Could the fairy tale of McInnis Cement have ended any other way? The saga of the frequently frozen cement plant in Quebec collided with reality this week when it emerged that the pension fund Caisse de depot et placement du Québec (CDPQ) and the provincial government are poised to let it go. The new buyer, Votorantim Cimentos, plans to form a new 83%-owned subsidiary based in Toronto to combine the assets of McInnis Cement and St Marys Cement. The proposed change in management marks a transition to a large multinational building materials producer.
Normally, Global Cement Weekly would end on a summary for its last outing of the year but the government involvement in the McInnis Cement’s ownership has created a very public tale of hope and hubris. Attempting to build a brand new integrated cement plant in rural Quebec might not seem exciting but this story has it all, from corporate competition to sustainability issues to clinker export markets. Readers looking for a global recap of 2020 should refer to the December 2020 issue of Global Cement Magazine with news and cement producer round-ups.
The McInnis story began in early 2014 when the Quebec provincial government announced that it would invest US$350m in a new 2.2Mt/yr cement plant and port facility to be operated by McInnis Cement at Port-Daniel. The project was championed by the Beaudoin-Bombardier family, which was to foot the larger share of the US$1bn total bill. Local press compared the gambit of entering a new market with established players as being similar to Bombardier's approach to its C Series airliner that was eventually bought out by Airbus: risky but potentially lucrative.
As the plan developed, competitors in both Canada and the US took exception to an export-focused cement plant being propped up by government money, political parties got involved over how public money was being spent and environmentalists became upset. The concerns of the latter were partially bypassed in order to get the project started. Then, when the cost over-ran by US$350m, the provincial government said it wasn’t spending any more and the CDPQ took over. The plant was inaugurated in September 2017 and the CDPQ started looking for a buyer or new investors at the start of 2018. It rowed back from this position in early 2019 when its chief executive officer told local press that the pension and insurance fund was ‘convinced’ of the potential of McInnis Cement. Votorantim was publicly linked to the company in September 2020 and the agreement followed this week.
It’s unknown how much Votorantim has paid to buy control of McInnis Cement but its presence in the Great Lakes region and the east coast will be augmented by this deal. Following the acquisition it will control two integrated plants and two grinding plants in the Midwest US, two integrated plants in Ontario, and now the McInnis integrated plant in Quebec. The combined integrated production capacity will rise to around 7Mt/yr. Things are looking up for the company with the Brazilian market recovering despite coronavirus and the US market holding steady so far in 2020.
The drama of McInnis Cement highlights the perils of state investment in heavy industry and the pitfalls of making a risky entry into a saturated market. The bit the Votorantim press release neglected to mention was the loss that the provincial government of Quebec is expected to make on its involvement with the cement plant. Instead it was left to Economy Minister Pierre Fitzgibbon to admit to journalists that the province is prepared to lose up to US$370m on the affair if it can’t recoup its costs after other creditors take their slices over the next decade or so. One consolation that was reported in the local press was that jobs and facilities at the McInnis plant would be supported until at least 2029. The story of the cement plant at Port-Daniel continues for now but it’s likely to be far less public as private companies take it into the unknown.
Global Cement Weekly will return on 6 January 2020
