Lafarge begins cement production in Bangladesh

Lafarge begins cement production in Bangladesh
Published: 21 December 2006

Lafarge Surma Cement Limited (LSCL), has started producing cement at a $270m Bangladesh project to meet demand from the country’s growing construction sector. 
 
The LSCL is a joint entity of Lafarge and Cementos Molins SA of Spain, government officials said.  
 
"Initially, the plant will produce 1.5Mta of cement which would meet about 10 per cent of the local demand," Yong Ngai Chan, a senior company official, said while visiting the plant at Chhatak, in northeastern Sunamganj district, 400km (250 miles) from the capital Dhaka.  
 
"It is a unique cross-border project as the basic raw materials – limestone and shale – are mined at the quarry situated in the east Khasia hills of the Indian state of Meghalaya and transported to the cement plant by a 17km  overland belt conveyor," Chan, managing director of LSCL, told reporters at the site.  
 
The belt runs for 10km on the Bangladesh side, mostly passing through marshy land, and runs through 7km of hilly terrain in India.  
 
The project, envisaged in 1998, has been built at a cost of $270m.  
 
Besides Lafarge and Cementos Molins, the principal sponsors of the project, its equity partners include International Finance Corporation (IFC) of World Bank, Asian Development Bank (ADB) and local conglomerates Islam Group and Sinha Group.  
 
The ADB, IFC, European Investment Bank, German Investment and Development Bank and the Netherlands Development Finance Company also financed in the project. More than $15m were also collected for the project through initial public offerings, another Lafarge official said.  
 
Bangladesh is short of limestone and other ingredients necessary for the production of cement. Almost all its existing cement requirements are met from imported clinker, which is then processed by small and medium-sized grinding factories. 
 
"Thus, being a fully integrated plant with its own quarry, the Lafarge Surma Cement project assumes an unparallel significance," Chan said.  
 
To ensure uninterrupted production in a country that suffers from frequent power shortages, the firm has set up a captive power generation project with 30 megawatts capacity.  
 
Chan said the poverty-stricken south-Asian nation, beset by strikes and vioLent protests ahead of a Jan. 22 election, offers good growth potential.  
 
"We choose Bangladesh as our investment destination because it’s economy was emerging despite political uncertainty and tension," Chan added.  
 
Demand for cement in the local market is increasing at the rate of more than seven per cent annually which Chan termed as "quite encouraging." There are about 60 cement factories in the country but only 16 are in regular production.