Uganda: Chinese firm takes US$105m Lafarge-Hima expansion works

Published 07 November 2007

Lafarge has awarded a Ush185 billion (US$105m) turn-key contract to China’s CBMI Construction for the later to expand its cement capacity in Uganda from 350,000t to 830,000tpa.

With demand surpassing supply, Hima Cement Uganda Limited (HCL) is undertaking the expensive expansion project adjacent to the old cement factory in the southwestern district of Kasese.

Lafarge officials said that that the contract was awarded to the Chinese firm because of the experience needed for the size of the project, success with similar projects undertaken for the Lafarge group in other countries, the need to adhere to technical standards and guidelines, and the fastest speed of delivery.

CBMI’s director, Mr. Si Guochen told East African Business Week at the new site in Kasese that it was still early to tell how much of the local contractors would be required for sub contract works.

The company would pay experts hired for the different tasks, according to Guochen at about $1,000 (Ush1.75 million) a month with accommodation and meals catered for.

"If we can use local resources, then we shall try our best to use it," he said through an interpreter.

The Chinese firm is doing similar multi- million dollar contracts in Zambia, South Africa and Morocco among other countries for the Lafarge group where it is employing mostly Chinese labour.

HCL, directly employing about 300 and over 400 contractors is also part of Lafarge East Africa comprising Bamburi Cement Ltd, Mbeya Cement Ltd, Lafarge Ecosystems and Bamburi Special Products.

The company was granted the license to mine at the Dura site on October 2 where studies have shown existence of good carbonate limestone reserves following a presidential directive.

Limestone is a critical component in the manufacture of cement, accounting for about 90% of the final product and the location of limestone deposits therefore often determines the location of the cement factory.

When the new highly automated plant commences operations in January 2010, the price of cement across the country is expected to drop as supply steadies. It will also reduce the cost of construction in the country and save the country some $1billion (Ush1.75 trillion) in cement imports according to experts.

Over the last one year, the climbing costs and declining supply have affected consumption patterns in Uganda and the Great Lakes region with a bag of cement peaking at an average of Ush25,000 ($14.28), the highest ever in the country.

The second factory in the country, Tororo Cement in eastern Uganda produces about 800,000 tonnes per annum.

Lafarge group CEO and chair, Mr. Bruno Lafont said at the October 25 ground breaking ceremony for the expansion in Kasese officiated by Uganda’s President Yoweri Museveni that the new cement plant would cut emissions by 20% and become an important site for Lafarge worldwide.

Statistics from the Office of the President show that between 2004 and 2006, Uganda imported about 710,000 tonnes of cement worth $70 million (Ush122.5billion) to meet the towering demand.

Experts and market players have attributed the shortage and high prices to the increased construction boom in the country ahead of the Commonwealth Heads of Government Meeting (CHOGM) due this November and in the Great Lakes region notably neighbouring

With the annual demand for cement in the region, according to experts growing at about 9%, there is need for the cement companies to step up their production to meet this demand through speedier and more efficient packing turn around time.

The Lafarge group, a member of the world’s largest building materials group operating in 75 countries and employing over 80,000 people worldwide is cognisant of increasing demand and is also expanding its Bamburi Cement (one of the largest cement producers in sub-Saharan Africa) operations in Kenya in a bid of continuing to be the market leader.

Bamburi anticipates that good limestone reserves at both the sites will greatly support its expansion plans and see it double its current annual production capacity to about 2.3 million tonnes of cement to the market.