PEC Consulting was retained by one of the potential buyers of the Lafarge assets in the Philippines to conduct a comprehensive due diligence of the operations, geology, power contracts, supply chain and market assessment of the business. Working jointly with our ASEAN Partner, EPCON, on services and solutions, a thorough due diligence was carried out both through desktop research and fieldwork.
Geology:
- Accurate reserves estimations of all Lafarge quarries validated through reliable sources.
- Regional maps of adjacent limestone deposits for Teresa, Norzagary, Bulacan and Batangas
- Tenement maps around all the plants showing all the MPSAs (Mining permits) that have been issued around the plants.
- A complete list of MPSAs applications and status as of July 2014 for the whole of the Philippines, which would give an indication of what potential competitors are doing and the status of their permits.
- National non-metals geology map.
Power:
- A complete assessment of the power supply agreements including potential upsides and risk mitigation.
- A comprehensive dynamic model that computes the power costs per plant bases on the formulas in the contracts benchmarked to the relevant indices. The model was developed by the former global head of the power division at Lafarge, who was responsible for the power strategy in the Philippines. She was instrumental in selecting the power suppliers and negotiating the current power supply agreements.
Alternative Fuels:
- Delivered cost per AF Fuel type per plant
- Current AF suppliers in the market inclusive of shareholding structure
- Competitor analyses on use of AF
Supply Chain:
In conjunction with a young and dynamic supply chain specialist, CEL Consulting, based in Vietnam:
- A comprehensive study on Raw Materials in and actual costs to plant per ton.
- Cement out to depots.
- Comprehensive analysis of the Ports in Manila, Batangas and Cebu (for Danao GS).
- Infrastructure bottlenecks for the operations.
- Future options for the business unit including a new dry bulk terminal.
- Batangas complete supply chain with actual costs.
- Danao GS supply chain with actual costs.
Market Assessment
- A complete supply demand study with estimates on actual installed capacity versus nominal rated capacity.
- Comprehensive study of potential capacity expansion by all players.
- Price History
- Brand value.
- Distributor/retailer margins.
- Buying behavior of end users
- Comprehensive SWOT analysis.
Much of the above was obtained through desktop and field-based interviews with contractors, developers, distributors and retailers.
This Due Diligence assignment was led by Len Dolby, Sr. Mining Consultant of PEC Consulting, and Pharaoh Hirani, Managing Director of EPCON Services.
