Listed cement manufacturer, Lafarge Cement is looking at investing $20 million towards the rehabilitation of its cement manufacturing plant in order to boost its volumes.
The cement manufacturing company will increase production capacity to 90 percent from the current 70 percent once the rehabilitation of the plant is completed by next year.
In an interview yesterday, Lafarge Cement chairman Mr Johnathan Shoniwa said the investment was part of the short-term projects to increase volumes of cement.
"As you recall for the past five years we have been spending about $5 million every year for plant refurbishments, so it is not a new thing but we are now focusing on specific projects which will give us more capacity on the existing plant.
"In the short-term we are focusing on existing plant rehabilitation as believe there is potential to produce more volumes that will satisfy the local and the export market," Mr Shoniwa said.
He said the company's long-term plan will be focused on setting up a new plant to complement the one that is currently in existence.
"We will be importing new technology as well as sophisticated equipment for the plant. In 2014 and 2015 we would be focusing on projects that will increase the capacity for the existing plant.
"Feasibility studies are being conducted on the long-term projects and we hope this will help us increase our revenue inflows," said Mr Shoniwa.
He said the company has reduced its export volumes of cement to regional markets due to the fluctuation of the South African Rand.
"In the past, the export market has been a big one for us from a foreign currency point of view. We channelled a lot of products into the export market but lately the situation has changed," he said. The low demand of cement has been a major challenge to the operations of the company but Mr Shoniwa said they are rolling out strategies to correct the situation.
The third quarter is usually the peak demand period and the volumes are not at the level that the company had anticipated.
"We understand there is the issue of liquidity but there are some avenues that investors are looking at in terms of development," he said.
Demand has been on the softer side because a number construction projects have been on hold due to funding issues.
Lafarge Cement has in the past five years injected about $25 million into its plant upgrading exercise, a move that is aimed at boosting the company's operations while easing product supply.
"The demand has been on the softer side but we are aware of a number of construction projects that are on hold due to funding issues and we believe once things start happening, demand would actually go up," Mr Shoniwa said.
While presenting financial results for the company last year, Former Lafarge chairman Mr Muchadeyi Masunda said he was optimistic that the company's performance would improve as a result of measures being implemented for instance plant rehabilitation.
"Following the successful implementation of various cost reduction exercises, profitability is expected to improve," he said.
- herald
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