Lafarge's decision to expand in Zimbabwe adds to the mix in sub-Saharan Africa.
As we discussed in Global Cement Weekly #104, Dangote and PPC (formerly Pretoria Portland Cement) may be facing off as the biggest local cement producers in the region but the influence of the European-based producers should not be dismissed too readily. Investing US$200m over the next 10 years matches PPC's similarly sized investment announced in November 2012. According to Lafarge, the spend will help maintain the cement producer's market share in the country.
The other point of note from Lafarge's Zimbabwe announcement is the emphasis on the multinational's 'Building Better Cities' campaign in the story. This is unsurprising given that that Lafarge Zimbabwe Managing Director Jonathan Shoniwa made the comments about Lafarge Zimbabwe at a branding event for the campaign. Similar events are happening around the world. However, looked at overall, the decision to place cities at the heart of its marketing makes an increasingly compelling case for a variety of markets.
Some commenters on the Global Cement LinkedIn Group discussed this very issue recently in response to a news story on Lafarge's next set of expansion plans for China. Specifically, someone asked why would Lafarge want to expand in a market suffering from overcapacity!
The Building Better Cities campaign offers one answer. As China prepares to shut down excess capacity, Lafarge's strategy to be in place once the dust settles (perhaps literally in some places) starts to make sense. As a marketing tagline 'building better cities' works well because who doesn't – from Zimbabwe to China to even France – want better cities with better transport links through price, planning, technical and aesthetic innovations.
To give a sense of the environmental zeitgeist happening in China right now, this week we carry a news story on the Chinese Institute of Public and Environmental Affairs reporting 17 Chinese cement companies for environmental misdemeanours. Elsewhere, we can see evidence of continued foreign enthusiasm for investment in the Chinese cement market from Japan's Sumitomo Osaka Cement, despite fears of overcapacity. Lafarge is saying the right things at the right time but it may not be alone in its strategy.
