Fossil Mines has completed the takeover of Lafarge Cement, giving the infrastructure company control of one of Zimbabwe’s biggest cement producers.
The deal reportedly involves over 61 million shares at a negotiated price of US$29.7 million.
Holcim, Lafarge’s holding company, announced its exit from Zimbabwe in January, as part of a global selloff from several other markets. It announced in June that it had picked Fossil as its preferred bidder for Lafarge.
“The company wishes to advise shareholders and members of the investing public on the withdrawal of the cautionary announcement dated 18 November 2022, as the Sale and Purchase Agreement for the sale of 76.45% stake in the Company has been finalised. The sale is thus soon to be concluded upon the transfer of the Company shares owned by Associated International Cement Limited to Fossil Mines (Private) Limited stake in exchange for the consideration agreed by the parties,” Lafarge said in a notice.
Fossil beat other bidders, among them Chinese cement giant Huaxin, because it went in with the backing of local banks and pension funds, the company said earlier this year. The company is run by Obey Chimuka, a long-time associate of businessman Kuda Tagwirei, and is part of a group that has recently won government infrastructure contracts.
With control of a large cement supplier, Fossil can now use its value chains as muscle against competitors in the infrastructure business.
The takeover comes at a time Lafarge is trying to recover from a bad year. A roof collapse in October last year halted production for four months, hitting sales when the company was already fighting liquidity problems. Fossil said earlier this year it planned to recapitalise the business and keep it listed on the stock exchange.
“Should Fossil takeover Lafarge, the planned strategy is to maintain the company as a listed business and also recapitalise the cement maker, leading to an increase in the cement output from the plant,” Fossil said in June.
With demand rising from government infrastructure projects, mining and home builders, cement consumption has increased from under one million tonnes per year in 2017 to 1.4 million tonnes this year, according to data from PPC, Lafarge’s bigger rival.
To take advantage of the demand, Lafarge in 2020 began a US$25 million expansion programme. The company has completed a that will more than double Lafarge’s annual cement milling capacity to one million tonnes. Commissioning was slowed down by payment delays to a Chinese contractor.
In 2021, Lafarge commissioned a new US$2.8m dry mortar plant, which increased output of dry mortar products – such as adhesives and agricultural lime – from just 7,000 tonnes per year to 100,000 tonnes annually, equal to national demand.