http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.04Change: -0.16
R/$ = 12.07Change: -0.10
Au 1204.60 $/ozChange: 1.40
Pt 1170.50 $/ozChange: 4.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 25, 2012

Lafarge SA challenged by rising costs, cheap imports, says CEO

Back
Construction|Africa|Aggregate|Cement|Concrete|Diesel|Lafarge|Lafarge SA|Lafarge South Africa|Water|Africa|Europe|North America|India|Nigeria|Pakistan|South Africa|Lichtenburg Plant|New Year's Day|Aggregate Supplier|Cement Industry|Cement Input Costs|Electricity|Energy|Energy Efficiency|Imported Cement|Local Cement|Maintenance|Product|Products|Infrastructure|Thierry Legrand|Water|Diesel
Construction|Africa|Aggregate|Concrete|Diesel|Lafarge|Water|Africa|||||Energy|Maintenance|Products|Infrastructure|Water|
construction|africa-company|aggregate|cement|concrete|diesel-company|lafarge|lafarge-sa|lafarge-south-africa|water-company|africa|europe|north-america|india|nigeria|pakistan|south-africa|lichtenburg-plant|new-years-day|aggregate-supplier|cement-industry|cement-input-costs|electricity|energy|energy-efficiency|imported-cement|local-cement|maintenance|product|products|infrastructure|thierry-legrand|water|diesel
© Reuse this



Local cement, concrete and aggregate supplier Lafarge South Africa (Lafarge SA) was facing "tremendous cost increases", said CEO Thierry Legrand on Wednesday.

With electricity and diesel price increases at double digits this year, Lafarge SA’s total cement input costs were 8% higher than in 2011 – well above the inflation rate. Legrand said the company was unable to compensate for these cost jumps through price adjustments on a similar level.

Another challenge was growing sales of cheap imported cement, specifically from India and Pakistan, landing up at small, sell-all shops in many of the country’s coastal regions. Consumers using this cement were often in the low-cost, DIY market.

Legrand said much of this cement was substandard, with some 50 kg bags also not holding the promised weight.

“This is clearly a concern. It is not good for the cement industry.”

Legrand said Lafarge SA had brought the matter to the attention of the National Regulator for Compulsory Specifications. It was also “looking at” whether the importation of this cement could be considered dumping, and whether further action should be taken.

“We want a level playing field,” noted Legrand.

He added that local cement makers, creating jobs while beneficiating limestone to its fullest, should not be disadvantaged should a carbon dioxide (CO2) tax come into effect.

“We want fair competition,” he emphasised.

Legrand estimated that 500 000 t of cement was imported into South Africa in 2011.

“A significant amount of that was not of good quality.”

Another challenge for Lafarge SA was that it would have to carry its share of an €1.3-billion cost-saving programme announced by its parent company for the 2012 to 2015 period.

Legrand did not want to commit to a number on how this would affect the company, saying only Lafarge SA was expected to contribute “at the level of its size”, noting that it added about 3% to yearly group turnover.

Legrand said there were no retrenchments planned for the local group, even though there had been around 60 job losses at the Lichtenburg plant in 2010, with 10% of this voluntary.

He believed the group could rather cut costs through improving efficiencies. Lafarge SA could, for example, use alternative fuels at its plants to achieve energy efficiency. It was also possible to rather use more electricity during cheaper, off-peak periods.

CEMENT MARKET TO GROW MODESTLY
Cement sales in South Africa was up 6.7% in the first quarter of 2012 compared with the same period last year, said Legrand.

“This is good growth, but a little bit disappointing.”

The second half of 2011 had spurred hopes of greater growth for the new year.

However, Legrand now expected to see the local cement market grow by between 4% and 5% in 2012 compared with 2011.

There was growth in the retail market, he said, with the construction and ready-mix markets flat. The residential market was seeing “a little bit more momentum”, with this trend to be aided by the recent interest rate cut. Legrand said Lafarge SA was not counting on government’s big infrastructure push “this year, or [in] the first half of 2013”.

Legrand did not want to forecast when there would be an upswing in the market.

“Today I see the interest rate go in the right direction, but I see clouds over Europe. I don’t want to be too wise, as I’ll be wrong.”

NEW FOCUS FOR LAFARGE
The global Lafarge group was currently focused on growing sales, cash generation and return on capital, rather than the geographical expansion seen earlier in its life cycle, said Legrand.

The focus was also on innovation that would see competitors stalled in coming up with similar products. One such product was HydroMedia, or “leaky” concrete, which allowed water to penetrate the concrete, entering the soil below. This product could, for example, reduce the costs and long-term maintenance of storm water infrastructure.

Lafarge had also shifted its focus to developing countries, with the Africa and Middle East cluster – at 22.5% – now responsible for most of the company’s sales, and no longer Europe and North America.

“These days it is better to have a strong position in countries such as Nigeria,” said Legrand.




 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Construction News
Acting Transnet CEO Siyabonga Gama
Acting Transnet CEO Siyabonga Gama, who was appointed to the position following the surprise secondment of Brian Molefe to Eskom, has placed revenue diversification at the top of his list of immediate priorities, with the weak commodity outlook seen as having the...
Phase 3 construction of the Maclear Wastewater Treatment Works (WWTW) upgrade project, in the Eastern Cape’s Joe Gqabi district municipality, will start in June this year, says South African black-owned engineering firm Gibb, This phase will include the construction...
The construction of a 100 MW natural gas-fired power station at Ressano Garcia is progressing well, with the first of 13 power generation sets having arrived at the Gigawatt Park site on April 15. South African investment group and majority shareholder in the project...
More
 
 
Latest News
South African mining and energy adviser Ted Blom has raised a litany of concerns about the state of power utility Eskom and has warned of runaway costs and shortfalls in coal and water, as well as rail capacity. Blom was surprised by the recent buoyancy shown by...
JSE-listed Astrapak will sell specialised packaging systems manufacturer Knilam to Mapflex SA for R17.7-million. The proceeds would be used to reduce Astrapak’s current level of gearing.
The last of the 26 mooring units comprising the Port of Ngqura’s automated mooring system (AMS) have arrived at the port and are expected to improve port efficiency and safety, further driving the Transnet National Ports Authority’s (TNPA’s) objective of establishing...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
Sappi Southern Africa CEO Alex Thiel
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96