Displaying items by tag: GCW192

In the UK there is an expression, coined by former Prime Minister Harold Wilson, that a 'week is a long time in politics.' While the week he was referring to has long since been forgotten, this refrain has since been repeated to the point of cliché by the mainstream media and is often used in the context of rapidly-changing political news stories. Regardless of its origin, this expression could well be used to accurately describe the current situation in France and Switzerland, where the past week has seen a number of serious and unpredictable developments in the preparation of the anticipated LafargeHolcim mega-merger.

Disgruntlement from 'those close to the deal' first surfaced as a 'wild rumour' a few weeks back but, in the past seven days, several of Holcim's shareholders, including the influential Thomas Schmidheiny, have questioned the contribution that can now be made by Lafarge. Holcim shareholders claim that the group has out-performed Lafarge in the 12 months since the deal was announced and they feel that this should be recognised financially. The abandonment of the Euro1.20 cap on the Swiss Franc by the Swiss National Bank (SNB) on 15 January 2015 has loaded the dice even further in Holcim's favour.

This is how the situation has deteriorated in the past seven days. Late last week, we had confirmation that Holcim was seeking to renegotiate the terms of the merger. On Monday we heard what at least part of those terms were, including an assertion that each Lafarge share was now worth just 0.875 of a Holcim share. Lafarge's main shareholders, accepting that their position was compromised to an extent, suggested that each Lafarge share was worth 0.93 of a Holcim share. Since then, it has become apparent that Bruno Lafont, the proposed leader of LafargeHolcim, has also put Holcim in a spin, as he is perceived to have presided over Lafarge's poorer performance.

Then, just yesterday, it was announced that the two current group boards had met separately in an attempt to arrive at new conditions with which to re-start negotiations. Commentators think that Holcim is holding all of the Aces but Lafarge has made it clear that it cannot accept a lower valuation and a CEO from Holcim. Discussions that take place 'in the dark' like this will do little to build confidence between the merging parties and infers that communication has become strained. There are twinges of antagonism in the releases that are not going to be solved by the boards sitting in separate rooms and whipping themselves into a frenzy.

Also caught up in this, like the child of a divorcing couple, is CRH. It only announced its purchase of Holcim and Lafarge divestments in February 2015. It stands to gain a joint Euro158m from Lafarge and Holcim if they fail to merge, but this will not make up for the loss of the many high-quality cement assets it otherwise stands to gain.

What will happen in the coming weeks? You have to be brave to predict how this will turn out, but our LinkedIn Group is a great place to discuss this rapidly-changing story. One thing we can be sure of is that there will be a lot to write about in another seven days. After all, a week is a long time in the cement industry!

Qatar: Qatar National Cement Company (QNCC) has announced that it will increase its cement production by 12% in 2015 to over 4Mt/yr. The company's total production was 3.5Mt/yr in 2014, a 3% rise compared to 2013.

"Our two new mills are scheduled to begin operation this year," said Salem Butti Al Naimi, Chairman and Managing Director of QNCC. "The first will commence production from 15 October 2015, while the second is expected to start by the year's end. The whole plant will start running at full capacity by early 2016 producing about 23,000t/day of cement." Al Naimi added that he expects cement demand in Qatar to continue to grow in the coming years ahead of the 2022 FIFA World Cup.

Nepal: Two private companies have signed an agreement of joint venture investment worth US$300m for cement production in Nepal. The investment, one of the biggest in Nepal's cement sector, has a 7:3 equity structure between Hongshi Holdings Limited of China and Nepal's Shiva Cement.

"This project will adopt a dry process with the use of 95% domestic raw materials," Xu Youyuan, Executive Vice President of the Chinese company said at the signing ceremony. He added that Hongshi had been attracted to Nepal's market by its booming cement industry in 2012.

Addressing the ceremony, Finance Minister of Nepal, Ram Sharan Mahat, said that the signing of this project was a landmark between the economic ties of the two neighbours and that he was happy to see that Chinese investors had shown confidence in Nepal. He even suggested that Nepal might become a net exporter of cement in the coming years.

Europe: The boards of Lafarge and Holcim met separately on 17 March 2015 to try and salvage their merger.

According to Reuters, one source said ahead of the Lafarge board meeting that Lafarge would not accept renegotiations on the governance of LafargeHolcim. The original merger agreement designated a board made up of seven members from each company and Lafarge boss Bruno Lafont as CEO. "The board cannot give satisfaction to Holcim on all points," the source said. "It cannot accept both a change of parity and a taking of control."

On 15 March 2015, Holcim said that it wanted to open talks on the exchange ratio and on 'governance issues' because the original merger terms were no longer acceptable to its board. Lafarge said on 16 March 2015 that it would consider revising the share exchange ratio, but nothing else. According to another source, Holcim has proposed changing the previously-agreed 1:1 exchange ratio to 0.875 Holcim shares for each Lafarge share, but Lafarge wants a 0.93:1 ratio.

One Holcim shareholder who opposes the deal reportedly said that the appointment of Lafarge's Lafont as head of LafargeHolcim has become a bone of contention, with some questioning his ability to deliver promised cost savings of Euro1.4bn/yr.
Ireland's CRH, which planned to buy a large portion of Lafarge and Holcim's assets to appease competition authorities, could experience collateral damage if the merger is cancelled. According to Reuters, if the merger fails, CRH is still liable for a break-up fee of Euro158m.

India: UltraTech Cement has commissioned its third clinker line at Aditya Cement (AC), Shambhupura in Rajasthan. The plant, which has a 6000t/day kiln and a clinker capacity of 2Mt/yr, can use a wide variety of fuels.

Meanwhile, its greenfield grinding plant in Jhajjar, Haryana is likely to be commissioned in 2016. "With this commissioning, UltraTech Cement will further increase its capacity in the north region," said UltraTech in a statement. "Further, the new grinding plant coming up in Jhajjar will assist us in capturing the growing demand for cement in this region with timely and effective supplies to the customers."

Sri Lanka/Japan: Japanese cement producers in Sri Lanka Tokyo Cement Lanka and Fuji Cement Lanka Limited have announced that they have merged under the terms of Section 242 (1) of the Companies Act No 7 of 2007. The merger to create Tokyo Cement Company (Lanka) plc was completed on 13 March 2015.

Egypt: Lafarge Egypt and Egyptian holding company Orascom Telecom Media (OTMT) and Technology Holding SAE have signed a memorandum of understanding (MOU) to develop a waste management framework of municipal and agricultural waste.

The memorandum, signed by Lafarge Egypt CEO Hussein Mansi and OTMT deputy CEO and COO Tamer el Mahdy, was created in an effort to process large volumes of municipal and agricultural waste into alternative fuels to be used in the Lafarge plant in Egypt and other companies.

The MOU represents a step towards sustainable development in the country and will begin the creation of a circular economy through the reduction of waste burning and dumping. The agreement will also create new employment opportunities and reduce the dependency on fossil fuels in the country.

Lafarge Cement Egypt has been providing thermal treatment solutions in Egypt for around three years in collaboration with its subsidiary Ecocem Industrial Ecology Egypt, which develops, sources and pre-treats solutions to facilitate the recovery of wastes into alternative fuels. Lafarge Egypt and Ecocem aim to achieve an average fuel substitution rate of 25% by the end of 2015.

Zimbabwe: Sino Zimbabwe Cement Company is now operating at 60% capacity utilisation following a US$4m investment in a three-phase plant upgrade.

Phase one upgrades were undertaken on the cement mill and rotary kiln in order to boost cement output. The completion of the kiln upgrade has seen Sino Zimbabwe Cement improve its energy consumption and reduce its carbon footprint, while the new high-temperature bag filter system will significantly reduce dust emissions. The second phase of upgrades will target the warehousing and storage facilities and are expected to be completed in 2015. The third phase will be completed in 2016.

"The completion of the first phase boosted clinker production at the Gweru plant. Now we can produce 700,000t/yr," said Industrial Development Corporation of Zimbabwe (IDCZ) public relations advisor Dereck Sibanda. "The amount invested went towards refurbishments of the cement mill, the rotary kiln as well as renewing and automating ancillary equipment."

Sibanda said that cement demand is at its peak and that Sino Zimbabwe Cement will continue its upgrades to improve viability. "The second phase is expected to be complete sometime this year and we are quite confident of our prospects considering the richness of our limestone deposits," said Sibanda.

Sino-Zim is a joint venture company between IDCZ and China Buildings Materials Corporation, which started operating in 2001. The US$4m investment by the Chinese shareholder was to boost output and reduce pollution. Sibanda said that the new technology would help Sino Zimbabwe Cement to reduce its emissions. In 2013, it was fined by the Environmental Management Agency for air pollution.

Bangladesh: MI Cement Factory Ltd plans to install new production unit soon to cater the growing demand for cement in the country.

"We have decided to set up another packing unit and a 1500t capacity cement silo to enhance the delivery capacity of our cement (Crown Cement)," said Mohammed Jahangir Alam, chairman of MI Cement. "This will also help maintain the quality of our cement and thus keep the pace of increasing revenue."

Bangladesh is preparing for development in public infrastructure, communication and housing facilities, said Alam. "The cement industry in Bangladesh is headed for a revolution," he said. High population densities in cities, unplanned urbanisation and rapid economic development are likely to expand cities vertically rather than horizontally to achieve maximum utilisation of available space and ensure future food security by not urbanising fertile land, he added.

Quoting a recent study, Alam said that the per capita cement consumption in Bangladesh was still low at 107kg, compared to 210kg in India, 265kg in Pakistan, 310kg in Sri Lanka and 570kg in Korea, indicating future growth of Bangladeshi cement consumption.

At present, MI Cement's total production capacity is 1.74Mt/yr. Alam said that in the fiscal year 2013 - 2014, the political unrest hampered MI Cement's day-to-day business activities and reduced its cement delivery to lower than expected. However, the company increased its revenue by 17% year-on-year to US$102m despite the political unrest. MI Cement sold US$86m of goods in the 2014 fiscal year, up from US$73.2m in 2013 in the previous fiscal year.

Iraq/Pakistan: The Economic Coordination Committee (ECC) has approved Attock Cement Pakistan Limited's (ACPL) request to establish a cement production unit in Iraq.

The ECC meeting, chaired by finance minister Ishaq Dar, approved the proposal to allow Attock Cement Pakistan Limited (ACPL) to remit US$24m for the establishment of a grinding plant in Basra, starting from March 2015 onwards. The proposed investment venture is expected to bring foreign exchange through dividends repatriation and growth in clinker exports. As ACPL intends to hire 50% of its labour force from outside Iraq, the venture is expected to create employment opportunities for Pakistanis.