Lafarge plans to double production in China

Lafarge plans to double production in China
Published: 17 October 2006

Lafarge plans to double its production capacity in China in the next few years, according to the company’s chief executive officer.

"Our cement production capacity in China should reach at least 40Mt, if we follow China’s 11th Five-Year Plan," Bruno Lafont told reporters during his first visit to Beijing since he took over as CEO in January.

The French company is currently able to produce 20Mt of cement a year in China, and has already started to expand its production facilities. Construction of a new line in Chongqing has started since the beginning of the year and a second line will begin developments at the Dujiangyan plant in Chengdu this month.

"We are also studying new projects in all the regions we operate in," said Lafont. Besides building new facilities, Lafarge’s expansion strategy includes mergers and acquisitions. 
 
The joint venture in 2005 with Shui On Construction and Materials Ltd, a top cement company in Southwest China, to establish its leadership in the local cement market, has been followed by an agreement to buy a controlling stake in another cement producer, Sichuan Shuangma Cement Co, late last year.

The company is now dedicated to business integration, but is still looking for further merger and acquisition opportunities in Chengdu, Chongqing, Yunnan and Guizhou, where it already has bases. New infrastructure construction projects have presented good opportunities to set up strong local positions in Southwest China. Lafarge aims to have an annual growth of more than 8% for its cement business in China in the next few years. According to Lafont, China is already one of the largest markets for the company’s cement business, amid continued co-operations with Chinese equipment suppliers in building facilities outside China. It has signed contracts worth RMB 2 billion to purchase Chinese equipment in January.