RHI divests dolomite business to Intocast

By Davide Ghilotti
Published: Monday, 02 October 2017

RHI is divesting its dolomite operations in Spain and Italy, which will be taken over by Germany’s Intocast, following European directives prior to the merger with Magnesita. Separately, the company is also selling off the fused cast refractories for glassmaking business in Italy and Russia.

Austrian-headquartered RHI has reached an agreement with Intocast Group to take over its dolomite business, in a divestment that the European Commission imposed as part of the merger process with Brazilian refractory maker Magnesita, RHI told IM.

The pool of assets being sold consists of two production sites, in Marone, Italy and Lugones, Spain.

Stefan Rathausky, spokesperson at RHI, told IM German refractories producer Intocast Group will acquire both sites, for an undisclosed amount.

The Marone site comprises of an open-cast mine and processing facility. The operation produces sintered dolomite. RHI Refractories Ibérica, the Spanish operation, is a manufacturing plant producing a number of refractories products.

In revenue terms, the two facilities contributed with "roughly €50m ($60.1m)" in 2016, equivalent to 3% of RHI Group’s revenue for the year, RHI said in a statement.

The company did not disclose the value of the sale, but said: "Resulting from the transaction, a positive contribution to earnings in the medium single-digit millions is expected in the fourth quarter of 2017."

European approval will be required to ratify the sale: "The European Commission will need to approve Intocast as a suitable buyer [prior to the closing of the transaction]," Rathausky told IM.

In late June, the Commission cleared the merger process between RHI and Magnesita, but on conditions that certain operations from both companies be divested.

Fused cast refractories

RHI also announced the divestment of its fused cast refractories business for the glass industry, with the selling of two production sites in Italy and Russia.

The company said it agreed in late August on the sales of the operations in San Vito, Italy and Sherbinska, Russia. The identity of the buyer has not been disclosed. The transaction is expected to be completed in the third quarter of 2017.

The sale means the de facto exit of RHI from the business of fused cast refractories for glass manufacturing, RHI confirmed to IM. The company said the operation is "associated with high fixed costs".

The two plants generated combined revenues of €26m in 2016.

"The measurement of the disposal group based on the purchase price offer led to an impairment of €1.7m in the second quarter of 2017," RHI stated.

The move is unconnected to the Magnesita merger, Rathausky told IM, adding that it was a "strategy related decision". 

RHI used to operate a third facility as part of its fused cast refractories for glass operation (US-based Monofrax), which was sold last year.

Additionally, the Aken, Germany, facility was mothballed during H1 for what is described as an indefinite period. The management intends to "sell or close" the plant to maximise capacity utilisation across its other facilities.

As of June, the inactive assets were impaired by €5.5m.

Following the completion of the process, RHI and Magnesita will form  a global refractories giant with over 50 facilities globally, and a foothold in Europe, the Americas and Asia.