Global Cement speaks with Tuan Hoang Minh of Song Lam Cement, a major Vietnamese cement producer and part of The Vissai Cement Group...
Global Cement (GC): Please could you introduce your background in The Vissai Cement Group?
Tuan Hoang Minh: (THM): I joined The Vissai Cement Group in 2012 as Secretary to the Global Trading Director. In 2013 I became Senior Trading Manager of the Global Trading Department and was promoted to Deputy Director in the same department in 2014. In 2017 I was appointed as Head of Global Trading, before moving to the Song Lam Cement plant in 2019, first as Deputy Director and, since the start of 2021, as the General Director of Song Lam Cement JSC.
GC: Please outline the history of the Song Lam Cement plant?
THM: The licence for Phase 1 of Song Lam Cement JSC was received in the first quarter of 2015. Commissioning of the first of its two production lines took place in October 2016, just 18 months after the start of construction in April 2015. The second production line followed in November 2016.
At first the plant only produced clinker, with two vertical roller mills for cement coming online in April 2017. In October of the same year, the plant held a grand opening for its first dedicated port, the Vissai International Port No.2, with 70,000dwt berthing and 50,000dwt loading capacity. Somewhat paradoxically, Port No. 1, with a capacity of 30,000dwt for both berthing and loading, was opened in July 2020. In October 2020 a third vertical roller mill, for slag and slag cement, came online.
Plant & Process
GC: What is the production process used today?
THM: The plant has a design capacity of 12,000t/day of clinker, split across identical custom-made kilns. The kilns are from Sinoma, with other equipment from European suppliers. There are two Loesche vertical roller mills (VRMs) rated at 300t/hr each. However, we have been able to increase production beyond these levels to 7200t/day for each clinker line and 310t/hr of cement from the Loesche VRMs. That equates to a clinker capacity of ~4.6Mt/yr. The clinker coolers are from IKN.
Our loading facility includes two bulk loading systems at each of the two ports, one at each for clinker (20,000t/day loading) and one at each for cement (12,000t/day loading). Our unloading facility has two shore crane system at each port, each with a capacity of 6000t/day.
GC: What types of cement are produced?
THM: The plant produces a total of 12 types of cement, some in bulk, some in bags. The dominant type in 2020 was Type II/V, of which we made nearly 1.3Mt, around a quarter of our 4.7Mt output for the year, followed by Type I ASTM (0.63Mt, 14%) and CEM I 42.5N (0.43Mt, 9%). The full breakdown for 2020 can be seen in Table 1.
Cement Type | Production (Mt) |
Portland Cement Blended in Bag (PCB40) | 0.33 |
Portland Cement Blended in Bulk / CEM II 42.5R | 0.362 |
Type I ASTM | 0.63 |
CEM II 42.5R | 0.35 |
Type IP | 0.289 |
CEM I 52.5N | 0.428 |
Type II | 0.016 |
CEM I 52.5 - Low Alkali | 0.346 |
TYPE II/V | 1.276 |
CEM III/42.5L (Slag Cement) | 0.319 |
P.II 52.5 (with 5% Slag) | 0.288 |
CEM III/42.5L (with 65% Slag) | 0.027 |
TOTAL | 4.661 |
Above - Table 1: Types of cement produced by Song Lam Cement in 2020.
GC: What fuels does the plant use and from where are they sourced?
THM: The plant uses coal wth a net calorific value of 5000 - 6000kCal/kg from Australia, Russia and from within Vietnam, as well as petcoke from the US and India. Each clinker line has a waste heat recovery plant of 7MW.
GC: What ongoing projects are currently taking place at the plant?
THM: We will add three additional berths at Vissai International Port No.1 for containerised exports and products. Another will be added for an upcoming liquid natural gas (LNG) fired power station.
GC: Are there any other projects planned for the next 1 - 2 years?
THM: While the plant is already a large producer of cement and clinker, we are currently planning the construction of clinker lines No.3 and No.4, each of which will have a design capacity of 6500t/day. This will take the rated clinker capacity of the plant to 25,000t/day, or around 8Mt/yr, in the coming years. We are also building an additional 12,000t/day cement loading facility to support these.
We will also build a conveyor belt system from the clinker plant to the grinding station, across a total distance of 49km. This will replace the existing method of using trucks.
Markets & Future
GC: Where are the plant’s main markets and how are they served?
THM: The plant’s main domestic markets are in central and southern Vietnam. For distances of less than 200km, we deliver by truck. Any further afield and we will deliver to domestic customers by ship.
We export cement and clinker to the Philippines, China, Hong Kong, Taiwan, the US, Australia, Singapore, Mauritius and New Zealand. All exports are delivered by ships ranging in size from 7000 - 45,000dwt. Our port facilities are designed to provide the most efficient and sustainable practices in terms of loading and logistics and to cater for most of the vessels in the region, as well as those that operate from South East Asia across the Pacific to North and South America.
GC: How have these been affected by the Covid-19 pandemic?
THM: When the Covid-19 pandemic took hold in the early part of 2020, several of our export markets were hit, including the Philippines, New Zealand, China and the US. Lockdowns across huge areas affected the rate of construction in these markets and others besides. The closure of the Vietnamese border also made exports difficult, across the cement sector and for many others too. On top of this, lower domestic consumption was also observed between April and July 2020, due to reduced infrastructure investment.
Overall, sales fell by 50% compared to before the pandemic. At times, the plant inventory reached 300,000t of clinker in the silos and other points in the stockyard. With the reopening of the border in July 2020 and a subsequent gradual loosening of controls in Vietnam and elsewhere, exports have gradually recovered. However, the prices we could charge took a hit, as many of the economies we serve were on shaky ground.
Looking at the first half of 2021, the Covid-19 pandemic had a far more limited effect on our global trading situation. The countries that we deliver to were predominantly on the more controlled side of the pandemic by international standards. However, the start of the second half of 2021 has been worse, both domestically and globally. New waves of Covid-19 are being seen around the world, including in Vietnam, where local governments have been forced to reintroduce social distancing and lockdown measures.
GC: What are your expectations for the market in the next 1 - 2 years?
THM: The global export market, from our perspective, is always going to be driven by two factors: market demand and freight supply. Our expectations over the short-term horizon for the rest of 2021 and 2022 is that freight will return to a ‘real-value’ level, not the high peaks seen since the end of 2020 and so far in 2021.
GC: What is the biggest challenge for the plant over the next five years?
THM: In the upcoming 1 - 2 years, Vietnam will introduce new benchmarks for commodity prices, which, from the perspective of a cement manufacturer, is a fairly big issue, as we will be unable to raise prices beyond a maximum. At the same time, freight costs are such that imported commodities, notably our fuels, are at their highest ever levels. This is starting to impact production costs, while our selling prices are the lowest in the region.
Another challenge will be CO2 emission quotas. The central government intends to regulate industrial CO2 emissions, starting with implementation from 2025 to 2030. Cement production is on the list of industries that will be included. At the same time, the government also has targets for 2050 that cover pollutants such as SO2 and NOx. There will also be efforts towards the greater use of alternative fuels in the sector.
As a developing country, I think that Vietnam will find such transitions more difficult than a developed economy and may put us at a relative competitive disadvantage in the future.
Another issue surrounds cement consumption in Vietnam, which is driven mainly by infrastructure investment. This is expected to fall in the coming years due to less rapid GDP growth, with the possibility of recession.
Another threat is the sector’s high reliance on exports, which may become more difficult in the future. Vietnam’s cement industry, as a whole, represents a low-cost threat to other national industries, which may lead to anti-dumping policies, import taxes and other tariffs in our export markets.
GC: What is the biggest opportunity over the same time-frame?
THM: Frankly speaking, I don’t see many new opportunities for the plant over the next 1 - 2 years, as I think that 2021 is likely to be the first year of a downward trend for our industry. However, despite this difficulty, which will be shared across all participants in the Vietnamese cement sector, those that prepare well and manage the risks, as well as maximise margins, will be more likely to survive in the market. Smaller producers don’t have the economies of scale that The Vissai Cement Group does. There will certainly be some producers in Vietnam that become overwhelmed in the coming 1 - 2 years, with bankruptcies or forced mergers and acquisitions into larger players. Over time, this will lead to a restructured Vietnamese cement market that, eventually, will be able to serve the market more effectively.
GC: Thank you for your time and fantastic insights into your company and the wider market.
THM: You are very welcome indeed.