By Anthony Harrup
MEXICO CITY--Mexican building materials company Elementia,
part-owned by billionaire Carlos Slim, said Tuesday it is planning
a joint venture with the world's largest cement company, Lafarge SA
(LFRGY) of France, to produce cement in Mexico.
The alliance will have three plants with annual production
capacity of close to 2 million tons of cement as Elementia's cement
division Cementos Fortaleza and Lafarge pool their production
facilities in Mexico.
Elementia said in a release that it will own 53% of the planned
joint venture, and Lafarge will own 47%.
Elementia said the two companies will continue operating their
facilities separately pending regulatory approval of the plan.
Lafarge said it will contribute its two Mexican plants, which
have a combined capacity of close to 1 million tons, to the joint
venture, and that it expects the deal will close in the second half
of this year.
"This combination will significantly strengthen Lafarge's
position in Mexico," Lafarge said in a separate release.
Elementia, which has business lines in copper and aluminum parts
for industry, plastic parts, and materials for construction, late
last year unveiled the near completion of a 1-million ton cement
plant in central Mexico.
The cement partnership will compete with companies that include
market leader Cemex SAB (CX, CEMEX.MX) and Holcim Apasco, a unit of
Switzerland's Holcim Ltd. (HCMLY, HOLN.VX).
Mexico produced around 35 million tons of cement 2011 and
consumed just over 34 million tons, according to the country's
cement chamber.
Mr. Slim has about a 46% stake in Elementia through conglomerate
Grupo Carso SAB (GPOVY, GCARSO.MX), and the rest is controlled by
Mexican businessman Antonio del Valle, who is a principal
shareholder and chairman for life of chemicals company Mexichem SAB
(MEXCHEM.MX).
Mexico's Vector brokerage said in a report the joint venture
will "undoubtedly ... generate some noise in the industry," and
could put downward pressure on cement prices in central Mexico.
Nevertheless, strong brand loyalty in the region "could be a
tough barrier to overcome in the short term," Vector added.
Write to Anthony Harrup at anthony.harrup@dowjones.com
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