Lafont had an interactive session with journalists after the commissioning of the state-of-the-art Ewekoro II cementplant in Ogun State. Excerpts:
How will you assess your investment in Nigeria?
The inauguration of the new cement plant is a visible signal of what Lafarge is doing in Nigeria for more than ten years, which is to purely become the supplier of choice of cement and building materials in Nigeria, hence in Africa and that is what we do also, usually in the world mainly in emerging countries.
How do you see Nigeria, from an investor perspective?
Nigeria is a very important country for Lafarge. We have seen it for a long time. And it is going to become even more important in the years to come. The operations you see here are large operations, they are flexible operations, and this is one of the largest we have in Africa.
How did you come to that?
We came to that after a long period of learning, training, team building, efficiency safety and finally, investments and this investment of a 2.5 million tonnes capacity will prove to be right and at the right time because we have all the resources not only the finance, not only the equipment but also the team to run it very efficiently, as efficiently as anywhere else in the world. It is our plan to have a world class cement plant in Nigeria, which is completely reflecting what we always say that we will do and we try to do what we say.
Lafarge will be able to produce in Nigeria about 8 million tonnes of cement and remember that the total cement market is roughly about 80 million tonnes as of now and this will continue to grow. I am very pleased with the achievement of this project in a relatively short time with a very strong team. The Lafarge team in Ewekoro II is a Nigeria team, 95 per cent of them are Nigerians. That is to show that we are prepared to grow in this country and to grow with the country.
What are your immediate goals?
First, Lafarge wants to be the best supplier of choice; that means we will develop new products for the market. Our goal is to satisfy better and better the needs for construction. And the need for construction is not just cement bags, but how to use the cement, how to make construction affordable, how to make solid, sustainable and environment-friendly construction.
Lafarge has a worldwide presence and has also a unique know-how in terms of making concrete. We have a research centre in France which is the largest research centre in building materials in the world and Nigeria is already benefiting from all the results of this research. Again, we continue to talk about new products; innovations and delivering more value to our customers and not only in the most developed countries, but mainly in emerging markets.
Next, we will continue to support and accompany the growth programme of the country. We will contribute to the 17 million new affordable homes being announced for the year 2020. That is exactly in line with what I was saying.
I think we have a contribution to make to reduce the cost of construction and to provide homes with energy-efficient solutions; not only in terms of solid, sustainable products but also to be able to consume less energy while being more effective and affordable.
We aim to build a plant where no accident will happen because of bad design, unsafe conditions etc, so that explains in a nutshell that the construction of this plant was actually done based on research findings. Lafarge is strongly committed to Africa and Nigeria. We have been the largest player in Africa for a long time and we want to keep it and to grow with it.
The critical issue in Nigeria today is meeting domestic demand, from what you have said, are you agreeing that you can meet the domestic need of the people? Despite the fact that the demand for cement has continued to grow by the day, does it mean you are going to increase your capacity from 8 million tonnes?
First, I love to say that the gap has dropped a lot, and we are working to meet the need between supply and demand. There are always seasonal effects, periods of high demand and periods of low demand during the year. This is because of weather or season. But over all, we have never been exposed to the balance between supply and demand. We work at providing the country with the appropriate value; that means to grow our capacity along with the consumption, at the same time, one year can be a very fast in growth, another might be a slower in growth.
We are to look on a midterm basis, and not just on one month, on a year, on a week, we are to look more on the midterm. When you build a cement plant, you are building for 50 years, this plant has been built for 50 years and we are still operating and so you are not building for the demand of today, of cause it is good for the demand of today, however, we are looking at the midterm and our strategy is to grow with the demand.
What are those major things you have put in place to minimize the impact of your production on the environment?
First of all, all Lafarge plants are dedicated to limit the dust emissions to the minimal, for example, dust emissions are 10miligram and you know is much below even being low and everything is done like that, so we are taking the high standards, we built the same plant that we will build in France, Japan or in America, we have not built to the law of today, but we built with international standards.
Mr Bruno Lafont
Lafarge is the first cement company to have committed itself to reduce dust emissions unilaterally without any regulations and we have done that for more than ten years and we have achieved more than what we have done, we have promised to reduce our total emissions by 20 per cent between 1990 and 2010, we have achieved more than 21 per cent. And on everything we strive to in the design of our plant and then during the operations to fulfill what we do.
I visited our plant in Ashaga some days ago, our plant which is more than the US plant built by Large is now much cleaner than it was five years ago and that you can see just by driving around and that is the result of what we do, not only by investing, but by managing, controlling and making sure that the environment in question is fully under control and is resulting in a continued simple means.
As you know, Lafarge is one of the critical company to this economy and I know you have a large number of Nigerians in your system, I would like to know, within the next ten years, how many Nigerians are you going to take into the system, I know you have a large number already, I want to know the percentage that you are going to add in the next ten years, also, are you planning to expand your facilities, I know you have one at Ashaga, Sagamu are you planning to have others in other states.
About employment, we are a local business and we want to develop locally. We want to develop local teams for the operations of our local operation that is our goal. At the same time these require a lot of training, for example the plant Manager of Ewekoro II has spent several years in the US managing the US plant, so he has learnt outside Nigeria, in the US, sent by Lafarge to one of Lafarge’s plant in the US and now he is back to fully utilize all the experience he has acquired there, and that is how we do it, we have several high level Lafarge Nigerians employee working outside Nigeria, learning outside.
Myself when I was young I was sent to Turkey and to Germany, I spent 10 years outside my country before returning to France and so that is our model, and so there will always be some foreigners in Nigeria too for this reason, because we are to keep an open mind set, but 95 per cent of Nigerians, that is a good number, I think, I will say is a very good number for this country and am very happy because it is as a result of a lot of efforts and investments we’ve put in this operations in the last five to ten years.
What percentage of Nigerians are you likely to add in the next ten years?
When you have a plant with employee of 300 people, you could think that probably 600 people are indirectly operating from this plant because they are outside contractors, they are people who are supplying fuel, they are suppliers, and they supply a lot of things, around, so this plant is creating direct and indirect employment. And then the growth, when we double the plant we add 300 people, 300 salaries, plus the sub-contractors, plus direct and indirect employment.
So if we think Lafarge will double its presence in Nigeria, yes we will double the number of employment in Nigeria and if we double our presence in Nigeria, it will mean construction will also accelerate, and with constructions, a lot of job will be created and we are also ready to contribute to train business people on very different jobs and not really only in construction.
So are you considering other state?
Yes, we are considering to invest, we are in the face of study where to invest, we have existing priorities with this location where we are and we want to be very solid on our market as I said, to deliver on the growth of the demand, but of cause that does not prevent us to look at other local market, yes we might develop in other states.
Which state?
It is too early to tell you exactly which one!
Between the factory price and the retail price there is a huge gap, why is that so, is it possible to narrow it?
There are many ways to narrow it, it is not the only Nigeria where this happens, everywhere in the world it is the same and when the demand is rising there is always some type of speculations, so our goal is that we make cement available, when cement is available there is less room for speculations, so there is little between the price elsewhere and the price that we sell here at the gate of the plant and the price of the market. The price between the gate and the market could be reflecting the price of handling by the retailer or the distributor; plus the consultations.
Going by the Federal Government’s plan to ban the importation of cement, do you think Lafarge and others have enough capacity to meet the demand of the people, can you unfold to us the 22 to 23 percentage of your investment profile in Nigeria, because as construction is growing, demand for cement will increase and definitely the price crisis will continue, what efforts have you put in place as regards this?
First I will tell you, we are managing the difficult, challenging constraint, and the heaviness of the industry, heaviness because you see it is not a small thing, the time it takes to set it up and the time it takes for it to work at full capacity, you have heard of different figures but it is more to attain 100 per cent of the product, and then when you look at the percentage of the growth in one year of cement demand, compared to 40 per cent, it is nothing compared to one per cent, two per cent, four per cent of the total and again we are working on these constraints.
Secondly, a new company is not a dramatic situation, for example, in the US when the demand is high, the US pause, what is very important is to have a strong local investor, able to supply and able to produce in a competitive way, because what dictates the price now should not be the import price it should be the cost of production of cement. When you are importing 70 per cent of your requirement, it is the import that dictates the price, when you produce more than 80 per cent of the demand, it will be local competition that will dictate the price, so that is the difference.
What is the phase two of your plan?
To tell you the phase two of our plan is too early because it is not every thing we will address, as some are still in the making, but of cause we are trying to reconsider our capacity in Ashaga, we are considering the North, we might also consider to do complimentary investment in the South East and we may have other idea also. We are looking, we are watching and we are studying, and when we are ready we’ll talk about it.
Have you experienced any project variance in the project funding?
No, it was not big project finance, the company is generating this flow and the shareholders and Lafarge has capacity to carry it out. It is a very small thing, is not necessary.
How much?
We do not disclose the figures, when we announce a figure originally we do it. We have not had of any over run in this project. Of course there are always some problems but we faced the problem and nothing went about the sensitivity with the project.
In term of local product, Lafarge today is the leader and largest. For us the leader is not always to be the largest, the leader has to be strong, has to be competitive, and has to be able to create a difference. Our difference is better visible than to talk about it. I have told you that we are working on several things, safety in the plant, quality of our product, sustainability of our management, environmentally friendly management, doing what we say, holding on our commitment, to be able to bring in new product to the market, working with the community, all these things can create a difference.
The staff of Lafarge with already mix operations is an important decision because you can see in Lagos some Lafarge staff there, is already mix up, you will see some of them in other places in the country, that will help to deliver, drop site using more technical products, using or wanting to make the construction more efficient and that will also provide new products for block manufacturers.
Looking at your price compared with Dangote, there is a huge difference, and with the new plant what should we be expecting?
You are saying that our price is twice that of Dangote?
Yes, almost N200 to N250 difference.
That is not a very big difference, if the customer accepts to pay for the slight difference, it means he accept to pay for the quality, if the customer is ready to pay it means he recognizes the difference, that means he is also ready to accept the difference in price. I cannot go more in details but is about that. If I am to go into details I would not say that Lafarge price is above the price of competition all being equal.
In what area will the host community benefit, I am talking of the people in the area where your cement is being produced?
Corporate social responsibility (CSR) means something for us, for a very long time, host community means something very important to us, we start CSR more than 100 years ago. I would say we are more profitable now, we are publishing a sustainability result every year and in the sustainability results you have all our commitment which is smart commitments. Smart commitment means you can measure on the results, and those commitments are directly on the environment on social responsibility and on other things.
On social responsibility, we look at health, safety, education, diversity, employment and all things which can improve the development around the operations we have and the economic development.
May be Mr. Jean Christophe Barbant, the Country Manager, can give details to you, what we are doing here, he will be able to say and will be more practical. The Country Manager Mr. Jean Christophe Barbant
In terms of social responsibility project, we like to focus on areas which are very important to us, the first area is health, we have in all of our plants, Ashaga, WAPCO, every plant a clinic where we of cause take best care of our own and that of their family. So health is very important for us, we want to build healthy staff in terms of health management in our operations.
The second area where we put a lot of focus is youth empowerment. Youth empowerment is basically allowing you in our community to be trained to be able to get job, employment when they leave their school and Lafarge is working on the project together with the state of Gombe and the University of Gombe to develop the employability of the youth in those area.
