Displaying items by tag: Cambodia
Cambodia: Siam City Cement's (SCCC) board of directors has approved a 40% share in a joint venture company in Cambodia, Chip Mong Cement Corporation, a first step in its strategy to take advantage of the upcoming Asean Economic Community.
The joint venture will involve the construction and operation of a 1.5Mt/yr capacity cement plant and related business, said Siva Mahasandana, acting SCCC deputy CEO and senior vice president for marketing and sales. He said the company had signed a definitive agreement with Chip Mong Group and three individuals, known collectively as CMG, to form the joint venture, which is expected to be in place by December 2015.
Mahasandana said that the joint venture company's registered capital would be US$150m, comprising 75,000 ordinary shares at a par value of US$2000/share. Once fully established, the new company will be renamed Chip Mong Insee Cement Corp.
Cambodia has been attracting investment with its government measures and low labour costs. Its economy has been growing measurably and the construction business is expected to grow in parallel, providing opportunities for SCCC's Insee brand. "We trust that this is an absolutely sustainable business venture in Cambodia and at the same time, we are exploring new investment opportunities in the Asean countries, especially in Cambodia, Laos, Myanmar and Vietnam," he Mahasandana.
Cambodia: Siam Cement Group (SCG) expects to invest US$200-300m of additional investment into Cambodia over the next five years, according to Aree Chavalitcheewingul, vice president for regional business of SCG Cement-Building Materials.
The five-year investment plan includes adding a third production line to its cement plant in Kampot, southern Cambodia, where SCG commenced the second production line in mid 2015. SCG also plans to double its network of ready-mix concrete plants in the country.
The group expects sales from its Cambodian operations to approach US$140m in 2015. Including its exports to Cambodia, which are expected to reach US$200, SCG's Cambodian revenues are targeted to total US$40m for the year. About 80 - 90% of SCG's Cambodian sales are derived from its cement sector.
"The growth is at a satisfactory rate of 5 - 10%," Aree said. "We have seen a lot of opportunities, especially this year, as cement demand has increased remarkably. There are many new residential and commercial projects coming up in Phnom Penh." Cambodia's GDP has expanded by about 7%/yr in the past few years.
SCG employs 31 international staff and 461 SCG staff in Cambodia. It is expanding rapidly in the ASEAN markets, with its first cement plant in Indonesia opening in the third quarter of 2015. It will start its first cement plant in Myanmar in 2016 and SCG will start a plant in Laos in 2017.
Vietnam: In the first seven months of 2014, Vietnam earned US$563m from the export of 13.1Mt of clinker and cement, a 24% rise year-on-year in value terms and a 20.4% increase in terms of volume. Indonesia, Taiwan and Malaysia were the largest importers of Vietnamese clinker and cement in this period, according to the Vietnamese Ministry of Industry and Trade.
Indonesia imported 1.42Mt of clinker and cement (worth US$69m), Taiwan bought 0.86Mt (US$37.6m) and Malaysia purchased 0.7Mt (US$34.7m). Cambodia was fourth with 0.29Mt (US$15.6m).
Vietnam's domestic cement sales are expected to rise by 9% year-on-year to between 49 - 50Mt in 2014, while cement and clinker exports are likely to hit 16 - 20Mt. The country exported 15Mt in 2013.
Cambodia/China: Huaxin Cement has injected US$24m into Cambodia Cement Chakrey Ting Factory to acquire a 40% stake in the southeast Asia-based company on 17 June 2014. After the investment, the Cambodia cement producer's registered capital grew to US$60m from US$32m. The Hubei Province-based cement manufacturer said that the acquisition in Cambodia is the company's second overseas investment after establishing a subsidiary in Tajikistan in 2011.
There has been an interesting knock-on effect from further economic integration of the Association of Southeast Asian Nations (ASEAN) this week. Holcim Philippines may delay the construction of a 2.5Mt/yr cement plant in Bulacan province due to a drop in import tariffs in 2015. Vietnam or Indonesia were named as possible sources of clinker due to their excess capacity.
The ASEAN group comprises 10 countries including Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Laos, Myanmar and Cambodia. Their respective cement production capacities range from 0.3Mt/yr at a clinker grinding plant in Singapore to Indonesia's integrated cement production capacity of 45Mt/yr. In total the ASEAN countries have a production capacity of around 220Mt/yr for a population of about 600m with national gross domestic products (GDP) per capita ranging from US$900 (Laos) to US$52,000 (Singapore).
One scenario for cement producers in the ASEAN countries is that they might be swamped by exports from places like Vietnam. That country had a production capacity of 73Mt/yr in 2013 with cement sales predicted to rise to 63Mt in 2014. Assuming the government released figures are correct, that leaves at least a 10Mt of cement production-sales gap that could torpedo a neighbouring country's cement industry in the free trade area.
Indonesia, the other potential source of clinker that Holcim Philippines mentioned, has seen construction growth slow and production capacity grow. Holcim reported in its nine-month report in November 2013 that, while national cement sales had risen by 5.3% to 41.6Mt, supply capacity had risen by 9% to 59Mt/yr. Assuming equal sales distribution throughout this suggests a capacity gap of 4Mt.
Some politicians in the region have complained that impending free trade area will create winners and losers. At a recent ASEAN meeting in Yangon, Myanmar a Myanmar planning minister raised the issue of a development gap within the ASEAN region calling for renegotiation for countries like Myanmar, Cambodia and Laos.
Meanwhile both the cement industries in Vietnam and Indonesia have clearly anticipated the implications of the ASEAN Economic Community. The Vietnam National Cement Association expects to remain competitive within the ASEAN region and against Chinese imports after 2015. In Indonesia State Enterprises Minister Dahlan Iskan stated this week that the cement industry was ready for the ASEAN Economic Community thanks to the government's strategy to consolidate its major cement producers within one company, Semen Indonesia. Consistent cement industry growth in South East Asia may be about to change.
Cambodia: Siam City Cement (SCCC) has cancelled a US$150m cement plant project in Cambodia due to political uncertainty, according to the Bangkok Post. The Thai cement producer is considering building a cement plant in Myanmar instead.
Philippe Arto, managing director of SCCC, said that the board has decided to 'put on the shelf' the plan to build a 1Mt/yr cement plant in Cambodia after finishing a feasibility study. SCCC, which is 27.5% owned by Holcim, signed a memorandum of agreement with Cambodia's Chip Mong Group for the study in late 2010. Under the previous plan, construction of the Cambodian cement plant was due to start around the end of 2013 and take two years to complete.
SCCC is looking at the possibility of pushing forward a cement project in Myanmar, where the market is sizeable and the economy is growing substantially. SCCC has placed no timeline for its Myanmar project.
Thailand/Cambodia: Owing to strong demand for cement in the country and the wider Far East region, Siam City Cement (SCCC) has announced plans to re-open one of the two clinker lines that it shut down in 2008, according to local press.
With the re-opening of the clinker factory in October 2013, SCCC's production capacity will rise by at least 1.4Mt/yr, or 10% of its current capacity, according to the company's managing director Philippe Arto.
SCCC shut down the two plants, which had total capacity of 2.25Mt/yr in 2008 because of an increase in production costs and a decline in demand for cement. However, the company has recently seen strong growth in demand. In 2013 it targets year-on-year growth of at least 5%, following an increase in both public and private sector projects.
Meanwhile, the company's board of directors has said that it will consider a plan to invest in Cambodia early in 2013. The company has been working on the plan since 2010. "Our board of directors will make a decision on this plan in 2013. This would be our first investment outside Thailand," said Arto.
If the plan is approved, SCCC will set up a cement plant in Cambodia via a joint venture with a local partner. "We are interested in investing in Cambodia because we have a more-than 40% share in the cement market in the country," said Arto.
SCCC's sales in the first nine months of 2012 climbed by 10.8% to US$653.8m from US$590.5m in the same period of 2011 due to growing demand. However, its net profit dropped by 5.3% to US$94.1m from US$99.3m due to rising energy costs.
Thailand: Siam Cement's third-quarter net profit has fallen by 13% to US$201m from US$240m. The conglomerate blamed higher expenses and the cost of sales.
For the quarter ending on 30 September 2012, sales increased by 11% to US$3.39bn from US$3.01bn. The cost of sales rose by 9.1% to US$2.89bn from US$2.65bn. Total expenses grew by 15% to US$305m from US$266m. Contributions from the cement unit rose by 33% to US$2.45bn.
Despite the profit decline, the conglomerate said that its board had approved plans to spend US$358m on a new cement plant in Indonesia and US$179m on an expansion of its cement business in Cambodia. Siam Cement has aggressively expanded its business in local and overseas markets over the past few years, particularly in members of the Association of Southeast Asian Nations, as it seeks to boost future income and diversify risk across markets.