Shareholders in the emerging Lafarge Africa are hoping that the new combination will increase its anticipated 12 million metric tons (MT) capacity to 17 million MT in 2017. Lafarge Group recently announced intention to transfer its shareholdings in businesses in Nigeria and South Africa to form Lafarge Africa. The expected capacity of the combination is 12 million MT, but there is now a possibility that more capacity will be added by 2017.
“We have been assured that all outlined expansion projects in the business units will continue and while Lafarge Africa will immediately have about 12 million metric tonnes once concluded, an additional 5.5 million metric tonnes will be added within a space of three years,’’ said the shareholders in a recent address read by Sunny Nwosu, national coordinator, Independent Shareholders Association of Nigeria in Lagos.
The transaction is expected to consolidates Lafarge’s 35 percent holding in the United Cement Company of Nigeria (UniCem), 58.61 percent in Ashaka Cement and 100 percent in Atlas.
Analysts say the emerging Lafarge Africa will have geographical and product diversification and a much stronger balanced sheet, while bringing on board the advantages of combining the South African business such as stable cash flows with high growth potential as the leadership of the new transaction will likely comprise seasoned executives with many years of experience in Africa and the building materials industry.
CSL Equities, economic and market research firm, had in its June report, predicted that the intended consolidation, with a unified management across four businesses in Nigeria, was much better positioned to deliver growth than Lafarge Wapco as a stand-alone company, adding that there would be great dividends from the diversification, given the enormous opportunities in the undeveloped Ready Mix Cement business, which Lafarge Wapco has developed more than any other cement maker in the country.