Lafarge to spend $15 mln on plant upgrade, eyes Mozambican market

via Lafarge to spend $15 mln on plant upgrade, eyes Mozambican market | The Source June 3, 2014

Cement maker Lafarge says it will invest around $15 million to upgrade its milling plant next year to increase production by nearly a third, as it considers exports into Mozambique, where a construction boom is expected.

Lafarge’s new chief executive Amal Tantawi told journalists on Monday night that the company will spend between $10 million and 15 million on the upgrade to be funded by the Lafarge group.

“The studies (for plant upgrade) are ongoing and the technical team is working on it. Our industrial director was in Paris last week conducting meetings. We will get the approval at the end of this year,” she said.

Once the plant has been upgraded it will push volumes up to 500,000 tonnes of cement per annum from the current 390,000 tonnes, Tantawi said.

She said the company was also conducting investigations on quarry and limestone reserves in the country.

“The intention is to conclude it by the first quarter of next year to have a final picture of the limestone reserves to be ready for the expansion of the plant,” she said.

Lafarge also expects to start exporting to Mozambique in the year, taking advantage of an expected construction boom in that country, particularly the Tete region.

The company launched a new brand, “SupaSet”, which is expected to contribute 10 percent to revenue in the current financial year, eventually growing to between 30 to 45 percent. The new product will also increase capacity utilisation to 100 percent, she added.

Lafarge says it has a local market share of nearly 40 percent.

Turning to the performance of the company, Tantawi said despite the tight liquidity conditions in the economy, the company was on course to meet its targets.

“So far we are very happy with the results,” she said, without elaborating, adding that the company was operating strictly on cash payments, with a 30-day credit for reliable customers.

“The liquidity is not affecting demand but payment for our products. We are becoming more stringent on cash payments,” she said.

Lafarge, she said, was partnering microfinance institutions and contractors to construct at least 1,000 low cost houses worth around $20,000 each.

The company will bring in technical support and supply building materials while the other partners will finance and construct the houses.

“We are facilitating and coordinating with the banks that will provide credit,” she said, adding that a memorandum of understanding on the project had been signed, but did not give details.