Displaying items by tag: Cemento Polpaico

Sad news this week from the Talcahuano cement plant in Chile that is to stop producing clinker. Local media reports that the Cementos Bío Bío unit has decided to import clinker from Asia instead, which will reduce its production costs. At the same time it has laid off a third of its workforce. The plant has been producing cement since 1961.

The decision carries echoes of Holcim New Zealand’s closure of its Westport cement plant in 2016, another unit in a country on the Pacific Rim. However, in that country LafargeHolcim has purposely moved towards becoming a distribution company by opening import terminals and depots. Plus the local subsidiary benefits from the cement-trading arm of a multinational company. By contrast, local producer Cementos Bío Bío still retains two integrated plants and a grinding plant in Chile. Following the closure its production share from integrated plants will drop to 2.4Mt/yr (39%) from 3.2Mt/yr (45%). The country will retain a total production capacity of 6.2Mt/yr from its clinker producing plants.

The timing of Cementos Bío Bío’s decision is also interesting given that the Chilean competition authority (TDLC) approved Hurtado Vicuña Group to buy a controlling stake in Cemento Polpaico from LafargeHolcim in early July 2017. The deal was originally announced in October 2016 to sell LafargeHolcim’s 54.3% stake in Cemento Polpaico for US$225m. The sale includes one integrated plant with a cement production capacity of 2.3Mt/yr and two grinding plants. Hurtado Vicuña has not been required by the regulator to sell any of its cement units but it has been asked to sell parts of its concrete business and to abide to a ban on repurchasing the assets within 10 years. Hurtado Vicuña owns Cementos BSA, a subsidiary that runs the El Bosque cement grinding plant in Santiago and it has just started-up production at a new 0.95Mt/yr grinding plant at Quilicura, also near the capital.

In its 2016 annual report LafargeHolcim reported that cement sales volumes of cement fell in Chile due to a fall in the residential construction market in the second half of the year. However it did manage to raise its operating earnings before interest, taxation, depreciation and amortisation (EBTIDA) off the back of higher prices and lower production costs compared to the previous year. Cementos Bío Bío concurred with this assessment of the market in its 2016 report, lamenting the country’s poor economic growth since 2015 and declines in the mining and construction sectors. Despite this its cement despatches rose very slightly to 1.56Mt in 2016. The big drop in its sales occurred in 2014 when its sales fell by 10% year-on-year to 1.51Mt. More recently, Bío Bío noted a 37% decrease in its operating profit for its cement, concrete and lime division for the first quarter of 2017 due to falling sales volumes and margins in cement and lime. However, it did benefit from falling costs for energy and petcoke inputs. The group also announced plans to sell a minority stake in itself in February 2017.

These stories show another country that is realigning its cement industry to a clinker-rich world market. Chile appears to retain a ‘big three’ group of local clinker producers that has shifted with the rise of Cementos BSA and the departure of LafargeHolcim. However, the market share in the cement grinding business has changed significantly as Cementos BSA has gained both an integrated plant and a more national profile, away from the capital, with its grinding plants. Once the local market picks up it will be interesting to see whether this trend towards clinker import and local grinding continues.

Chile: Hurtado Vicuña Group has been cleared by the Chilean competition authority (TDLC) to buy a controlling stake in Cemento Polpaico from LafargeHolcim. However, it will be required to sell assets from its concrete business worth up to an estimated US$90m, according to the Diario Financiero newspaper. The agreement also includes other measures such as a ban on repurchasing assets within 10 years. Hurtado Vicuña and its subsidiary Inversiones Caburga operate Cementos Bicentenario (BSA). It agreed to buy Cemento Polpaico in October 2016.

Chile: Cemento Polpaico has changed its commercial strategy following a poor year for the construction industry in 2016. The cement producer has moved from a geographical approach to one based on the profile and sector of its customers, according to the Diario Financiero newspaper. It has also reorganised its business into three segments: retail, construction and special projects.

LafargeHolcim agreed to sell its controlling stake in Cemento Polpaico to Inversiones Caburga in late 2016. However, the transaction is still awaiting approval by the Fiscalía Nacional Económica.

Chile: LafargeHolcim has signed an agreement with Inversiones Caburga, part of the Hurtado Vicuña Group, to sell its 54.3% stake in Cemento Polpaico for US$225m. The transaction will be carried out by a public tender offer by Inversiones Caburga to all shareholders of Cemento Polpaico.

Cemento Polpaico operates one integrated plant and two grinding plants with an annual cement capacity of 2.3Mt/yr. The company is also a leading ready-mix concrete producer operating 25 plants and produces aggregates. The launch of the public tender offer is subject to the approval of the Chilean competition authorities, which is expected for the first half of 2017. Following the successful completion LafargeHolcim would exit Chile completely.

Chile: Chile's environmental authorities have approved a plan of Cemento Polpaico for the construction of a 23.5MW photovoltaic (PV) park as part of the country's power grid.

The approval envisages the installation of 243,120 modules near Cemento Polpaico's Cerro Blanco plant in Tiltil, Chacabuco. The solar facility will require an initial investment of US$42m and its energy will be injected into the grid through the existing interconnection with the Punta Peuco substation. The annual output is estimated at 44GWh. The company will need around 112 workers during the construction phase, which could start at the end of April 2016, and up to 10 workers during operation.

Chile: On 20 May 2014 the environmental committee of Chile's Santiago Metropolitan region admitted for evaluation a 20MW solar power project from Chilean cement producer Cemento Polpaico.

Cemento Polpaico plans to invest US$42m in the Cerro Blanco photovoltaic park, which will be installed next to its cement plant in the Tiltil Municipality. The park will help to diversify Chile's energy mix and will supply renewable energy to the central power network (SIC), through the Punta Peuco substation, according to the environmental impact declaration. Construction is projected to commence in 2014.