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Lafarge Holcim may withdraw from Vietnam

Released at: 06:37, 15/07/2016

Lafarge Holcim may withdraw from Vietnam

Photo: Lafarge Holcim Vietnam

Final announcement to be made before the end of the year.

by Hong Nhung

Cement manufacturer the Lafarge Holcim Group may fully divest from Holcim Vietnam but no final decision has been made as yet.

A representative from Holcim Vietnam’s Public Relations Department told VET on July 14 that it “has not yet received any official notice from the parent group about its divestment in Vietnam.”

But VET has learnt that a final decision from the parent group on the issue would be available before the end of the year.

Mr. Luong Quang Khai, Chairman of the Vietnam Cement Industry Corporation (Vicem), which holds 35 per cent of Holcim Vietnam, told local media in early July that the Lafarge Holcim Group had informed Vicem in March of its plans to withdraw from the domestic market.

Market observers believe Lafarge Holcim’s divestment is due to the oversupply of cement in the domestic market. “It was no surprise,” Mr. Khai said. “Lafarge and Holcim completed their merger last year and need to restructure their business operations accordingly.”

The group has worked with Vicem since March on a proposal and detailed plan for its divestment in Vietnam, which will be finalized before the end of this month. VET was unable to reach Mr. Khai for further comment on specific details of the divestment.

Sources close to the deal said that the Lafarge Holcim Group would divest all of its 65 per cent stake in Vietnam joint venture. The name of the buyer has not been revealed.

Given the problems besetting Vietnam’s cement industry and the fiercely competitive market, Mr. Khai said that Vicem would make any possible purchase decision based on the company’s current business performance, future potential, and price.

Holcim Limited from Switzerland last year merged with France’s Lafarge Group to form the Lafarge Holcim Group, becoming the world’s largest multinational cement producing company in terms of production capacity.

After merging Lafarge Holcim had five cement plants and eight ready mixed concrete plants in Vietnam, with an annual capacity of 6 million tons of cement and 1 million cubic meters of concrete. It surpassed the Nghi Son Cement Corporation and the Phuc Son Cement Company as the largest foreign-invested cement company in terms of production output.

The State-owned Vicem has been planning its initial IPO in the fourth quarter. Formerly known as the Union of Cement Plants, Vicem was founded in April 1980 and primarily operates in cement production and distribution, with a total annual capacity of 20 million tons of cement.

Vicem has eight affiliates: Vicem Hai Phong, Vicem Hoang Mai, Vicem Ha Tien, Vicem Bim Son, Vicem Hoang Thach, Vicem But Son, Vicem Hai Van and Vicem Tam Diep. Five of the eight have undergone equitization and changed to joint stock companies: Vicem Hoang Mai, Vicem Bim Son, Vicem Hai Van, Vicem But Son and Vicem Ha Tien.

There are more than 62 companies with some 100 cement plants in Vietnam’s cement market, according to the Ministry of Construction.

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