‘Lafarge will continue to meet specific needs of consumers’

GUILLAUME ROUX is the group managing director and chief executive officer of Lafarge Africa Plc, Nigeria’s second largest cement maker. In this interview with ODINAKA ANUDU, he speaks on Lafarge’s position on the recent price reduction by a competitor as well as enormous transformation going on in the newly emerged Lafarge Africa, among other issues.   

You have just transformed from Lafarge WAPCO into Lafarge Africa. What is Lafarge Africa bringing to the Nigerian cement market?

It is really about creating a great platform for growth. It is a combination of four businesses-Wapco Operations, Ashaka, UniCem and Atlas. By putting them under the umbrella of Lafarge Africa, we are creating the first phase of a very strong position in Nigeria. Today, we have about 8.5 million tonnes and will add another 5.5 million tonnes in the next three years.

If you push it a little bit further, it doubles capacity. This is a very strong platform for Nigeria and another interesting part is that we will be present in all parts of the country. The consolidation story is one side of the platform for growth.

Once you put these together, you put enough resources to continue to grow because Nigeria is going to be a very strong market. I understand that in 2020 or 2050 one out of five births will be Nigerian. So the potential for growth is enormous. Today the consumption per capita here is only a little above 100 kilogram, and it will go up significantly because of the infrastructure needs.

At the same time, the consolidation combines the largest economy in Africa, which is Nigeria, and the second largest, which is South Africa.

South Africa is a bit more mature, second market in size and a little bit more than half of the Nigerian market.

By combining the two, we still have quite a stable cash flow from the South African business, with potential for growth, but also the availability of more sophisticated solutions and products for our customers that we will be able to bring faster to Nigeria. With South Africa at the onset, we have 12 million metric tonnes already. We will add about 5.5 million metric tonnes in three years and will get seventeen and a half very soon, while also becoming a diversified business.

Your major competitor has just announced price slash. What is your reaction to this?

Lafarge operates under strong corporate governance principles that preclude our involvement on competitors’ pricing.

What I mean is, do you have any plan to reduce your own price?

For us, pricing is a function of certain economic and operational indices.

We hold our consumers in highest esteem and will continue to make competitive solutions available to the market. However, I can assure you that we have also responded in our own way and our customers are aware of that.

But do you have any short-term plan to develop new products?

We already have quite an innovative range. We have the largest range in the country; so when you talk about cement products, we have what is called Classic Cement, which is good for all types of construction. Then we have the Powermax, used for high-rise constructions or technically high-rise buildings. We also have Supaset, which has been specifically designed for block makers to allow them have faster setting. We have what is called Sulfur Resistant Cement, which is particularly suitable for bridges, constructions where there is sea water or subject to alkaline erosion. We also sell today a product which we call Roadcem, which is specific for road construction, and there will be more coming along.

And this is just cement. We have ready mix business and it is growing fast. Here we have a very strict quality control. We have different products for different purposes. We have ready mix for foundations; we have it for columns, for beams and this is gaining a lot of traction, and it is again new innovations.

In terms of quality, is what you produce here similar to what you manufacture in Europe and elsewhere?

Absolutely. They are exactly the same as what we have in every part of the world. And not only that, we actually benchmark regularly the performance of our laboratories to make sure they are of the highest standards. So we check daily the quality of our cement. We judge the performance of our labs on consistency. We provide cement which is very consistent. Our customers build their mixes; they know the quantity they need to use because our products are consistent. This is very much appreciated in the construction business.  This is the same as our ready mix brands. We develop a world-wide quality control of our mixes, which is applied here and in any part of the world.

You recently entered into a $400 million electricity deal with the International Finance Corporation and  Wärtsilä?

How soon will Nigerians begin to see results?

There are two phases in that project. The first phase deals with providing to the grid the excess power that we are already capable of producing. We hope that by the middle of next year we will be able to provide to Nigerians an additional 40 megawatts to the consumers around our plant.

This is the part of the phase which we believe is quite attractive. The second phase, when we build it,  will provide additional 220 megawatts.

This will take a couple of more years, about 2016.

How do you intend to improve your relationship with the Standards Organisation of Nigeria (SON)?

We have had a good relationship with SON for quite a number of years. We work a lot with the agency to improve the quality of cement, and we will continue to do that. We do not have problems with government institutions in Nigeria, not even SON. We feel it is important to involve other stakeholders in developing new standards. And that is not just the quality of cement but also the quality of construction and enforcement of building codes.

Quality of construction is a very important topic in Nigeria and we want to be part of the discussion that leads to the construction of very strong standards in the future. We want to make sure that the way standards are developed in Nigeria is for the good of the construction sector to improve in a sustainable way.

And in order to do that we believe that in the development of these standards, there is need to involve other stakeholders. It is important to follow the normal international way of doing things. This is the topic of our discussion with SON.

But do you have any intention of upgrading to the mass production of 42.5 grade?

Lafarge has been producing 42.5 long before the competition set in. We have been producing Powermax long before now.  We have the capacity to produce all grades, but we want to do what is right for the consumer always.

ODINAKA ANUDU