Mexico's Cemex creates electricity unit to tap into energy reform
Cemex power projects could provide up to 5 percent of Mexico's electricity requirements within five years. (Photo: Archive/AP )
Mexican cement-maker Cemex said on Thursday it has created an energy
division to take advantage of Mexico's landmark energy reform, and launch power
projects that could provide up to 5 percent of Mexico's electricity
requirements within five years.
Cemex has struggled with a
large debt load and cost-cutting since an ill-timed US$16 billion takeover of
Australian rival Rinker in 2007, when the U.S. housing market nosedived.
In recent years the company
has been slashing costs and looking to sell assets to regain a coveted
investment grade rating. Cemex executives are hopeful that Mexico's energy
reform will be a lucrative new path for the giant cement-maker.
"We are very
enthusiastic about Mexico's energy sector future, and we will leverage on our
experience in developing projects that benefit the country," Cemex Chief
Executive Officer Fernando Gonzalez said in the statement.
The company will invest US$30
million in the new unit, to be called Cemex Energía, over the next five years,
the statement said.
Cemex also said it had signed
a joint venture agreement with Pattern Energy Group Inc, which owns wind power
projects, to create 1,000 megawatts of renewable power in Mexico within the
next half decade.
In a separate statement, Pattern
said new legislation in Mexico, which mandates that 35 percent of
Mexico's power must come from renewable sources by 2024, prompted it to expand
into Latin America's second largest economy.
Mexico's energy reform,
finalized last year, is President Enrique Peña Nieto's big bet to kick-start
Mexico's long-lagging economy, by bringing private investors into the
country's ailing oil, gas and electricity sectors to stem a 10-year decline in
crude output and steep power costs for manufacturers.