VICEM considering filling the void behind LafargeHolcim

July 07, 2016 | 08:50
State-owned Vietnam Cement Industry Corporation (VICEM), which holds 35 per cent of Holcim Vietnam, its joint venture with LafargeHolcim, is considering buying up the stake that the multinational cement producer is putting up for sale.

Luong Quang Khai, chairman of Vicem’s board of members said at a recent interview with VIR that LafargeHolcim talked to Vicem about divesting from the joint venture in March. LafargeHolcim will hold a public bid to find a partner and will announce the new owner at the end of July.

“Vicem wants to take the wheel in its joint ventures and to increase its holdings,” Khai said, “but it depends on the price LafargeHolcim sets, as well as Vicem and its consultants’ valuation of the company and its growth prospect.”

“I cannot yet say whether Vicem is going to buy the whole stake or a part, or even sell its holding,” he said, adding that if a capable investor takes over from LafargeHolcim, Holcim Vietnam is going to continue growing.

Regarding allegations that LafargeHolcim’s sale is due to the saturation of the Vietnamese cement market, Khai refused to comment, but noted that it is totally normal for Lafarge and Holcim, after their merger last year, to restructure their operations in foreign markets, including Vietnam.

Holcim Vietnam presently holds 26 per cent of the domestic market, while Lafarge Vietnam takes another 12 per cent, with their main products being cement, concrete, and aggregates.

According to industry insiders, Vietnam’s cement output is estimated at 81.56 million tonnes a year, while the consumption in 2016 is estimated to fall between 75 and 77 million tones, presenting an oversupply. Later this year, Song Lam cement production plant will open its gates to produce an annual four million tonnes, which is expected to intensify competition amongst domestic cement manufacturers.

Yet foreign and domestic players alike have not given up on the market. Earlier, in April, Thai conglomerate Siam Cement Group (SCG) said it was planning to wholly or partially acquire another cement plant in Vietnam, to ride the wave of an expected increase in construction projects due to the increasing GDP.

In mid-June, cement producer Tan Thang Cement Joint Stock Company signed an engineering and procurement contract with system and service supplier FLSmidth for the main equipment to a green-field cement plant in the central province of Nghe An. Once completed, the cement plant will have a capacity of 5,000 tonnes a day. FLSmidth’s executive vice president of the Cement Division Per Mejnert Kristensen commented that after a number of years seeing limited growth, the Vietnamese cement market “is starting to pick up again.”

By By Hai Yen

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