Displaying items by tag: Brazil
Martin Engineering supplies air cannons to Votorantim
09 August 2012Brazil: Votorantim Cimentos has ordered 110 air cannons from Martin Engineering to aid material flow in two new plants currently nearing completion in Brazil. The two new plants are part of a massive US$988m investment by Votorantim. They are expected to produce approximately 8500t/day of clinker when they come online later in 2012.
110 Martin Hurricane Supreme Air Cannons are to be installed in the plants in Cuiabá and Rio Branco, covering preheater towers, additive silos and cyclones. Benefits of specifying the new technology for air cannon networks include reduced energy costs, improved system performance and increased uptime, with greater availability of compressed air for other processes within the plant.
Camargo wins battle for Cimpor
11 July 2012The news that Brazil's competition regulator, Cade, has approved Camargo Corrêa's attempt to control Portugal's Cimpor after over two years of poker-faced mergers, acquisitions and deals, has significantly changed the cement landscape of the country. Camargo will now be allowed a controlling stake in the Portuguese producer assuming that Votorantim, Cimpor's other major shareholder, sells its Brazilian Cimpor assets to a third player.
The deal looks likely to happen fairly quickly, with Votorantim stating that it never intended to remain as Camargo's partner in Cimpor. Lafarge appears to have first refusal as the original seller of the stake to Votorantim, but Cade may want to avoid this due to Lafarge's strong Brazilian position.
With its Cimpor interests now set to go to another producer, the regulator is clearly looking to spread the cement wealth in the country. Cade also said that Camargo must sell some assets in Brazil's heavily developed São Paulo state - presumably not to Votorantim! An asset swap will see Cimpor assets abroad transferred to Votorantim.
The Brazilian cement market has become increasingly concentrated since 1990. At that time there were 19 different producers; by 2000 there were 12. That number has since increased slightly, but Votorantim, Cimpor, Camargo Corrêa, Holcim and Lafarge still have 85% of the integrated capacity between them. Cade's attempts to moderate their influence is understandable, given that some regions are currently now supplied by Votorantim-owned production to the tune of 70%. Accusations of cartels have been rife in Brazil for many years.
Consumers, both large and small, will be hopeful that the deal will go through smoothly and that a drop in market concentration will reduce prices in the country. Even the Brazilian government is affected. It is seeking to spend hundreds of billions of dollars on road, port and home construction and for expansion of its mines, farms and factories. If prices of building materials can be reduced, it will be able to accelerate its general development and ramp up extraction and production of its valuable natural resources.
Cade approves Camargo's Cimpor share purchase
05 July 2012Brazil: Brazil's competition regulator, Cade, has approved Camargo Corrêa's June 2012 purchase of a controlling stake in the Portuguese cement maker Cimpor subject to several conditions. The main requirement is that Votorantim, a competitor of Camargo in the Brazilian cement market, must sell its own stake in Cimpor. Votorantim and Camargo Correa both bought shares in Cimpor in 2010.
The Cade decision is expected to result in an agreement between Camargo and Votorantim whereby Camargo gets Cimpor assets in Brazil and Votorantim gets Cimpor assets abroad including those in Spain, Turkey, China and India.
With 40% of Brazil's cement market, Votorantim is Brazil's largest cement maker. Through their shareholdings in Cimpor, both Camargo and Votorantim previously increased their share of Brazil's market. Cade also said that Camargo must sell some assets in Brazil's São Paulo state, the country's most populous and industrially-developed region, and create a technological development programme.
Under the terms of the Cade decision, Votorantim's exit from Cimpor will be carried out either by selling its Cimpor stock back to France's Lafarge or by a sale to a third party, according to Alessandro Octaviani Luis, the Cade board member who wrote the decision. "We take Votorantim's willingness to negotiate its departure from Cimpor as a symbol of goodwill to Cade," said Vinicius de Carvalho, Cade's president.
Luis had recommended rejecting the initial Votorantim purchase of Cimpor on the grounds that it would raise Votorantim's dominance of Brazil's cement market, saying that while it has less than half of Brazil's total market, in some states, Votorantim's market share is as high as 70%. "In the cement market, Votorantim does not have the means to grow through acquisitions," he said. Votorantim said later in a statement that it bought its Cimpor stake to expand internationally and it was never its intention to remain a partner in Cimpor with Camargo.
The Cade decision comes as two decades of consolidation in Brazil's cement and concrete markets have led to limited competition and kept prices high. The market conditions have created problems for a government seeking to spend hundreds of billions of dollars in road, port and housing construction and for companies expanding mines, farms, factories and transport infrastructure to supply soaring Asian demand for commodities.
Cimpor bought by Camargo Corrêa
22 June 2012Portugal: The Brazilian industrial conglomerate Camargo Corrêa has completed its takeover of Portugal's Cimpor on 20 June 2012 and now controls 94.8% of the cement-maker.
The success of the move was largely expected by analysts who will now look at the terms in which the company's assets will be split between Camargo and its Brazilian rival Votorantim. The deal includes an asset swap with Votorantim, Cimpor's second largest shareholder.
Camargo will integrate its South American and Angolan cement operations into Cimpor. Votorantim will then have the opportunity to buy Cimpor's operations in China, India, Morocco, Tunisia, Turkey and Peru and part of its Spanish business at a set price defined by independent auditing companies.
Camargo, which was already the largest single shareholder in Cimpor with a 33% stake, launched a Euro2.5bn bid for the rest of the company in March 2012. Portugal's state-owned bank CGD, investor Manuel Fino and Millennium BCP's pension fund all accepted Camargo's Euro5.50/share offer.
The Portuguese government has said a Cimpor deal will help CGD deleverage and defended Camargo's bid from suggestions that it was against the national interest. Cimpor has been one of Portugal's most successful and internationally-diversified companies.
Home improvement expands cement demand in Brazil
12 June 2012Brazil: A large report by Sindicato Nacional da Industria do Cimento (SNIC) has revealed that home consumption of cement has risen by 104% in Brazil since 2006. The report, carried out by Galanto Consultoria, showed that Brazilian families are carrying out more home improvement, resulting in a surge in demand for many building materials.
DIY consumption of cement rose from US$14m in 2002-2003 to US$28.8m in 2008-2009. Interestingly, the use of bricks fell from 6% to 4.6%, wood from 5.7% to 3.9% and tiling from 6.4% to 5.9% of total materials used over the same period. The president of SNIC, Jose Otavio Carvalho, said that DIY applications now represent 18.23% of the total consumption of cement in Brazil.
Overall cement consumption in Brazil has risen by 34% to U$1.7bn in 2011, up from US$1.3bn in 2006. The major regional consumer is the south east with a 40.2% share followed by the north east with a 25.5% share of national consumption.
SNIC estimates that Brazil produced 63.6Mt of cement in 2011, just shy of national demand of 64.6Mt. Imports made up the shortfall. The industry's installed capacity was estimated at 78Mt/yr at the end of 2011, with SNIC predicting an increase to 111Mt/yr by the end of 2015.
Cade makes recommendations for Cimpor bid
23 May 2012Brazil: Cade, the Brazilian anti trust agency, has recommended that the acquisition of Portuguese cement producer Cimpor by Camargo Corrêa should be approved but that that Votorantim Cimentos should divest its stake in Cimpor.
In 2010, Camargo Corrêa teamed up with industrial conglomerate Grupo Votorantim to acquire 54% of Cimpor, blocking a bid by Brazilian steelmaker CSN in the process. Camargo Corrêa has since raised its stake in Cimpor to nearly 33%, later launching a Euro2.5bn bid for the rest of Cimpor in March 2012 at Euro5.50/share.
Camargo Corrêa's buyout of Cimpor could help competition in Brazil by reducing Votorantim's market share, Cade chief Olavo Chinaglia told the press in April 2012. Votorantim may have to sell some of its Brazilian cement assets to reduce its market concentration. The conglomerate's market share is about 40% nationally but reaches nearly 90% in some regions.
In November 2011 Cade found that Votorantim, along with Camargo Corrêa and four other rivals, colluded to fix prices, hampering competition in the Brazilian cement market during a construction boom. Further approval of Camargo Corrêa's purchase may depend on certain conditions, such as selling assets in some markets and avoiding participation in other cement companies.
Camargo Corrêa details bid for Cimpor
09 May 2012Brazil: Brazil's second largest construction group Camargo Corrêa has said it would offer cash to take over the Portuguese cement maker Cimpor and it would preserve the company's name and strategic outlook.
Camargo Corrêa's cement division, InterCement, has offered clarification on its bid, first announced on 30 March 2012. In a statement, Camargo Corrêa maintained its bid of Euro5.50/share to acquire the 67.1% of Cimpor it does not already own. However it added that it would pay, "in cash and immediately to all shareholders that adhered to the offer."
It said it would maintain the brand name of Cimpor, preserve its long-term strategic outlook and keep the company's decision-making offices in Portugal, as it tried to win over support for the takeover bid. In its initial response the takeover bid, Cimpor's board said that Camargo's bid was too low and lacked details on its plans for the company's future.
Brazilian twist
11 April 2012Camargo Corrêa's ongoing bid for Cimpor must be creating nightmares for Brazil's anti-cartel authorities.
If the takeover goes through, Camargo Corrêa's Brazilian market share will rise from 24% to 37% according to data from the Global Cement Directory 2012. Together with industrial conglomerate Grupo Votorantim, who already own 21% of Cimpor, this share would amount to 72% of the country's total cement capacity.
As covered in this week's Global Cement Weekly #44 Jose Barros Franco, chief executive of Intercement a subsidiary of Camargo Corrêa, has explicitly denied that Camargo had a pre-agreement with Votorantim to split up Cimpor assets. However, he did not rule out a deal in the future to jointly manage the company. This implies that companies representing nearly three-quarters of the Brazilian cement market might be working together to at least some degree!
In October 2011 Camargo Corrêa denied that it was in talks to buyout Cimpor. According to one source at that time, Camargo Corrêa planned to take over Cimpor's operations in Brazil while Votorantim was considering taking assets outside of Brazil. Currently analysts expect the same thing to happen now if the takeover goes through, especially given any possible anti-competitive attention in Brazil.
With operations in four continents Portugal's Cimpor holds 77% of its global capacity outside of Brazil. If the takeover does actually happen, then the key question is this: how much of Cimpor's international operation does Votorantim want in return for helping its competitor Camargo Corrêa to grow back at home in Brazil?
Brazil: Brazil's second-largest construction group Camargo Corrêa does not expect to have to sell any assets if its buyout of Portuguese market-leader Cimpor goes ahead as it hopes. It expects Cimpor to gain scope and global reach as its unit.
Jose Barros Franco, chief executive of Intercement, a subsidiary of Brazil's second-largest construction group Camargo Corrêa, has stated that the bid price of Euro5.5 per Cimpor share was 'fair' but he would not say if the company would consider sweetening the offer. Portuguese conglomerate Semapa has made a proposal to major shareholders in Cimpor to try to keep it in Portuguese hands by forming a joint holding company. It does not represent a counter-bid.
"We pay close attention to all manifestations of interest, but we believe that our offer is a good opportunity for all shareholders and will subsequently transform Cimpor into a bigger company than it is today, implying a significant entry of foreign investment to Portugal," Barros Franco added. He denied market talk that Camargo had a pre-agreement with another Brazilian shareholder in Cimpor, the country's largest cement producer Votorantim, to split up Cimpor assets, but did not rule out a deal in the future to jointly manage the company.
Analysts expect Intercement to take over the bulk of Cimpor's capital, but say Votorantim is likely to keep its 21.2% stake, which would allow it to carve out part of Cimpor's international business later, avoiding problems with Brazil's competition regulator.
"There is no pre-agreement. We believe that our bid is a good opportunity for all shareholders. Still, we can't rule out the possibility of a future agreement to allow for a better management of the company and addressing competition issues in Brazil," Barros Franco wrote. Camargo holds a 32.9% stake in Cimpor.
"For now we do not expect any asset sales. We are at the disposal of the antitrust authorities to provide all the necessary explanations," he said.
Analysts have previously said that Cimpor may have to sell at least one mill to address Brazilian antitrust regulator's concerns. Votorantim would have to sell various plants. If Camargo Corrêa took over 100% of Cimpor, it would double its market share in Brazil to near 20%, reducing Votorantim's dominant lead.
Camargo Corrêa makes bid for remaining Cimpor stake
03 April 2012Brazil: Brazil's Camargo Corrêa has launched a bid for the 68.1% stake in Portugal's Cimpor that it does not already own. Camargo Corrêa Cimentos, the Brazil-based cement unit of which is that nation's fifth-largest cement producer, currently controls 32.9% of Cimpor.
It is thought that Camargo Corrêa may be taking advantage of depressed valuations in the troubled Portuguese economy to win control of the company. Cimpor is itself the fourth-largest cement producer in Brazil. In 2010, Camargo Corrêa teamed up with industrial conglomerate Grupo Votorantim to thwart Brazilian steelmaker CSN's bid for full control of Cimpor. Votorantim holds 21% of Cimpor.
This new move may open up the spectre of a lengthly and interesting anti-trust approval if the deal is accepted by Cimpor, especially given that Camargo Corrêa, Votorantim and four other producers were accused of price-fixing in the Brazilian cement market in November 2011.
At the end of 2011 Portuguese media reported that both Camargo Corrêa and Votorantim were preparing to buy Cimpor minority shareholders out. It has now been reported that Votorantim is looking to make use of its option to buy bank Caixa Geral de Depositos SA's 9.6% in Cimpor and thus reach a stake in Cimpor similar in size to that owned by Camargo Corrêa.