The cash flow from investing activities increased by CHF 59 million to CHF 1,724 million. The net capital expenditure to maintain productive capacity and to secure competitiveness amounted to CHF 738 million, while investments in expansion and diversification projects reached CHF 1,020 million. Proceeds from sale of Property Plant and Equipment amounted to CHF 209 million (2013: 205). Investments in property, plant and equipment for expansion mainly reflect key projects, the objective of which was to increase cement capacity in emerging countries such as Brazil, Indonesia, Ecuador and India, as well as in some mature countries such as Holcim Australia.
The net financial divestments consisted mainly of the sale of subsidiaries.
Key investment projects
Indonesia – capacity expansion at Tuban and new Cement Terminal at Lampung in South Sumatra
In order to meet rising demand, Holcim is building a new integrated cement plant in Tuban, East Java, with two production lines of 1.6 million tonnes each. The cement mill of the first line was put into commercial operation in December 2013 and the kiln followed in September 2014. The second line will be fully operational in the second quarter of 2015.
Holcim is also building a cement terminal and packing plant near Lampung, South Sumatra. This terminal is expected to be in operation in the first quarter of 2016. Holcim already has a strong position in the regional market of Southern Sumatra which is growing faster than the Indonesian average, and this strengthening of the footprint will allow for an improvement in customer service and a reduction in logistics costs.
Brazil – capacity expansion at Barroso
In Brazil, a second kiln line is being installed at the Barroso plant and will be commissioned in the second half of 2015. The additional cement capacity of 2.3 million tonnes will bring the total capacity of Holcim Brazil to 7.7 million tonnes. With this investment, the Group company will be better positioned to meet the long term growing demand for building materials in the south-east of the country.
Ecuador – clinker capacity expansion at Guayaquil
Following the timely commissioning of the new cement mill in the second half of 2011, Holcim Ecuador began the second phase of the cement plant modernization in Guayaquil in December 2012, which will increase clinker capacity by 1.4 million tonnes in May 2015 when the project will be commissioned. This investment will balance local clinker production capacity with local cement capacity in order to eliminate costly clinker imports, reduce logistics-related risks, increase local value creation and reduce the CO2 footprint. With this investment, Holcim Ecuador will be better positioned to further leverage its strong brand presence, meet its customer’s needs and substitute imports.
India – expansion of market position
The ongoing construction of a new cement plant at Jamul in India is progressing as per the plans. The production unit with a capacity of 2.8 million tonnes of clinker at Jamul is expected to commence operations by mid-2015. The satellite grinding units with a capacity of 2.5 million tonnes per annum at Jamul and Sindri are expected to go on stream by the end of 2015. The two additional proposed grinding units in the eastern region have been temporarily put on hold due to change in market conditions.
Australia – expansion of aggregates capacity
In 2011, Holcim began work in the south-west of Sydney on what will become the company’s largest project in the field of aggregates. Known as Lynwood Quarry, the site will supply aggregates to one of Australia’s largest markets. Due to the possibility of transporting the raw material by rail, the quarry, together with the distribution center in West Sydney, will offer one of the most cost-effective and sustainable solutions of this kind. The plant is due to be commissioned in May 2015. The site is expected to enable Holcim to strengthen its integrated market position in Sydney and New South Wales.
Russia – modernization at Volsk plant
Holcim Russia’s modernization strategy continues with the upgrade of its existing wet process Volsk plant in the Volga region. The modernization of the Volsk plant is divided into two phases: “clinker line” and “cement upgrade”. The main structural foundations were already completed and the installation of mechanical equipments is on-going. The project is generally progressing according to plan with the new clinker line to be commissioned in the second half of 2016. This project will strengthen Holcim Russia’s ability to capture growth and will improve the long-term cost competitiveness of the Volsk plant.