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Cementos Pacasmayo updates on phosphate spin-off

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World Cement,

Peruvian cement company, Cementos Pacasmayo, has confirmed the date it will spin off its phosphate holdings into a new company, FOSSAL.

According to a release to the New York Stock Exchange, FOSSAL will be spun off on 1 March, subject to spin-off registration conditions of the Peruvian Public Registry.

Following the split, FOSSAL will own 70% of Fosfatos del Pacifico (FOSPAC), which owns phosphate reserves of 108.1 million t with additional estimated resources of 546.1 million t. MCA Phosphates PTE, a division of Mitsubishi, will continue to own the remaining 30%.

Pacasmayo announced the split last year, stating that it was seeking a strategic partner to help fund the hefty US$831 million CAPEX requirement to develop FOSPAC's proposed mine.

The split is likely to be more positive for the cement side of the business, however.

According to Daniel Sasson, an analyst at Itau BBA, "the value of the company will remain concentrated on the cement assets rather than on the mining business", adding that it is "positive" that Pacasmayo will come out of the reorganisation a pure-play cement company.

"Shareholders will not have to bear the overhang risk of an investment in a mining project," said Sasson.

Located in the north of Peru, Cementos Pacasmayo owns three cement plants, as well prefab, ready-mixed concrete, brick, lime and aggregates businesses.

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