After a difficult 18 months during which HeidelbergCement’s efforts to restructure its finances saw the company considering divesting various assets, including those in West Africa, the producer has secured a deal with the International Finance Corporation (IFC), a member of the World Bank, which will ensure that the group retains its sub-Saharan network.
Under the agreement, IFC and its financial partners will inject equity of up to US$180m in exchange for a minority stake in HeidelbergCement Group’s operations in Africa. HeidelbergCement is committed to use the proceeds to invest in the expansion of local cement capacities in sub-Saharan countries supported by the International Development Association (IDA). “Through the co-operation with IFC, HeidelbergCement secures attractive equity financing for the development of local cement capacities in Africa,” explains Dr Bernd Scheifele, CEO of HeidelbergCement. “The investment program will stimulate the improvement of local infrastructure and housing, create additional jobs and improve environmental standards.”
Dimitris Tsitsiragos, IFC Director for Global Manufacturing and Services, said, “IFC’s support of HeidelbergCement’s strategic expansion will increase the supply of locally produced cement in the region and help stimulate the development of infrastructure. It will also improve production standards and help create employment opportunities.”
IFC and its financial partners, which include PROPARCO, a development institution partly held by Agence Française de Développement (AFD), will inject equity by way of a capital increase in Scancem International ANS, a subsidiary of HeidelbergCement that runs the company’s Africa operations. The initial capital injection will amount to US$60m, but the total equity contribution may be increased up to US$180m. Part of the initial capital injection will be used to expand the cement mill capacity in Liberia. Additional projects envisaged include the construction and upgrade of mill and kiln capacities in Ghana, Togo and Gabon. The projects are expected to be implemented by 2013.
HeidelbergCement initially entered Africa via the 1999 acquisition of Scancem International, the Norway-based producer that had been operating in the region since the 1960s. The West Africa operations consist of a string of coastal grinding plants in Benin, Ghana, Liberia, Sierra Leone, Togo, and Gabon, and one integrated cement plant in Gabon, with a combined regional cement capacity of approximately 5.5Mta.