Global Cement News

Guyana: Chetram Ramnarine, an employee of Toolsie Persaud, was granted bail in the sum of US$250,000 when he appeared at the Georgetown Magistrates' Courts to answer to a charge of robbery on 16 May 2014.

The charge stated that on 9 April 2014 the defendant stole cement valued more than US$1m from Toolsie Persaud Ltd. Ramnarine, who told the court he is a banker for the company, pleaded not guilty to the charge and stated that he had no previous convictions. The defendant is set to reappear at the Georgetown Magistrates Court on 6 June 2014 for statements.

Mexico: Cemex has announced that it has promoted its chief financial officer (CFO), Fernando Gonzalez, to chief executive. Gonzalez replaces Lorenzo Zambrano, who died suddenly on Monday 12 May 2014. It also named Rogelio Zambrano, a cousin of the late executive, as its new chairman. Lorenzo Zambrano had been chief executive since 1986 and chairman since 1995.

"We will stay focused on creating value for all of our stakeholders," said Rogelio Zambrano in a statement. "I am very optimistic about Cemex's future." He has been a member of the Cemex board since 1987 and president of the company's finance committee since 2009.

Fernando Gonzalez joined the company in 1989 and held senior positions in a number of regions before being named executive vice president for finance and administration several years ago. "We are encouraged by the positive outlook and the improving business environment in the markets where we operate," he said in the release.

The board's decision to replace Lorenzo Zambrano from within the company is likely to reassure investors of continuity at Cemex, which is seeing a recovery in earnings after the recent economic crisis led the highly leveraged firm to refinance debt, sell assets and lay off around 10% of its workforce. The speed at which the board has responded is also likely to instill confidence.

After taking over the company, Zambrano embarked on a rapid and ambitious international expansion that transformed Cemex from a regional producer into a global supplier of cement and building materials, borrowing heavily to acquire companies and aggressively paying down debt.

Spain: Cement demand in the northern Spanish region of Catalonia went down by 15.1% year-on-year to 108,191t in April 2014, according to the regional cement association Ciment Catala. Exports of cement and clinker from the region grew by 44% to 223,219t in April 2014, over twice the volume of regional consumption. The decline in sales of cement in Catalonia was attributed to the lower amount of civil works.

Mexico: The board of Cemex may soon decide on a new CEO to replace the late Lorenzo Zambrano, who died of heart failure in Madrid on 12 May 2014. A funeral Mass was held on 14 May 2014.

Directors are likely to hold a meeting in the next few days, according to CFO Fernando Gonzalez. "The board meeting should occur this week," said Gonzalez. "What I can't tell you is the result." A swift decision by directors on a new CEO may reassure investors about the course of Cemex after Zambrano's three-decade tenure. He led the company to the top of the regional industry with US$29bn of acquisitions and became one of Mexico's best-known CEOs, while leaving no publicly anointed successor. Gonzalez, Cemex's CFO, is the odds-on favourite to succeed Zambrano according to analysts.

Gonzalez said that he didn't know whether the board would consider hiring a leader from outside of the company and that major shifts in the business are unlikely. "Cemex's strategy should be maintained," he said. "The strategy is to participate in the global market of the building materials industry." Gonzalez, who isn't a director, said that only the board knows the details of Cemex's succession planning. Even if the board meets this week, there's no guarantee it will make a final decision on new leadership.

Kenya: Kenya's antitrust authority may force Lafarge to sell some of its interests in the country if the cement maker is found to be flouting domestic competition rules.

The Competition Authority of Kenya (CAK) is probing Lafarge's influence on Kenya's cement industry through its 59% stake in Bamburi Cement and 42% shareholding in East Africa Portland Cement Co (EAPCC). The findings will be published in June 2014, according to the CAK's director general Francis Kariuki.

"The current arrangement between Lafarge and EAPCC may be deemed to be an unwarranted concentration of economic power because of the close directorship Lafarge has in EAPCC and Bamburi," said Kariuki. The CAK is investigating pricing in the Kenyan cement industry amid a dispute between shareholders and the government over ownership of EAPCC. Kenya's Treasury holds a 25% stake in the company, while the state-owned National Social Security Fund has 27%.

The government wants Lafarge to dilute its shareholding in EAPCC because no company should hold a 'monopolistic stake' in Kenyan industries, according to Industrialisation and Enterprise Development permanent secretary Wilson Songa. Cross-shareholdings are 'widely recognised to dampen competition,' according to the CAK. Bamburi Cement, in which Lafarge has a controlling stake, owns 12.5% of EAPCC. "Even passive shareholdings change the incentives to set prices, as some of the earnings from sales diverted to a rival are now internalised," said the CAK.

If Lafarge is found to have a monopolistic position in Kenya, the CAK may force Lafarge to sell its stake in one of its businesses in the country, according to Kariuki. Kenyan law also stipulates that anyone found guilty of price fixing faces a US$115,000 fine or a five-year jail term.