Displaying items by tag: Acquisition

France: Imerys has signed an agreement to buy a 60% stake of Haznedar Group, a Turkey-based monolithic refractories and refractory bricks producer for the cement, steel, iron and petrochemical markets. The acquisition is expected to conclude in the fourth quarter of 2020 subject to approval by competition authorities. No value for the deal has been released.

The acquisition will add basic and acidic refractory bricks to Imerys’ product range and extend its industrial footprint with a production base in Turkey. It is also expected to strengthen its position within the Turkish market. The business will be consolidated in Imerys’ High Temperature Solutions business area, part of its High Temperature Materials & Solutions segment.

Namibia: The Namibian Competition Commission has blocked the sale of Ohorongo Cement to China-based West China Cement on the grounds that it would ‘substantially’ reduce competition in the cement market. It warned that it could lead to coordination between Ohorongo Cement and Whale Rock Cement. The commission added that, “no concrete benefit would outweigh the detrimental effects that will result from the implementation of the proposed merger”.

West China Cement agreed to buy a majority stake in the cement company for US$104m from Germany-based Schwenk Zement subsidiary Schwenk Namibia in January 2020. Previously, Singaporean authorities stopped the sale of Schwenk Namibia to Singaporean-based International Cement Group (ICG) in September 2019 due to the latter’s inability to cover the losses of the Namibian company.

China: West China Cement says that its subsidiary Yaobai Special Cement has agreed to buy a 97.5% share of Kangding Paomashan Cement for US$105m. Kangding Paomashan Cement is currently building a 1.5Mt/yr cement production line in the northwest of Ganzi Prefecture of Tibet. The new plant is intended to benefit from its location when the Sichuan-Tibet Railway project fully opens in 2021.

UK: Breedon Group says it has completed the acquisition of selected assets from Cemex. Following instructions from the Competition and Markets Authority (CMA) the assets will be operated as Pinnacle Construction Materials, a newly-created separate business led by its own management team and operating from its own offices. Pinnacle will offer a range of heavy building materials, including aggregates, asphalt, ready-mixed concrete, concrete products and cement, together with contracting services, from approximately 100 locations in England, Wales and Scotland.

The CMA is still investigating the acquisition and plans to announce its initial conclusions in late August 2020. Breedon Group expects to integrate Pinnacle into its UK business at a later date once this process is fully completed. Cemex agreed to sell Breedon Group some of its UK assets in January 2020. This included 49 ready-mix plants, 28 aggregate quarries and a cement terminal for Euro211m.

India: Calderys has completed its acquisition of Hysil’s calcium silicate insulation division. The deal was signed in January 2020 but delayed to July 2020 due to coronavirus-related lockdowns. Calcium silicate boards are used for thermal insulation in industries such as cement, metallurgy, oil refinery, petro-chemical and power plants. Calderys says it now the largest manufacturing capacity of calcium silicate boards in India and South East Asia. The purchase will enable it to expand its product portfolio and offer calcium silicate insulation products along with refractories solutions.

Egypt: Austria-based Mondi Group subsidiary Mondi Paper Bags has announced its acquisition of two cement bag plants, the Helwan Cement bag plant and InterCement bag plant, with a combined capacity of 60m – 80m bags/yr. As a result, Mondi Paper Bags will now meet the bagging needs of both cement producers.

Chief executive officer (CEO) Claudio Fedalto said, “These collaborations will offer Helwan and InterCement access to our latest innovations, industry expertise and our strong plant network and customer service in the Middle East. Thanks to Mondi’s vertical integration, our partners will further benefit from our high quality kraft paper.”

Helwan Cement owner Suez Cement managing director Jose Maria Magrina said, “We are delighted to continue our relationship with a reputable and reliable global paper bags supplier like Mondi, while we can focus on our core operations, the production of grey cement and ready-mix.” InterCement subsidiary Amreyah Cement legal and administration director Paulo Dall’Aqua added, “Building sustainable partnerships is InterCement’s tagline, and it is exactly what this deal represents.”

India: Emami Group has completed its divestment of Emami Cement, which is now 100% held by Nuvoco Vistas. Emami Group, which continues activities in the beauty and traditional medicine sectors, received US$731m for the sale of its sole cement industry subsidiary.

India: Retail investor Radhakishan Damani has announced plans to acquire a majority stake in The India Cements. The deal is subject to the approval of competition authorities.

India: Nuvoco Vistas has received approval from the Competition Commission of India for its 100% acquisition of Emami Cement from Emami Group. Reuters has reported that the acquisition, through which Nuvoco Vistas enters the Bihar and Odisha markets, brings its installed cement production capacity to 23.5Mt/yr.

Huaxin Cement’s deal to buy ARM Cement’s assets in Tanzania has reportedly completed this morning. The Chinese cement producer will pour US$116m into Maweni Limestone to settle its liabilities and add another US$30m to complete plant construction and an upgrade, according to Reuters. Kenyan-based ARM Cement operates an integrated plant at Tanga and a grinding plant at Dar es Salaam.

Given the state of the world at the moment due to coronavirus the timing seems almost prophetic. There have been plenty of jingoistic warnings in Western media about renewed Chinese global dominance in the wake of the crisis. However, this agreement dates back to at least September 2019 when it was publicly announced, well before the current health scare. This is part of the Chinese expansion plan in Sub-Saharan Africa that’s been happening informally and formally since at least 2013. ARM Cement has seriously suffered since 2017 when cement demand fell in Kenya, a coal import ban in Tanzania caused production issues at its Tanga plant and increased competition hit both countries. It entered administration in the summer of 2018 and previous owner Pradeep Paunrana has been fighting PricewaterhouseCoopers’ attempts to sell the business to local rival National Cement. In some respects the timing of this deal may also be bad for Huaxin Cement given that it’s just suffered a 36% year-on-year drop in sales revenue to US$542m in the first quarter of 2020, related to the coronavirus outbreak. If the company can’t absorb this through the rest of the year then it might have a problem.

The real trend here in Chinese expansion strategy by its cement sector is a move from imports, building plants and co-financing projects to outright asset acquisition. This isn’t the first example either. West China Cement completed its purchase of a majority stake in Schwenk Namibia for US$104m in January 2020. This gave it control of Ohorongo Cement. Other recent Chinese moves in Sub-Saharan Africa include the supply of a modular grinding mill in Guinea by Sinoma and the competition of construction of a 1Mt/yr integrated plant in Lubudi Territory in Democratic Republic of Congo by another CNBM subsidiary, Tianjin Cement Industry Design and Research Institute.

An outlier from the more ‘traditional’ Chinese routes of either supplying equipment and/or co-financing cement plants in Africa has been the CNBM/Sinoma plan to build a 7Mt/yr ‘mega’ plant in Tanzania. Once completed it will nearly double local clinker production! Unsurprisingly, when it was first announced it was pitched towards the export market. Cement producers in East Africa might do well to remind themselves what has happened in Egypt since the 13Mt/yr government/army-run El-Arish Cement plant at Beni Suef opened in 2018: the over-supplied market collapsed. Together with the Huaxin Cement purchase, once the CNBM project completes, Chinese companies will own the majority of cement production capacity in Tanzania.

Looking at Sub-Saharan Africa, Chinese cement producers look set to benefit from any potential economic realignment following the coronavirus pandemic due to their conservative approach in expanding overseas. By investing cautiously and generally avoiding large-scale international acquisitions and mergers they have insulated themselves relatively well from any potential economic crisis. One weakness though is a reliance on the strong Chinese domestic market. If, say, it declines over a longer period due to the coronavirus crisis or ever reaches more ‘normal’ per-capita cement consumption figures then expanding too slowly overseas might look like the wrong strategy in retrospect. Yet, if western competitors start retreating further then the temptation to start to buy assets in bulk may grow. Another risk is how badly the coronavirus outbreak hits countries in Africa. The combination of poor healthcare systems, younger populations and warmer climates make it extremely unpredictable. Fortune may favour the bold but slow success seems to be working well for Chinese producers so far.