Lafarge (company)

Lafarge S.A. was a French industrial company specialising in three major products: cement, construction aggregates, and concrete. It was founded in 1833 by Joseph-Auguste Pavin de Lafarge.

Lafarge S.A.
Subsidiary
ISINFR0000120537 
IndustryBuilding materials
FateMerged with Holcim
PredecessorBlue Circle Industries 
SuccessorLafargeHolcim
Founded1833 (1833)
FounderJoseph-Auguste Pavin de Lafarge
Defunct2015 
HeadquartersParis, France
Key people
Eric Olsen (Chairman and CEO)
ProductsCement, Construction aggregates, asphalt production and concrete
Revenue€12.843 billion (2014)[1]
€1.881 billion (2014)[1]
€770.36 million (2014)[1]
Total assets€34.804 billion (end 2014)[1]
Number of employees
63,000 (end 2014)[1]
WebsiteLafargeHolcim.com
Bags of Lafarge cement. Note the Blue Circle logo.

On 10 July 2015 Lafarge merged with Holcim, a Swiss cement company. On 15 July 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

Foundation and development

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.

Villeneuve-lès-Maguelone

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 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]

The Lafarge quarry on Kelleys Island, Ohio.

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

In 2009, Lafarge sells Canadian precast concrete company, Pre-Con to Armtec Infrastructure Income Fund.[11]

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).[12]

In 2011 Lafarge sold to Boral its stake in their common Asian Gypsum joint-venture LBGA (Lafarge Boral Gypsum Asia).[13]

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.[14][15][16]

In April 2013 Lafarge adopted a new brand baseline "Building better cities".[17] 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:[18]

  • 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.[19]

In 2018, the Lafarge Cement plant located south of Kobanî, Syria was being used as a base of operations by 1st Marine Infantry Parachute Regiment and United States Army forces.[20][21]

Merger with Holcim
Main article: LafargeHolcim

On 7 April 2014 Lafarge and Holcim announced they had agreed to terms on a "merger of equals".[22] The exchange ratio will be based on 9 Holcim shares for 10 Lafarge shares.[23] 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.[24] Lafarge Chief Executive Officer Bruno Lafont and Holcim's Chairman Wolfgang Reitzle will be co-Chairmen of the new group.[25] Eric Olsen, current Lafarge Executive Vice-President, in charge of Operations will be the future CEO of the new group.[26] 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."[24]

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.[24] 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.[25] 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.[24]

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."[27] 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.[25] Most analysts surveyed by Reuters felt the merger would be approved in the end.[27]

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

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

Controversies

Terrorist financing

In June 2016 France opened an inquiry into the Syrian activities of the construction. The inquiry followed reports by French journalist Dorothée Myriam Kellou, published by Le Monde and FRANCE 24, which uncovered the deals Lafarge made with an array of armed groups, including the Islamic State of Iraq and the Levant terrorist group, in order to keep the cement plant operating. ISIL had captured the plant on 19 September 2014.[28] In 2017 the LafargeHolcim executives were investigated for these claims in the civil and criminal courts.[29][30]

Environmental concerns
Cement plant in Frontignan, France.

On 11 July 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" [31] 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.[32] In November 2010 Lafarge, together along with other companies, opposes new EPA regulations that require mercury-emissions reductions at cement plants.[33] 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.[34]

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.[35]

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 23 July 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.[36] 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.[37]

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 1 July 2016. At that time, the existing Ravena plant - which remains in compliance with all current environmental requirements - will be taken offline.[38]

Lafarge's $300 million upgrade to its Ravena plant includes a new, German-designed dry-process cement kiln that will replace two 50-year-old wet-process kilns. The new kiln will use less coal and emit fewer pollutants, including a 66% reduction in mercury emissions, while increasing production capacity. It will also take less water from the Hudson River, getting most of its water from the nearby limestone quarry that feeds the plant.[39]

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 mercury; and
  • Set a strict, new timetable complete the Ravena plant modernization project.

In July 2019, the company filed a request for a permit with the Ontario Ministry of the Environment, Conservation and Parks to increase the amount of water it moves from its gravel pits near Guelph in Wellington County, Ontario, Canada into the local watershed.[40] According to a news report, "If it’s approved, the company would be permitted to take up to 27.7 million litres of water a day — more than half of the city’s average daily demand of 47 million litres" but a City of Guelph report stated that it would "add a groundwater water-taking of 21,718 m3/day to the existing permit". The company was already permitted to take just over six million litres per day. According to a Lefarge spokesperson, the company's plan was actually to move the water from the quarry and pump into nearby wetlands or the Speed River, not to take water from the area.[41][42] The Wellington Water Watchers lobby group expressed concern about how the discharged water might affect aquatic ecosystems downstream and believed that a full environmental review was necessary before the request for the permit should be allowed. "With climate change, there's all kinds of uncertainties that come into our long-term water security issues and we can no longer afford to play fast and loose with that", said the group's chair Robert Case.[43]

Board of directors

The board of directors of Lafarge has 15 members appointed by the annual shareholders' meeting for a period of four years:[44]

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, Hillary Clinton, .

Financial data

The following is a summary of data:[45][46][47]

Financial data in millions of euro
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sales 13,698 14,610 13,658 14,436 15,969 16,909 17,614 19,033 15,884 14,834 15,284 15,816 15,198 12,843
EBITDA 2,862 3,101 2,820 3,028 2,920 3,610 4,183 4,618 3,600 3,614 3,217 3,450 3,102 2,721
Net results 750 446 728 868 1,096 1,372 1,909 1,598 736 827 593 432 601 143
Net debt 9,332 8,544 6,734 7,017 7,221 9,845 8,685 16,884 13,795 13,993 11,974 11,317 10,330 9,310
Staff 82,892 77,547 75,733 77,075 80,146 82,734 77,720 83,440 77,994 75,680 68,000 65,000 64,000 63,000

By 29 February 2016 the company had a share value of 17.292 billion euros, distributed in 288,383,057 shares.

Nature Reserves

Lafarge also own several nature reserves. An example of this is Brandon Marsh,[48] in the UK, which is on an old quarry and an existing quarry is next door to it. Another example is the LaCouronne plant in France. It was never quarried but Lafarge bought some land and began to convert it into a 16.5 hectare nature reserve. Other nature reserves are Eardington Nature Reserve; Shropshire (UK), Medway Nature Reserve; Kent (UK) [49] and NWT Besthorpe Nature Reserve; Trent Vale (UK). They own other nature reserves.

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References
  1. "Annual Report 2014" (PDF). Lafarge.
  2. "A New Leader for a New World: LafargeHolcim Officially Launched around the Globe". Reuters.
  3. "Lafarge - Transcript of: Timeline: history of Lafarge".
  4. moderator@boatnerd.com. "J.A.W. Iglehart". Archived from the original on 2010-03-23.
  5. "The Investment Column: Redlands needs white knights". 16 October 1997.
  6. "Hima Cement Expands Factory". Archived from the original on 2011-07-23. Retrieved 2011-02-02.
  7. "Lafarge in India - Cement, concrete, aggregates".
  8. "Jerry Knight - French Parent Targets Huge but Little-Known Lafarge North America".
  9. "Subscribe to read".
  10. "Lafarge Enters in Indian RMC Business with L&T Acquisition". Archived from the original on 2010-01-12.
  11. "Pre-Con". www.pre-con.com.
  12. Post, The Jakarta. "Lafarge may invest Rp 5t in N. Sumatra".
  13. "Lafarge agreed with Boral to sell them its stake in their common Asian Gypsum Joint-Venture for 429 M€". Lafarge. Retrieved 26 December 2017.
  14. "Lafarge closes sale of Gypsum assets to Etex Group". 10 March 2015.
  15. "Lafarge agreed with Boral to sell them its stake in their common Asian Gypsum Joint-Venture for 429 M€". 10 March 2015.
  16. "Lafarge sells its Australian Gypsum operations for 120 million euros". 10 March 2015.
  17. ""Building better cities" An ambition driving our innovation". Lafarge.com. 10 March 2015.
  18. "Our ambition: Building Better Cities". 4 February 2015.
  19. "Lafarge - September 2013". CemNet.com. International Cement Review. 3 October 2013. Retrieved 31 October 2013.
  20. Zorlu, Faruk; Copur, Hakan (June 19, 2018). "France cooperating with PKK/YPG terrorists: Coalition". Anadolu Agency. According to information obtained by Anadolu Agency on March 30 from local sources, more than 70 French special forces under the international coalition against Daesh are stationed at the Lafarge Cement factory near the strategic Mistanur Hill and Harab-Isk village in southern Ayn al-Arab province (Kobani).
  21. @obretix (July 10, 2018). "US Army Apache helicopter at the Lafarge cement plant in northern Syria www.google.com/maps?ll=36.546725,38.589478&q=36.546725,38.589478&hl=en&t=h&z=17 … www.dvidshub.net/video/612558" (Tweet). Archived from the original on July 10, 2018 – via Twitter.
  22. "Holcim Agrees To Merge With Lafarge". Bloomberg TV India. April 7, 2014.
  23. "Lafarge, Holcim, CRH shares rise as merger saved". Financial Times. March 20, 2015.
  24. David Jolly (April 7, 2014). "Antitrust Hurdles Loom Large for Giant Cement Merger". New York Times. Retrieved April 9, 2014.
  25. Patrick Winters; Francois de Beaupuy (April 7, 2014). "Holcim to Merge With Lafarge to Form Biggest Cement Maker". Bloomberg. Retrieved April 9, 2014.
  26. "Eric Olsen appointed as future CEO of LafargeHolcim". April 9, 2015.
  27. Natalie Huet; Caroline Copley (April 7, 2014). "Holcim, Lafarge agree to merger to create cement giant". Reuters. Retrieved April 9, 2014.
  28. .France24 (June 13, 2017). "France opens inquiry into Lafarge deals with Syrian armed groups".
  29. "LafargeHolcim executives under investigation - Financial Times". Financial Times. Retrieved 2018-04-30.
  30. Alderman, Liz; Peltier, Elian; Saad, Hwaida (2018-03-10). "'ISIS Is Coming!' How a French Company Pushed the Limits in War-Torn Syria". The New York Times. ISSN 0362-4331. Retrieved 2018-04-30.
  31. "Update at Ravena Cement Plant to Clean Air". Albany Times Union. Retrieved 2008-07-29.
  32. "Update at Ravena Cement Plant to Clean Air". Albany Times Union. Retrieved 2008-07-29.
  33. "NY Plant at Heart of Cement-Making Air Pollution Battle".
  34. "Page Not Found | US EPA". www.epa.gov.
  35. "Lafarge Cement Plant". www.health.ny.gov.
  36. "07/23/2013: Lafarge North America Inc. Agrees to Environmental Projects as Part of Clean Air Act Agreement". yosemite.epa.gov.
  37. "A.G. Schneiderman & DEC Commissioner Martens Announce Continuing Air Pollution Reductions - NYS Dept. of Environmental Conservation". www.dec.ny.gov.
  38. "Press Room < About Us: Lafarge".
  39. "New, less-polluting cement plant rises in Ravena".
  40. https://ero.ontario.ca/index.php/notice/019-0240#proponent(s), Lafarge Canada Inc. - Permit to take water Instrument type: Permit to take water
  41. https://www.guelphmercury.com/news-story/9558617-lafarge-water-taking-request-is-the-largest-guelph-has-seen/, Lafarge water-taking request is the largest Guelph has seen
  42. https://guelph.ca/2019/08/information-about-the-citys-plans-to-provide-comment-on-lafarge-canadas-permit-to-take-water-application/, Information about the City’s plans to provide comment on LaFarge Canada’s water-taking application
  43. https://www.guelphmercury.com/news-story/9489964-lafarge-canada-looking-to-expand-quarry-operations-near-guelph/, Lafarge Canada looking to expand quarry operations near Guelph
  44. "Board of Directors". Retrieved 13 February 2013.
  45. "Annual Report 2011" (PDF). Lafarge. Retrieved 17 April 2011.
  46. "Annual Report 2009" (PDF). Lafarge. Retrieved 2010-03-14.
  47. OpesC. "Fiche d'entreprise".
  48. "Rugby Design and Access Statement" (PDF).
  49. "Lafarge Tarmac renew Medway Nature Reserve lease | Agg-Net". www.agg-net.com.
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