Agreement with LafargeHolcim will see expansion of Group’s aggregates operations in Belgium
AIM-quoted construction materials group SigmaRoc have entered into an agreement to assume control of the LafargeHolcim quarrying operations which are co-located at the Group’s Carrieres du Hainaut (CDH) Belgian business, providing a platform for significant expansion of SigmaRoc’s European aggregates activities.
In October 2019, SigmaRoc established their European heavy-side materials platform through the acquisition of CDH, a major quarrying and dimension stone company located in Belgium. In addition to annual production of around 1 million square metres of Belgian Blue Stone, a high-value decorative stone, the operations also produce approximately 1.5 million tonnes of construction aggregates.
Prior to entering into the new agreement, production and commercialization of these aggregates was undertaken by LafargeHolcim, under an inefficient royalty deal which was due to end in February 2023.
The agreement with LafargeHolcim will give SigmaRoc full control over CDH’s production assets, putting the Group in a far stronger position commercially and operationally to pursue its growth strategy in the Belgian aggregates market as a large-scale supplier.
In addition to generating an estimated incremental EBITDA of €1 million per annum, the assumption of full control of all production at CDH will allow the Group to drive operational efficiencies over time. Furthermore, the agreement will give SigmaRoc the flexibility to install new crushing and screening equipment, further enhancing output.
Under the terms of the agreement, SigmaRoc will, from 1 April 2021, take over all of LafargeHolcim’s production installations located at CDH for nil consideration. The Group has agreed to supply LafargeHolcim Belgium with a minimum of 1.5 million tonnes of aggregates per year until 31 December 2024, under a take or pay agreement, for which SigmaRoc will charge a production margin.
Additional volumes produced will be subject to a pre-emption right by LafargeHolcim or will be utilized by SigmaRoc.
During the period of the agreement, SigmaRoc will build and commission a new aggregates production facility and decommission the old LafargeHolcim installations. This process is expected to be seamless and the decommissioning and demolition of the old installation to be cost neutral.
Given their entry into the Belgian market as a large-scale supplier of high-quality aggregates, SigmaRoc have decided to incorporate a new subsidiary and launch a new brand for their quarrying operations – Granulats du Hainaut. The new operations will form part of a larger network of quarries in Belgium, including the Group’s three existing Stone Holdings SA sites. SigmaRoc’s total European production volume will, therefore, increase to approximately 2 million tonnes per year.
David Barrett, chairman of SigmaRoc, commented: ‘This agreement is the right next step for Carrieres du Hainaut and our partners LafargeHolcim. Over the next four years we will continue to work together by producing a quality material for the Belgian market, improving safety, efficiency and sustainability on site. Carrieres du Hainaut will also welcome nearly two dozen colleagues from Holcim Belgium who will help deliver a good result for both parties.’
Max Vermorken, chief executive officer of SigmaRoc, commented: ‘When we acquired CDH, we saw the potential to unlock significant added value from the legacy arrangements with LafargeHolcim. With the assumption of control over the aggregate production assets, we get one step closer to fully benefitting from the potential CDH has to offer and this intermediary step will allow us to be well prepared to establish ourselves as a major supplier of aggregates in the Benelux market by the end of 2024.’