Global Cement News

Trinidad & Tobago: Cemex has struck a deal with the board of Trinidad Cement Limited (TCL) that will allow Cemex to increase its stake in TCL to at least 35%, with the option to add another 5%.

Cemex SAB de CV currently owns 20% of TCL, the maximum that was allowable per shareholder, through Sierra Trading. It has committed not to seek a stake higher than 40% of TCL under an accompanying deal to an upcoming rights issue. The deal, referred to as a Subscription Agreement, was signed by Sierra and TCL on the same day that TCL's shareholders voted to remove the cap on ownership of TCL shares.

Sierra will take up its full allowable allotment under the rights offer that gives shareholders the option to acquire one additional share for every two held. Some 124,882,568 shares will be available for subscription. If Sierra fails to reach its 35% ownership target at the close of the offer, "Then subject to receiving all required approvals, including shareholder approval, a private placement of TCL shares will be issued in favour of Sierra Trading in an amount that will permit Sierra Trading to achieve a shareholding of 35% of TCL's outstanding shares," said a Trinidad Cement spokesperson. The TCL board, under the leadership of chairman and shareholder Wilfred Espinet, also signed off on an 'exclusive' plan for Sierra to buy up the TCL shares that are not taken up during the rights offer, but under terms where Sierra's stake does not exceed 40% of the publicly traded company.

The ownership structure of TCL is undergoing changes that, according to the board, will facilitate a new debt-restructuring plan under negotiation with creditors. The loan agreements of 2012 that lengthened the maturity profile of the debt by six years were placed on hold by the current board while it negotiated a new deal. Consequently, TCL's US$315m of long-term debt was reclassified as short-term obligations.

India: On the fourth day of India's coal block auctions, on 17 February 2015, Bharat Aluminium Co bid US$48.5/t to beat rivals Hindalco Industries and UltraTech Cement, among others, to win the Chotia mine in Chhattisgarh. The block has Grade C coal reserves with 1Mt/yr of production capacity. The price of imported coal of a similar grade is around US$72.2/t.

Jaiprakash Power Ventures won the Amelia North coal block in Madhya Pradesh for US$11.4/t, while agreeing to forego the mining cost. The mine has extractable reserves of 2.8Mt/yr and was previously owned by Madhya Pradesh State Mining Corp. OCL Iron & Steel won the Ardhagram mine in West Bengal at a price of US$36.9/t. The mine has extractable reserves of 400,000t/yr.

Canada: The Cement Association of Canada (CAC) has welcomed the British Columbia government's efforts to improve the Province's carbon tax. The British Columbia Carbon Tax is applied only to domestically-produced cement, while imported cement from the US and Asia is exempt, resulting in a net loss to the British Columbia economy. With local manufacturers facing higher costs under the carbon tax, cement imports from jurisdictions without a carbon policy have risen significantly.
The proposed 'transitional incentives,' of US$22m paid over a three year period, to encourage the British Columbia Cement industry to adopt cleaner fuels and further lower emission intensities will assist the current inequality that the industry faces as a result of imports coming from the US and Asia into British Columbia with no carbon tax applied. The cement industry has been working with the British Columbia government and other stakeholders for many years to find a win-win solution to protecting jobs, economic development and the environment.

"British Columbia produces some of the highest quality cement in the world, so the change makes sense both for the environment and for the Province's continued economic prosperity. British Columbia cement is a strategic commodity and a key component of concrete, which is essential to the implementation of the government's ambitious plan for infrastructure development," said CAC president and CEO Michael McSweeney.

"This incentive will help level the playing field for domestic producers of cement. It assists our company to ensure that good jobs stay and continue to be created in British Columbia," said Bob Cooper, vice president of Lafarge Western Canada. "Our competitiveness has been threatened by imports for the past five years and the move by the British Columbia government will also ensure that British Columbia has a long-term and secure local supply of made-in-British Columbia cement."

France: Lafarge has reported that during the fourth quarter of 2014, its sales were up by 2% year-on-year to Euro3.21bn, its earnings before interest, taxes, depreciation and amortisation (EBITDA) were down by 4% to Euro679m and operating income fell by 8% year-on-year to Euro450m. In the entirety of 2014, Lafarge's sales were down by 2% year-on-year to Euro12.8bn, EBITDA was down by 3% to Euro2.72bn and operating income fell by 3% to Euro1.88bn.

"2015 will be an exceptional year for Lafarge. Over the past few years, we have undertaken a structural and fundamental transformation. We have focused on our customers, promoted innovation and reshaped our portfolio to concentrate on fast growing market segments," said Bruno Lafont, chairman and CEO of Lafarge. "In 2014, we completed our 2012 - 2015 cost reduction and innovation objectives a full year ahead of schedule, supporting our solid operating results. Lafarge is now perfectly-positioned to best benefit from upswings in any and all of its markets in an economic environment that, while remaining volatile, will be more favourable in 2015. I am confident that we will drive significant growth of our results and we do expect EBITDA of Euro3 – 3.2bn in 2015."

Cement sales volumes were up by 4% in 2014 thanks to continued growth in most emerging markets and the US, the benefit from innovation actions and the start-up of new plants in India and Russia. Lafarge delivered its 2014 cost cutting and innovation target, generating Euro600m in 2014, Euro370m from cost cutting and Euro230m from innovation. Net debt was further reduced to Euro9.3bn as of 31 December 2014.

Overall, Lafarge sees cement demand increasing in 2015 by 2 – 5% year-on-year, predominantly driven by growth in emerging markets. Cost inflation in 2015 should continue, at a slower pace than in 2014 given the recent changes of fuel oil prices. Lafarge has confirmed its target to generate at least Euro1.1bn of additional EBITDA from its cost reduction and innovation measures in 2015 - 2016. Its capital expenditures in 2015 will be limited to Euro1.1bn. Net debt should be reduced to Euro8.5 – 9bn by 31 December 2015.

Canada: Alexandre Rail has been appointed as plant manager of McInnis Cement's Port-Daniel-Gascons plant in Gaspé. Rail brings with him 15 years of experience in heavy industry. He joins the company from ArcelorMittal, where he served as a Steel plant manager for seven years.

"We are pleased with our recruitment of an experienced manager in the heavy industry who shares our values in the areas of health and safety, environment and quality. Rail has proven abilities to mobilise employees," said Christian Gagnon, CEO of McInnis Cement. "Rail's family comes from Gaspé, so he is undoubtedly happy to relocate to that region and eager to contribute its local economic development."

McInnis Cement has also named Mark T Newhart as vice president of Logistics and Distribution and as a member of the company's management team. He will develop an efficient distribution network, with responsibility for transport management and marine terminals. Newhart will report to Jim Braselton, senior vice president of Commerical and Logistics.

"With his 30 years of experience in logistics, which includes 20 years in the cement industry, the addition of Mark to our management team is a major milestone," said Gagnon. "Since our business model is based on marine transportation of our products, Newhart's expertise in transportation and marine terminal management will be beneficial for our organisation."

With Newhart's appointment, McInnis Cement's management team is now complete. It comprises: Christian Gagnon as CEO; André Racine as senior vice president of Corporate Development and Legal Affairs; Jim Braselton as senior vice president of Commercial and Logistics; Gaétan Vézina as senior vice president of Operations; Claude Ferland as CFO; Mark T Newhart as vice president of Logistics and Distribution; Marc Lachapelle as senior director of Human Resources; Maryse Tremblay as director of Communications and Corporate Social Responsibility. McInnis Cement has also announced the relocation of its corporate office in downtown Montreal.