UPDATE ON VULCAN'S MEXICO OPERATIONS
On May 5, 2022, Vulcan Materials Company (NYSE: VMC) reported an unexpected shutdown of its underwater quarrying operations in Quintana Roo, Mexico, by government officials. The Company believes these orders are illegal and plans to pursue legal action to resume operations. Vulcan has held the necessary permits for over 30 years and currently has the ability to export available inventories. The Company is also involved in ongoing NAFTA arbitration regarding prior operational shutdowns, with a decision anticipated in late 2022.
- Vulcan has the ability to export available inventories from its port.
- The Company has maintained compliance with Mexican laws for over 30 years.
- Unexpected shutdown orders from the Mexican government could disrupt operations.
- Involvement in NAFTA arbitration may indicate ongoing legal challenges affecting business.
BIRMINGHAM, Ala., May 5, 2022 /PRNewswire/ -- Vulcan Materials Company (NYSE: VMC), the nation's largest producer of construction aggregates, today provided an update with respect to its Mexican operations.
On May 5, at around 2 p.m. CDT, Mexican government officials unexpectedly presented local Vulcan Materials Company (the "Company") employees with arbitrary shutdown orders to immediately cease underwater quarrying and extraction operations at its SAC TUN subsidiary in Quintana Roo, Mexico. The Company strongly believes that this action by the Mexican government is illegal. The Company has the necessary permits to operate and intends to vigorously pursue all lawful avenues available to it in order to protect its rights and resume normal operations. The Company currently has the ability to export inventories readily available for shipment from the port. In March, Vulcan received its routine three-year customs permit, which enabled the Company to continue serving its customers.
The Company has quarried limestone legally in Mexico – on land that it owns – for over 30 years. Vulcan has the right to maintain full ownership of its properties, owns the limestone reserves in the same, and complies and has always complied with Mexican law, including the laws and permitting regulating our operations from which we service our customers both in Mexico and abroad.
Since late 2018 and as previously disclosed, Vulcan Materials has been engaged in a NAFTA arbitration with Mexico over Mexico's repudiation of an agreement to unlock a portion of Vulcan's aggregates reserves in Mexico and the arbitrary shutdown of a portion of the Company's quarrying operations there. A hearing took place in July 2021, and a decision is expected in the second half of 2022. Vulcan has continued to engage with government officials to pursue an amicable resolution of the dispute while awaiting the final resolution from the NAFTA tribunal.
About Vulcan Materials Company
Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation's largest supplier of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt and ready-mixed concrete. For additional information about Vulcan, go to www.vulcanmaterials.com.
FORWARD-LOOKING STATEMENT DISCLAIMER
This document contains forward-looking statements. Statements that are not historical fact, including statements about Vulcan's beliefs and expectations, are forward-looking statements. Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales. These forward-looking statements are sometimes identified by the use of terms and phrases such as "believe," "should," "would," "expect," "project," "estimate," "anticipate," "intend," "plan," "will," "can," "may" or similar expressions elsewhere in this document. These statements are subject to numerous risks, uncertainties, and assumptions, including but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC.
Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements. The following risks related to Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; a pandemic, epidemic or other public health emergency, such as the COVID-19 outbreak; Vulcan's dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; changes in Vulcan's effective tax rate; the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; the impact of the state of the global economy on Vulcan's businesses and financial condition and access to capital markets; risks related to international business operations and relationships, including recent actions taken by the Mexican government with respect to Vulcan's property and operations in that country; the highly competitive nature of the construction industry; the impact of future regulatory or legislative actions, including those relating to climate change, wetlands, greenhouse gas emissions, the definition of minerals, tax policy or international trade; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena, including the impact of climate change and availability of water; availability and cost of trucks, railcars, barges and ships as well as their licensed operators for transport of Vulcan's materials; energy costs; costs of hydrocarbon-based raw materials; healthcare costs; labor shortages and constraints; the amount of long-term debt and interest expense incurred by Vulcan; changes in interest rates; volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; the effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan's products are distributed; and other assumptions, risks and uncertainties detailed from time to time in the reports filed by Vulcan with the SEC. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement. Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law.
Investor Contact: Mark Warren (205) 298-3220
Media Contact: Janet Kavinoky (205) 298-3220
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SOURCE Vulcan Materials Company
FAQ
What happened on May 5, 2022, regarding Vulcan Materials operations in Mexico?
Why does Vulcan believe the shutdown orders are illegal?
What actions is Vulcan planning to take in response to the shutdown?
What is the status of Vulcan's NAFTA arbitration?
