Bheki Mpofu
25 July 2008
Johannesburg — CEMENT maker Lafarge SA said yesterday the building of its Randfontein plant, a key part of its plans to increase production by about a quarter, was on track to meet its October completion deadline, despite power cuts experienced earlier this year.
The Randfontein plant is part of a R1,2bn capacity expansion, which is expected to lift Lafarge's annual cement output by 1-million tons to a total of just less than 4-million tons.
The investment includes the expansion of its Lichtenburg operations in North West, expected to come on stream in January. The company has another plant in Richards Bay, with output of about 200000 tons.
CEO Albert Corcos said the greenfields project on the West Rand would grow Lafarge's market share in Gauteng from 25% now. PPC and AfriSam are the two market leaders in SA's cement industry .
"Despite the challenge of dramatic international freight rate escalations and power shedding, which meant some onsite activities came to a halt, the project is on schedule for completion and on budget," Corcos said.
He said growth in demand for cement had weakened in recent months due to a slowdown in the residential building market, but consumption was still high.
The slowdown now follows shortages last year, which saw some companies forced to import cement to meet growing demand.
Corcos said cement consumption was driven largely by the housing market, making up 70%, while infrastructure comprised about 10%.
The residential sector has been hit by a combination of higher interest rates and a slowing economy, which has affected consumer confidence.
"Unluckily, the housing market, which sustains cement industry growth, has been suffering the past couple of months. We believe we are going through a hard time, but expect demand to pick up again after 2010 as the economy recovers," he said.
"With this R1,2bn investment, Lafarge has taken a long-term view of SA's economy -- that it will continue to grow, and as it does, so will cement demand. Our projection is we will even need to invest in extensions of plants, or in new plants," Corcos said.
Lafarge also announced yesterday it was financing the R40m new bulk power supply Middelvlei substation, which will collect and redistribute power to the plant and provide electricity to about 30000 people in the surrounding townships.
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