23 May 2018

21 May 2018

16 May 2018

UltraTech Cement’s deal to buy the cement business of Century Textiles & Industries could see it become the world’s third largest cement producer by production capacity outside of China.

 

It announced this week that it had entered into an acquisition agreement to buy the cement subsidiary of BK Birla Group for US$1.26bn. If the deal completes then it will gain three integrated plants in Madhya Pradesh, Chhattisgarh and Maharashtra respectively with a combined production capacity of 11.4Mt/yr and a 1Mt/yr grinding plant in West Bengal. At this point UltraTech Cement will increase its production capacity to 106Mt/yr seeing it become the third largest cement producer in the world in Global Cement’s Top 100 Report.

 

 

This latest deal is subject to the usual regulatory approval from competition bodies and the like. Bustling past this step seems far from clear at this stage given that UltraTech Cement owns cement plants already in each of the four states the proposed purchases are in. It has described the purchase as giving it, …”the opportunity for further strengthening its presence in the highly fragmented, competitive and fast growing East and Central markets and extending its footprint in the Western and Southern markets.” Synergy savings from procurement and logistics are expected to follow with further benefits to be gained from the company’s distribution network. Local and national competitors may not see it the same way and the fallout from a price war could be damaging for smaller producers.

 

As covered previously, UltraTech Cement seems hell bent on winning its on-going fight against Dalmia Bharat to buy Binani Cement. Rightly or wrongly UltraTech Cement tried to muscle its way into buying Binani by making a bid directly to its owners after it lost an auction for it. Legal wrangling has followed as the insolvency process for Binani Cement has clashed against the auction process of the administrator. At the time of writing it is still far from clear which company will win.

 

Comparing the prices of the two latest acquisition targets by UltraTech Cement may offer some insight of its motivations. The Binani Cement assets roll in at just over US$125/t of production capacity. Although, as noted below, some of this is located outside of India. The Century Textiles & Industries assets are being purchased for a little over US$100/t. This is interesting as it is lower that the Binani cost, although the close links between BK Birla Group and UltraTech Cement’s owner Aditya Birla may help to explain this.

 

UltraTech Cement’s milestone as it surpasses the 100Mt/yr capacity level will mark a continuing change in the world’s cement industry as it moves away from Europe and North America to developing economies. As ever the classification is a bit of a fudge given that Global Cement’s top producers list excludes Chinese producers. Partly this arises from the difficulty obtaining reliable data on the Chinese industry. Partly this comes from top producer’s list looking at multinational companies over (extremely) large national ones. Due to this UltraTech Cement remains a regional player. Or it will at least until it (or if it) manages to buy Binani Cement. Some of the assets included in that sale include plants in both the UAE and China. At this point UltraTech Cement’s claim to be the third biggest cement producer in the world will be secure.

www.worldcement.com

Canada: CSL Group has agreed to buy 50% of Eureka Shipping, SMT Shipping agreement for CSL to acquire 50% of Eureka Shipping, SMT’s pneumatic cement vessel business. The new joint venture will allow Eureka and CSL to expand services to customers in the seaborne cement powder and fly ash transportation markets around the world. CSL’s Australian cement shipping business is not included in the joint venture.

 

 

www.globalcement.com

“The joint venture represents an important step in CSL’s strategy to increase its presence in the global construction material sector,” said Louis Martel, President and chief executive officer (CEO) of CSL Group.

 

The companies say that the partnership is a strong strategic fit, leveraging the companies’ respective strengths in the shipping and handling of dry bulk cargos. There will be no change in the day-to-day management and operation of vessels in the Eureka fleet. The transaction is subject to regulatory approval and is expected to be completed by the end of June 2018.

 

Eureka Shipping operates a fleet of self-unloading cement carriers in the Baltic Sea, the Atlantic Ocean, the Mediterranean Sea, the Caribbean and Asia. SMT Shipping Group has, over the past 30 years, built a fleet of about 45 vessels through a number of joint venture companies operating in various bulk commodities markets, focusing on geared bulk carriers, floating storage/transhipment terminals and belt-unloaders.

 

www.globalcement.com

US: Simon Shipp has become the general manager of Aumund USA. He holds over 25 years of international experience in mechanical engineering, in particular with conveying equipment for bulk materials. Shipp succeeds Geoffrey Conroy who has held the post for nearly 20 years. Conroy will remain on the board in a consultant role.

Copyright © 2015 Seal Plus

Address: 701 Morris Road, Hockessin, DE 19707, USA - Phone: ( 302 ) 3778632