This week Cementos Bio Bio announced its 9M16 profits had been hard hit by foreign exchange rates and a similar story was given by Cemento Polpaico, even though it quadrupled its new profits YoY. But beyond these recent results, the industry is embarking on a period of significant transition.

Chile's cement market recorded its lowest sales growth in 1H16, reaching US$514bn as Cementos Melon, Polpaico and Bio Bio clawed in sales that were up just 3.7 per cent on the same period in 2015.
Against this background, some cement producers have decided to divest assets. Melon SA announced this week that it would sell Melon Morteros SA, its mortar company, to ParexGroup, a French provider of specialty dry-mix solutions.

Moreover, LafargeHolcim decided in October 2016 to sell its majority stake in Cemento Polpaico. The sale is still subject to approval by the competition authorities, but Chile-based Inversiones Caburga Ltda (Hurtado Vicuna Group) is set to buy the 54.3 per cent stake in the domestic cement producer. This includes the integrated cement works in Santiago as well as the two separate grinding plants in Mejillones and Coronel, plus 25 ready-mix plants and an aggregates business. The cement side of the deal offers 2.3Mta of cement production and the new owner will operate the second-highest capacity in the Chilean cement industry behind Cementos Bio Bio. The sale contributes to LafargeHolcim's divestment target of CHF3.5bn by the end of 2016 and the company has extended this programme to CHF5bn by the end of 2017 as it looks to shed its less-profitable units.

Caburga Ltda is not only acquiring new assets, it is also significantly investing in existing ones. Despite the slowly-improving domestic cement sales, the company's subsidiary Cementos Bicentenario SA expects to see the commissioning in 1Q17 of a new FLSmidth OK™ 30-4 cement mill for its plant at El Bosque, Santiago, after placing the order in July 2014. The works will also be equipped with an Essa® jaw crusher, automation process control and ECS/Process Expert® System, baghouses, FLSmidth Maag Gear reducer, cement silos and bulk load-out systems.

Cementos Bicentenario also saw the completion of a new dome from Dome Technology in 1Q16 which will hold 50,000t of clinker for the Quilicura plant, located on the outskirts of Santiago. This project helps to increase the company’s cement production to 0.95Mta in the first stage of operation, but the overall plan is to raise capacity to 1.9Mta with an investment of US$70m.