Displaying items by tag: Lafarge

Encouraging news from Egypt with the announcement that Lafarge Ecocem has taken on two refuse-derived fuels (RDF) contracts in Suez and Qalyubeya. The RDF plants will have production capacities of 42,000t/yr and 280,000t/yr respectively, after upgrades are built.

The move follows a deal Lafarge struck with Orascom in March 2015 to develop a waste management framework of municipal and agricultural waste. The plan is to achieve an average fuel substitution rate of 25% by the end of 2015. Around the same time Ecocem also signed a cooperation agreement with the German Development Cooperation (GIZ) and the Qalyubeya Governorate to upgrade a recycling plant in Qalyubeya to produce RDF. Part of the deal was intended to reinvest some of the revenue from RDF sales back into the region's waste collection infrastructure.

These production levels compare to SITA UK's new RDF plants in the UK, which has a more mature RDF market. There, the newly opened Malpass Farm plant is planned to produce 200,000t/yr and the Tilbury plant will have an output capacity of 500,000t/yr when it opens. However, the Malpass Farm plant mainly feeds one cement plant, the 1.3Mt/yr Cemex Rugby plant with a mean substitution rate of 61% in 2013. By contrast, Lafarge Cement Egypt runs the massive 10.6Mt/yr El Sokhna plant.

Co-processing at El Sokhna by Lafarge is of particular interest given the links with Egypt's unofficial household waste collectors, the Zabbaleen. Lafarge Egypt recruited and trained 140 Zabbaleen to gather waste material for RDF production. The strategy enabled Lafarge to gather continuous supplies of RDF and strengthen local stakeholder relations, as Lafarge's 2013 sustainability report puts it. Lafarge Egypt's substitution rate was 2.2% in 2012 with significant improvements made since then. The current target of 25% for the end of 2015 shows how much progress Lafarge has made.

Hisham Sherif of the Egyptian Company for Solid Waste Recycling (Ecaru) placed Egypt's municipal solid waste level at 20Mt/yr at a presentation given at the Global CemFuels Conference earlier in 2015. From this 4Mt/yr of RDF could be produced. Together with biomass derived fuel (BDF) Sherif reckoned that the country's cement plants could reach substitution rates of 30 – 40%. Problems though with increasing RDF rates in Egypt include legal complexities, institutional issues, poor services and monitoring and centralised planning with little regard for the country's unofficial waste pickers, such as the Zabaleen.

Lafarge Ecocem appears to be tackling each of these problems in turn as the deals with Orascom and the Qalyubeya Governorate show. However, spare a thought for Egypt's unofficial waste sector workers who are likely to lose their livelihoods as waste management becomes more formalised and personnel rates per tonne of waste collected tumble.

For more information on the Zabaleen, check out the documentary made about them in 2009, called 'Garbage Dreams'.

Europe: Following the clearance from the Autorité des Marchés Financiers (AMF) on 28 May 2015, Holcim launched the public exchange offer for all Lafarge shares at an exchange ratio of 9 Holcim shares for 10 Lafarge shares on 1 June 2015. Through acceptance of the public exchange offer, Lafarge shareholders will pave the way for the creation of LafargeHolcim.

The public exchange offer will be open for 25 trading days until 3 July 2015. With this public exchange offer, Lafarge and Holcim are implementing the final step of their project to merge the two companies. The merger is expected to close in July 2015.

Egypt: Lafarge Industrial Ecology (Ecocem) has signed two major contracts to manage and operate existing refuse-derived fuel (RDF) platforms in Suez and Qalyubeya in Egypt.

In an effort to continue its efficient waste management processes, the company has signed a year agreement to renovate and upgrade the platforms in Suez and another separate 10-year agreement to manage and operate the existing platforms in Qalyubeya. Lafarge Ecocem has already added a new production line to the Suez platform and plans an additional line within one year of signing its contract with the governorate. The plant will produce 42,000t/yr of RDF and the investment will total US$1.66m.

Ecocem has also already added an extra line to the Qalyubea plant, in addition to renovating one production line. The company's future investments in the governorate will increase the RDF production capacity by 32,000t/yr to 280,000t/yr. Both investments at the Qalyubeya plant were funded by GIZ and the Bill and Melinda Gates Foundation with a total Investment of US$1m.

"In line with our 'Building Egypt 2030' campaign, Lafarge is committed to help solve the issue of waste in Egypt and to continue taking the necessary steps towards sustainable development," said Hussein Mansi, CEO of Lafarge Egypt. "At Lafarge Egypt, we feel it is our responsibility as a leader in building solutions to be the major proponents in waste management and plan to continue finding many opportunities to make a difference."

Building on its waste management strategy, Lafarge Ecocem is committing to several additional long-term contracts with different governorates to help convert municipal solid wastes to alternative fuels. In addition, in March 2015, Lafarge Egypt and Orascom Telecom Media and Technology Holding S A E signed a memorandum of understanding to develop a waste management framework of municipal and agricultural waste.

Lafarge Egypt and Ecocem have implemented many projects over the past three years in order to increase the use of alternative fuels and aim to achieve an average fuel substitution rate of 25% by the end of 2015. More than 260,000t of waste have been processed and fired in Lafarge's Sokhna plant since 2013, an equivalent of 100,000t of fossil fuels.

There was a lot of news out of Lafarge and Holcim this week regarding preparations towards their merger. Just this morning we heard that the partners have entered into a binding agreement with Ireland's CRH regarding the sale of the assets that must be divested. Meanwhile, Lafarge and Holcim have also completed the appointments for the future LafargeHolcim executive committee. Its nine members will be responsible for such tasks as finance, integration, performance and costs, growth and innovation, as well as regional activities in Europe, Asia Pacific, the Middle East and Africa, North America and Latin America.

However, it was other types of personnel that featured in Lafarge and Holcim's earlier press releases. On 19 May 2015 Lafarge came out and announced the first (pre-merger) job losses that will result from the merger. It will cut 380 positions in central and regional corporate roles, with 166 going in its native France. For its part Holcim will make 120 pre-merger job losses, all in Switzerland. Ignoring the clear discrepancy in scale between the different sides, Lafarge and Holcim will have lost at least 500 jobs out of their combined ~130,000. This is just a scratch on the surface, but it does raise an interesting question: How many more jobs will go at LafargeHolcim?

First up are the staff that will go to work for CRH. This probably represents the largest number of staff that will come of LafargeHolcim's books relative to Lafarge and Holcim's current staff levels. According to their 2014 Annual Reports, Lafarge and Holcim employ a combined 81,000 staff in cement roles. Given that they have a combined 425Mt/yr of cement capacity (give or take) this equates to around 190 staff for each 1Mt/yr of capacity.

As the new LafargeHolcim will have control over around 340Mt/yr of cement capacity, we can crudely scale the 190 staff up to 64,600 cement sector staff. This indicates that around 16,400 staff that are currently employed by Lafarge and Holcim will be 'off' to CRH (and others). This leaves 48,100 staff in non-cement roles at LafargeHolcim.

Will more jobs be lost post-merger? Lafarge and Holcim have stated that the new entity will have 115,000 staff. However, with around 42% of future employees employed in non-cement roles - compared to 41% and 34% for Lafarge and Holcim respectively in 2014 - it certainly seems that there could be scope for at least some reduction in overall numbers from LafargeHolcim's non-cement functions. Future job losses could therefore be a possibility, but the exact scale of future consolidations and 'synergies' (if any) will only become apparent post-merger. Maybe LafargeHolcim could end up with around 105,000 to 110,000 staff.

A key time may well be early 2016, when LafargeHolcim will launch a new 'corporate structure.' This term was also used by Lafarge and Holcim in their most recent releases, so further job losses could be on the cards.

One member of LafargeHolcim staff with nothing to worry about now will be Bruno Lafont, current CEO of Lafarge. He received a Euro2.5m bonus this week for his 'key role' in conducting the merger. How LafargeHolcim staff who could be nervous about their jobs will take this remains to be seen.

The Lafarge-Holcim Report from Global Cement is available to order now

Europe: Lafarge and Holcim have completed the appointments for the future executive committee of LafargeHolcim following a recommendation by Eric Olsen, future CEO of the combined group. The future executive committee, under the leadership of Eric Olsen, is composed of:

• Finance - Thomas Aebischer, currently in charge of finance at Holcim;
• Integration, organisation and human resources - Jean-Jacques Gauthier, currently in charge of finance at Lafarge;
• Europe - Roland Köhler, currently in charge of Europe at Holcim;
• Asia Pacific - Ian Thackwray, currently in charge of East Asia Pacific and trading at Holcim;
• Middle-East Africa - Saâd Sebbar, currently in charge of Morocco at Lafarge;
• North America - Alain Bourguignon, previously in charge of North America and the UK at Holcim;
• Latin America - Pascal Casanova, currently in charge of France at Lafarge;
• Performance and cost - Urs Bleisch, currently in charge of corporate functions at Holcim;
• Growth and innovation - Gérard Kuperfarb, currently in charge of innovation at Lafarge.

Following appropriate information-consultation processes with relevant works councils and employee representatives, Lafarge and Holcim have now entered a binding agreement with CRH regarding the sale of several assets. The assets include operations mainly in Europe, Canada, Brazil and the Philippines with an enterprise value of Euro6.5bn. The divestments remain subject to the completion of the merger including the acceptance of Holcim's public exchange offer by the shareholders of Lafarge. The merger is expected to close in July 2015.

France: Lafarge chief executive Bruno Lafont has been awarded a Euro2.5m bonus for the successful merger with Holcim. The board of directors of the company awarded Lafont the money 'for his key role in the merger project with Holcim' and 'his exceptional performance,' according to a document posted on its website. The board accorded the bonus at a meeting on 12 May 2015, two days after Holcim shareholders approved the merger by a vote of 94%. Lafont will receive the money in May 2015.

Malaysia: Lafarge Malaysia's pre-tax profit for the first quarter of 2015, which ended on 31 March 2015, rose to US$27.6m from US$26.9m in the same quarter of 2014. Its revenue improved to US$193m from US$188m in the prior year due to higher cement and concrete sales in the domestic market on the back of market growth. The company expects the construction sector to continue to grow in 2015 driven mainly by the continued progress of key infrastructure projects and ongoing commercial and residential development.

India: Six foreign and domestic cement companies, along with one private equity firm, have expressed interest in buying the assets that Lafarge is divesting in India before it closes its merger with Holcim. The bids were in excess of US$627m.

The deadline for submitting non-binding bids for the assets expired on 16 May 2015. Ahead of that deadline, local media reported that bids came from Shree Cement, Chettinad Cement, HeidelbergCement India, The Ramco Cements, CRH and Blackstone Group.

As a precondition to clearing Indian leg of the LafargeHolcim, the Competition Commission of India (CCI) directed Lafarge to sell two of its assets in Chhattisgarh and Jharkhand. These are a cement plant at Sonadih, Chhattisgarh and a grinding plant at Jojobera, Jharkhand, with a total capacity of approximately 5Mt/yr. In its directions, the CCI said that Lafarge should sell its assets 'to relatively smaller players, having an installed capacity of less than 5% of their total capacity in the relevant geographic market.'

With the non-binding bids in, Lafarge is likely to shortlist bidders by the middle of June 2015. The deal is likely to be concluded in July 2015.

France: Lafarge has proposed to cut 380 jobs as part of its pre-merger preparations ahead of its merger with Holcim to form LafaregHolcim. The new group, set to be the world's largest building materials group, will employ approximately 115,000 people.

The organisation of the new group will be balanced between a decentralised structure and strong central functions based on three organizational levels: Countries; Regions (Europe, North America, Middle East & Africa, Latin America, Asia-Pacific, and; Corporate functions, which will help define the Group's key strategies.

There will be an equivalent number of personnel in the central functions in France and Switzerland. The new group's research and development centre will be located in France.

Concerning Lafarge at worldwide level (i.e., in sites located in Atlanta (USA), Beijing (China), Cairo (Egypt), Kuala Lumpur (Malaysia), Lyon (France), Montreal (Canada), Paris (France) and Vienna (Austria)), the proposed new organisation of central functions will result in approximately 380 net job losses, with 166 of these in Paris and Lyon.

The social support measures that will be negotiated with employee representatives will mostly consist of solutions based on internal mobility, early retirement and (in France) voluntary departures. The proposed merger will not affect employment in Lafarge's operational functions in France, which employ more than 4500 people.

This procedure is a key phase in the preparation of the creation of the new LafargeHolcim Group. The completion of the proposed merger is expected to occur in July 2015. Before this can happen, the public exchange offer will have to be successful, with shareholders tendering at least two-thirds of Lafarge shares.

Philippines: Aboitiz Equity Ventures Inc has signed a deal with CRH, which when completed would allow it to join CRH in investing in the Philippine cement plants of Lafarge.

CRH had earlier agreed to buy for US$7.34bn in cement assets from Lafarge and Holcim Ltd, whose asset divestments are part of preconditions to winning regulatory approval for their merger. Both Lafarge and Holcim have cement assets in the Philippines. Aboitiz Equity plans to join CRH in acquiring a majority of the shares of Lafarge Republic Inc and the shares in Luzon Continental Land Corp and Lafarge Cement Services Philippines Inc, which constitute the majority of Lafarge's local cement operations.

Aboitiz Equity president Erramon Aboitiz said that if the deal with CRH is finalised, it would provide it with an investment that dovetails with its plan to invest in infrastructure development. The company is already in banking, property development, food manufacturing and power generation and distribution. "Venturing into infrastructure meets our growth criteria. We are very optimistic of the potential gains this new core business will bring to the Group amid the huge demand for infrastructure in the Philippines," said Aboitiz.

The conclusion of deal is subject to the successful completion of the merger between Lafarge and Holcim as well as approval by the boards of both CRH and Aboitiz Equity.