Wednesday 19 December 2018

ArcelorMittal recycle drive boosts Ecocem

Steel giant has lifted stake in companies' French venture

ArcelorMittal chief Lakshmi Mittal. Photo: Bloomberg News
ArcelorMittal chief Lakshmi Mittal. Photo: Bloomberg News
Gavin McLoughlin

Gavin McLoughlin

Cement maker Ecocem Materials has received a substantial capital boost on foot of a deal with steel giant ArcelorMittal.

ArcelorMittal has lifted its stake in a joint venture between the companies known as Ecocem France.

Ecocem, in which financier Dermot Desmond is an investor, is a producer of so-called "green cement" - a type deemed more environmentally friendly.

The company manufactures ground granulated blast furnace slag (GGBS) - a type of cement that has a much lower carbon footprint than the more commonly used ordinary Portland cement (OPC). It also has a whiter finish, making it more visually appealing for use in certain projects.

ArcelorMittal said it was increasing its stake in Ecocem France to "strengthen [Arcelor Mittal's commitment] to the ecological recycling of its by-products".

Ecocem France was set up by the companies to recycle a by-product of Arcelor's steelmaking, known as granulated blast furnace slag (GBS) for use in the production of GGBS.

Based in Fos-sur-Mer in the south of France, the business supplies cement to the market in that region, and also supplies the UK, Italy and Spain.

A second French production facility is due to open at Dunkirk in May. It will supply western and northern France, as well as major construction sites such as Grand Paris, a massive infrastructure project in the French capital that will effectively double its metro capacity.

Ecocem France is also hoping the facility will increase exports to the UK and Belgium where demand is increasing.

Ecocem Materials founder and chief executive Donal O'Riain said the deal "strengthens the partnership between our two groups.

"Ecocem France is exploring new applications for GBS, which presents many opportunities for the future. Indeed, our current investment in innovation opens new markets for Arcelor Mittal by-products.

"The technical and environmental benefits will widen the range of potential customers considerably," O'Riain said.

Ecocem has recently completed a rebrand as it seeks to broaden the areas in which GGBS is being used.

Most of the company's product is sold in bulk to concrete manufacturers, which then blend it with OPC (this has to be done in order to get the GGBS to 'activate') to make their product. It also sells a bagged cement product, itself a blend.

In its most recently filed accounts, covering the year to the end of December 2016, Ecocem posted turnover of €72.6m, compared to €63.8m.

Operating profit was €4m, compared to €2.6m the year before.

Meanwhile, ArcelorMittal, run by Indian billionaire Lakshmi Mittal, had its best year since 2011 in 2017.

The world's biggest steelmaker said it planned to start paying dividends again after suspending them in 2015.

"The combination of improving market fundamentals and delivery against our strategic objectives contributed to a successful year," Lakshmi Mittal said, adding that "the market environment remains supportive."

Global steelmakers, after years of tough market conditions, were buoyed last year by a rare combination of good news. Global demand is strong - ArcelorMittal said steel usage rose 3.2pc last year - and China, which has long been the cause of too much supply, is shutting plants to cut pollution.

However, concerns about a potential trade war may prove a dampener.

ArcelorMittal's 2018 full-year ebitda (earnings before interest, taxation, depreciation and amortisation) was $8.4bn, the highest since 2011.

It said it would pay a dividend of 10 cents a share, having promised to cut its debt pile before resuming payments to shareholders. Net debt fell to $10.1bn, the company said in January.

(Additional reporting Bloomberg)

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