Global Cement News

Asia Cement has completed its purchase of Halla Cement this week for US$723m. The deal has created the third largest cement producer in South Korea with a cement production capacity. This includes one integrated plant at Okgye, three slag grinding plants and a distribution network.

Graph 1: Cement producers in South Korea by cement production data from 2016. Chart includes mergers in 2017 and 2018 to represent current market share. Source: Korea Cement Association.

The Halla Cement transaction marks an on-going consolidation process in the local industry. 2017 proved a busy year with the purchase of Daehan Cement by Ssang Yong Cement and Hyundai Cement by Hanil Cement. Assuming the dust has settled this now leaves Ssang Yong Cement and its new subsidiary in the lead by cement production data from 2016 with 12.9Mt or a 23% market share, Hanil Cement next with 12.4Mt or a 22% share and Asia Cement with 10.8Mt or a 19% share. Overall the country produced 56.7Mt of cement in 2016, according to Korea Cement Association data. The remainder of production is shared between six producers.

Fears that the construction industry may have been about to slow down might have prompted Glenwood Private Equity and Baring Private Equity Asia to sell Halla Cement a little earlier than expected. However, they don’t appear to have done too badly out of this. The two private equity firms that bought Halla Cement from LafargeHolcim in 2016 seem to have made a cool US$180m on the deal. At the time it was reported in the local press that they paid US$542m for the cement producer. Glenwood Private Equity was the lead investor followed by Baring Private Equity Asia. They bought Lafarge Halla Cement in May 2016 and then were looking for buyers a year later in August 2017.

Cement consumption in South Korea has followed a rollercoaster path since 1992 hitting a high of 61.7Mt in 1997 and a low of 43.7Mt in 2014. It then rose to 55.8Mt in 2016. The consolidation behaviour by the cement producers suggests either a poor performing market or an uncertain one. Since the gap between the peak and the trough is more than Halla Cement’s production capacity no wonder its private equity owners were keen to get shot of it at the first sign of trouble. So let’s end with the words of Han Chul Kim, Managing Director of Baring Asia, from the time of the purchase from LafargeHolcim in 2016: "We couldn’t imagine a more solid platform from which to access the growth opportunities in the Korean market in the coming years.”

UK: Samson Materials has appointed Dale Lockley as its managing director. He joined the subsidiary of Aumund in 2016 as Senior Project Manager and later worked as Program Delivery Manager. Lockley is a trained mechanical engineer with over 20 years of experience working within and leading international multidisciplinary teams and developing materials handling technologies of worldwide operating companies, including more than seven years as managing director.

US: Rexa has appointed Geoff Hynes as its president and chief executive officer (CEO). He succeeds Sam Lalos. Hynes has worked for Rexa for his entire career in a variety of roles, including Factory Assembly, Direct and Regional Sales, Aftermarket Manager, International Sales Manager and Director of Sales.

Other appointments include Robert Sass’ promotion to Director of Customer Support. Michael Murphy has become the Director of Sales and Marketing and Nicholas Lalos has been appointed as a Marketing Manager.

Rexa manufactures actuators and drives for a variety of industries including the mining and power generation sectors.

US: Vortex has appointed Lyndon Flower as a Business Development Manager for its USA & Canada division. His focus will be on working with manufacturers’ representatives, regional and territory sales managers, and industry specialists to further expand the sales of Vortex products in the dry bulk material handling industry. Previously, Flower served as vice president and general manager at A&J Mixing International for 18 years until the company was acquired by Smico in 2015. Since then, he has been focused on sales and marketing efforts for the A&J Mixing line.

Japan: Tetsuya Horimoto has been appointed as the managing director of Schmersal Group’s new subsidiary in Japan, Schmersal Japan. He succeeds Tekashi Kabe who ran the group’s sales office in Tokyo. Horimoto is an electronic engineer with management experience at companies in the automation sector. He is also a TÜV-certified Functional Safety Engineer. The company, which operates switchgear and control device products, will continue operating out of its Tokyo office.