Concrete Products

AUG 2015

Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.

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10 • August 2015 Within weeks of the Lafarge Group and Holcim Ltd. merger, two European peers outlined an agreement that will perpetuate a realignment of cement, con- crete and aggregate production in key U.S. and Cana- dian markets. Lehigh Hanson Inc. parent, Germany-based Heidel- bergCement AG, outlined late last month a two-phase plan—valued at €3.7 billion [$4.1 billion] and subject to customary conditions—to acquire Essroc Cement Corp. parent Italcementi S.p.A., Bergamo, Italy. With a targeted 2016 closing, the deal would position the com- bined business as the number one, two and three player, respectively, in the global aggregates (275 million metric tons, annual production), cement (200 million metric tons, annual capacity) and ready mixed concrete (49 million cubic meters, annual production) market. The companies reported 2014 sales totaling €16.8 billion [$18.6 billion] from activities in 60-plus countries. HeidelbergCement officials characterize the acqui- sition as a "unique opportunity to accelerate growth. It will add a valuable portfolio of assets with a perfect geographical fit to the existing footprint of the Group. Italcementi operates across 22 countries with strong market positions in France, Italy, the United States and Canada." Echoing the geographical fit, Italcementi officials cite "limited overlap of plants in Belgium and the U.S." and note "the significant potential for synergies and the combination of strong innovation and R&D capabilities of both companies." Essroc Cement is strongest in Mid-Atlantic and eastern-central Great Lakes cement markets, and has integrated cement, aggregate and ready mixed production in Ohio, Pennsylvania, Virginia and West Virginia, plus Ontario and Quebec. Areas of tightest cement market overlap with Lehigh Hanson, based on proximity of mills and terminals, are Maryland, eastern Pennsylvania, southern Indiana and, to less- er extent, New York and Virginia. Among markets where Lehigh Hanson has integrated businesses are Alabama, California, New York, Texas and Washington, plus Canada's Prairie Provinces and British Columbia. Outside North America, HeidelbergCement points to Italcementi's emerging-market positions with high growth potential, plus underlying portfolio strength, noting in a statement: "Plants are well invested due to a total of €3.5 billion [$3.9 billion] in capital expenditures over the past seven years. [Italcemen- ti] has extensive reserve positions in cement plants and aggregate quarries and shares HeidelbergCement's philosophy of operating with strong local brands." "There is no other major wroup in the industry which offers a similar complementary fit to our own operations. With the market recovery gaining traction in southern Europe and the U.S., it is now the right time for us to accelerate our growth with this transac- tion," affirms HeidelbergCement Chairman Dr. Bernd Scheifele. "We see significant potential for value cre- ation with the realization of synergies and the imple- mentation of our proven standards of operational and commercial excellence." NEWS SCOPE PRODUCERS HeidelbergCement, Italcementi deal invites test of Lehigh Hanson, Essroc synergy HeidelbergCement credits Italcementi's proactive capital investment program, un- derscored in North America by the recent upgrade of the Essroc Cement mill in Martinsburg, W.V. Governor Earl Ray Tomblin recognized the operation in an early- 2015 West Virginia Edge Business Report, on the heels of its inaugural Environ- mental Protection Agency Energy Star program certifcation. PHOTO: West Virginia Department of Commerce STRATEGIC HOLCIM MILL TRIPLES ESSROC SLAG CEMENT CAPACITY Essroc Cement Corp. has integrated a 500,000 metric ton/year capacity, Camden, N.J., slag cement grinding operation into its Northeast and Mid-Atlantic powder network. It closed on the former St. Lawrence Cement and Holcim (US) Inc. mill, located along the Delaware River directly across from Philadelphia, in a deal with the newly formed LafargeHolcim Ltd., Zurich. Nazareth, Pa.-based Essroc markets ground granulated blast furnace (GGBF) slag cement under the Slag brand. "The Camden operation allows [us] to provide a more comprehensive product offering to our customers in the Northeast and Mid-Atlan- tic markets," says Essroc CEO Francesco Carantani. "This strategic acquisition demon- strates our commitment to providing the highest level of customer and technical ser- vice. With the focus on sustainability and durability, there is a projected growth in the demand and usage of slag cement." Combined with the company's Picton, Ont., San Juan, P.R., and Middlebranch, Ohio, operations, he adds, Camden positions Essroc with annual GGBF slag cement production capacity exceeding 750,000 metric tons. Essroc Italcementi is one of four approved buyers of Holcim (US) and Lafarge North America assets whose planned sale anchored a U.S. Federal Trade Commission consent agreement with merger-bound Holcim Ltd. and Lafarge Group. The agency also stipu- lated unloading of the Holcim (US) Chicago Skyway slag cement plant, Dallas-based Eagle Materials—parent of Illinois Cement Co.—the suitor. The Camden and Chicago Skyway plants are located about 75 miles and three miles, respectively, from Lafarge North America's Sparrows Point, Md., and south Chicago GGBF slag cement properties. They remain part of the LafargeHolcim portfolio, along with a Holcim (US) slag cement mill in Birmingham, Ala.

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