Lafarge to invest US$200million

LISTED cement manufacturer Lafarge Cement Zimbabwe has announced plans to invest US$200million within the next 10 years towards setting up new cement manufacturing plant.

Report by Taurai Mangudhla

Lafarge MD Jonathan Shoniwa told businessdigest at the company’s launch event for the “building better cities” branding campaign recently the new investment will add one million tonnes of cement to the company’s annual production from the current 450 000 tonnes per year.

“In terms of numbers I think the indications are that if we are to put a million tonne plant the money that we will be looking at is somewhere in the region of US$200 million, so its quite a big investment of between US$180million and US$200million,” said Shoniwa.

He said the move would also increase market share significantly from current levels of 38%.

In the current year, Lafarge is targeting a market share of 40% on account of its strong brand and expects to continue to benefit from the continued growth in demand for cement. In 2012, the local demand grew 10% and is on course for a target 5% growth.

Like many other local manufacturing firms, cement producers are facing competition from imports. Recently, PG Industries indicated plans to import cement after seeing an opportunity in the market.

“I think competition is always there and you can’t shut it out completely. You need to just play the game, but we have a strong brand. Other players can import cement, but it takes time to build a brand, they can push volumes but it’s not an overnight (job) to build a brand,” Shoniwa said.
Shoniwa also took advantage of the branding campaign to announce plans for a multimillion dollar low cost high density residential housing scheme. He said the cement producer would partner banks, council and other relevant players to see the project through.
“We are at design stage. We are having discussions with possible partners and so far it’s looking very positive,” Shoniwa said, adding Lafarge’s target was to bring the cost of constructing a standard high density residential housing unit to US$10 000.

“When people talk of affordable housing, the thing that comes to mind is cheap. It does not necessarily have to be cheap in terms of quality so there is that innovation to say we should come up with new building materials that are cost effective.”

Council is expected to provide land parcels while banks are expected to provide long-term and affordable funding for the scheme to enable beneficiaries to build houses at their own pace. Lafarge is targeting a 29% increase in the top line in this financial year after reporting revenue inflows of US$69,9 million in the year to December 2012, an increase of 41% from 2011.

Earlier this year, Shoniwa said full-year revenue was expected to rise to US$90 million, with individual home builders expected to continue supporting the upward trend.

 

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