DMCI, Cemex union produces 44-MW power deal

Construction and engineering conglomerate DMCI Holdings Inc. is slowly integrating its business with cement manufacturer Cemex Holdings Philippines Inc., first through the Consunji-led firm’s power unit.

In a stock exchange filing on Monday, Cemex said its subsidiary, APO Cement Corp., had signed a retail supply agreement with SEM Calaca RES Corp., the retail electricity supply arm of Semirara Mining and Power Corp.

A source familiar with the agreement said the deal involved 44 megawatts (MW) of electricity supply, which will be used to power APO’s cement facilities in Naga, Cebu province.

READ: Consunji buys Cemex PH in $305.6-M deal

“There is no fuel pass-through provision in the contract,” the source said. This means that the price APO pays for power will not be affected by fluctuating fuel prices.

The contract will lapse on Dec. 25 this year, according to Cemex.

This is the first collaboration between the two firms since DMCI announced in April that it was set to take over Cemex in a $305.6-million deal forged with the majority shareholder of the country’s fourth largest cement manufacturer.

DMCI chair Isidro Consunji previously said they were banking on the integration of the two companies’ subsidiaries to help Cemex recover from losses. Coal is a major fuel source for kilns used to make cement.

Cemex is currently constructing a 1.5-million-ton integrated cement production line in Antipolo, Rizal province that is scheduled to begin commercial operations by September.

The facility is expected to double the company’s production capacity in Luzon and boost overall installed annual production capacity by 26 percent to 7.2 million tons.

READ: Consunji sees Cemex turnaround by 2025

Meanwhile, DMCI and its property development arm, DMCI Homes, are eyeing to source around 400,000 MT of cement from Cemex.

Cemex’s net loss in the first quarter ballooned by 158 percent to P917.84 million as revenues declined, reflecting a still-challenging environment for cement companies.

Consunji said, however, that they expected power, fuel and other production supply costs, which represented 73 percent of Cemex’s costs in 2023, to decrease due to “normalizing” market prices. INQ