Swiss cement major Holcim aims to spend $1.1 billion to expand capacity in India and has no plans to bid for Cimpor, Portugal’s largest cement producer at the centre of two rival bids by Brazilian firms, a senior Holcim official said on Thursday.
“No plan, absolutely no plan,” Paul Hugentobler, a member of Holcim’s executive committee, told reporters on the sidelines of an industry conference in New Delhi, when asked whether Holcim was interested in Cimpor.
Brazil’s Grupo Camargo Correa on Wednesday offered to buy a minority stake in Cimpor and then merge its cement unit into the Portuguese firm, to trump a rival bid by Brazilian steelmaker CSN worth about $5.6 billion.
Analysts expect global cement majors to also bid for Cimpor to head off a new competitor and at a time when global cement prices are stable as demand gradually limps back from the beleaguered real estate industry.
Cimpor has 30 million tonnes capacity across Asia, Europe, Africa and South America, making it the world’s 10th largest cement producer.
Hugentobler said cement prices globally were likely to remain flat. “They stay where they are. Energy costs are going up again, transportation costs are going up again.”
TO BOOST INDIA CAPACITY
Holcim, which controls about a fifth of India’s 240-million-tonne cement production capacity through ACC and Ambuja Cements, plans to spend $1.1 billion to boost capacity by a further 10 million tonnes.
“ACC and Ambuja will have around 50 million tonnes by this year end. The three- to five- year plan is to add about 10 million tonnes,” Hugentobler said.
The addition would be by way of 2-3 new projects, he said, adding there were no plan to merge the two Indian firms.
In November, Aditya Birla group said it would consolidate cement operations under group firm UltraTech Cement, making it the largest cement producer in the country with capacity of 49 million tonnes by end-March.
Aditya Birla has also announced plans to raise capacity by 25 million tonnes over the next five years.
India’s has seen cement demand pick up in recent months after a strong revival in industrial and construction activity. But industry plans to add 90 million tonnes by 2011 have raised concerns of pressure on prices in the long term.
ACC Managing Director Sumit Banerjee said he expected cement prices in India to go up over the next few months.