Through Ciments Français, Italcementi is taking a 5.4% stake in Sibirskiy Cement, the second largest Russian cement producer, and is exploring the possibility of joint ventures with Sibirskiy Cement in Russia and elsewhere in Central Asia as well as technical co-operation agreements. The deal with Sibirskiy Cement covers the sale of Ciments Français’ Turkish operations to Sibirskiy Cement for EUR600m, of which EUR400 is in cash and the remainder in Sibirskiy Cement shares. The deal values the operations being acquired at €171/t sold last year, and is subject to official approval.
This will be the first investment by a Russian cement producer in the Turkish cement market and Turkey has in the recent past become an important supplier of cement to Russia, given the geographical proximity and the surplus of cement in Turkey and the shortage in Russia. Through this deal Sibirskiy Cement will acquire four integrated cement works, one grinding centre and 18 batching plants, that last year generated a turnover of EUR260.0m and an EBITDA of EUR47.2m.
The co-operation agreement between Italcementi and Sibirskiy Cement opens up a number of possibilities in Russia outside Siberia and in parts of Central Asia that used to belong to the Soviet Union. Italcementi is one of the leading cement producers in Kazakhstan through Shymkent Cement and, with local partners is building two new cement works in the country, each with a capacity of 1.3Mt, that would take the cement capacity in Kazakhstan under Italcementi’s management to 3.8Mt. Sibirskiy Cement has been a traditional supplier of cement to the Kazakh market, which has relied on considerable imports to supplement domestic production, though this should alter with considerable new capacity under construction.
In Siberia, Sibirskiy Cement has four cement works, the largest of which, at Topkinski, has a 3Mta capacity, and a market share of around 65% and in aggregates its market share is in the region of 55%, while its presence4 in the ready-mixed concrete market is presently limited to four batching plants, in what remains an undeveloped market. No doubt, Italcementi’s considerable expertise in ready-mixed concrete could be helpful in developing the Siberian ready-mixed concrete market.