New Delhi: Swiss cement major Holcim Ltd aims to spend $1.1 billion (Rs5,005 crore) to expand capacity in India and has no plans to bid for Cimentos de Portugal SGPS SA (Cimpor), Portugal’s largest cement producer at the centre of rival bids by two Brazilian companies, a 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 steel maker CSN worth around $5.6 billion.
Analysts expect global cement companies 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.
Stabilizing prices: An ACC cement plant at Barmana in Bilaspur, Himachal Pradesh. Ramesh Pathania / Mint
Cimpor has 30 million tonnes (mt) 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.”
Holcim, which controls around one-fifth of India’s 240 mt cement production capacity through ACC and Ambuja Cements, plans to spend $1.1 billion to boost capacity by a further 10 mt.
“ACC and Ambuja will have around 50 mt by this year end. The three- to five-year plan is to add about 10 mt,” Hugentobler said.
The addition would be by way of two-three new projects, he said, adding there were no plan to merge the two Indian firms.
In November, the Aditya Birla Group said it would consolidate cement operations under group firm UltraTech Cement Ltd, making it the largest cement producer in the country with capacity of 49mt by end-March. Aditya Birla has also announced plans to raise capacity by 25 mt over the next five years.
India has seen cement demand pick up in recent months after a strong revival in industrial and construction activity. But industry plans to add 90 mt 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.
Prashant Mehra contributed to this story.