Lafarge Cement Zimbabwe says it may build a new cement manufacturing plant in Zimbabwe to increase its installed capacity to 1 million tonnes in five years, but cautioned this would depend on the outcome of a feasibility study currently underway.
The local unit of France-based Lafarge SA is the country’s second-largest cement producer with 450 kilo-tonnes of installed potential, 300 kio-tonnes less than South Africa’s Pretoria Portland Cement, the current market leader.
The plant, on a systematic ramp-up since dollarisation, is currently utilising about 70% of available capacity, which is seen increasing as local markets recover from a decade-long recession.
“It looks to be a more and efficient plant since we’re investing in renovations,” Lafarge SA CEO and chairman Bruno Lafont said in Harare on Friday.
“We’ve invested $15 million on the plant over the last five years. The future will require more investments from the group. We’ll have to increase our growth in Zimbabwe and neighbouring countries. We’re currently in the middle of our studies. We want to increase capacity in Zimbabwe to 1 million tonnes in the next five years. This will be followed by other investments.”
Lafont added: “It’s not a commitment yet, we’re in the middle of our studies.”
Lafarge SA owns and controls 76% of the ZSE-listed local operation, which manufactures and supplies a wide range of building materials to the local market, including cement and concrete and gypsum products.
The world’s top cement maker with operations in 78 countries worldwide says it has a long-term view on Zimbabwe for three strategic reasons.
Firstly, Zimbabwe is a “thirst market” with an estimated housing deficit of about 1 million units, which signals the potential for future demand.
Secondly, the country’s centrality in southern Africa positions the local unit well for organic expansion into the regional market.
Lastly, Lafarge Cement Zimbabwe can serve as a buffer to the group’s regional investments and markets, crowding out low-cost competitors, which would take advantage of a pullout to make inroads into its traditional markets.
Lafarge SA has invested $130 million in Zambia.
Lafont said these factors were a more powerful force than the risk concerns often raised about Zimbabwe.
“We remain positive in terms of how we view Zimbabwe,” Lafont said.
“The country has a high level of education, it has huge potential and is in the middle of the region.”
Asked if Lafarge SA would consider selling equity to local investors in compliance with the country’s indigenisation legislation, Lafont said the company’s decision would depend on the sector-specific indigenisation equity thresholds that government is currently working out.
“They are still under review. They’re still under discussion. We’ll find the best solution in due course. The frame of the regulation is very important for our decision-making and the way we operate in the country.
“But we should not see the law in negative terms.”