Displaying items by tag: LafargeHolcim
Holcim Colombia to build grinding plant
23 November 2016Colombia: Holcim Colombia is planning to build a 0.5Mt/yr grinding plant at Buga in the Valle del Cauca department. The project will have an investment of US$32m, according to the New Century newspaper. The site for the new plant was chosen for both local demand and its proximity to the port of Buenaventura. Construction work on the unit will start immediately and the plant will be launched in the first quarter of 2018. It is expected to create up to 180 jobs when operational.
LafargeHolcim, ArcelorMittal, Evonik and Solvay form partnership to reduce carbon emissions across industries
17 November 2016Morocco: LafargeHolcim, ArcelorMittal, Evonik and Solvay have formed a Low Carbon Technology Partnerships Initiative across the steel, cement and chemicals industries. This new partnership will look at the potential synergies that exist between the manufacturing processes of these three energy intensive sectors, and how these synergies could be harnessed to reduce CO2 emissions.
As a first step, and following preliminary research, the innovative partnership will produce a study with the technical support of Arthur D Little to identify potential ways to valorise industrial off-gases and other by-products from their manufacturing processes to produce goods with a lower carbon footprint than through the fossil path. The preliminary research has already allowed identification of significant potential in selected trans-sector pathways.
The study is aimed at bringing a fact-based overview of carbon and energy sources from industrial off-gases (first at a European level), and evaluating the technical, environmental and economic feasibility of different Carbon Capture and Usage (CCU) pathways and their potential.
Initial findings from the first step already underway suggest that deploying cross-sector carbon capture and reuse opportunities on an industrial scale could reduce up to 3 GT/yr or 7% of global anthropogenic CO2 emissions. Existing conversion technologies that could be deployed across the three sectors could utilise by-products in the off-gases to create building materials, organic chemicals and fuel. Increased availability and greater access to renewable energy sources would significantly boost net carbon reduction efforts by those three sectors, within a supportive legislative framework. Cross sector carbon capture and reuse should also result in job creation, to be further investigated.
The study, carried out at European level, is building the ground for similar investigation extended at global level and paves the way for identifying and assessing industrial scale projects on CCU at the interface between the sectors.
“Concrete offers the highest level of life-cycle sustainability performance and we are continuously developing new products and solutions for a low carbon society. This new ambitious partnership will support our mission to cut our net emissions per ton of cement by 40% towards 2030 (versus 1990) and to develop and further deploy low carbon solutions for the construction sector. But to make this a reality, we will need an enabling regulatory framework and support for innovation,” said Bernard Mathieu, Head Group Sustainable Development of LafargeHolcim.
Before and after the merger
16 November 2016The other shock news from the US last week was LafargeHolcim’s poor cement sales volumes in North America so far in 2016. HeidelbergCement’s third quarter financial results followed and they give us an opportunity to compare the fortunes of the world’s two largest cement producers either side of a high profile merger.
Graph 1 - Changes in cement sales volumes for LafargeHolcim, HeidelbergCement and selected European multinational producers in the first three quarters of 2016 compared to the same period in 2015 (%). Data labels are the volumes reported in 2016. Source: Company reports.
Graph 1 shows the effect of HeidelbergCement’s completion of its acquisition of Italcementi in mid-October 2016. Now that the purchase is complete its sales volumes have taken a whopping 20% boost to 73Mt. LafargeHolcim by comparison is struggling to hold sales. Although do note the difference in sales volumes between the two largest cement producers in the world. LafargeHolcim has sold nearly 2.5 times the amount of cement as HeidelbergCement so far in 2016.
Graph 2 - Changes in sales revenue for LafargeHolcim, HeidelbergCement and selected European multinational producers in the first three quarters of 2016 compared to the same period in 2015 (%). Data labels are the sales reported in 2016. Source: Company reports.
The point to take away from Graph 2 is the huge difference turbulent currency exchange rates are having on the financial returns of these companies. Like-for-like reporting of sales revenue hasn’t helped LafargeHolcim to grow but it is making a big difference to the sales of Cemex and Vicat.
Focusing on LafargeHolcim, the group has had a tough time of it so far in 2016 with falling cement sales volumes and falling sales revenue year-on-year on both a straight comparison basis and like-for-like one. Like many European cement producers negative currency effects have plagued its financial reporting. However, unlike many of its European-based competitors its like-for-like sales figures have also declined.
Particular problems have been noted in Nigeria as well as Brazil, Indonesia and Malaysia. It has managed to keep its profit indicators such as earnings before interest, taxation, depreciation and amortisation (EBITDA) mostly rising through the first three quarters of 2016 on a like-for-like basis. Yet, to give an idea of the effect fuel supply problems had in Nigeria in the third quarter of 2016 on the group’s entire bottom line, excluding Nigeria from its results would have seen its adjusted operating EBITDA rise significantly. With regard to the rest of the world, cement sales volumes have fallen in every one of the group’s territories so far in 2016 including, worryingly, its North America region. Here, falling cement sales volumes have been blamed on delays to infrastructure projects and bad weather.
By contrast, HeidelbergCement has reported rising sales revenue and profit indicators such as earnings before interest and taxation (EBIT) although its profit has fallen. Most of the good financial cheer has been derived from the new Italcementi assets although most of its territorial cement sales revenues have grown even when the effects of the new purchase have been excluded. The exception has been Africa where the group mentioned problems in Ghana due to local competition and imports.
The comparison between the world’s largest European-based cement producers is stark. LafargeHolcim made a big show of announcing the merger between Lafarge and Holcim in mid-2015. Today it is battening down the hatches as its tries to claw profit from asset sales and synergy savings. HeidelbergCement almost casually announced that it had finalised its acquisition of Italcementi in October 2016 and it has proceeded to rack up the profits at its first subsequent financial report. However, HeidelbergCement may be waiting for the regulators to finish approving parts of the deal before it makes a final announcement. For example, the Federal Trade Commission only approved the sale of various US assets on 15 November 2016. Meanwhile, the credits ratings agencies passed their own judgement when Standard & Poor upgraded its rating of HeidelbergCement earlier this week.
LafargeHolcim remains a much larger company than HeidelbergCement despite the problems it is facing so provided it can keep the investors happy it should be fine as its whittles itself down to a more sustainable shape. To this end the Swiss press has been speculating whether chief executive officer Eric Olsen will announce job cuts and plant closures at an investors meeting on 18 November 2016.
LafargeHolcim increases stake in Ambuja Cement and ACC
16 November 2016India: LafargeHolcim has increased its shareholding in Ambuja Cement and ACC via its subsidiary Holderind Investments. It now owns 63% of Ambuja Cement’s shares and 4.5% of ACC’s shares. The group will pay for the additional stakes in Indian Rupees. The impact on LafargeHolcim’s net debt will be Euro302m. It described India as one of LafargeHolcim’s key markets with solid long-term fundamentals and a clear potential for further improvement in business performance.
Sherpa and European Centre for Constitutional and Human Rights take legal action against Lafarge over operations in Syria
16 November 2016France: Sherpa and the ECCHR (European Centre for Constitutional and Human Rights), as well as 11 complainants who are former Syrian employees of Lafarge, are taking legal action against Lafarge and its subsidiary Lafarge Cement Syria (LCS) for its actions in Syria. The non-government organisations have accused the cement producer of conducting business with the Islamic State of Iraq and Syria (ISIS), a terrorist group, via its Jalabiya cement plant.
“The Lafarge case highlights once again how multinationals doing business in conflict zones can directly fuel armed conflicts and contribute to grave human rights violations committed therein. Companies like Lafarge must be held accountable,” said Miriam Saage-Maaß, Vice Legal Director at ECCHR.
Sherpa and the ECCHR have accused LCS of entering into arrangements with ISIS in order to maintain production, by paying for passes issued by the jihadist organisation and buying raw materials necessary for cement production such as oil and pozzolana in areas under ISIS’s control. They have also accused Lafarge of reckless endangerment given that the plant continued to operate in the conflict zone. LCS repatriated its expatriate staff in 2012 but it kept its Syrian employees working at the site. Subsequently, when the plant was attacked, Sherpa and the ECCHR say that the local employees were forced to escape on their own.
Holcim Indonesia inaugurates cement terminal in Lampung
14 November 2016Indonesia: Holcim Indonesia has officially inaugurated its new 1Mt/yr cement terminal in South Lampung. The event was attended by the Vice Regent of South Lampung Regency, Nanang Hermanto, the representatives of the Ministry of Industry and the Board of Directors of Holcim Indonesia. The US$26m project was started in 2014 and it will process bagged and bulk cement. It is intended to serve markets in Sumatera Island, especially in Lampung.
“We want to get closer to our customers and ensure secure supply to meet local demand in Lampung. This terminal applies the latest technology and environmental-friendly equipment and a jetty to support the operation,” said Gary Schutz, President Director of Holcim Indonesia.
Schutz also addressed the country’s economic slowdown and decreasing demand for cement by calling for the government to invest in delayed infrastructure projects. He said that numerous additions to the national cement production capacity has led to a ‘drastically’ over-supplied market outpacing demand by far for the next six to 10 years.
India: ACC has revealed that an appeal by cement producers to the Competition Appellate Tribunal (COMPAT) against a fine imposed by the Competition Commission of India in August 2016 for alleged cartel activity has succeeded in negotiating the terms of the penalty. The COMPAT has ordered that the producers deposit 10% of the US$1bn fine in a similar manner to that of a fine levied in 2012. That fine was eventually dropped in 2014 with the CCI citing a lack of evidence.
Fines totalling US$1bn were levied on ACC, ACL, Binani, Century, India Cements, JK Cement, Lafarge, Ramco, UltraTech, Jaiprakash Associates and the Cement Manufacturers Association in late August 2016 for alleged cartelisation activity.
Switzerland: LafargeHolcim’s net sales have fallen by 7.5% year-on-year to Euro18.9bn in the first nine months of 2016, from Euro20.4bn in the same period of 2015. However, on a like-for-like basis it said its net sales fell by 1.8%. Cement sales volumes fell by 6.4% to 177Mt from 189Mt. Its adjusted operating earnings before interest, taxation, depreciation and amortisation (EBIDTA) fell by 3.3% to Euro3.9bn from Euro4.03bn. No direct comment was made on the nine-months results but Nigeria was blamed for significantly affecting earnings and ‘challenging’ markets were also reported in Brazil, Indonesia and Malaysia.
“These results demonstrate the strength of our balanced portfolio with solid contributions from both mature and emerging countries across our regions. As we anticipated, challenging conditions in Nigeria continued to impact our earnings, but we started to see the positive effects of higher prices and of our actions to diversify our fuel mix towards the end of the quarter,” said Eric Olsen, CEO.
Cement sales volumes have fallen in most of the group’s operating regions. Although on a like-for-like basis modest rises were reported in Asia Pacific, Middle East and Africa and North America. In Nigeria the company has taken steps towards greater fuel flexibility following gas supply interruptions earlier in 2016 but production levels only recovered at the end of the third quarter in the year.
Ambuja Cement presents mixed results so far in 2016
04 November 2016India: Ambuja Cement’s sales volumes have risen slightly to 16.1Mt in the first nine months of 2016. Its net sales fell slightly to US$1.04bn and its net profit after tax rose by 41% year-on-year to US$147m. The cement producer said that sales volumes fell due to poor demand but profits have risen due to increased prices.
Lafarge Jordan to start building 15MW solar power unit in 2017
31 October 2016Jordan: Lafarge Jordan is set to start building a 15MW solar power unit for its Rashadiya cement plant in early 2017. The power plant, which is being built by Adenium Energy Capital, is expected to be operational by the third quarter of 2017, according to the Jordan Times newspaper. The agreement between Adenium and Lafarge was signed in late October 2016.
“This is an important milestone for the domestic industrial sector in general and the cement industry in particular as this agreement emphasises the positive role that industries can play in using alternative and renewable energy resources,” said Lafarge Jordan’s chief executive officer Amr Reda. This project will also follow the national Jordanian strategy for renewable energy launched by the Ministry of Energy and Mineral Resources in 2015.