Displaying items by tag: Federal Antimonopoly Service

Russia: Soyuzcement has warned the government that the cost of cement could rise by up to 30% year-on-year in 2024 due to mounting energy, logistics and staffing costs. The national cement manufacturing union has informed various departments and agencies - including the Ministry of Economy, the Ministry of Industry and Trade, the Ministry of Construction and the Federal Antimonopoly Service (FAS) - that this price rise will follow a 23 - 30% production cost inflation reported in 2023, according to the Kommersant newspaper. Other contributing factors have included negative currency exchange effects leading to a 20% rise in the cost of certain imported equipment items as well as logistic issues stemming from a shortage of drivers and declining fleet levels. Separate analysis by Kommersant estimates that the rising cost of cement in 2023 led to a 10 - 15% increase in the overall cost of construction in 2023.

The economic fallout from the war in Ukraine continued this week with the news that Holcim plans to leave the Russian market. It said that it took the decision based on its “values to operate in the most responsible manner.” The company’s Russian subsidiary added that all of its plants would continue to operate as normal while it considered its divestment options.

Holcim’s road to withdrawal has been staggered. In February 2022 at the start of the war it pronounced its sympathy for any affected colleagues and their families and made a Euro1m donation to the Red Cross. Later it said that it would continue operating its business in Russia by following all regulations and supplying the local market. However, at this time it said it would suspend further capital investments in Russia and that it would “not benefit from our presence in this market.”

It’s unknown what prompted Holcim to take the plunge with Russia one month after the war started. At the very least, making decisions over assets valued this highly takes time. CM Pro has reported that the Russian government has considered introducing reference prices for building materials for infrastructure projects and that the Federal Antimonopoly Service (FAS) has been monitoring prices for ‘unreasonable’ growth over the last month. This follows grumbling by the Ministry of Industry and Trade in late 2021 about an apparent low capacity utilisation rate in the country despite shortages in the Central Federal District.

CRH said that it was leaving its Russian concrete business in early March 2022. Yet the decision by Holcim makes it the first of the three western multinational cement producers with large-scale operations in Russia to publicly say it’s pulling out. Holcim, HeidelbergCement and Buzzi Unicem each operate at least two integrated cement plants in the region.

Lafarge entered the Russian market in 1996. Its successor Holcim runs plants at Voskresensk and Kolomna in the Moscow region, at Ferzikovo in the Kaluga region and Volsk in the Saratov region. Together the plants have a production capacity of around 9Mt/yr. Over the last decade Holcim and its predecessor has invested at least a reported Euro1.3bn in three of the plants. The dry-production line Ferzikovo plant was built in 2015. The Shchurovsky plant in Kolomna was originally founded in 1870 and claims to be the oldest in the country. In 2011 it started commissioned a new dry production line. The Volsk plant started a modernisation project in 2017. The fourth, the Voskresensk plant, was mothballed in 2016. However, in early February 2022 LafargeHolcim Russia said it was aiming to spend Euro23m towards restarting production at the site. This was likely due to a boom in construction in 2021. The subsidiary also owns three aggregate quarries in the Republic of Karelia region of the country, near the border with Finland.

Selling up in Russia looks set to be difficult for Holcim. This is principally due to the European and American economic sanctions and the Russian government’s stated intention to nationalise the assets of any company trying to leave. This is clearly why Holcim has worded its plans so vaguely. If or when a peace deal is reached between Russia and Ukraine, the business environment could change significantly, depending on the terms, complicating any existing sale process. Determining how much Holcim might want to get from such a sale in these conditions is complex. Smikom bought Eurocement from Sberbank for Euro2.1bn in 2021 giving it 10 plants. Could Holcim realistically expect to sell its plants for around Euro200m each in the current environment? As for the hit Holcim might take, in its annual report for 2021 it said that the group’s Russian operations represented around 1% of the 2021 consolidated net sales. This would have been around Euro260m. Its Russian cement production capacity was reported as being 9Mt/yr in 2021 or 3% of the group’s global figure of 293Mt/yr.

Finally, it is worth noting though that Lafarge’s charges of ‘complicity in crimes against humanity’ also continued to be tested in the French courts this week. The legal case relates to the conduct of Lafarge in Syria between 2011 and 2014. This is totally separate from the situation in Russia but it does highlight the issue of corporate ethics for the group once again. Following proceedings in December 2021, Beat Hess, chair of the board of Holcim said, “The described events concerning Lafarge SA were concealed from the Holcim board at the time of the merger in 2015 and go completely against the values of our company.” Consider that use of ‘values’ again. Holcim may be about to find out how much it is prepared to pay for its values as it departs Russia.

Russia: Mikhailovsky Building Material Works (Mikhailovsky KSM), part of Smikom Group, has received conditional approval to acquire Eurocement. Interfax has reported that the Federal Antimonopoly Service made its approval on a number of conditions including the requirement that Mikhailovsky KSM submits to it a quarterly performance report. If prices rise by more than 5% in a month then the company will be required to explain why to the regulator. The producer will also be obliged to fulfil any existing contracts and preserve the technological capability of its production base.

Eurocement currently holds a 35% market share in Central district, the region where Mikhailovsky KSM produces its building materials.

Russia: The Federal Antimonopoly Service (FAS) has approved Siberian Cement Holding Company (SibCem) to acquire executive body rights in Angarskcement and Iskitimcement. In the case of the transactions, the charter capital structure of Angarskcement and Iskitimcement will not change, the companies will sign management contracts, according to the Kommersant newspaper. Sibcem holds a 49.9% stake in Iskitimcement, via Topkinsky Cement, and a 43.33% stake in Angarskcement.

Russia: The Federal Antimonopoly Service (FAS) has issued warnings to companies certifying cement products that certification has been mandatory since March 2016. The competition body reported that the decision by Cemiscon and SibNIIcement to refuse some applications for certification without adequate grounds could restrict competition in the cement market. The FAS has since warned the companies that their actions broke the law.

Russia: The Federal Antimonopoly Service (FAS) has brought together local cement producers to develop exchange trading with cement. Attendees agreed that trading should not be limited to Moscow and St Petersburg and a proposal was made to organise exchange trading supplying goods for export. They agreed to submit proposals to FAS, which will also ask industry experts and buyers for their comments towards shaping exchange trading.

“Exchange trading is an opportunity for new players to enter the market”, said Deputy Head of the FAS Andrey Tsarikovskiy. He added that attracting new companies to the market would lead to increased competition in the sector.

Russia: The Federal Antimonopoly Service (FAS) has held a meeting to discuss cement pricing and mandatory certification. Representatives of FAS, cement producers, industry associations and government authorities - including the Ministry of Economic Development, the Federal Accreditation Service, the Federal Agency on Technical Regulation and Metrology, the Ministry of Construction and the Ministry of Industry and Trade - took part in the event on 17 May 2016.

Attendees reported that the pricing of bulk cement to industrial customers had increased slightly due to seasonal demand. FAS had received a growing number of complaints about rising prices from purchasers of bagged cement. To counter this, FAS has proposed using points of sale for bagged cement with the intention to remove intermediaries from the supply chain and cut costs.

On mandatory cement certification the Federal Agency on Technical Regulation and Metrology and the Ministry of Economic Development reported that over 50 cement plants in Russia and several Belarusian cement producers have certified their products. However, some cement importers have experienced difficulties with certification. FAS agreed to coordinate the forwarding of issues importers and other producers have experienced to the supervising body. It will also draft proposals on amendments to the certification. Mandatory cement certification came into force on 7 March 2016 due to No. 930 Decree of the Government of the Russian Federation.

Russia: Topkinsky Cement, a part of Siberian Cement, has received the Federal Antimonopoly Service's (FAS) permission to purchase a 24.92% voting stake in Iskitimtsement. Siberian Cement's stake will therefore grow to 49.899%. In February 2013 the FAS blocked Sibirsky Cement from acquiring a 90% stake of Iskitimtsement's voting shares.

Iskitimtsement posted a revenue of Euro85m and a net profit of Euro11m in 2013 compared to a revenue of Euro77m and a net profit of Euro16m in 2012. The cement plant holds 17% of the Siberian Federal District's cement market.

Russia: The Federal Antimonopoly Service (FAS) has rejected a claim against Pikalyovsky Cement over an application submitted by BaselCement-Pikalyovo. The FAS dismissed the claim because it saw no violations of the law.

BaselCement-Pikalyovo, located in Pikalyovo in the Leningrad region, halted production in 2009 due to a shortage of raw materials. The situation then was settled by the then Prime Minister Vladimir Putin when a supplies treaty was signed.

In January 2013 BaselCement-Pikalyovo applied to the FAS with a claim accusing Pikalyovsky Cement of breaking the antimonopoly law. Allegedly Pikalyovsky Cement had imposed low prices on BaselCement-Pikalyovo for the supply of nepheline slime. BaselCement-Pikalyovo later said that Pikalyovsky Cement revoked its order for nepheline in January 2013 and that this threatened to halt the operations at BaselCement-Pikalyovo since the cement producer is its sole customer.