Elementia SA, a maker of copper and aluminum products backed by billionaires Carlos Slim and Antonio Del Valle, is planning to challenge Cemex SAB with a cement plant in Hidalgo.
The plant, which will supply Elementia’s building-products customers and the broader Mexican cement market, would bring a new player to an industry dominated by a handful of global giants. Hidalgo, in central Mexico, is already home to operations of both Cemex and Lafarge SA. (LG)
Elementia sees an opportunity to grab a piece of a growing market and does not plan aggressive price competition, said Enrique Ortega, head of investor relations. The company may use the same distribution channel for cement as for some of its other building products, he said.
“More than going out to compete on price, we’re going to be in a market where there’s a very important demand,” Ortega said. “It’s an additional option you’re giving to the market.”
For Cemex (CEMEXCPO), the nation’s largest producer, Mexico accounted for 23 percent of sales in the first nine months of the year and 45 percent of earnings before interest, taxes, depreciation and amortization, a measure of cash flow known as Ebitda, according to a statement released today.
Mexico consumed 34.4 million tons of cement in 2011, up 1.5 percent from the year before, according to the National Cement Chamber, a trade group in Mexico City. Production amounted to 35.4 million tons, 2.6 percent more than in 2010.
A spokesman for Cemex wasn’t immediately available for comment. Calls to the Mexico City press offices of Lafarge and Holcim Ltd. (HOLN), which has a cement plant in a neighboring state, weren’t immediately returned.
Slim, the world’s richest man, controls 46 percent of Elementia’s shares through Grupo Carso SAB. Del Valle controls the rest through Grupo Empresarial Kaluz.
Elementia is expected to have about $1 billion of sales this year, Del Valle said in an interview in March. The company is exploring an initial public offering next year, Ortega said, echoing comments made by Del Valle in June.
Elementia won’t be Slim’s first indirect participation in the Mexican cement market. Companies affiliated with Slim or family members also own 9 percent to 10 percent of Corporacion Moctezuma, according to Luiz Camargo, chief financial officer for Moctezuma.
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