Sunday, 6 April 2014

Aggregate Industries’ parent Holcim and Lafarge to merge

It’s all change again in the global world of cement and aggregates, according to reports in this morning’s international press. Aggregate Industries’ Swiss parent Holcim and Lafarge from France - the world’s two largest cement makers - have agreed to merge to create a company with £26bn in sales. According to Holcim
Holcim and Lafarge believe that... there is rationale in considering a potential merger that could deliver significant benefits to customers, employees and shareholders
In reality, operations will be sold, capacity and costs cut, jobs lost. According to Bloomberg:
A deal would allow the cement producers to cut costs by combining their production operations as some of the industry’s kilns run at a loss after the recent global recession eroded demand for building materials. “There is still massive oversupply in the industry,” Ian Osburn, an analyst at Cantor Fitzgerald, said in an interview. A deal would help Holcim and Lafarge to “cut a lot of costs and dominate a few more markets.”
What are the effects closer to home? According to Construction News:
On the impact to the UK market, however, the source said it was likely that if any merger were to be completed, the resulting company could be faced with having to sell off UK assets. “You have to put it in perspective when it comes to the UK, it’s a very small part of their business. If they really want to do something worldwide the UK is a pretty small factor. “But there would be a serious problem in terms of aggregates in the UK... there would be a serious disposal issue there.”
In fact, ever since Aggregate Industries was taken over in 2005, Holcim has been selling off chunks of the AI estate - only last week it was a concrete plant in Gloucestershire. And with aggregate giants re-aligning, if AI did ever win permission to quarry Straitgate Farm, it is far from certain that it would be AI who would eventually work it; much less certain who would - if ever - restore it.