Lafarge local content drive cuts forex use
Lafarge Africa Plc, leading building solutions provider in Nigeria,has increased local sourcing of critical materials to lower the foreign exchange component of its operational costs.
Michel Puchercos, Country CEO of Lafarge Africa disclosed this at the AGM in Lagos on June 7, 2017.
A turn-around plan, launched in the third quarter of 2016 amid country-wide gas shortages, was already counting in 2017 leading to record level fuel flexibility at its Ewekoro I plant and Sagamu plants, an achievement the government recently commended.
Puchercos noted that, “the plan is to increase the use of alternative fuel (biomass) and locally mined coal to lessen production disruptions due to gas supply shortages. In 2017, we aim to consolidate energy optimisation at Ashaka, Ewekoro 2 and Mfamosing”.
Also at the AGM, shareholders agreed to issue up to a record N140 billion in additional shares to existing shareholders, the Rights Issue is planned to be launched in Q3 2017.
Listing the benefits of recapitalisation, the first since 2005, Mobolaji Balogun, Chairman of the Board of Directors, said “It reduces our foreign currency exposure by approximately half, improves our cash flow and positions the Company for our future capacity expansion plans.”
Lafarge Africa, with support from LafargeHolcim, is taking measures to hedge against currency risks.
The company is embarking on a Rights Issue to reduce its exposure to adverse foreign currency translation losses as experienced in 2016 following a 40% depreciation of the Naira against the US Dollar.
Puchercos said that doubling the production capacity of the Mfamosing plant in Calabar to 5 million metric tons per annum has “contributed significantly to Lafarge Africa’s capacity and footprint in Nigeria and has begun to impact positively on the financial results of the Company.”
Combining its operations in Nigeria – Ewekoro and Sagamu plants in Ogun State, Ashakacem in Gombe State, Mfamosing in Cross Rivers State, Atlas cement in Rivers State and Ready-Mix Nigeria with its varied operations in South Africa, Lafarge Africa has a current installed cement capacity of 14.1Mtpa.