Lafarge still stalls on Azer plant

Lafarge still stalls on Azer plant
Published: 30 December 2007

No progress has been reached in cement factory negotiations between Azerbaijan Investment Company and France’s Lafarge despite they signed a preliminary protocol on the occasion. AIC chief executive Anar Akhundov said that in December the Lafarge mission failed to accord finally all the issues surrounding future factory location. “In January the French company will send another mission to Azerbaijan to go on relevant discussion,” Akhundov emphasized.

Lafarge has finally declined the use of a quarry in Tovuz region and the location of its future cement enterprise there. It now wants to build the factory in Baku. In this connection it is going to make choice between quarries in the Garadagh district of Baku or adjoining Gobustan district.

Under the primary estimate, factory’s capacity can be 1-1.5Mta roughly equivalent to 40-50% of Azerbaijani cement market for an investment of EUR150-200m. Lafarge, Ministry of Economic Development and AIC first signed the Memorandum of Understanding for the project on December 28, 2006.

Local construction groups also interested in building their own cement production facilities might claim the delaying tactics by Lafarge are affecting their own proposals with the Azerbaijani government  and wonder if Lafarge really intends to build a new factory and go head-to-head with Holcim in what is relatively a fairly modest regional market. Alternatively Lafarge may be still mulling over the small print in a deal that will most likely enrich local investment groups for little real involvement in the actual project implementation.