23 November 2006

HeidelbergCement expands in Georgia

HeidelbergCement has signed an agreement for further expansion in the Georgian cement market. HeidelbergCement and Chemexim International Ltd. will form a joint venture to operate the local cement company Saqcementi. Under the terms of the agreement, HeidelbergCement holds a share of 75% and Chemexim International Ltd. the remaining 25%. Saqcementi is the largest cement producer in the Caucasus Region and currently operates two cement plants near the capital Tbilisi. The wet process plants are in good technical condition and have a total capacity of 1.6 million tonnes of cement. Saqcementi is the market leader in Georgia with a share of around 60% and, in addition, supplies neighbouring Azerbaijan (20% market share) and Armenia. Azerbaijan is also supplied by our Ukrainian plant Doncement.

Georgia has a favourable strategic location and strong growth potential. The country benefits from the transport of oil from neighbouring Azerbaijan, and is a transit country for goods traffic between the Black and Caspian Seas. We therefore expect strong economic growth, heavy investment in expanding infrastructure and a significant increase in cement consumption. Together with Azerbaijan, the Caucasus cement market with its 13 million inhabitants currently has a volume of 3.3 million tonnes; it is anticipated that cement consumption will have risen to 5 million tonnes by 2010.

"We want to benefit from the growth potential of the Caucasian market and establish a strong market position in this region”, explains Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. This acquisition ideally complements our participation in Kartuli Cementi, which we acquired in May this year. “The expansion in Georgia is another important step in extending our network in the rapidly growing markets of Eastern Europe and Central Asia.”

Caption: Kartuli Cementi in Georgia, part of HeidelbergCement’s network of efficient production sites in Eastern Europe and Central Asia.

Andreas Schaller

Group Spokesman, Director Group Communication & Investor Relations
+49 6221 481 13249
+49 6221 481 13217
HeidelbergCement AG
Berliner Straße 6
69120 Heidelberg