Cemex has just announced today that it intends to begin the construction of a second kiln at its Balcones Cement Plant in New Braunfels, Texas. The expansion is expected to be completed in 2008. The total value of the investment over the course of three years is approximately US$220m.
The strong demand for cement, coupled with a current shortfall in regional supplies of cement, support Cemex’s need for expansion of its Texas facility. The current production of the Balcones Cement Plant is approximately 1.1Mta, which is not sufficient to meet regional construction and infrastructure demands.
Cemex has received a permit from the Texas Commission on Environmental Quality which allows it to double its production capacity at Balcones and also includes several provisions and special conditions that will ensure Cemex’s continued commitment to the environment and neighboring communities, including the latest "state-of-the-art" emission control units.
Cemex will invest worldwide US$500m in an expansion capitalprogram planned for 2006. This program will fund the initial phase of the Balcones expansion and investments in countries such as Latvia, the UK and France, among others. This program will be fully funded with free cash flow generated during the year. Investments under the program are expected to be immediately accretive and will have a significantly higher investment hurdle rate than Cemex’s acquisition criteria of a minimum return on capital employed of ten per cent.