Displaying items by tag: Lafarge

Slovenia: Lafarge said that the country's environment inspectorate has ordered the plant to suspend operations as it lacks environmental permits. The inspectorate acted following a recent decision from the European Commission to refer Slovenia to the European Court of Justice for failing to issue an industrial permit to a major cement plant. The Commission is also asking for fines to be imposed.

Lafarge said in a statement on its website that it will respect the decision and shut down the kiln on 5 March 2015, but would lodge a complaint with the Ministry of Environment and Spatial Planning. Lafarge said that in the process of obtaining the required licences, it had operated in accordance with all relevant environmental standards and that numerous studies have shown that the plant does not have a major impact on local air quality. It also stressed that it had invested more than Euro33m to modernise the plant since it was bought by Lafarge some 13 years ago.

Malaysia: Quarrying at Gunung Kanthan, Perak by Lafarge Malaysia has alarmed green groups, who said that work has encro¬ached close to 'sensitive' areas. A small hill within the limestone mountain's southern area was reportedly mined in January 2015. Concern that rocks from Area B where the hill was located would be strewn along the adjacent Area C have caused fears that quarrying there would follow.

Gunung Kanthan, which is home to many endangered species of flora and fauna, is divided into several sections with Areas C and D located in the south. Malaysian Nature Society (MNS) president Henry Goh, who confirmed that quarrying had been conducted on the hill, cautioned that the removal of forestry there would have damaging effects on Areas C and D. Two new flora species were recently discovered in Area C, which is also home to nine species that are on Malaysia's Red List of Endangered Plants.

Goh said that Lafarge Malaysia had assured him that Areas C and D would not be affected. He also claimed that temples embedded in or around the mountain had received evacuation notices. Goh said that a biodiversity report by Universiti Malaya, commissioned by Lafarge Malaysia, had not been revealed.

The International Union for Conservation of Nature (IUCN) has highlighted its concerns to Lafarge chairman Bruno Lafont. "We are concerned to learn that a road is being blasted immediately adjacent to Area C," said IUCN Species Survival Commission chairman Simon Stuart. He stated that Google Earth images showed that the forested valley next to Area C 'is being filled with rubble.'

Lafarge Mal¬aysia vice-president Mariano Garcia maintained that Areas C and D were out of the mining plans. He said that he did not know of the evacuation notices, but that monks and temple staff had entered the quarry site and verbally abused his workers. He also said Lafarge Malaysia had been trying to meet the Forest Research Institute Malaysia (FRIM) to no avail.

On the face of it this week's 'news' that CRH expects to receive the regulatory decisions it needs on its Euro6.5bn purchase of Lafarge and Holcim's joint divestments without significant delay is not particularly ground-breaking. However, the press release helpfully suggests that the deal will proceed according to CRH's desired outcome and only needs to be rubber-stamped. This is not strictly the case, with approval required in the EU, Philippines, Brazil, Canada and Serbia.

So... this story could just be incidental 'puffery' and the timing irrelevant. However, if read in the context of the letter concerning the acquisition from CRH Chairman Nicholas Hartery to company shareholders, it makes for a far more interesting read. Issued on 20 February 2015, the letter notifies shareholders of CRH's planned Extraordinary General Meeting (EGM) on 19 March 2015 and it starts fairly innocuously. The Chairman recommends that shareholders approve CRH's resolution to proceed with the acquisition of the LafargeHolcim assets. He describes the strong overlap between the divestments and CRH's existing portfolio, as well as the financial reasons behind the move. So far, as expected.

However, later in the document, the language gets fairly heated, bordering on bizarre in places. Hartery says that CRH has given 'hell or high-water' commitments to Lafarge and Holcim regarding the purchase This language indicates the importance of the deal to the board and possibly the level of personal involvement in the process to this point.

'What has CRH done?' we are supposed to ask. Are we led to believe that CRH has, in poker parlance, gone 'all in?' Any shareholders that are in doubt as to the board's position need look no further than the section concerning 'break fees.' If CRH backs away from the deal for any reason, for example by failing to approve the resolution at the EGM, the company will have to give a combined Euro158m to Lafarge and Holcim. This would be a sizeable headache and CRH can take no chances.

Returning to CRH's press release, its timing is even more intriguing when we consider reports out of Switzerland this week. Swiss newspaper Sonntagszeitung reports that Holcim has considered offering its shareholders a 'sweetener' to win their approval for the merger. It says that this could involve 'creative methods' to sway its shareholders into backing the deal, including a generous special dividend or a share buyback. The paper reports that Holcim is wary of not securing investor approval for a capital increase for financing, which is required for it to satisfy its side of the deal.

Holcim's actions may in turn be motivated by Reuters reports from 23 February 2015, which state that analysts have seen a potential divergence in earnings outlooks between Lafarge and Holcim as a potential 'spanner in the works' of the deal. This is in response to Lafarge's apparent poor performance relative to Holcim in the fourth quarter of 2014. Reuters even refers to analysts' rumblings that the terms of the whole mega-merger may be up for renegotiation in light of this.

CRH has said that it is prepared to move hell and high water to buy the LafargeHolcim divestments, but will it be able to if there is no LafargeHolcim from which to divest?

The full letter to CRH shareholders and associated information about the proposed CRH acquisition of Lafarge and Holcim's proposed divestments can be seen here. 

China: SOCAM Development Ltd has agreed to sell its entire 45% stake in Lafarge Shui On Cement Ltd, its cement joint venture project, to its partner Lafarge for US$329m. Lafarge Shui On Cement has 32Mt/yr of cement production capacity in southwest China, in Yunnan, Sichuan, Guizhou and Chongqing Provinces. The sale would make Lafarge Shui On Cement a wholly-owned subsidiary of Lafarge.

SOCAM Development, which has been seeking to sell its cement operations since 2013, said that the disposal would allow it to focus on its construction business and to capture opportunities arising from a massive public housing programme recently announced by the Hong Kong government.

Europe: Holcim is considering offering its shareholders a sweetener to win their approval for a planned merger with Lafarge, according to Swiss newspaper Sonntagszeitung.

Sonntagszeitung said that Holcim was looking at several 'creative methods' to sway its shareholders into backing the deal, including a generous special dividend or a share buyback, instead of trying to alter the terms of the deal, which involves a one-to-one share swap. However, Holcim's chief executive Bernard Fontana said that the merger agreement did not contain any mechanisms by which the terms could be automatically adjusted. Sonntagszeitung said that Holcim was considering the sweetener in response to opposition from its shareholders to the deal, which hinges on investor approval for a capital increase for financing.

Ireland: CRH expects to receive regulatory decisions on a Euro6.5bn purchase Holcim and Lafarge operations as soon as March 2015. CRH chief executive Albert Manifold said that the acquired facilities would help CRH to expand in both North America and Europe, where it sees opportunities to expand its business.

"There are significant building needs and funding going to countries like Poland, Slovakia and Romania," said Manifold. He added that construction growth in those countries could be as high as 4%/yr over the next 10 years. Manifold said that CRH had already begun discussions with regulators in the various markets and expected decisions in March and April 2015. The acquisitions require the approval of CRH shareholders and an extraordinary shareholders meeting has been scheduled for 19 March 2015 for this purpose. Manifold said that CRH would continue to trim its portfolio and make further acquisitions.

Slovenia: Slovenia faces EU judicial proceedings for its alleged failure to fully-implement a system of environmental permits for its large industrial plants. The case referred to the EU Court of Justice relates to one of the country's two cement producers, which continues to operate without permits.

The Commission said that matter would be referred to the court for failure to implement provisions of the integrated pollution prevention and control (IPPC) directive of 2007, which requires that industrial plants be licensed to verify that they meet strict environmental controls. It is the second time that Slovenia has faced EU court action over the IPPC directive, after the Court of Justice found in 2010 that Slovenia was running afoul rules requiring that all plants meet the set requirements.

The EU is seeking a base fine of Euro1.6m for the country plus Euro9009 for each day that the violation persists. The Slovenian Ministry of Environment and Spatial Planning said that it was, "Striving to implement as quickly as possible the alleged violations of EU law." Licenses under the IPPC directive became a requirement for member states as of 30 October 2007. According to the Commission, Slovenia has made considerable progress since the 2010 ruling, but full compliance with the judgement has still not been reached.

The new case concerns 'a major cement factory,' which continues to operate without a permit. While it avoided naming the plant, Slovenia has two cement plants owned by Salonit Anhovo and Lafarge. Whereas Salonit Anhovo is a licensed IPPC plant, Lafarge is involved in lengthy bureaucratic and legal proceedings in seeking a permit. It has faced ongoing protests from local groups against it being granted a license. Despite not having a license, the plant continues to operate.

The Environment Ministry said that one of the factors influencing the length of procedures was a ruling by an administrative court in Slovenia demanding that Lafarge's plant be treated as a new facility rather than an existing installation. The Environment Agency, which issues permits, is therefore obliged to complete all procedures prescribed for licensing of new plants.

Russia: According to the Russian Cement Association (CMPRO), for the first time since 2009, domestic cement consumption is expected to decline by 15% in 2015 due to the reduction in housing and infrastructure development.

Sales have dropped by at least 5% since the start of 2015. The slow decline may continue for several years. Lafarge expects that the strongest drop, by some 8 - 12%, will be seen in central regions of Russia. Lafarge intends to produce about 2.6Mt in 2015. Siberian Cement has predicted that the cement market of Siberia may shrink by 5 - 7% in 2015 and will reduce its production by 7% to 4Mt during the year. According to the NEO Centre consulting group, cement output in Russia grew by 3% year-on-year to 68.4Mt in 2014.

South Africa: The Competition Commission of South Africa has referred Natal Portland Cement (NPC) to the Competition Tribunal. The referral follows the Commission's investigation, between 2008 and 2012, of collusive conduct in the cement cartel against the four main cement producers, NPC, Pretoria Portland Cement Company Limited (PPC), Lafarge Industries South Africa (Lafarge) and AfriSam Consortium (Pty) Ltd (AfriSam).

PPC was granted conditional leniency in terms of the corporate leniency policy of the Commission. AfriSam settled with the Commission and agreed to pay an administrative penalty of US$11.2m representing 3% of its annual turnover in 2010. Lafarge also settled with the Commission and agreed to pay an administrative penalty of US$13m representing 6% of its annual turnover in 2010.

The investigation found that the four cement producers agreed to collude and to divide the cement market by allocating market shares and indirectly fixing the price of cement during a legal cartel in South Africa that ended in 1996. The Competition Commission allege that they subsequently reinforced these collusive arrangements through a series of other agreements, which NPC's representatives were party to, including an agreement to progressively exchange competitively sensitive sales data through the Concrete and Cement Institute of South Africa.

The Commission is pursuing a maximum penalty of 10% of NPC's annual turnover and a Tribunal order that NPC contravened the Competition Act.

India: Ambuja Cement, ACC and Lafarge India may merge as part of the proposed global merger of Lafarge and Holcim, according to local media. The plan is still at an early stage and LafargeHolcim have mandated investment bank Lazard to advise on the restructuring of their Indian operations. The most likely option is the merger of ACC, Ambuja and Lafarge India into one listed entity to create the largest cement company in India. The combined cement production capacity of the three subsidiaries would be some 70Mt/yr.

As part of the new restructuring proposal, LafargeHolcim may reassess Holcim's restructuring of ACC and Ambuja, which was announced in 2014 and is currently incomplete. As part of the plan, shareholders of Ambuja had approved ACC's stake acquisition from Holcim.