UWE KOEHLER General Director Garadagh Cement INTERVIEW

s a construction boom sweeps through Azerbaijan, the visual landscape is morphing. The opening of the BTC pipeline has ushered in a new architectural fever. Locals speak of a Dubai-like transformation for Baku. Residential complexes and skyscrapers, however, are not the only structures vying for building materials. Large-scale energy projects are also expanding at a breakneck pace and require things such as cement.

Garadagh Cement was established in the 1950s. The plant, near Sahil, saw productivity fall in the early 1990s. By the time it was privatized to the Swiss-based Holcim Group in 1999, the technology was obsolete. After a transitional period, things are moving forward again. According to Uwe Koehler (INTERVIEW), the General Director since 2004, the Holcim Group has invested $40 million in modernizing the plant, $17 million more than stipulated by contract. Garadagh Cement now has capacity for 1.3 million tons per year, making it the industry leader in Azerbaijan. The plant currently consists of four kilns, nine cement mills and a staff of 553.

“Our plan for the future is to switch from the obsolete wet process to the dry process. Energy consumption will go down by 35 to 40 percent and will allow us to stop importing clinker from Russia, thus increasing our capacity by 15 percent,” says Mr. Koehler. But even then, the company will not be able to meet domestic demand, which the general director estimates at 2.5 million tons annually. “That’s a huge gap and it would require a further investment of $120 million,” says Mr. Koehler. The company is in talks with the European Bank for Reconstruction and Development to secure funds.

So far, the Holcim Group has devoted much of its attention to environmental impact. In the clinker and cement industry, Soviet-era processes were heavily polluting. Garadagh Cement is now working to comply with strict EU directives. With the best laboratory in the CIS, the company is ISO 14001:1996 certified. A major step in the plant’s rehabilitation has also involved a battle against inappropriate usage. “Before, people used the hardest cement for all applications. We now invite engineers to training sessions to explain how to use the right cement for the right application,” says Mr. Koehler.

In 2005, plant revenue grew ten percent, and in a market renowned for tight demand and supply, prices have increased.

The general director is excited to be witnessing the country’s renaissance. The business environment and legal framework still have room for improvement, but Mr. Koehler has struck a new path that is beginning to rub off in other industries. He has done away with 97 percent of the so-called distribution system that placed the plant’s cement products in the market. “That system was dismantled thanks to our local workers. One of my professional dreams is to empower local people,” he says.

Repositioning the company’s products and a reduction of imports from Russia has produced excellent results. But with a construction boom north of the border, officials at Garadagh Cement think it is time for new competitors, as the plant would fare well in a sound competitive market. “Clearly, there’s room for other cement producers in this country,” says Mr. Koehler.