A change of strategy: Cemex to sell some US assets
Cemex, the Mexican giant of the cement world, announced this week that it intends to further reduce its exposure in the USA by selling US$400m worth of assets to a US subsidiary of fellow Mexican Grupo Cementos de Chihuahua. Is this part of a long-term plan to pull business out of the USA, to reduce debt or is Cemex reluctantly selling cement capacity in a country that the PCA has forecast will see a 3.4 per cent rise in cement consumption in 2016?
At the close of 2015 Cemex’s US operations included 17.1Mta of cement capacity with 13 majority-owned cement plants and five plants in which it had a minority share. Company sales have performed positively with growing volumes and profits. The net sales of the company’s US operations rose by seven per cent in 2015 to US$3.9bn, but grey cement sales only increased by two per cent, although the ready-mix contribution was up 13 per cent and aggregate volumes advanced by six per cent. In 1Q16 the group’s net sales in USA amounted to US$920m, up six per cent on 1Q15, while operating EBITDA rose 71 per cent to US$109m, versus the comparable period in 2015.
The plants that Cemex has decided to divest through Cemex US Inc include Odessa, Texas, and Lyons, Colorado, as well three terminals. Cemex will also sell the building materials business in El Paso, Texas, and Las Cruces, New Mexico, as part of the US$400m asset sale.
Although home to 10 plants and still the largest cement-producing state in the US, the Texas market saw cement consumption fall in 2015 by 3.6 per cent to 14.3Mt. In terms of competition, Ash Grove Cement has recently expanded its Midlothian factory in the state by replacing wet-process technology with a one semi-dry preheater/precalciner. Buzzi Unicem is also upgrading its Maryneal plant to 1.2Msta from 0.55Msta.
At Odessa FLSmidth is currently raising the production capacity from 0.345Mta to 0.9Mta, installing a new 2540tpd line with modern five-stage preheater with an inline calciner which is soon to come online. The decision for this new line was taken in 2013 on the back of forecasts that expected oilwell cement demand to rise in west Texas. However, the recent fall in oil prices have seen the oil industry shy away from further investment.
As well as the Odessa plant, Cemex also owns the 2.5Mta Balcones cement plant in New Braunfels, Texas, that has been operating since November 1980 and underwent modernisation in 2008. It is a very efficient plant that can utilise up to 40 per cent alternative fuels.
Meanwhile, in Colorado Cemex's Lyons plant and its Florence cement terminal face competition from GGC’s 1Mta Pueblo plant and Holcim US’ 1.9Mta Portland plant in Florence.
