stated that the company, as Lafarge, was under control of the plant in Jalabiya between 2010 and September 2014 and that the safety of its employees had always been its first priority. Part of the statement read, “Once the conflict reached the area of the plant, the first priority for Lafarge was the safety and security of the employees, while planning for the eventual closure of the plant. In September 2014, Lafarge stopped operating the Jalabiya plant. After that, all employees were evacuated, put on paid leave and were no longer allowed to access the plant. In December 2015, given the evolution of the situation in Syria, the decision was taken to terminate all employee contracts and, where possible, transfer employees to other parts of the group.”

The company may yet face prosecution for the dealings if it is found to have financed any terrorist organisation. Emmanuel Daoud, a specialist in international law quoted by various media sources, speculated that the outcome of any potential investigation might depend on whether the company was protecting its staff or protecting its profits. Additional complications also arise from the subsequent merger of France’s Lafarge and Switzerland Holcim to form LafargeHolcim.

It should be remembered though that cement plants and their staff are often very real targets in regional conflicts. They can also be held under switching jurisdictions. We reported that a Lafarge Syria plant near Aleppo was attacked and set on fire in 2014. Before the site was abandoned to protect the staff the site was first under the auspices of the Syrian army and then the Syrian Kurdish Democratic Union Party. Paying ‘taxes’ to the loosing side in a civil war might well be interpreted as funding terrorists in the aftermath.

A similar story resolved itself this week with the news that seven quarry workers kidnapped in Nigeria were released. Unfortunately there was one death and injuries sustained in the ambush that trapped them. Sy van Dyk, the chief executive of Macmahon, the company involved, refused to comment to local press on whether his company had paid a ransom to release the workers.

This all links to the wider issue of how multinational companies should deal with armed groups and de-facto governments in unstable areas. For example, the UK and US governments discourage paying ransoms to kidnappers because they say it encourages it as a business. Yet, other European nations notably paid to release their nationals during the earlier stages of the Syrian conflict and elsewhere. This in turn offers insight towards why Lafarge, a French multinational company, might have been more likely to negotiate with armed groups in Syria than say a British or American one. If an official investigation into Lafarge’s dealings follows then more details may emerge but there are no easy answers to these kinds of issues.