Lafarge speeds expansion as demand soars, Morocco

Lafarge speeds expansion as demand soars, Morocco
Published: 08 March 2007

The Moroccan affiliate of Lafarge SA will accelerate a capacity expansion to cope with soaring demand, its managing director said on Wednesday.  
Low-income housing, road infrastructure and tourism developments are using growing quantities of cement and ready concrete, especially in Morocco’s long-neglected north, site of a big new port and industrial complex.  
"It is not impossible that we find ourselves with two-figure percentage growth" in the Moroccan market this year, Lafarge Ciments Managing Director Jean-Marie Schmitz said at a results presentation in Casablanca.  
The Moroccan government plans to spend 150bn dirhams between 2002 and 2015 on basic infrastructure including roads, motorways and ports.  
Competition among companies trying to feed the building boom is fierce, as foreign cement firms look to muscle into the market and Lafarge Ciments’ local rival, Holcim Maroc, invests heavily to boost output.  
Schmitz said Lafarge Ciments was accelerating the timing of investments to cement its market position. 
Part of that involves bringing forward - to the start of 2009 from 2011 - a plan to double the capacity of a cement plant in nearby Tetouan to around 2Mt.  
Last year, Lafarge Ciments’ net profit grew 11.6 per cent to 955.1m dirhams (US$112.5m), operating profit before financial costs rose by the same percentage to 1.345bn dirhams, while turnover climbed 18.4 per cent at 3.731bn dirhams.  
Sales by volume grew 12.3 per cent, topping a 10.4 per cent increase in the broader market.  
But profitability was held back by rising energy prices, with the cost of petcoke climbing to US$67/t from US$57 in 2005 and electricity prices rising eight per cent.  
Higher maintenance costs at a key plant near Casablanca, disruption during work to permit capacity increases, and saturation of capacity in the north weakened productivity.  
With combustible fuel in Morocco costing three times that in Egypt,  Lafarge Ciments aims to lower energy costs by doubling the amount of tyre waste used as fuel this year and as much as tripling installed wind farm capacity at its plants.