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. Last Updated: 07/27/2016

French Firm Acquires Stakes In 2 Russian Cement Plants

Cement and construction materials producer Lafarge SA of France has acquired majority stakes in two Russian cement plants and a quarry in Voskresensk, the first stage in what it said would be hundreds of millions of dollars in investment in the country over the next several years.


"This is a long-term industry, and we'll have to invest over 10 years on a regular basis," Ivan Brytow, Lafarge vice president in charge of management and development in the CIS, said Monday. "We're under negotiations to buy some more plants in Russia in the next two years" and are considering more acquisitions in former Soviet republics, he said.


"Altogether in Russia it means hundreds of millions of dollars," he said in a telephone interview from Paris.


Brytow would not disclose the amount paid for the stakes in the three facilities, and a press release last week from Sector Capital, the chief financial adviser to Lafarge, did not give a figure. However, market sources said Lafarge bought an average 80 percent of shares in each of the three enterprises using on-site share acquisition services for a total of roughly $20 million.


The two plants, Voskresenskcement and Voskresensky Cementny Zavod, have an annual production capacity of 2.7 million tons, or about 4 to 5 percent of stated Russian cement production capability. That represents about 40 percent, or 5.5 million tons, of Moscow consumption annually. Voskresensk is within 100 kilometers of Moscow.


Industry analysts estimate that to convert a 1 million-ton capacity wet cement plant to dry cement costs about $150 million. Investments would also likely include improving operating efficiencies and environmental control over air pollution.


One of the world's leading cement and construction materials concerns, Lafarge received an approval from the State Antitrust Committee to buy the shares in the last half of July.