Cemex Philippines begins its integration with DMCI

DMCI Holdings Inc is gradually integrating its business with cement producer Cemex Holdings Philippines Inc, initially through the company’s power unit.

In a stock exchange filing on Monday, 15 July, Cemex announced that its subsidiary, APO Cement Corp, has signed a retail supply agreement with SEM Calaca RES Corp, the retail power supply arm of Semirara Mining and Power Corp. According to Cemex, the contract will lapse on 25 December 2024.

A source close to the deal said the agreement included 44MW of electricity supply, which will be used to power APO’s cement facilities in Naga, Cebu province. According to the source, “There is no fuel pass-through provision in the contract.” Therefore, the price APO pays for power will not be affected by changing fuel prices.

This deal is the first collaboration between the two companies since DMCI announced in April that it was planning to take over Cemex Philippines in a US$305.6m deal made with the company’s majority shareholder. In addition, DMCI and its property development arm DMCI Homes are looking to source approximately 400,000Mt of cement from Cemex.

Chairman of DMCI, Isidro Consunji, previously said they were relying on the integration of the companies’ subsidiaries to help Cemex recover from losses. Cemex’s net loss in 1Q24 shot up by 158 per cent to PHP17.84m as revenues fell, reflecting the ever-changing environment for cement producers. Mr Consunji stated that they expected power, fuel and production supply costs, which represented 73 per cent of Cemex’s costs in 2023, to fall in response to normalising market prices.

Cemex is currently constructing a 1.5Mta integrated cement production line in Antipolo, Rizal province, that is set to begin commercial operations by September 2024. The facility is expected to double the company’s cement capacity in Luzon and boost overall installed capacity by 26 per cent to 7.2Mta.