Sans dumping, DMCI, Cemex good fit

Diversified conglomerate DMCI Holdings announced it has completed its acquisition of the local subsidiary of Mexican cement major Cemex, as it looks to boost cement production capacity amid growing domestic construction demand.

DMCI of the Consunji family is involved in construction as well as real estate, mining, power generation and construction materials manufacturing. The holding company, together with affiliates Semirara Mining and Power and investment company Dacon, jointly acquired about 90 percent of the shares of Cemex’s local subsidiary in a deal worth $272 million or about P15.5 billion.

Cemex Holdings Philippines (CHP) is the fourth-largest cement maker in the Philippines, with plants in Rizal province, near Metro Manila, and on the island of Cebu.

Its annual production capacity is 5.7-million tons, with plans to increase the figure to 7.2-million tons by 2025 through expansion.

With the acquisition, DMCI seeks to respond to the rising need for infrastructure construction in the Philippines as the economy grows. The conglomerate is working to reduce operating costs by taking steps such as sharing logistics infrastructure among its group companies.

DMCI, however, faces a lot of work to make its return to cement manufacturing a driver for growth. Cement is a losing game primarily as a result of competition from dumped products from Vietnam.

CHP has been spewing red ink since 2022, posting losses in 13 of the 32 quarters since 2016. The company cited high electricity costs and intense competition from imported cement as the reasons for the losses.

CHP, however, is seen as a good fit for DMCI, with the cement maker potentially supplying its engineering, procurement and construction business and its DMCI Homes unit, while coal producer unit Semirara can supply the power-hungry cement manufacturing of CHP with electricity.

Semirara coal has also been making moves to tap into Semirara Island’s limestone reserves in a bid to diversify from coal, and this could potentially supply CHP with raw materials.