The Chilean unit of Lafarge is investing US$27m in the construction of a new plant in southern city Puerto Montt in region X, according to local press.
The new infrastructure will increase the company’s annual production capacity from the 1.6Mt of cement currently produced at La Calera plant, to 1.9Mt, said the company’s general manager, Erico Zursiedel.
The new plant, which will help Lafarge keep up with the country’s increasing cement demand, is slated to launch operations by year-end.
One of the concerns in Chile’s cement industry is the current power crisis that affects the country, which is heavily dependent on imports for its fuel requirements. Cuts in the natural gas supply from Argentina have forced industry in general to turn toward more costly fuels for energy generation and production. This is on top of the international rise in oil prices.
Increased production costs due to the power crisis are expected to lead to a 7-10% hike in cement prices, said Zursiedel, who added that during 2006 the market was relatively flat on the year before.
But in spite of the challenges faced, the executive projects a 3% increase in Lafarge’s results for 2007.
Chile is the French company’s second largest market in Latin America, after Brazil, according to past reports. The firm controls 34% of the Chilean cement market.
The company, formerly called Cemento Melón, changed its name in May to reflect the majority ownership of Lafarge.