Lafarge (company)

Lafarge S.A.

Type	Société Anonyme
Industry	Building materials
Fate	merged with Holcim
Successor	LafargeHolcim
Founded	1833 (1833)
Headquarters	Paris, France
Key people	Eric Olsen (Chairman and CEO)
Products	Cement, Construction aggregates, asphalt production and concrete
Revenue	€12.843 million (2014)[1]
Operating income	€1.881 million (2014)[1]
Profit	€770.36 million (2014)[1]
Total assets	€34.804 million (end 2014)[1]
Number of employees	63,000 (end 2014)[1]
Website	www.lafarge.com

Bags of Lafarge cement. Note the Blue Circle logo.

Lafarge is a French industrial company specialising in three major products: cement, construction aggregates, and concrete. The company has become a world leader in building materials.

On 2015, July 10, Lafarge merged with Holcim, a Swiss cement company. On July 15, the new company was officially launched around the globe under the name of LafargeHolcim, creating a new leader in the Building Materials sector.^[2]

History

Lafarge was founded in 1833^[3] by Joseph-Auguste Pavin de Lafarge in Le Teil (Ardèche), to exploit the limestone quarry in Mont Saint-Victor between Le Teil and Viviers. The limestone is white and argillaceous, and yielded an eminently hydraulic lime.

In 1864 Lafarge signed its first international contract for the delivery of 110,000 tonnes of lime to the Suez Canal construction project.^[3] In 1980 Lafarge joined with the Belgian coal, coke and fertilizer company Coppée to become SA Lafarge Coppée.

Lafarge purchased a plant from the National Gypsum Company in early-1987.^[4] Ten years later, it bought Redland plc, a leading British quarry operator.^[5]

In 1999, Lafarge acquired 100% shareholding in Hima Cement Limited, the second-largest cement manufacturer in Uganda, with installed capacity of 850,000 metric tonnes annually, as of January 2011.^[6] In 1999, Lafarge entered the Indian market through its cement business,with the acquisition of Tata Steel's cement activity.This acquisition was followed by the purchase of the Raymond Cement facility in 2001.^[7] In 2001, Lafarge, then the world's second largest cement manufacturer, acquired Blue Circle Industries (BCI), which at the time was the world's sixth largest cement manufacturer, to become the world leader in cement manufacturing.^[3]

In 2006, Lafarge North America shareholders accepted a $3 billion tender offer from Lafarge Group which gave the parent company full control over the North American business, removing LNA from the New York Stock Exchange. Previously the Group had owned 53% of LNA shares.^[8]

In 2007, it divested its roofing division, selling it to a private equity group in a deal that resulted in Lafarge retaining a 35% equity stake.^[3]

In December 2007, Lafarge announced the purchase of the Orascom Cement Group, an Egyptian-based cement producer with operations across Africa and the Middle East, from Orascom Construction Industries (OCI).^[9]

On May 15, 2008 Lafarge acquired Larsen & Toubro Ready Mix-Concrete (RMC) business in India for $349 million.^[10]

In 2010, Lafarge strengthened its presence in Brazil (agreement with Lafarge and STRABAG to create a common company in Cement in Central Europe).

In 2011, Lafarge SA announced it would build a cement plant in Langkat, North Sumatra, Indonesia with investment up to Rp 5 trillion ($585 million).^[11]

Lafarge launched three plants in Hungary, Syria and Nigeria and created a joint-venture with Anglo American in the United Kingdom.

The Group sold most of its European, South American, Asian and Australian gypsum operations.^[12][13][14]

In April 2013, Lafarge adopted a new brand baseline "Building better cities".^[15] It reflects the Group’s ambition to contribute to the improvement of cities by developing innovative construction products, solutions and systems. Lafarge’s contribution to better cities addresses some key challenges of urbanization:^[16]

• contribute to more housing in cities;
• contribute to more compact cities;
• contribute to more durable cities;
• contribute to more connected cities;
• contribute to more beautiful cities.

In September 2013, Lafarge agreed to the sale of its 53.3 per cent stake in its Honduras subsidiary Lafarge Cementos SA de CV to Cementos Argos for €232m.^[17]

Merger

On April 7, 2014, Lafarge and Holcim announced they had agreed to terms on a "merger of equals".^[18] The exchange ratio will be based on 9 Holcim shares for 10 Lafarge shares.^[19] The new company would be based in Switzerland and have a manufacturing capacity of 427 million tons a year would vastly exceed the 227 million ton capacity Anhui Conch, the current industry leader in that category.^[20] Lafarge Chief Executive Officer Bruno Lafont and Holcim's Chairman Wolfgang Reitzle will be co-Chairmen of the new Group.^[21] Eric Olsen, current Lafarge Executive Vice-President, in charge of Operations will be the future CEO of the new Group.^[22] Executives from both companies said the deal would save the new company 1.4 billion euros (US$1.9 billion) annually and create "the most advanced group in the building materials industry."^[20]

The deal will face significant regulatory obstacles, as 15 different jurisdictions could potentially raise objections. The cement market in Europe is already tightly consolidated and antitrust scrutiny of deals has been commonplace since the 1970s.^[20] To meet regulatory concerns, Holcim and Lafarge plan to sell or spinoff assets that generated about 5 billion euros (US$6.9 billion) of revenue in 2013 in areas of large overlap between the two companies.^[21] Lafont said the merger was aimed at rebalancing operations, not cutting costs. He said overlapping businesses would be sold, not closed, so industry job losses would be minimal.^[20]

Industry analysts said the deal would combine Holcim's marketing strength with Lafarge's edge in innovation, while providing significant cost savings, but cautioned "the road to merger clearance will be a long, complex and uncertain one."^[23] Others said the deal could lead to further mergers within the industry and give competitors a chance to pick up assets at a bargain price.^[21] Most analysts surveyed by Reuters felt the merger would be approved in the end.^[23]

The acquisition, will turn it into the world’s third-biggest building materials supplier. Analysts said that although it was broadly anticipated by the market. “The additional assets expand the company’s footprint in Eastern Europe and into Brazil and the Philippines. Given the well flagged nature of the deal however, these benefits are largely reflected in the price at current levels,” Alan Breen of Cantor Fitzgerald Ireland said.

On 2015, July 10, Lafarge merged with Holcim, a Swiss cement company.

On July 15, the new company was officially launched around the globe under the name of LafargeHolcim, creating a new leader in the Building Materials sector.^[2]

Environmental concerns

Cement plant in Frontignan, France.

On July 11, 2008, the Albany Times Union reported that Lafarge's Ravena, New York plant "was the greatest source of mercury emissions in New York from 2004 to 2006" ^[24] According to the story, plans have been made to upgrade the plant to reduce the mercury emissions. A second story, published the following day, stated that the factory had emitted 400 pounds (181 kg) of mercury annually from 2004 to 2006.^[25] In November 2010 Lafarge, together along with other companies, opposes new EPA regulations that require mercury-emissions reductions at cement plants.^[26] Preliminary data published by the EPA for the year 2009 showed 145 pounds of mercury were recorded for the Ravena plant (total on- and off-site disposals). The plant has continued to perform within permitted limits.^[27]

In July 2013, the New York State Department of Health (NYS DOH), in partnership with the federal Agency for Toxic Substances and Disease Registry, completed a public health assessment for communities near the Lafarge Cement Plant in Ravena, New York.^[28]

Major findings and results from the NYS DOH Lafarge Cement Plant Health Assessment:

• Breathing the ground-level air concentrations of metals (e.g., mercury), polycyclic aromatic hydrocarbons, polychlorinated biphenyls, carbon monoxide, lead, particulate matter, dioxins, furans, hydrocarbons, volatile organic compounds and ammonia released in cement kiln stack emissions is not expected to harm people's health.
• For the general public, breathing ground-level air concentrations of sulfur dioxide or nitrogen dioxide released in the kiln stack emissions is not expected to harm people's health.
• Touching, breathing or accidentally eating dust that originated from the Ravena cement plant and other sources is not expected to harm the health of people who reside, work, or attend school in the community.
• Current health status of the communities near the cement plant is similar to the health status of other areas in the region and state.

On July 23, 2013, under an agreement with the U.S. Environmental Protection Agency, the U.S. Department of Justice and the state of New York, Lafarge North America Inc. agreed to fund $1.5 million in projects to reduce air pollution in the community surrounding its Ravena, New York cement plant.^[29] The agreement also amends a March 2010 consent decree that the federal Environmental Protection Agency, New York and 11 other states entered into with Lafarge requiring the company to limit pollutant emissions from its 13 plants nationwide.^[30]

Under the agreement, Lafarge North America will adhere to an updated schedule that provides Lafarge an additional 18 months to finish construction of a new modernized facility by July 1, 2016. At that time, the existing Ravena plant - which remains in compliance with all current environmental requirements - will be taken offline.^[31]

Details of the agreement include that Lafarge North America will:

• Invest $1.5 million in projects benefiting the local environment;
• Make additional improvements to the environmental infrastructure at the existing Ravena plant;
• Adopt new, stricter emission limits for SO2 and Hg; and
• Set a strict, new timetable complete the Ravena plant modernization project.

Board of directors

The board of directors of Lafarge has 15 members appointed by the annual shareholders' meeting for a period of four years:^[32]

• Chairman of the Board of Directors and Chief Executive Officer: Bruno Lafont
• Vice-Chairman of the Board of Directors: Oscar Fanjul
• Directors: Philippe Charrier, Juan Gallardo, Ian Gallienne, Mina Gerowin, Jérôme Guiraud, Luc Jeanneney, Gérard Lamarche, Hélène Ploix, Baudouin Prot, Christine Ramon, Michel Rollier, Ewald Simandl, Véronique Weill.
• Honorary Chairmen: Bertrand Collomb and Bruno Lafont

Former members of the Board: Guilherme Frering, Raphaël de Lafarge, Michael Blakenham, Jean-Pierre Boisivon, Alain Joly, Bernard Kasriel, Jacques Lefèvre, Eric de Waubert de Genlis, Michel Pébereau, Pierre de Lafarge, Gérald Frère, Michel Bon, Thierry de Rudder, Colette Lewiner, Philippe Dauman, Paul Desmarais (fils), Nassef Sawiris.

Financial data

The following is a summary of data:^[33][34][35]

External links

• Official website

References