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Lafarge in Nigeria

Lafarge in Nigeria. Guillaume Roux Executive Vice President, Lafarge Group. Lafarge in Brief. Lafarge was created in 1833 It is the world leader in building materials and holds top-ranking positions in all of its businesses: Cement – World Leader Aggregates & Concrete – No. 2 worldwide

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Lafarge in Nigeria

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  1. Lafarge in Nigeria • Guillaume Roux • Executive Vice President, Lafarge Group

  2. Lafarge in Brief • Lafarge was created in 1833 • It is the world leader in building materials and holds top-ranking positions in all of its businesses: • Cement – World Leader • Aggregates & Concrete – No. 2 worldwide • Gypsum – No. 3 worldwide • Operates in 79 countries with 2,200 industrial sites worldwide • Employs 84,000 people • 19,033 million Euros in Sales as at December 31, 2008 • Listed on Euronext Paris stock exchange 2

  3. A well balanced geographical portfolio,a worldwide presence in 79 countries on every continent Central & Eastern Europe Workforce: 8,600 Sales: 1,761 M€ Western EuropeWorkforce: 17,900 Sales: 6,021 M€  €19 billion in sales  84,000 people in 79 countries  2,200 industrial sites North America Workforce: 14,200 Sales: 4,270 M€ AsiaWorkforce: 20,900 Sales: 2,029 M€ Latin America Workforce: 4,400 Sales: 968 M€ Developed countries  54 % Sales – 40 % COI Emerging countries  46% Sales - 60% COI AfricaWorkforce: 11,200 Sales: 2,373 M€ Middle EastWorkforce: 6,400 Sales: 1,611 M€ Lafarge 2008 key figures

  4. Lafarge in Brief • Our business: we extract mineral resources from the earth and transform them into major construction materials. • Our activities meet the basic needs of mankind by: • Providing housing and infrastructures all over the world. • Shaping the everyday surroundings of millions of men and women • Lafarge is more than ever at the heart of the way our societies are being transformed. • Lafarge has for many years pursued a sustainable development strategy. • In 2009 and for the fifth year in a row, Lafarge was listed in the ‘Global 100 Most Sustainable Corporations in the World’. 4

  5. Lafarge Presence in Nigeria • Turnover – c450 M€ • Employees – c2 000 • 5 integrated plants, 1 grinding station, 2 Import terminals • Total installed capacity – 5.5 MT in 2009 and c10 MT by 2012 horizon Ashaka 0.8 Lafarge plant Grinding station Abuja Imports terminal Projects UNICEM (JV of Lafarge, Holcim, Dangote, & Flour Mills): 2.5 Mta Wapco / Sagamu 0.8 Wapco / Ewekoro 1.3 Ewekoro / New Line2 MT by 2011 Calabar Sagamu / New Line2 MT by 2012 1 Grinding Station– 0.5Mta Unicem Port Harcourt Lafarge / Atlas 0.5 Mta Source: company

  6. Our objective • Maintain a leadership position in the country:  From 3.5 million tones in 2008 to 10 million tones by 2012 • Contribute to the economic and social growth of the country • Reduce the dependence upon imports 6

  7. BACK UP

  8. Our main « people » challenges in Nigeria… • HEALTH and SAFETY FIRST: Our ambition is to rank among the top world-class industrial groups for safety performance by ensuring the safety of our employees and contractors • HEALTH: we are developing communication campaigns within our workforce about the fatal dangers of Malaria and AIDS and the ways to be better protected against these diseases • SAFETY: we have defined a common and compulsory policy, rules and standards in order to achieve significant improvement. • No lost time incident (LTI) in Ashaka for 970 days, but 3 fatalities and 6 LTIs in Wapco operations last year: a lot remains to be done to put safety in the heart of our culture 8

  9. Our main « people » challenges in Nigeria… • SUPPORT TO THE COMMUNITIES: communities living around our production sites expect that we support their development. On the other hand, we believe that there is no lasting leadership without both respect for the environment and social responsibility • We entertain close relationships with the communities to understand their needs and the ways to help their long lasting development • We support communities in many ways, going beyond our role as an economic player, with construction, housing, education, health care, heritage conservation, youth empowerment etc. 9

  10. Our main « people » challenges in Nigeria… • PEOPLE DEVELOPMENT: • It is our goal to promote first Nigerians into positions at all levels of the company • Specialized skills and professional experience are scarce, especially in the technical areas and away from large cities • We organize a continuous development of our local talents through learning tracks and Individual Development Plans • We expatriate Nigerians to other Group Units to long term training (management positions, new plant start up…) • It is difficult to attract “excellent” expatriates for the very few positions that cannot –temporarily- be occupied by Nigerians • An overly negative image of the reality country… • Significant salary premiums are the normal practice in these cases to overcome reluctance 10

  11. Other main challenges in Nigeria… • ENERGY SUPPLY: Power and gas are strategic inputs for the production of cement. Shortages are creating important damages to our capacity to deliver enough volumes from our production capacities • Wapco: 130 hours lost due to gas shortages and 180 hours lost due to power failures in the 1st Quarter 2009 • We are now investing in own power plants or looking for Independent Power Providers to supply our needs in all our cement plants • We are investing in “dual firing” capacities to allow our kilns to use alternative energy sources: gas, fuel oil or even coal • Development of our own coal mine in Ashaka 11

  12. Other main challenges in Nigeria… • LOGISTIC CONSTRAINTS • The lack of rail transport and professional trucking companies restrict our abilities to deliver our markets • We have to accept to sell a large part of our production “ex-works”, limiting our customer service and our control of the destination of our products • We collaborate with the more professional transporters to upgrade the safety and quality of their deliveries • The congestion of ports creates important difficulties and delays in the import of equipments / raw materials • We have increased our level of “strategic spare parts” to avoid lengthy production disruptions • We have to accept delays and higher costs for our investment projects 12

  13. Other main challenges in Nigeria… • ADMINISTRATIVE CONSTRAINTS: • Corporate Governance: • We have defined and communicated a rigorous “code of business conduct” to be respected by all our employees • We have put in place a “whistle blower” system with an independent auditor to identify abnormal activities • Continuous activities of internal control are required in all areas of the business (sales, purchasing, stock management…) • Unstable legal environment • Restrictions on work permits for foreign workers • Import bans/restrictions for raw materials • In some areas, efforts and time are required to convince the relevant authorities that regulations with apparent short term benefits can create a mid term disadvantage for the country 13

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