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IPO and alternative fuel news from Arabian Cement 16 April 2014
Egypt: Arabian Cement Company has announced that its initial public offering (IPO) is expected to take place before the end of the second quarter of 2014, with trading on the Egyptian Stock Exchange to start around 21 May 2014. The company plans to sell a 22.5% stake.
Arabian Cement Company has also invested US$35m to shift from using 100% natural gas to 70% coal and 30% alternative fuels. It expects to use coal within the next three to four months once the government issues the company with the necessary license. The company produced 4Mt of cement in the 2013 fiscal year from a capacity of 5Mt/yr. It expects no growth in the 2014 fiscal year on the back of energy shortages.
LafargeHolcim: everyone expects the Spanish acquisition
Written by Peter Edwards
16 April 2014
A lot has happened since the 4 April 2014 announcement that Lafarge and Holcim intend to become LafargeHolcim. There have been several related announcements from around the global cement industry this week, prompting some interesting discussion with respect to the future look of the industry.
Oyak Group, which operates a number of plants in Turkey, appears to be limbering up for LafargeHolcim-based acquisitions in the UK, the EU or Africa, with aims to become a regional player. Meanwhile, Lafarge has pulled out of talks regarding its proposed acquisition of the Cementos Portland Valderrivas (CPV) plant in Vallcarca, Spain, directly citing the merger as the reason for this. We have also seen Colombia's Cementos Argos purchase a grinding plant in French Guiana, which was jointly-owned by Lafarge and Holcim. Announced just a few days after the merger, this asset was presumably jettisoned in order to avoid future issues with local anti-monopoly authorities. Finally, ACC and Ambuja have announced that they would retain their separate identities in India after the merger.
This flurry of announcements is likely to be just the start of frenzied speculation as the competitors of Lafarge and Holcim work out what assets are most likely to be sold. So what about the multinationals, Cemex and HeidelbergCement?
Cemex certainly has cause for concern, weighed down by the debt that it took on in 2007 with the acquisition of Australia's Rinker. It is in a relatively weak position with respect to acquiring any LafargeHolcim divestments. Could it lose market share? HeidelbergCement, by contrast, has long extoled the virtues of its financial efficiency policies and its diverse and forward-looking geographical spread. It could snap up more strategic assets after the merger. While both of these multinationals will be wary of dealing with an enlarged competitor in LafargeHolcim, they have the opportunity to increase their market shares and both will move up one position in the global cement producer rankings.
It is likely to be the smaller players that have the most to gain from the shedding of LafargeHolcim's various assets, especially those that enjoy strong domestic markets and have cash at the ready. Oyak Group has already entered the ring but what if Nigeria's Dangote, Brazil's Votorantim, Colombia's Cementos Argos or Thailand's SCG go on a spending spree? Could one of these rise to become a new global cement multinational?
However, if we can expect a change anywhere it will be in Spain. Following reports in 2012 that Spanish cement production had crashed to its lowest levels since the 1960s jobs have been shed and profits have evaporated. In 2013 Holcim and Cemex agreed to combine all of their operations in Spain. Roughly, according to the Global Cement Directory 2014, cement production capacity in Spain breaks down as follows: CPV (23%), Cemex (18%), Lafarge (11%) and Holcim (10%). Letting the Cemex-Holcim deal happen, followed by the Lafarge-Holcim merger and the CPV Vallcarca purchase, would have led to a major headache for Spain's competition authorities, creating an entity with 43% production market share! Unsurprisingly the first casualty has been the CPV Vallcarca deal. Whatever happens, the next 18 months will be an interesting period for the global cement industry.
Ambuja Cements to set up three new plants 15 April 2014
India: Ambuja Cements will invest US$133m in 2014 from internal funds in order to partially finance its on-going capacity expansion projects.
"2014 will see capital expenditure worth US$133m, over and above the US$120m investment made in 2013. The entire proposed expenditure will be financed by internal funds," Ambuja Cements said in its annual report.
At present, Ambuja Cements has a cement production capacity of 27.25Mt/yr. It is setting up three 1.5Mt/yr capacity greenfield cement plants in Rajsthan, Madhya Pradesh and Uttar Pradesh. Ambuja Cements is investing US$581m for setting up the three new plants. The company is also adding 0.8Mt/yr of clinker capacity in West Bengal and Rajasthan.
Cement monopoly is choking housing sector 15 April 2014
Nigeria: Property firm Haven Homes Ltd is worried that the exorbitant price and low availability of cement in Nigeria will slow the pace of housing construction, lamenting that just a few firms have monopolised cement production.
"At the moment only Dangote Cement and Lafarge Cement are consistently producing cement in the entire country. For a population of 160 million that is not good enough, that sort of monopoly makes the product too expensive," said Tayo Sonuga, Haven Homes' managing director and CEO. "Cement is too important to be left to the vagaries of private or public monopoly. You cannot build without cement so the government cannot remain silent about this matter. It calls for urgent action."
Shree Cement on expansion drive 15 April 2014
India: Shree Cement plans to increase its cement production capacity to 20Mt/yr by 2015, up from 13.5Mt/yr in 2013.
Shree Cements will construct an integrated cement plant in Chhattisgarh for US$282m, a grinding plant in Bihar for US$82.9m and is increasing the cement production capacity at its plant in Rajasthan.
"The Chhattisgarh plant could be commissioned by April 2015, while the Bihar unit could be in operation as soon as May 2014. We are also on the verge of completing the expansion at Rajasthan," said H M Bangur, managing director of Shree Cement.