Recently, Cemex announced its decision to sell $400 million worth of assets in the United States in order to reduce its debt. Two cement plants in Odessa, Texas, and Lyons, Colorado, and three cement transfer stations, as well as operations in El Paso, Texas, and Las Cruces, New Mexico. GCC (Grupo Cementos de Chihuahua) is the purchaser of the assets.
The two cement plants for sale have a combined annual cement production capacity of 2 million tons, and a rough estimate of the selling price is $200/ton. Compared to CEMBUREAU's estimate of $170/t, this needs to be reassessed. As early as August 2015, CalPortland, a subsidiary of Pacific Cement (California) (Taiheiyo Cement's Californian), acquired two cement plants in Martin Marietta Materials, a building materials manufacturer in the state, for $181 per ton. Summit Materials paid as much as $375/t for Lafarge's Davenport, Iowa, cement plant in July 2015, although the deal also included seven cement transfer stations and some exchange terminals. In 2014, Martin Marietta Materials and Cementos Argos reached a high price of $450 per ton, and many other assets, including cement grinding plants and ready-mix concrete production plants, were included in the deal.
Cemex will maintain its position as the third largest cement producer in the U.S. market after the sale of assets to GCC and the completion of Heidelberg's acquisition of Italian Cement by the Federal Trade Commission in July 2016. However, Cemex is in decline, with its cement production capacity falling from 15.2 million tons per year to 13.2 million tons per year. It no longer has cement production capacity in Colorado, but it will still have distribution in Colorado if it continues to have a transit station in Florence. In Texas, Cemex retains the Balcones cement plant near San Antonio and will increase the number of cement terminals to nine after the sale of assets to GCC.
Selling the U.S. assets was an extremely difficult decision for Cemex, as a quarter of its net sales came from that market in 2015. This is the largest single market in terms of sales. As building materials in the US market continued to recover, the company's market share increased in the first quarter of 2016.
Withdrawing from the oil-dependent Texas market in the West makes a lot of sense. Cemex maintains its Balcones plant in the state, in the so-called Texas Triangle, which is expected to continue to benefit from the housing construction needs of Texas's growing population, or something like that. Colorado is one of the States with a medium population in the United States, and its development priority is lower than that of other States. Cemex will reduce cement production in the southern and eastern United States, with the exception of the Victorville plant in California.
In recent years, Cemex and other multinational cement producers have been equally keen to merge and have plans to do so. Burdened with debt, Cemex has been unable to buy more assets and has stayed away from any merger talks. The U.S. asset sale announcement deepened the image that Cemex will take action to ease its debt in 2016, followed by revised credit agreements and more borrowing in Thailand, Bangladesh and the Philippines. However, the sale of cement plants in Texas and Colorado, which are weaker in the west, has not meant that Cemex has reduced its debt burden. Cemex continues to walk a tightrope between its debt woes and the recovery of the U.S. construction market.
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