Holcim could sell its Zimbabwe unit, Lafarge, as part of a continuing global asset sell-off by the world’s largest cement company.
Lafarge Zimbabwe is one of the country’s biggest cement companies, and has been increasing investment to take advantage of rising cement demand. But it could become part of Holcim’s global consolidation strategy.
“We are constantly evaluating possibilities to align our portfolio with this vision to open new growth opportunities for our company,” a Holcim spokesman told Bloomberg. He would not comment on “market rumours” that the Zimbabwe unit may be among the units being sold off.
A Lafarge cautionary says: “The Company wishes to advise the shareholders and the members of the investing public that there may be developments relating to the Company, the full impact of which are currently being determined, which may have an effect on the Company’s securities.”
A likely buyer is Huaxin Cement, one of China’s biggest cement companies in which Holcim is a a shareholder. Huaxin bought Lafarge Zambia and Lafarge Cement Malawi late last year. In June, Huaxin bought 75% of Lafarge Zambia for US$150 million and spent US$10 million to buy Pan African Cement from Lafarge Cement Malawi. In 2020, Huaxin bought Tanzania’s Marvini Limestone for US$145 million, its first investment in Africa.
Last year, Holcim sold part of its Ghana business and disposed of its Brazil unit for US$1 billion.
In Zimbabwe, the past year has been one of contrasts for the cement company.
Increased construction inspired the company to lay out a US$25 million expansion plan to meet growing demand for building materials. But the company also faced rising costs, the surprise departure of its CEO and a plant accident that has stopped cement production for a quarter.
In September, CEO Precious Nyika stepped down after the company took a fine of the equivalent of US$1 million for exchange control violations. She had been in the job for just over a year. Geoffrey Ndugwa, who has been with the company since he joined it in 2001, replaced Nyika in December.
Ndugwa’s last job was CEO of Lafarge Malawi, which was sold to Huaxin. He declined to comment on speculation about a sale.
A roof collapse at Lafarge’s Manresa mills has stopped production since October, and the company has issued a warning that sales will be seriously hit.
In April, Lafarge commissioned a new US$2.8m dry mortar plant. The new plant has sharply 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.
Lafarge also announced plans to use output from the new plant to launch 3D-printed low-cost housing, which would be a first for Zimbabwe.
The company has also started construction of a separate Vertical Cement Mill plant, which will more than double Lafarge’s annual cement milling capacity from the current 450,000 tonnes to one million tonnes. Completion is expected in the first half of the year.