Corporate News

Lafarge’s two new grinding mills to boost output to over 7 million MT

Posted on April 16, 2015

LAFARGE Republic, Inc. (LRI) is set to complete the expansion of its plants in Rizal and Bulacan this year, boosting cement capacity to over seven million metric tons (MT), even with the looming global merger of its parent firm Lafarge S.A. with Holcim Ltd.

LRI inaugurated yesterday an P892-million new grinding mill that produces 850,000 MT of cement annually, increasing the facility’s capacity by half to two million MT.

By December, the listed firm will unveil another grinding mill with the same capacity in its Norzagaray plant in Bulacan, LRI President Renato C. Sunico told reporters on the sidelines of the inauguration ceremony.

The two new mills will bring LRI’s total cement capacity to “a little over 7 million MT,” putting the firm in a position to meet the projected strong growth in infrastructure investments in the country.

“We are anticipating the continued increase in construction activity [and] we have set forth new investments in plant capacity,” LRI Chief Executive Officer Dong Hoon Lee said during the inauguration ceremony.

The Teresa and Norzagaray plants owned by LRI are not part of the assets that will be bought by Holcim Philippines, Inc. (HPI) in line with a global merger of their parent companies that will create the world’s largest cement firm.

Instead the facilities -- along with LRI plants in Taysan, Batangas and Danao, Cebu -- will be sold to Irish building materials company CRH Plc, which is buying some of Lafarge’s and Holcim’s businesses cumulatively worth €6.5 billion in the Philippines, Europe, Canada and Brazil to obtain antitrust regulatory approval for their merger.

“The first step is to wait for the global merger. Nothing happens after the global merger is completed which we expect in June or July,” Mr. Sunico said.

LRI shareholders controlling 88.85% of the company were granted the right to sell their combined stake to CRH last February.

“First, they [CRH] will have to look for a local partner because they have to comply with the nationality requirements. Remember, we have a quarry so they can only own 40%...I think they are looking,” Mr. Sunico said.

HPI is buying select assets of LRI such as Lafarge Iligan, Inc.; Lafarge Mindanao, Inc.; Lafarge Republic Aggregates, Inc. and Star Terminal at Harbour Centre in Manila, subject to certain terms and conditions.

LRI will lose 800,000 MT of cement capacity with the sale of its plant in Mindanao to HPI, Mr. Sunico said.

Its shares lost 0.11% or a centavo to close at P9.09 each. -- Krista Angela M. Montealegre