Lafarge (company)
Lafarge is a French industrial company specialising in cement, construction aggregates, and concrete. It is the world's largest cement manufacturer. It was founded in 1833 by Joseph-Auguste Pavin de Lafarge and is a part of the Holcim Group.
In 2015, Lafarge merged with Holcim and a new company was formed under the name of LafargeHolcim. It was renamed to Holcim Group in 2021.
Lafarge was embroiled in the Lafarge scandal, in which it was convicted of financing terrorism and complicity in crimes against humanity by the US Department of Justice for paying $5.92 million to the terrorist groups ISIS and al-Nusra Front between 2013 and 2014 to keep its cement plant in Syria operating.
History
Foundation and development
Lafarge was founded in 1833 by Joseph-Auguste Pavin de Lafarge in Le Teil, France, to exploit the limestone quarry in Mont Saint-Victor between Le Teil and Viviers. The limestone is white and argillaceous, and yielded an eminently hydraulic lime. In 1864 Lafarge signed its first international contract for the delivery of 110,000 tonnes of lime to the Suez Canal construction project.During the Second World War, Lafarge provided the Nazi regime with concrete for the French part of the Atlantic Wall. This maintained activity permitted the company to transition rapidly to the period of post-war reconstruction.
In 1980 Lafarge joined with the Belgian coal, coke and fertilizer company Coppée to become SA Lafarge Coppée.
Lafarge purchased a plant from the National Gypsum in early 1987. Ten years later, it bought Redland plc, a British quarry operator.
In 1999, Lafarge acquired a 100% shareholding in Hima Cement Limited, the second-largest cement manufacturer in Uganda, with an installed capacity of 850,000 metric tonnes annually, as of January 2011. That same year, Lafarge entered the Indian market through its cement business, with the acquisition of Tata Steel's cement activity. This acquisition was followed by the purchase of the Raymond Cement facility in 2001. In 2001, Lafarge, then the world's second largest cement manufacturer, acquired Blue Circle Industries, a British company which at the time was the world's sixth largest cement manufacturer, to become the world's largest cement manufacturer.
In 2006, Lafarge North America shareholders accepted a $3 billion tender offer from Lafarge Group which gave the parent company full control over the North American business, removing LNA from the New York Stock Exchange. Previously the group had owned 53% of LNA shares.
In 2007, it divested its roofing division, selling it to a private equity group in a deal that resulted in Lafarge retaining a 35% equity stake.
In December 2007, Lafarge announced the purchase of the Orascom Cement Group, an Egyptian-based cement producer with operations across Africa and the Middle East, from Orascom Construction Industries.
On 15 May 2008 Lafarge acquired Larsen & Toubro Ready Mix-Concrete business in India for $349 million.
In 2009, Lafarge sells Canadian precast concrete company, Pre-Con to Armtec Infrastructure Income Fund.
In 2010, Lafarge strengthened its presence in Brazil.
In 2011, Lafarge SA announced it would build a cement plant in Langkat, North Sumatra, Indonesia with an investment of up to Rp 5 trillion.
In 2011 Lafarge sold to Boral its stake in their common Asian Gypsum joint-venture LBGA.
Lafarge launched three plants in Hungary, Syria and Nigeria and created a joint venture with Anglo American in the United Kingdom.
The group sold most of its European, South American, Asian and Australian gypsum operations.
In September 2013, Lafarge agreed to the sale of its 53.3 percent stake in its Honduras subsidiary Lafarge Cementos SA de CV to Cementos Argos for €232m.
In 2018, the Lafarge Cement plant located south of Kobanî, Syria was being used as a base of operations by 1st Marine Infantry Parachute Regiment and United States Army forces.
in 2022, Lafarge Egypt, launched "Shatbna," an eco-friendly masonry cement with a 40% lower carbon footprint.
The company is active in Greece through the full ownership of Heracles General Cement, since 1991.
As of September 2024, The company is set to build a new cement plant in Ratari near Obrenovac, within Serbia.
Merger with Holcim
On 7 April 2014, Lafarge and Holcim announced they had agreed to terms on a "merger of equals". The exchange ratio will be based on 9 Holcim shares for 10 Lafarge shares. The new company would be based in Switzerland and have a manufacturing capacity of 427 million tons a year would vastly exceed the 227 million ton capacity Anhui Conch. Lafarge CEO Bruno Lafont and Holcim Chairman Wolfgang Reitzle became co-chairmen of the new group. Eric Olsen, then Lafarge's Executive Vice-president in charge of Operations, became the CEO of the new group. Executives from both companies said the deal would save the new company 1.4 billion euros annually and create "the most advanced group in the building materials industry."The deal faced significant regulatory obstacles, as 15 different jurisdictions could have potentially raised objections. The cement market in Europe is tightly consolidated and antitrust scrutiny of deals has been commonplace since the 1970s. To meet regulatory concerns, Holcim and Lafarge planned to sell or spinoff assets that generated about 5 billion euros of revenue in 2013 in areas of large overlap between the two companies. Lafont said the merger was aimed at rebalancing operations, not cutting costs. He said overlapping businesses would be sold, not closed, so industry job losses would be minimal.
Industry analysts said the deal would combine Holcim's marketing strength with Lafarge's edge in innovation, while providing significant cost savings, but cautioned "the road to merger clearance will be a long, complex and uncertain one." Others said the deal could lead to further mergers within the industry and give competitors a chance to pick up assets at a bargain price. Most analysts surveyed by Reuters felt the merger would be approved in the end.
The acquisition would turn it into the world's third-biggest building materials supplier. Analysts said that although it was broadly anticipated by the market. "The additional assets expand the company’s footprint in Eastern Europe and into Brazil and the Philippines. Given the well flagged nature of the deal, however, these benefits are largely reflected in the price at current levels," Alan Breen of Cantor Fitzgerald Ireland said.
On 10 July 2015, Lafarge merged with Holcim. On 15 July 2015, the new company was officially launched around the globe under the name of LafargeHolcim, which was later renamed as the Holcim Group on 8 July 2021.
Legal and environmental issues
Terrorist financing and complicity in crimes against humanity charges
In June 2016, France opened an inquiry into the activities of Lafarge in Syria. The inquiry followed reports by French journalist Dorothée Myriam Kellou, published by Le Monde and France 24, which uncovered deals Lafarge made with an array of armed groups, including the Islamic State of Iraq and the Levant terrorist group, in order to keep its cement plant in Syria operating. ISIL captured the plant on 19 September 2014. In 2017 LafargeHolcim executives were investigated for these claims in the civil and criminal courts.Lafarge sought to have the claims dismissed, arguing that the payments were intended to allow Lafarge to continue commercial activities, not to support ISIS, and that the company and its executives could not be held accountable for actions undertaken by its Syrian subsidiary. Initially, the Paris Court of Appeals agreed with Lafarge.
On 7 September 2021, the French Supreme Court confirmed charges of financing terrorism and endangering employees' lives. The Supreme Court quashed the Court of Appeal ruling, determining that there was sufficient evidence, including minutes from Lafarge meetings, for the investigative judge to find Lafarge had "precise knowledge" of the nature of ISIS's activities. In the decision, the Supreme Court explained that "crimes against humanity are the most serious of crimes because beyond the attack on the individual, which it transcends, it targets and denies humanity." It found that for a conviction on complicity in crimes against humanity, Lafarge did not need to be a part of ISIS but "It is sufficient that has knowledge that the main perpetrators are committing or are about to commit such a crime against humanity and that by his aid or assistance, he facilitates the preparation or the commission thereof." The Court concluded that "the knowing payment of a sum of several million dollars to an organization whose object is only criminal is sufficient to characterize complicity by aiding and abetting." The Supreme Court referred the matter back to the Court of Appeal.
On 18 May 2022, the Investigative Chamber of the Paris Court of Appeals rejected a request by Lafarge to dismiss charges of complicity in crimes against humanity and endangering lives. In confirming the charges, the Court of Appeal judges found that "although informed that the actions of ISIS could constitute crimes against humanity, Lafarge, which could have put an end to the activities of LCS by asking it to close the plant, decided instead to continue this activity … even if it meant paying several million dollars to its groups".
In a statement, the company said it strongly disagreed with the Court of Appeal's decision to retain complicity in crimes against humanity within the scope of an investigation and said it would appeal the decision to France's Supreme Court.
On 17 October 2022, the United States Department of Justice reached a $777.8 million criminal plea agreement with Lafarge in the case. Executives with Lafarge agreed to the deal after paying $5.92 million to Islamic State and al-Nusra Front leaders and urging them to help the company keep its production facilities running, according to a company spokesman and law enforcement official.