Lafarge Africa Enters Consolidation Phase

By Odinaka Anudu

The newly-emerged Lafarge Africa is showing strong confidence in the Nigerian economy, having entered into a phase that can best be described as a consolidation one.

Exactly last Monday, Lafarge completed the acquisition of its shareholdings in Lafarge South Africa Holdings (Pty) Limited (LSAH), the United Cement Company of Nigeria Limited (Unicem) through Egyptian Cement Holding BV, AshakaCem plc (Ashaka) and Atlas Cement Company Limited (Atlas). The transaction now places the cement maker as the sixth largest entity listed on the Nigerian Stock Exchange (NSE), with a market capitalisation of N521.9 billion.

Lafarge Africa now has 12 million metric tons (MT) capacity, with 5.5MT additional capacity by mid-2017.

It is expected that the transaction will help the firm actualise $350 million growth in the balance sheet.

As part of its consolidation exercise, the firm has now entered into an electricity supply partnership with the International Finance Corporation (IFC) and Wärtsilä, a deal that has been estimated to be worth $400 million. Within 18 months, the logistics will have been over, as confirmed by Richard Arkutu, IFC manager for the Africa Special Initiative for Infrastructure. IFC is providing financial and commercial structuring for the project through InfraVentures, its Global Infrastructure Project Development Fund. On the other hand, Wärtsilä will build and manage the power plant.

The project could more than triple the output of Lafarge’s Ewekoro plant, improve electricity access for about 1.4 million households in the country and help mitigate energy problems of many Nigerian firms, according to the Lafarge Africa and its partners.

With the prospect of constructing a new 220 megawatts (MW) engine power plant that will be connected to the national grid through a purchase agreement with the National Bulk Energy Trading Company, analysts say the agreement is a call for Lafarge to transform WAPCO’s existing 90MW

dual-fuel, captive power plant into a 310MW gas-fired and highly-efficient internal combustion engine power plant. It is estimated that when completed, the plant will have capacity to supply approximately 260MW to the national grid.

By implication, the cement maker will soon have the capacity to be self-sufficient and even sell excess energy to homes and companies.

“We hope we will be able to sell excess energy in 2015. The plan is on the pipeline,” Guillaume Roux, group CEO, Lafarge Africa plc, said earlier, during the press conference to announce completion of Lafarge Africa deal. Apart from this, Lafarge Africa’s boss had earlier said the firm remained the only cement maker in the country that used local coal (at Ashaka) to produce cement, adding that the firm now used biomass to replace fossil fuels at its Sagamu plant.

He further said 10 percent of the firm’s needs had been replaced by biomass. As part of the consolidation exercise equally, Lafarge Africa eyes the use of much more of renewable energy sources at its plants. Real Sector Watch understands that Lafarge Africa plans to have the capacity to use 50 percent of non-fossil fuels, including 30 percent of biomass in their plants.

This Post was first Published on BusinessDay HERE

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