http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.15Change: 0.05
R/$ = 11.58Change: -0.02
Au 1195.87 $/ozChange: -1.05
Pt 1197.50 $/ozChange: 0.00
 
 
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 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|Cement Industry|Cement Input Costs|Electricity|Energy|Energy Efficiency|Imported Cement|Local Cement|Maintenance|Product|Products|Infrastructure|Thierry Legrand|Water|Diesel
Construction|Africa|Aggregate|Cement|Concrete|Diesel|Lafarge|Water|Africa|||||Energy|Maintenance|Products|Infrastructure|Water|
construction|africa-company|aggregate|cement-company|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|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 Materials News
The battle for the assets cement firms Lafarge and Holcim must sell to get the go-ahead for their merger will likely be between three groups, several people familiar with the matter said. The three groups expected to hand in binding bids by a mid-January deadline...
Construction resources and aggregates company Lafarge Ash Resources aims to have fly ash exempted from the National Waste Management Amendment Bill’s classification as hazardous waste. This exemption will improve the sustainability of construction materials and...
VALVES Importing companies account for about 80% of the jobs in the valves industry
Local valve importer CMO Africa says the government regulation, which stipulates that 70% of valves used in State projects be manufactured in-country, will lead to the demise of the valves import industry. CMO Africa MD Mark Bowden told Engineering News at the Mining...
More
 
 
Latest News
China appears to have been routinely underestimating output from its sprawling steel sector, with official figures for last year alone 40-million tonnes below a key industry estimate - an amount equivalent to Germany's entire annual production. Beijing has vowed to...
Lumwana, Zambia
Canada’s Barrick Gold Corp will suspend operations at its Lumwana copper mine, in Zambia’s Northwestern province, after the country enacted legislation that raised the royalty rate on openpit mining operations from 6% to 20%. TSX- and NYSE-listed Barrick, the world’s...
The Labour Court in Johannesburg has set aside the 2011-2014 metal sector wage agreement, the National Employers' Association of SA (Neasa) said on Thursday. The 2011-2014 wage deal was the result of an agreement between the Steel and Engineering Industries...
More
 
 
Recent Research Reports
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.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
 
 
 
 
 
This Week's Magazine
South Africa remains an important manufacturing and export platform for Ford Motor Company, says executive chairperson Bill Ford. However, he adds that other countries on the continent are “becoming interesting”, and that the US carmaker is casting its net wider for...
TO BE PHASED INTO SERVICE The first MeerKAT dish, with another 63 to come
Germany’s Max-Planck-Society (MPG) and the Max-Planck-Institute for Radio Astronomy (MPlfR) are investing €11-million (about R150-million) into South Africa’s MeerKAT radio telescope array programme. The money will be used to design, build and install S-band radio...
Infrastructure spend in sub-Saharan Africa will grow from $70-billion in 2013 to $180-billion by 2025, says PwC capital projects and infrastructure Africa leader Jonathan Cawood. This is one of the findings of PwC’s Capital Projects & Infrastructure report on East...
Private-owned defence and aerospace manufacturer Paramount Group and the Ichikowitz Family Foundation unveiled its Anti-Poaching Skills and K9 Training Academy in Magaliesburg last month.
MATT BARKER Wireless networks should enable users to engage and must provide relevant information to them based on their activity and location
The inclusion of Bluetooth to provide sub-three meter accuracy and heightened functionality for users is one of the ways to change existing wireless networks into engagement networks. An engagement network differs from common wireless networks in that it enables the...
 
 
 
 
 
 
 
 
 
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