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Dalmia Bharat goes central

14 December 2022

Further consolidation of the Indian cement sector looked closer this week with the news that Dalmia Bharat’s cement subsidiary has agreed to buy the remaining cement plants from Jaiprakash Associates. The US$685m deal covers cement and power plants in Madhya Pradesh, Uttar Pradesh and Chhattisgarh. It includes clinker production capacity of 6.7Mt/yr, cement capacity of 9.4Mt/yr and 280MW of captive power capacity.

Chart 1: Map of Dalmia Bharat’s cement plants in November 2022 with region of proposed new plants highlighted in orange. Source: Adapted from Dalmia Bharat investor presentation.

Chart 1: Map of Dalmia Bharat’s cement plants in November 2022 with region of proposed new plants highlighted in orange. Source: Adapted from Dalmia Bharat investor presentation.

The acquisition gives Dalmia Bharat the opportunity to draw level with Shree Cement in terms of cement production capacity. If the deal completes, then both cement companies will hold a capacity of around 46Mt/yr. This puts them behind UltraTech Cement and Adani Group nationally. In terms of the cost, the proposed acquisition works out at around US$73/t of cement capacity, although this doesn’t take into account the additional captive power generation capacity. This compares to US$119/t for UltraTech Cement’s purchase of Jaiprakash Associates plants in 2017 and US$97/t for Adani Group’s purchase of Holcim’s Indian-based business in September 2022.

Dalmia Bharat’s rationale for its move this week was that it wants to grow in the Central Region of the country and work towards a capacity target of 75Mt/yr by the 2027 financial year and at least 110Mt/yr by the 2031 one. It backed this up in an investors’ presentation by saying that cement consumption was around 170kg/capita locally and that the region represented about 15% of national demand at 54Mt/yr. This roughly checks out with regional integrated/clinker production capacity distribution analysis that Global Cement Weekly carried out in June 2022. Only the East region was lower, but this didn’t take into account grinding plants or new projects.

Completion of the agreement is planned by December 2023 and is subject to the usual regulatory approvals. However, readers may recall the difficulties UltraTech Cement had in the mid-2010s when it attempted to buy two plants from the subsidiary of Jaypee Group. Problems stemming from an amendment to the Mines and Minerals (Development and Regulation) (MMDR) Act caused the original proposal to be rejected by the Bombay High Court in early 2016. UltraTech Cement bounced back though with a deal to buy far more plants instead. This deal completed successfully in mid-2017.

Jaypee Group’s debts have also caused problems along the way. Indeed, this is the reason why it has finally decided to leave the cement business altogether. In early December 2022 it reported its latest default on interest payments towards some of its loans. Overall its outstanding debt was US$3.39bn. Due in part to this, there have been plenty of stories in the local press over the last decade on whoever was reputedly buying the Jaypee Group’s cements assets. In October 2022, for example, Adani Group was reportedly in advanced talks to buy Jaypee Group’s remaining cement business until it denied it publicly. One deal that did reach fruition was Dalmia Bharat’s purchase of Bokaro Jaypee Cement back in 2014 from a joint-venture majority controlled by Jaypee Group. That agreement gave it full control of the 2.1Mt/yr Bokaro grinding plant in Jharkhand. Looking at the current proposed acquisition, one commentator from HDFC Securities in the local business press noted that detail on the transaction is lacking, such as what will happen to existing limestone reserves. Another pointed out that the deal was probably 30 – 40% below the replacement cost because the plants were old, lack of interest from potential buyers and due to the “likely need for additional CAPEX to run operations.”

If the Dalmia Bharat - Jaiprakash Associates deal completes then it marks the end of an era for the Indian cement industry as one of the big players bows out of the sector. It shows once more that, despite the mounting fuel and raw material costs in 2022, companies are still seeing big opportunities. In its December 2022 report, the ratings agency ICRA found that cement sales volumes grew by 11% year-on-year to 187Mt in the first half of the 2023 financial year. The acquisition might also, hopefully, put an end to the endless speculation about who Jaypee Group might be selling its cement plants to! Although, of course, the question then becomes who else might be considering divesting cement assets.

Published in Analysis
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Filiberto Ruiz elected as chair of PCA

14 December 2022

US: The Portland Cement Association (PCA) has elected Filiberto Ruiz as its next chair. He is the current vice-chair of the association and is the president and chief executive officer (CEO) of Votorantim Cimentos North America. He will succeed Ron Henley, the president of GCC of America, in the post.

Massimo Toso has been elected as the vice chair. He is the PCA’s Climate and Sustainability Council co-chair and is the president and CEO of Buzzi Unicem USA. David Loomes, the president of Continental Cement Company, has also joined the PCA board. He succeeds Tom Beck, the executive vice president of Summit Materials, who has stepped down from the board.

Published in People
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Innocent Zulu Chikwata appointed as acting head of Lafarge Zimbabwe

14 December 2022

Zimbabwe: Fossils Mines has appointed Innocent Zulu Chikwata as the acting chief executive officer (CEO) of Lafarge Zimbabwe. Willcort Dzuda has become the acting chief finance officer (CFO), according to the Business Times newspaper. The appointments follow the departure of Geoffrey Ndugwa and Amry El Moufay, as CEO and CFO respectively, following the acquisition of a majority stake in the cement producer by Fossils Mines in December 2022.

Chikwata worked previously as the sales manager and then the commercial director of Lafarge Zimbabwe since joining the company in 2017. He holds over 15 years of experience in the construction materials and consumer packaged goods sectors. Dzuda is a chartered accountant and registered public auditor. He holds 25 years of experience in auditing, consultancy and financial management.

Published in People
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Holcim divests Holcim Russia to local management

14 December 2022

Russia: Holcim has agreed to sell its Russian business to its local management. When the transaction is completed, the business will continue to operate under different branding. Holcim says that it remains committed to supporting Holcim Russia’s employees and ensuring an orderly transfer for its customers. DGAP Corporate News has reported that Holcim deconsolidated the subsidiary in March 2022, following Russia’s invasion of Ukraine.

Holcim said “Holcim’s Board of Directors expresses its heartfelt concern about the tragic human suffering in the region, and is fully committed to supporting affected people, families and communities. The Board of Directors thanks all Holcim colleagues who are mobilising around the world alongside local NGOs to provide shelter, essential goods and medical supplies, as well as volunteering their time.”

Published in Global Cement News
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Capital Market Authority replaces board of Raysut Cement

14 December 2022

Oman: The Capital Market Authority (CMA) has replaced the board of directors of Raysut Cement and appointed a temporary one following a financial audit. The CMA said the new board would, “deal with the reasons that led the company to conditions that prompted such action.” It will restructure the company to ensure the stability of its financial position. In late November 2022 the CMA questioned the validity of the company’s third quarter results in 2022 when it detected ‘material misrepresentation.’ Additionally, the cement producer’s chief executive officer and chief financial officer resigned in August 2022 and November 2022 respectively.

The new board is headed by Hamdan Ahmed Al Shaqsi. It also includes Majid Sultan Al Tauqi, Dr. Ali Amer Al Ghaithi, Ahmed Saud Al Zakwani and Mubeen Jalil Yasin Khan. The new board members will each hold their posts for three years.

Published in Global Cement News
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Court grants Cementa four-year mining permit for Slite

14 December 2022

Sweden: The Land and Environmental Court has granted Cementa a four-year permit to continue mining operations in Slite on Gotland. The latest temporary permit was set to expire at the end of 2022. Both the Environmental Protection Agency (Naturvårdsverket) and the county administrative board of Gotland recommended rejecting Cementa’s application earlier in 2022. Prior to this the central government extended the cement company’s mining licence by one year from late 2021.

The subsidiary of Germany-based Heidelberg Materials said that it viewed the latest four-year permit as a ‘bridge’ until it is able to secure a long-term permit. It is aiming to submit an application for a 30-year permit in 2023.

Published in Global Cement News
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Ciments du Maroc starts Nador grinding plant

14 December 2022

Morocco: Ciments du Maroc has officially started its 0.7Mt/yr Nador grinding plant in Oulad Settout. The new unit will be supplied with clinker from the integrated Ait Baha plant in Souss-Massa. It is intended to support the development of the north and east regions of the country. The project had a cost of around Euro84m.

Robert Dölger, the German ambassador, Zouhair Magour, the honorary consul of Germany, René Aldach, the chief financial officer of Heidelberg Materials, Hakan Gürdal, the head of Heidelberg Materials’ Africa-East Mediterranean Region, the president of the Oulad Settout region and various directors of Ciments du Maroc attended a ceremony marking the event on 9 December 2022.

The subsidiary of Heidelberg Materials operates three integrated plants, four grinding plants, four aggregate quarries and 21 ready-mix concrete plants in the country.

Published in Global Cement News
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Dangote Cement to commence 10% share buyback

14 December 2022

Nigeria: Dangote Cement’s shareholders have authorised a buyback of up to 10% of the company’s issued shares.

Chair Aliko Dangote said “Over the past decade, Dangote Cement has recorded exponential growth across all areas. Group cement volumes are now at almost 30Mt/yr, our production capacity has tripled to 51.6Mt/yr and we export cement from five countries across Africa.”

Published in Global Cement News
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Beumer Group appoints V-Line Middle East as Saudi service provider

14 December 2022

Saudi Arabia: Beumer Group has appointed V-Line Middle East to provide services for its customers in Saudi Arabia. Beumer Group said that the new partnership will help it to strengthen its focus on sales in the region.

Beumer Group’s director of sales André Tissen said “Our partnership will bring us closer to customers and strengthen our customer service in key industries. Through V-Line Middle East, we can offer our customers in Saudi Arabia access to a network of local specialised suppliers, augmenting our range of services.”

Published in Global Cement News
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Lafarge Zement to establish Recycling Centre Mannersdorf

14 December 2022

Austria: Lafarge Zement plans to invest Euro8m in the establishment of the Recycling Centre Mannersdorf at its 1.2Mt/yr Mannersdorf cement plant in Lower Austria. Niederösterreichische Nachrichten News has reported that the facility will process demolition waste into alternative raw materials for use in the cement producer’s operations.

Plant manager Helmut Reiterer said “The Recycling Centre Mannersdorf is of great importance for the construction industry. It enables people to build in a much more environmentally friendly way, increases the recycling rate and strengthens the domestic circular economy.”

Published in Global Cement News
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