Lafarge Cement Zambia Plc is a subsidiary of Lafarge, the world's largest building materials supplier and a major player in the Zambian construction industry. And its product is in no less demand from neighbouring countries, as John O’Hanlon learned from newly-appointed CEO Fola Esan.
In Zambia, Lafarge traces its roots to the former Chilanga Cement, founded in 1949. Chilanga was one of the first large state-owned companies to be privatised in 1994, and the following year it became the first company to list on the Lusaka Stock Exchange. Today the Lafarge Group holds 84 per cent of the shares, with the rest held by pension funds and individual shareholders.
Cement production at the Chilanga Plant in Lusaka commenced in September 1951 and was upgraded with the installation of two more kilns in 1956 and 1967. One kiln at Chilanga was closed due to obsolescence in 1982, which brought the annual Lusaka production capacity to 200,000 tonnes. In 1969 the Ndola Plant kiln was commissioned and in 1974 a second kiln was added. The Ndola plant currently has an annual production capacity of 450,000 tonnes.
<
In 2006, Lafarge embarked on an expansion programme, adding a further 830,000 tonnes of capacity to the Chilanga plant. At the same time the original production line was closed due to poor energy efficiency. Chilanga 2 is an up-to-date modular plant, allowing for additional capacity to be added as demand increases. The current capacity from both plants is now around 1,300,000 tonnes.
Earlier this year, Fola Esan, formerly vice-president responsible for strategy and business development in the Aggregates & Concrete division, was appointed managing director and chief executive officer of Lafarge Cement Zambia (LCZ), bringing over 15 years’ experience of international assignments for global multinational companies.
Lafarge is a major contributor to Zambia's economy. Activity in the construction and infrastructure sector is commonly used as an indicator of a developing country's growth, says Esan. “The Zambian government authorities frequently refer to Lafarge's cement production and consumption statistics to help assess growth in the economy.” Lafarge has been a key partner to the government, contributing to the development of infrastructure in the economy, and will continue to play a large role in the foreseeable future, he predicts. Not surprising, considering the company has the largest market share in cement and cement clinker.
Furthermore the domestic market is expanding, partly stimulated by increased availability of product out of Lafarge’s cement mills. Demand grew by 35 per cent in 2009, while major export markets like the Democratic Republic of Congo also grew—LCZ is currently exporting an average of 14,000 tonnes of cement to the DRC every month.Buying Zambian cement is a cost effective solution for Zambia’s huge neighbour because it is relatively easy to transport it by road or rail. The next biggest export market is Burundi, which takes 4,000 tonnes a month from LCZ.
The DRC has embarked on the reconstruction of key infrastructure such as schools, roads and hospitals in Katanga Province, and a $10 million deal was signed earlier this year after the country's cooperating partners wrote off a $10 billion debt when the country attained the Highly Indebted Poor Countries (HIPC) completion point.
Lafarge produces two types of cement. The flagship brand is Mphamvu, an all-purpose building and construction cement. It also produces and sells Powerplus cement, which is designed for large construction projects and mines. “The merchant channel is the major segment—the drivers of this segment are mainly residential home construction customers, as well as commercial building developers,” says Esan. However, Lafarge enjoys direct relationships with major mining companies in Zambia such as Vedanta, First Quantum Minerals (FQM), Equinox and Glencore.
Cement demand in Zambia and the surrounding sub region is driven by activity in mining, residential and commercial construction, as well as infrastructure development such as dams, roads, hospitals, schools and airports, Esan continues. “The mining, construction and agricultural sectors are still expanding. However, the growth in these sectors is lower than initially forecast prior to the global economic downturn. Tourism suffered due to the recession and so did domestic consumption.”
Since he took up the reins at Lafarge, Esan has embarked on a programme of organisational and cultural change in an effort to enhance operational efficiency. Lean manufacturing is part of that plan; so is the associated metric of health and safety. In June 2010 LCZ became the first African company to achieve membership of the Lafarge Group Health and Safety Excellence Club. “This is a prestigious ‘club’ made up of high-scoring countries in terms of safety. To be eligible, national companies should not have had a fatality in the last two years, and no recorded lost time incidents (LTIs). The group wants 75 per cent of its business units to attain this level by 2015, so LCZ is well ahead of the pack!” he says.
During the induction ceremony of LCZ into the Lafarge Health and Safety Excellence Club, acting commerce minister Catherine Namugala made a point of praising Lafarge not only for its safety record but also its benchmark social programmes and environmental responsibility. She noted that apart from ensuring employee safety, Lafarge Group was also committed to finding solutions to the environmental challenges by committing itself to reducing its gas emissions and thereby helping to deal with the challenge of climate change and contributing to sustainable development.
The company also works with Doctors Outreach Care International, to provide medical services to communities in the areas in which it operates. It’s a programme that enables patients to be attended to free of charge by specialist doctors in their field, with any treatment and medication administered free of charge, and it has been awarded the best Lafarge community relations initiative in the group.
Lafarge is also involved in education and is building libraries across the country. This project is being done in partnership with an organisation called Room to Read that is active in Asia and Africa, and involves building libraries and stocking them with books and other reading materials. In addition the company sponsors girls in primary and basic education. Other activities include sponsorship of clinics, schools and police stations by providing materials and financial support. www.lafarge.com
