Lafarge reports that its Clean Development Mechanism (CDM) project which substitutes
alternative, biomass energy sources for fossil fuels in two of its cement plants in Malaysia, has been validated by the CDM Executive Board, in line with the framework established by the Kyoto Protocol.

Registered on April 7, 2006, the CDM project was approved by Malaysian and French authorities. It is the first CDM project of its kind to be registered by the cement industry. It is also the second CDM project to be registered by Lafarge, the first being a wind farm, powering the Group’s Tetouan cement plant in Morocco which was inaugurated in September 2005.

The Malaysian project involves the substitution of a percentage of imported coal with a biomass alternative, Palm Kernel Shells (PKS), in the cement manufacturing process. PKS are a waste product of Malaysia’s palm oil industry. PKS now account for over five per cent of energy used in the heating process of the plants’ kilns during the production of cement. By substituting PKS for coal, Lafarge is able to reduce CO2 emissions by more than 60,000t per year - the equivalent of planting four million trees a year.

Lafarge is currently developing two other CDM projects, one in India and another in Brazil. This project is consistent with the Group’s voluntary objective to reduce net CO2 emissions by 20 per cent per tonne of cement produced worldwide over the period 1990 to 2010, as part of its partnership with WWF. So far, significant progress has been made and in 2005 Lafarge recorded a 12.7 per cent reduction in CO2 emissions.