Giant construction-material manufacturers Siam Cement Group (SCG) and Siam City Cement (SCCC) yesterday announced major expansion plans to become key players in the region under the Asean Economic Community in 2015. SCG and SCCC separately announced investment plans in the region. SCG will invest Bt4.3 billion or US$135 million to take over construction materials company Boral Indonesia (BI) from Boral Limited, Australia. The transaction is expected to be completed by the end of June 2012. The acquisition is part of SCGs expansion of its core business across Asean. Siam City Cement will expand cement and wood-replacement products plants in Cambodia, Burma, and Indonesia from this year until 2015. The company has set aside a budget of at least Bt6.5 billion for expansion of operations, of which Bt1 billion will be spent this year on maintenance of its manufacturing plants in Thailand. Another Bt1 billion will be spent between this year until 2015 to build Conwood Cos manufacturing plant in Indonesia. About Bt4.5 billion or US$150 million will be invested to build a cement plant in Cambodia from this year until 2014. Conwood Co is a subsidiary of SCCC, which produces wood-replacement products. Managing director Philippe Arto said the company has been studying increasing its investment in Cambodia since last year and had plans to build its manufacturing plant last year. The delayed project should get off the ground in the next six months. The construction is expected to take about a year and half with production supporting the demand in Cambodia in 2014. The business is a joint venture with a Cambodian partner. The company also sees the potential to expand its investment in Burma because of the opportunities. Currently, local cement product sales are only half of Thai demand. We believe we will expand our business in Burma in the next three or five years, he said. He added that when the AEC come into effect in 2015, it will be an opportunity to expand investments in Asean. Meanwhile, the company is continued to focus on value-added products, especially green products, whose sales are targeted to account for 40 per cent of net sales in 2015, he said. Currently, green products have recorded sales of about 25 per cent of total sales in last year.
Mission to become leader Kan Trakulhoon, president and CEO of SCG, said the group has continued to expand its presence in Asean countries to achieve its mission of becoming a sustainable leader in the region. He added that Boral Indonesia is the leading producer of ready-mixed concrete with capacity of 2.2 million cubic metres, and operates under the brand Jayamix across its 40 plants across Java and Sumatra. Besides ready-mixed concrete, BI possesses other highly valued assets such as concrete pipes, precast concrete operations, strategic quarries, and key limestone reserves for future expansion considerations. Indonesia is an attractive market for SCGs cement and building materials businesses, supported by the potential for high growth and ample untapped demand. Earlier in 2011, SCG acquired Kokoh and Kia in Indonesia, which are in the distribution and building materials businesses, respectively, added Kan.
Figure 2: Works continued on Holcim's cement plant in Tuban, East Java, Indonesia in 2014. When the second 1.7Mt/yr line is complete, the plant will have 3.4Mt/yr of cement production capacity. Photo: BAM International.Figure 3: Cement terminals at Jurong Port, Singapore, are the country's contribution towards an active cement industry. Photo: IBAU Hamburg.Figure 3: Ha Long Bay is a UNESCO World Heritage Site in Quang Ninh Province, Vietnam. In October 2014, some 7000L of oil contaminated with PCBs was removed from the bay and disposed of at Holcim's Hon Chong cement plant in Kien Luong.Figure 1: Integrated cement plants and those planned, under construction or closed in the ASEAN countries in 2015. Countries colour-coded by cement production capacity Source: The Global Cement Directory 2015 and Global Cement research.
In 1992 the Association of Southeast Asian Nations (ASEAN) signed a trade bloc agreement, known as the ASEAN Free Trade Area (AFTA) to support local manufacturing in all ASEAN countries. In late 2015 the agreement will be extended to achieve 'regional economic integration,' in which ASEAN countries will eliminate tariff rates on commodities to facilitate their free flow. The ASEAN Economic Community (AEC) envisages the following key characteristics:
The 10 ASEAN countries - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam - all have active cement industries in one form or another. Vietnam has by far the largest cement industry in southeast Asia, with 58 integrated cement plants and 91.4Mt/yr of production capacity (Table 1). There is a large gap between Vietnam and the second-largest cement producing country in the region, Indonesia, which has 15 integrated plants and 63.1Mt/yr of production capacity. Thailand, the Philippines and Malaysia all also possess fairly large cement markets. In contrast, Singapore and Brunei have no active integrated cement plants, however, they still need cement for infrastructure and housing construction...
Above - Table 1: The integrated cement plants and cement production capacities (Mt/yr) in 2015, GDP (PPP - US$bn), GDP growth (%) and industrial production growth rate (%) in 2013 of the ASEAN countries. Sources: The Global Cement Directory 2015, Global Cement, the CIA World Factbook and the IMF World Economic Outlook.
According to the International Monetary Fund (IMF), all nine of the emerging and developing ASEAN countries and the one advanced country (Singapore), are on track for strong GDP growth in 2015 and beyond. This usually coincides with a booming construction industry, causing high demand for materials like cement. Recent surveys have shown that the majority of ASEAN businesses are optimistic regarding the outcome of the economic integration.1 The free trade of commodity materials should boost all ASEAN construction industries.
Above - Figure 1: Integrated cement plants and those planned, under construction or closed in the ASEAN countries in 2015. Countries colour-coded by cement production capacity Source: The Global Cement Directory 2015 and Global Cement research. (click to open PDF with cement plant listings)
Brunei Darussalam's GDP grew by 1.4% in 2013 to US$22.3bn, while its GDP/capita hit US$54,800. GDP was contributed to by industry (70.9%), services (28.4%) and agriculture (0.7%). Industrial production grew by 1.5% in 2013. Brunei, a net exporter, mainly exports crude oil, natural gas and garments, while it imports raw materials like iron and steel, machinery, food and chemicals.
Brunei has one 0.55Mt/yr capacity grinding plant in Muara. According to the USGS,2 the plant is a joint venture project between HeidelbergCement (70%) and Brunei's PJ Corp Sdn Bhd (30%). It produces specialty cement from imported clinker and gypsum, including sulphate-resistant cement, mainly for oil wells. According to HeidelbergCement, it currently produces Class 62.5N Ordinary Portland Cement (OPC) in accordance with the Ministry of Development of Brunei Darussalam's BS 12 : 1996 since April 2003 specification.
The USGS said that in 2011, domestic cement demand was about 330,000t/yr and that, due to import competition, HeidelbergCement's capacity utilisation rate was around 50%. In the same year, 275,000t of cement was produced (Table 2), the largest volume in the preceding five years. This made HeidelbergCement's market share 83% in 2011. Cement imported from China and Thailand is sold at lower prices than domestically-produced cement,3 the reason perhaps that there is just one cement plant in the country.
The IMF has predicted that Brunei's GDP will grow by 3% in 2015 and 3.3% in 2016. No new cement plant plans have been announced, likely due to the import competition highlighted by the USGS. Brunei's construction and cement industries are likely to see great change when the ASEAN economic integration comes into play; imported cement could become even cheaper. However, if expensive imported raw materials and fuels are one of the reasons that HeidelbergCement's production costs struggle to be competitive, cement production in Brunei may also become more profitable.
Cambodia's GDP (PPP) rose by 7% year-on-year in 2013 to US$39.6bn, while GDP/capita rose to US$2600 from US$2400 in 2012. GDP is contributed to by the service sector (40.7%), agriculture (34.8%) and industry (24.5%). Industrial production grew by 7% in 2013. Cambodia is a net importer of fuels, construction materials, machinery and chemicals, while it exports timber, garments, food and rubber.
Cambodia has one active cement plant, Kampot Cement in Phnom Tatung, Kampot, which is 90% owned by Thailand's Siam Cement and 10% owned by Khaou Chuly Group. The plant has 960,000t/yr of cement production capacity and has been operational since 2008. Siam City Cement, which is currently 27.5% owned by Holcim, planned to build a 1Mt/yr dry-process cement plant in Cambodia, but in 2013 the project was postponed due to political uncertainty. In 2014, China's HuaxinCement acquired a 40% stake in the project for US$24m and construction was 98% completed.4 No updates have been made regarding the completion of the project or its commissioning. In February 2015, Holcim announced plans to sell its entire stake in Siam City Cement.
According to the USGS, Cambodia produced 980,000t of cement in 2012, the highest volume in the last five years (Table 3). Cheam Sothea, marketing manager at KP Industry Company, said that demand for Kampot's Elephant brand cement was high in 2012 and that the locally-produced cement was well-known, well-trusted and often sold out.5 "Kampot Cement's 'Elephant Trademark' is very popular, as Cambodians trust its quality. Another reason is it is locally-manufactured," said Sothea. Cambodia's demand is significantly higher than its domestic production capacity. The shortfall is made up by imports, mainly from Vietnam, but also from Thailand and Laos. In the first seven months of 2014, 290,000t of cement was imported from Vietnam.
The IMF has predicted that Cambodia's GDP will grow by 7.3% in 2015 and 7.5% in 2016, making it one of the fastest-growing ASEAN countries. Its 1.63% population growth in 2014 is indicative of an increasing need for residential housing construction, but development remains slow. Cambodia's lack of essential infrastructure is one challenge faced by potential future Cambodian cement producers, as noted by the USGS. Poor energy, fuel and raw material supplies are others.
Indonesia's GDP (PPP) grew by 5.3% in 2013 to US$1.29tn, while its GDP/capita was US$5200, up from US$5000 in 2012. GDP is contributed to by industry (46.6%), services (39.1%) and agriculture (14.3%). Industrial production grew by 4.3% in 2013. Indonesia is roughly neutral with regards to import:export volumes. It exports oil and gas, textiles and rubber, while it imports equipment, fuels, chemicals and food.
Indonesia has 15 active cement plants and 63.1Mt/yr of production capacity. Two of the active plants are undergoing significant expansions. There are a further two mothballed plants and one closed plant, as well as three that are currently under construction. Plans have been announced for a further seven new cement plants. Indonesia also has five grinding plants, four of which are owned by Semen Baturaja. Holcim owns the fifth grinding plant.
Indonesia's largest integrated cement producer is Indocement, which has four cement plants and 23Mt/yr of production capacity. Indocement has been owned by HeidelbergCement since 2001. Semen Indonesia has three cement plants and 20.9Mt/yr of production capacity, making it the country's second-largest producer, while Holcim has four cement plants and 12Mt/yr of production capacity, placing it third.
Although faster than many western countries, Indonesia's cement industry grew at a lower-than-expected rate in 2014. Cement production hit 60Mt, up by 7.1% year-on-year from 56Mt in 2013, according to the USGS (Table 4). The slow growth was attributed to import competition, excessive rain, weaker property and construction demand, the eruption of Mount Kelud, preparations for elections and unfavourable regulations and macroeconomic conditions.
The Indonesian Cement Association (ASI) warned that imported cement from Thailand and Vietnam was a threat to domestic producers, particularly in the east. ASI chairman Widodo Santoso estimated that demand for Indonesian cement in eastern Indonesia fell by 29.5% year-on-year to 93,000t in the first three months of 2014.
Consistent with the ASI's observations, Semen Indonesia reported that its cement sales grew by just 3% year-on-year to 26.4Mt in 2014. Domestic sales contributed 13.9Mt of the total sales, up by 7% from 2013. Similarly, Indocement sold 18.8Mt of cement in 2014, up by 3% from 2013. According to Semen Baturaja, things worsened in January 2015, when it reported a 9.7% year-on-year decline in sales volumes to 90,764t. This followed a neutral 2014, in which its 1.26Mt of cement sales remained flat year-on-year.
Profitability has also become more challenging for producers. On 1 May 2014, the Indonesian government raised electricity rates by 38.9% or 64.7%, depending on the businesses' power needs. Holcim, which was subject to a 64.7% increase in its electricity rates, recorded an increase in costs of sales to US$292m, while its operating costs went up by 15.9% to US$61.6m.
In December 2013 the minister of state-owned enterprises Dahlan Iskan said that he expects Semen Kupang, a cement company in East Nusa Tenggara that went bankrupt in 2008, to re-open and build a new plant to meet regional cement demand. Iskan said that all of Semen Kupang's debt had been paid.
In January 2014 Semen Baturaja announced plans to build a new 1.85Mt/yr cement plant in SouthSumatra. Also in January 2014, Loesche established a full service hub in Jakarta. It focuses on plant modernisation, spare part supply, on-site audit services, maintenance, installation and commissioning.
In March 2014 Semen Indonesia won a US$123m loan to build a new 3Mt/yr cement plant in Rembang, Central Java. The US$325m plant is expected to commence operations in 2016. Claudius Peters will supply three new 20,000t cement storage silos for the plant, while FLSmidth will supply the main components for the new 8000t/day cement line.
In April 2014 Holcim announced that it would merge two of its fully-owned cement manufacturing subsidiaries, Bintang Polindo Perkasa and Wahana Transtama. The former operates a 600,000t/yr capacity cement plant in Ciwandan, Banten, while the latter has been inactive since 2006. In May 2014 Holcim announced a delay to the merger as it had not received approval from the stakeholders and the Financial Services Authority. No updates have been made since.
In August 2014 Semen Indonesia won an energy award from the Energy and Mineral Resources Ministry for using biomass as an alternative fuel. The biomass was obtained from areas around the plants, including Tuban, Lamongan and Bojonegoro in East Java, as well as Rembang in Central Java. Also in August 2014, Indocement announced plans to invest US$150m to build two 2.5Mt/yr capacity greenfield cement plants in North Sumatra and in Pati, Central Java in response to decreasing market share.
China's State Development and Investment Corp (SDIC) and Anhui Conch signed an agreement on 25 September 2014 to build a 3Mt/yr capacity cementplant in Manokwari, West Papau, as part of investment cooperation measures that were agreed by China and Indonesia in 2013. The plant will serveIndonesia and neighbouring countries, including Papua New Guinea. SDIC and Anhui Conch will have stakes of 51% and 49% respectively.
In September 2014 Semen Indonesia announced plans to construct a 1Mt/yr cement plant in Manokwari, Papua. According to Semen Indonesia, Papua consumes 600,000t/yr of cement, 40% of east Indonesia's total 1.5Mt/yr cement consumption. Papua's cement demand is expected to reach 900,000t/yr by the time the plant is completed. Semen Indonesia supplies around half of Papua's cement from its plants in East Java and South Sulawesi. With a new plant in Papau, it expects to increase its market share to 70%.
In October 2014, Semen Indonesia announced plans to expand its plant in Aceh to meet increasing local demand from the construction of the Trans Sumatra highway, a 2700km toll road that stretches from Aceh to Lampung. Construction of the plant is expected to start in 2015. Also in October 2014, Semen Indonesia commenced the construction of a 30.6MW waste heat recovery (WHR) system at its cement plant in Tuban, East Java at a cost of US$52.9m. Operations are expected to start in the second half of 2016, when it will provide 33% of the plant's energy needs, saving US$9.95m/yr in energy costs. The WHR system is from Japan's JFE Engineering Corporation. Semen Indonesia also uses an 8.5MW WHR system at its plant in Padang, West Sumatra.
The IMF has predicted that Indonesia's GDP will grow by 5.5% and 6% in 2015 and 2016, respectively. ASEAN economic integration will likely increase threats from importers due to the introduction of tariff-free trading. However, domestic cement demand is also expected to increase faster than in recent years.
Semen Indonesia expects demand to grow by 6% in 2015 and plans to boost its cement production to 39.3Mt/yr by 2016 and to 40.8Mt/yr by 2017. Indocement also expects its sales volumes to grow by 6% in 2015 and plans to invest up to US$391m in 2015.
Laos' GDP (PPP) rose by 8.3% year-on-year to US$20.8bn in 2013, while GDP/capita grew to US$3100 from US$2900 in 2012. GDP is contributed to by the service sector (37.5%), industry (32%) and agriculture (24.8%). Industrial production grew by 11% in 2013. Laos is a net importer, primarily of equipment, fuels, consumer goods and food. It exports wood products, coffee and metals.
Laos has 12 active cement plants,6 with a total production capacity of >3.991Mt/yr; the capacity of one plant in Xieng Khuang is unknown. Six of the active plants are in Vientiane, including Lao Cement's three plants in Vang Vieng, which between them have 1.17Mt/yr of production capacity. Wanrong Cement also has three plants and 438,000t/yr of production capacity. Lao-Patthana Cement, part of Souksomboon Group, has a 1.6Mt/yr cement plant under construction in Khammuan, which is due to start production in 2016. According to Chittakorn Souksomboon, president of Souksomboon Group, the opening of the third Lao-Thai Friendship Bridge over the River Mekong is one of the main reasons to invest in Khammuan.7 He added that Laos' rapid economic development and increasing cement demand is partly due to the construction and restoration of more than 60 hydropower plants nationwide.
The USGS estimated that in 2012, Laos produced 400,000t of cement, although it has made the same estimate for the previous five years as well, indicating that the information may be unreliable.8 The Laos Cement Producers' Association said that cement demand was around 2.8Mt in 2014. The economy is growing rapidly with infrastructure projects such as roads and dams being developed ahead of when the ASEAN single market comes into force. The government issued licences for studies for the construction of five new cement plants in 2014, one in Oudomxay and four in Khammuan. The new plants will have 6.8Mt/yr of production capacities once operational.In July 2014, the Laos government halted coal exports to protect the cement and other key national industries, which import large volumes of highly-priced coal. According to local cement producers, the price of domestic cement exceeded that of imports from Thailand, partly due to high production costs. Accordingly, Laos has opted to secure an adequate supply of more reasonably-priced domestic coal.
In November 2014, Siam Cement started a survey of available raw materials and possible locations to build a 1.8Mt/yr cement plant in Boualapha, Khammuan. The plant is expected to start production in the second quarter of 2017. According to Vanthong Sitthikoun, president of the Lao Cement Producers' Association, a Chinese group was also conducting a feasibility study for a cement plant.9
The IMF has predicted that Laos' GDP will grow by 7.2% in 2015 and by 7.5% in 2016. With a booming construction sector, the Laos Cement Producers' Association said that cement demand is expected to increase by 5 - 10%/yr in the next 10 years. The government expects cement demand to grow and plans to increase its production capacity to 10.6Mt/yr in the near future.10 The USGS highlighted major infrastructure developments that have been proposed by the government, including hydroelectric plants, the development of a 420km railway system to connect Laos with China and the expansion of the Wattay International Airport in Vientiane.8 The construction of the railway alone is estimated to require about 3.5Mt of cement. The ASEAN economic integration will provide many opportunities for new potential importers to Laos. However, tariff-free fuel and raw material imports may increase domestic production levels and provide incentives for new market entrants.
Malaysia's GDP (PPP) rose by 4.7% year-on-year to US$525bn in 2013, while its GDP/capita rose to US$17,500 from US$17,000 in 2012. GDP was contributed to by the service sector (48.1%), industry (40.6%) and agriculture (11.2%). Industrial production grew by 5% in 2013. Malaysia is a net exporter of palm oil, equipment, petroleum and gas, while it imports equipment, plastics, iron, steel and chemicals.
There are 11 active integrated cement plants in Malaysia and 27.8Mt/yr of cement production capacity. Lafarge is Malaysia's largest cement producer with four plants and 14.7Mt/yr of production capacity, representing 52.9% of the country's total integrated capacity. YTL Cement has two plants and 4.95Mt/yr of production capacity, while Cement Industries of Malaysia (CIMA) has two plants and 3Mt/yr of cement production capacity via its Negeri Sembilan Cement subsidiary. Malaysia also has seven grinding plants that share >5.12Mt/yr of production capacity. CMS Cement owns two of the plants, YTL Cement has two, Holcim owns one and Lafarge owns one. The final grinding plant belongs to Cement Industries (SABAH).
According to the USGS, in 2012 Malaysia produced 21.7Mt of cement, up from 21.2Mt in 2011 and its highest production in the previous five years (Table 5). At the time, demand was 16 - 17Mt. The USGS noted that while west Malaysia was well-developed in terms of infrastructure, the east was relatively undeveloped. Under the 10th Malaysia Plan and Economic Transformation programme, the government plans to build a highway from Jabur to Kuala Terenggaru and to improve infrastructure across the east. Combined with commercial property construction, cement demand is expected to increase significantly.
In January 2014, CMS Cement announced plans to invest in a third grinding mill to boost its installed capacity by 1Mt/yr to 2.75Mt/yr. The mill will be integrated with its cement plant in Kuching, Sarawak and will be supplied by Christian Pfeiffer. It should be complete by 2016. The new mill will serve Kuching, while the existing mills will serve other Sarawak towns. CMS Cement will invest US$18.1m in the coming years on the new grinding mill, a third bulk cement barge to improve distribution, a 4000t cement silo and an inline packer for its Bintulu grinding plant.
In March 2014, CIMA installed an alternative fuel combustion system from Taiheiyo Engineering Corporation at one of its Negeri Sembilan Cement plants. It allows CIMA to use tyres and biomass waste like palm kernel shell and empty fruit bunch as alternative fuels. "The move makes CIMA the first cement manufacturer in the country with this technology," said CIMA managing director Mohd Yusri Md Yusof. "We can reduce energy costs through the utilisation of up to 30% tyres and biomass and play an active role in reducing our carbon footprint," he said.
The IMF has predicted that Malaysia's GDP will grow by 5.2% and 5.5% in 2015 and 2016 respectively. With a population growth rate of 1.47% in 2014 and a government dedicated to further developing its country via heavy investments, housing and infrastructure construction, cement demand is expected to grow at an impressive rate in the near future. Malaysian producers are also expected to benefit from tariff-free cement, raw materials and fuel imports and exports.
Myanmar's GDP (PPP) grew by 6.8% year-on-year to US$111bn in 2013, while its GDP/capita rose to US$1700, up from US$1600 in 2012. GDP was contributed to by the service sector (41.7%), agriculture (38%) and industry (20.3%). Industrial production grew by 11.4% in 2013, the highest in all of the ASEAN countries. Myanmar is a net importer of petroleum, fertiliser, equipment, cement and oil, while it exports wood products, gas, food and precious gems.
Myanmar has 13 active cement plants and 3.09Mt/yr of cement production capacity. There is one 1.8Mt/yr capacity cement plant under construction by Siam Cement's subsidiary Mawlamyine Cement Ltd (MCL), while Semen Indonesia also plans to build a 2.5Mt/yr capacity cement plant in the country. Myanmar Ceramic Industries is the only producer with more than one cement plant in the country. It has four plants and 1.41Mt/yr of production capacity, 45.6% of Myanmar's total integrated capacity. Myanmar also has one grinding plant, owned by China's Anhui Conch, which has 128,000t/yr of production capacity.
According to the USGS 2012 mineral survey, Myanmar produced 540,000t of cement in 2012, up from 538,000t in 2011 (Table 6). The USGS said that many of the country's cement plants were unable to operate at full capacity due to unreliable energy sources and a lack of infrastructure.11 In 2012, Myanmar consumed 4Mt of cement. The Myanmar Investment Commission is eager for more new cement plants to be built, approving plans from a variety of investors in recent years. "As a result, cement production is expected to reach 10.5Mt/yr," said Union Minister for Industry U Maung Myint. "With the boom in the construction sector, foreign investors will play a major role in supplying the materials to accomplish infrastructure projects such as building roads, harbours, hotels and Special Economic Zone (SEZ) projects," he added. Myint highlighted the need for the plants to reduce their energy consumption and CO2 emissions.
Myanmar's residential development is taking place primarily in Yangon, Mandalay and Nay Pyi Taw, according to Chana Poomee, Myanmar country director for Siam Cement's building materials business.12 "The growth of Myanmar's GDP and GDP/capita after the country opened up for foreign investments in recent years has resulted in an increase in consumer demand and foreign investments. This has also contributed to increased sales opportunities," said Poomee.
Much of Myanmar's cement is imported, mainly from Thailand, Indonesia, Malaysia and Bangladesh. The imports are needed due to under-supply in the local market and because of the reported low-quality and high prices of domestic cement.13 The high prices have been attributed to the relatively small cement plants that typify the country. The low quality has been blamed on the result of sanctions that have caused Chinese machines and spare parts to replace German equipment in the plants. "Facilities are staffed with unskilled workers who have little or no knowledge of cement. Hence, the quality of cement is unsafe. There needs to be improvement in the management and technical human capital," said U Ko Ko Thwe, owner of Taw Win Construction.
Myanmar's under-supply and low quality domestic cement makes it an attractive destination for importers. In February 2014, producers in southern India started to export cement to Myanmar. According to Dalmia Bharat's CEO-south Vipin Agarwal, the exports are not very remunerative, but said that he hoped that the market would become more profitable given time. Italcementi has also recently expressed interest in entering Myanmar in the next few years, according to its chief executive Carlo Pesenti. He said that Italcementi was negotiating with a local partner in Myanmar and studying the country's foreign investment laws.
In March 2014 Siam Cement said that, once it starts operations in 2016, it will operate its new 1.8Mt/yr capacity US$400m cement plant in Mon via its subsidiary Mawlamyine Cement Ltd (MCL). "We see a lot of potential in Myanmar because we consider it an ASEAN 'mid-land.' There are very good opportunities here," said Siam Cement's Poomee. The plant will use a WHR system, waste-derived fuel and other environmentally-friendly technology. The cement line will be provided by Citic Heavy Industries, while Cargotec's Siwertell will supply an 800t/hr capacity rail-travelling ship unloader. Siam Cement is looking for future opportunities to invest in Myanmar, in greenfield projects and through acquisitions.
In November 2014, Lafarge opened a cement repacking and storage terminal near Thilawa Port, its first cement venture in Myanmar. Lafarge owns 60% of the terminal, while two local firms own 20% each. It can store 20,000t of cement and will be able to expand its capacity as needed. Cement will be imported in bulk from Lafarge plants in the region, mainly Malaysia and Vietnam. Lafarge will primarily supply its cement to the Thilawa development project.
Also in November 2014, Myint Investment Group started a joint venture project with China's Anhui Conch Cement, called Myanmar Conch Cement. The project will upgrade the No 33 Kyaukse grinding plant from 400t/day to 500t/day production capacity through a build-operate-transfer (BOT) system.
In January 2015 Semen Indonesia announced that it may cancel its plans to invest in Myanmar if it fails to reach an agreement with its local partner. Disagreements over share price and stake size, among other problems, prompted Semen Indonesia's corporate secretary Agung Wiharto to state that if the prices demanded by the local partner were too high, Semen Indonesia would either seek a different Myanmarese company to cooperate with or move the expansion plan to another Asian country.
The IMF has predicted that Myanmar's GDP will grow by 8.5% in 2015 and 7.6% in 2016. The USGS believes that Myanmar's outlook is strong thanks to the implementation of economic reforms, which should increase foreign investment.11 New mining and cement plants projects are expected in the near future, prompted by a favourable economic climate and the government's infrastructure plans, which include gas pipelines to China, highways and transportation projects and deep-sea ports. Siam Cement sees strong potential in the Myanmar market, especially with the upcoming establishment of the AEC.12 "Siam Cement sees more potential on the growth of structural products as a result of increasing infrastructure development projects in Myanmar," said Poomee. Siam Cement has predicted that by 2017, cement consumption will have increased by 10%.
The Philippines' GDP (PPP) grew by 6.8% year-on-year to US$454bn in 2013, while its GDP/capita rose to US$4700 from US$4400 in 2012. GDP was contributed to by the service sector (57.2%), industry (31.6%) and agriculture (11.2%). Industrial production grew by 9% in 2013. The Philippines is a massive trade hub; in 2013, it exported US$47.5bn and imported US$63.9bn of goods. The main imports were mineral fuels, equipment and chemicals, while exports were led by garments, copper and coconut oil.
There are 18 cement plants in the Philippines and 24.9Mt/yr of integrated production capacity. Holcim Philippines is the country's largest cement company with 7.63Mt/yr of production capacity from four plants. It also has one standalone grinding plant. Lafarge Republic is the Philippines' second-largest producer; it has 6.06Mt/yr of production capacity from five plants. Cemex Philippines is the only other producer in the country with more than one cement plant. It has two integrated plants and 4.83Mt/yr of cement production capacity, making it the third-largest cement producer in the Philippines.
According to the USGS, cement production rose to 18.9Mt in 2012, up from 16.1Mt in 2011 (Table 7). Cement sales increased by 9.6% year-on-year in 2014, according to the Cement Manufacturers' Association of the Philippines (CeMAP) president Ernesto M Ordoez. Domestic sales were 21.3Mt compared to 19.4Mt in 2013. Sales for the fourth quarter of 2014 jumped by 15.7% year-on-year to 5.2Mt, up from 4.5Mt in 2013.
The increase was driven by the continuous growth of construction projects and rebuilding following the destruction wrought by typhoon Haiyan in November 2013. Cement demand from rebuilding was expected to drive cement sales 'for more than a year,' according to Ordoez. The government raised its 2014 budget for infrastructure by 37% to US$9bn, up from US$6.6bn in 2013, to provide for rehabilitation and reconstruction in areas affected by the typhoon. Data from the Philippine Statistics Authority (PSA) showed that construction activities in January - September 2014 amounted to US$6.17bn, 39% higher than the same period of 2013. Non-residential projects had the largest amount of construction projects at US$3.25bn, while residential projects were US$2.45bn.
Holcim Philippines' 2014 results were in agreement with CeMAP's market observations. Its net income rose to US$113m, while its net profit rose by 12.9% year-on-year to US$115m. Cement sales volumes jumped by 12.3% year-on-year. "The healthy economy continues to provide opportunities for our business to thrive. In 2014, with the sustained construction boom, the challenge was ensuring that there was enough supply so that the projects were completed on time and on budget," said EduardoSahagun, Holcim Philippines president and CEO.
In June 2013, Cemex announced that it would undertake a US$60m expansion at its APO Cement plant in Cebu to increase its production capacity to 4Mt/yr from 2.5Mt/yr. It was also planning works at its plant in Rizal, although no further details were provided.
In February 2014 Holcim announced that it may delay the construction of a proposed US$550m, 2.5Mt/yr capacity cement plant in Bulacan that was due for commissioning in 2016, due to the impending launch of the ASEAN Economic Community (AEC). "We have to plan as a region because the region is consolidating," Holcim Philippines' Sahagun.
In March 2014 Lafarge announced that it was investing US$25m towards building a new 850,000t/yr cement mill at its plant in Bulacan. The plant is expected to be operational by June 2015. The upgrades were commissioned to meet an expected increase in demand in response to an anticipated increase in infrastructure spending by the government.
In May 2014 Lafarge and Global Business Power Corporation (GBPC) launched an initiative to reduce the cost of rehabilitation projects, including the rebuilding efforts for Yolanda and the Bohol earthquake-affected areas, through the introduction of an ash-based cement called Kapit-Balay cement. Under the collaboration, Lafarge uses the fly ash from GBPC's power generation processes to produce blended cement. Kapit-Balay cement production was optimised to lower the overall cost of rebuilding and a direct sales distribution model to rehabilitation projects was produced.
In November 2014 Pacific Cement Company (PACEMCO) extended the suspension of its cement plant operations for three months to complete ongoing negotiations regarding a possible investment of funds needed to re-open its cement plant. It had halted operations on 5 May 2014 after the Surigao del Norte Electric Cooperative cut its power supply for unsettled obligations of at least US$555,432.
In February 2015 it emerged that Lafarge and Holcim, the country's most prominent cement producers, have agreed to sell some of Lafarge Philippines' assets to Ireland's CRH as part of their planned merger.
The IMF has predicted that the Philippines' GDP will grow by 6.3% in 2015 and 6% in 2016. The country's continued strong growth, both of its economy and its construction sector, imply that cement demand will grow for the years to come. The number of expansion and greenfield cement plant projects that have been announced show that Filipino cement producers expect demand to continue on its upwards trend.
Holcim Philippines' Sahagun said that the company's outlook on domestic cement demand remained positive. "The growth scenario is the same, but where the supply will come from will change," said Sahagun. He added that the expected ramping up of construction and the cement industry in the coming years will further improve its sales and operations, particularly amid a higher government budget for infrastructure, sustained private sector expansion and faster implementation of public-private partnership projects.
Singapore's GDP (PPP) grew by 4.1% year-on-year to US$339bn in 2013. Its GDP/capita, which rose from US$60,800 in 2012 to US$62,400 in 2013, is the highest of the ASEAN countries. Singapore is the only country with an advanced economy in southeast Asia, as defined by the IMF. GDP was contributed to by the service sector (70.6%) and industry (29.4%). Industrial production grew by 1.7% in 2013. Singapore is a net exporter, primarily of equipment, pharmaceuticals and petroleum products, while it imports equipment, mineral fuels, chemicals and food.
Singapore has no integrated cement plants and just one 300,000t/yr capacity grinding plant in Tuas Crescent, which is owned by G & W Industries. Its cement industry is represented by the Cement and Concrete Association of Singapore, which has eight member companies.
EnGro, one such company, participates in Singapore's cement industry via its cement terminal at Jurong Port (Figure 3). The terminal has 60,000t of cement storage capacity and can handle 1.2Mt/yr. Singapore Cement Manufacturing Company, a joint venture between Hong Leong Asia and Taiheiyo Singapore, also has a terminal at the Port of Singapore Authority that used to grind cement, however, in 1984 it switched to import only. Singapore Cement Manufacturing Company now has a second terminal with 50,000t of cement storage capacity at Jurong Port. Other companies, including United Cement and Sin Heng Chan, also operate terminals in Singapore.
In September 2014, Lafarge and Holcim received approval from the Competition Commission of Singapore (CCS) to merge their businesses in the country. Holcim has nine ready-mix concrete plants in the country, while Lafarge has several sales offices and no plants. After a public consultation exercise, the CSS said that the transaction was 'unlikely to lead to substantial competition concerns in Singapore.'
The IMF has predicted that Singapore's GDP will grow by 3% in 2015. Its construction activity and industrial production also show no signs of any slowdown in the near future. Although Singapore has no cement plants and no plans for any have been announced, the country's cement traders and concrete producers are likely to benefit from tariff-free cement imports once the ASEAN economic integration comes into play. Additionally, as raw materials, fuel and clinker imports become cheaper, incentives may be provided for the establishment of domestic grinding plants.
Thailand's GDP (PPP) grew by 2.9% year-on-year in 2013 to US$673bn. Its GDP/capita rose from US$9600 in 2012 to US$9900 in 2013. GDP was contributed to by the service sector (44.2%), industry (43.6%) and agriculture (12.1%). Industrial production fell by 3.1% year-on-year in 2013, the only ASEAN country to see a fall. Thailand is a net exporter of electronics, equipment, rice and fish products, while it imports raw materials, fuels and consumer goods.
Thailand has 11 cement plants with 46.7Mt/yr cement production capacity. Thailand's largest cement producer is domestic company Siam Cement Group, which has five cement plants and 18.7Mt/yr of production capacity, including 0.14Mt/yr of white cement capacity. Italcementi, via Jalaprathan Cement and Asia Cement, also has a significant stake in the market. The Asia Cement plant in Pukrang, Saraburi has 5Mt/yr of production capacity. Other multinational players include Siam City Cement and Cemex Thailand. Thailand also has two grinding plants, both operated by Jalaprathan Cement, which have 2.7Mt/yr of production capacity.
According to the USGS, in 2014 Thailand produced 42Mt of cement, flat when compared to 2013 (Table 8). The Thai Cement Manufacturers Association (TCMA) reported that, in 2013, some 35.9Mt of cement was produced in Thailand, of which 30.1Mt was sold domestically.14 According to its 2014 estimate, cement consumption was 464kg/capita, flat from 2013, but significantly higher than previously. In 2014, some 3.33Mt of clinker and 4.9Mt of cement was exported, up from 2.22Mt of clinker and flat from 4.9Mt of cement in 2013. Although cement exports have remained relatively stable since 2007, in the same time frame clinker exports have fallen from a peak of 13.2Mt in 2007. Indeed, 2014 is the first year since 2007 when year-on-year clinker exports rose.
The data suggests that 2014 has been a difficult year for Thai cement producers. On 22 May 2014, a coup d'tat was launched by the Royal Thai Armed Forces. The next six months saw much political upheaval as the military established the National Council for Peace and Order (NCPO) to govern Thailand. It was not a positive environment for those in the construction sector, with major infrastructure works and foreign investments delayed or cancelled. This was corroborated by Siam Cement, which reported a net profit of US$1.03bn in 2014, down by 8% year-on-year due to political turmoil and flat demand.
There was no active Board of Investment (BoI) from October 2013, when board member terms expired, due to the political crisis. This caused a slowdown in the construction and property sectors and fewer new private investments. Investment proposals worth US$15.3 - 18.4bn stalled awaiting approval from the BoI, including one project from Siam Cement. A new BoI was announced in June 2014.
In the period of political crisis, Siam Cement announced plans to focus on the export market due to the adverse economic outlook. According to company president and chief executive Kan Trakulhoon, sales of cement and construction materials fell by 7 - 8% in January and February 2014 against the 4 - 5% growth that SCG had projected. Usually, the late December - April period is the peak selling season for construction materials as people build and renovate their homes.
In March 2014 TPI Polene announced plans to spend US$341m in 2013 - 2016 to add a new 3Mt/yr capacity line at its 9Mt/yr cement plant in Saraburi. It also plans to expand into renewable energy with a 90MW power plant fuelled by community waste, pending an environmental review. Around 60MW will be sold to the Electricity Generating Authority of Thailand, with the rest consumed in-house. The project had been postponed since the financial crisis of 1997. TPI Polene will be the first Thai cement maker to invest in expansion since the financial crisis. It has signed a memorandum of understanding for the project with P&V Project (Siemens), ALC Tournai, Magotteaux and Atlas Copco.
The IMF has predicted that Thailand's GDP will grow by 4.6% and 4.3% in 2015 and 2016, respectively. However, economists hold mixed views on the country's near-future market. Some believe that GDP growth will remain stunted compared to the other ASEAN countries.15 However, Siam Cement expects its earnings to rise substantially in 2015, largely due to cement demand from planned infrastructure projects. It expects demand to grow by 6% to 42Mt in 2015. With greater domestic demand, Siam Cement expects its cement and clinker exports to fall to 4Mt, down from 4.4Mt in 2014.
Vietnam's GDP (PPP) grew by 5.3% in 2013 to US$359bn, while its GDP/capita rose to US$4000, up from US$3800 in 2012. GDP was contributed to by the service sector (42.2%), industry (38.5%) and agriculture (19.3%). Industrial production grew by 5% year-on-year in 2013. Vietnam is a net exporter of crude oil, rice, coffee and wood, while it mainly imports equipment, petroleum products raw materials and plastics.
There are 58 cement plants and 91.4Mt/yr of cement production capacity in Vietnam, the largest by far in both number and size of all of the ASEAN countries. There are two significant producers, including state-owned Vietnam Cement Industry Corporation (Vicem), the largest cement manufacturer in Vietnam with 12 active cement plants and 25.2Mt/yr of production capacity. Vissai Group is Vietnam's second-largest producer. It has four cement plants and 11.6Mt/yr of cement production capacity. Vietnam also has 15 grinding plants and 13.7Mt/yr of production capacity. Holcim has three of the plants, Vicem (via Ha-Tien Cement) has four grinding plants and Lafarge has one grinding plant.
According to the USGS, Vietnam produced 60Mt of cement in 2014, up from 58Mt in 2013 (Table 9). Cement production and consumption levels have both risen dramatically in recent years in line with increased infrastructure development and residential housing projects. Vietnam's Ministry of Construction said that cement demand was 65 - 67Mt in 2014. Cement sales in the first 11 months of 2014 rose by 16% year-on-year to 64.5Mt. Some 46.2Mt was sold to the domestic market, an 8% year-on-year rise, while 18.3Mt was exported, a year-on-year rise of 43%. Cement consumption continued to grow in January 2015, when it reached 5.87Mt, 30% higher than in January 2015.
Despite increasing domestic consumption and export levels, concerns have been raised over the number of planned cement plant projects. According to the Vietnam Cement Manufacturers Association (VCMA), the combined capacity of all the country's cement plants was expected to exceed 90Mt/yr in 2015, while cement demand was forecast at just 75 - 76Mt/yr. In March 2014, prime minister Nguyen Tan Dung asked the Ministry of Construction to review the planning of the cement industry and to remove low capacity cement projects from the process. A large number of cement plants were removed from planning in early 2014, including nine projects with <2500t/day of capacity each and five more in September 2014 with a combined capacity of 910,000t/yr.
Despite the long-standing cement overcapacity, a number of projects are still underway as the owners have invested huge sums and would be unable to recuperate their investments. The prime minister has also continued to approve new expansion projects and has agreed to extend the deadline for the construction of seven cement plant projects until after 2015. However, in April 2014 the Vietnamese government said that it would no longer provide guarantees to foreign loans for cement projects as domestic supply had surpassed demand. According to an audit in 2012 from the Ministry of Finance on cement projects using loans with the government acting as underwriter, 10 cement projects resulted in losses in 2012 and some of them could not repay their loans.
One way to tackle the overcapacity is to continue to increase exports. In February 2015, the Vietnam Chamber of Commerce and Industry's HCM City branch said that Vietnamese companies should promote exports to Sudan, where demand is rising due to its booming construction sector. However, the USGS has highlighted challenges to exporters, including poor local infrastructure that impedes transportation, as well as a lack of adequately-sized ports.
In February 2014 authorities withdrew the license of a 1.2Mt/yr capacity cement plant under construction in Cam Lo, Quang Tri due to its sluggish implementation. Construction commenced in June 2009, but the company was unable to continue the project. March 2014 saw the 1.7Mt/yr capacity Thach My Cement plant in Quang Nam start operation after a brief construction delay due to a shortage of materials.
In April 2014, it emerged that Vietnamese cement producers had failed to build government-mandated WHR systems. Under Vietnam's cement industry development plan until 2020, all cement plants with >2500t/day of clinker production capacity must have implemented a WHR system to save >20% of their electricity consumption by 2015. However, only Holcim and Ha Tien 2 in the south and Chinfon and Cong Thanh in the north had invested in the technology by 2015. Other producers had reportedly been prevented from investing by high debt and poor sales.
In June 2014 Semen Indonesia announced plans to invest US$300m to build a 1.5Mt/yr cement plant in Vietnam via its subsidiary Thang Long Cement. Construction is expected to start in 2015 and operation is due in 2018. Thang Long Cement, in which Semen Indonesia bought a 70% stake for US$157m in 2012, currently has 2.3Mt/yr of cement production capacity, although a second 2.3Mt/yr line is being installed.
In August 2014 Vissai Group signed a contract to export 1.5Mt of clinker to France's Ciment de Bourbon for the expressway road project on Runion Island. It is the biggest contract that a Vietnamese cement producer has secured to date, according to Vissai Group's deputy director Nguyen Tien Dat. The clinker will be shipped for US$42/t under the contract, which will be effective for five years.
7000L of toxic oil was removed from the edge of Ha Long Bay in October 2014 and disposed of at Holcim's Hon Chong cement plant. According to local media, the plant was the only facility in the country with the required technology. The oil was contaminated with polychlorinated biphenyls (PCBs), which are associated with endocrine disruption, neurotoxicity and cancer. It is an illegal substance in Vietnam.
In February 2015, DAP Joint Stock Company, which has produced 2Mt of synthetic gypsum since 2009, developed a process to use its gypsum to produce cement additives. DAP has signed a cooperation agreement with Vicem, under which Vicem will be responsible for the consumption of the resulting additive. The 600,000t/yr capacity Dinh Vu Gypsum JSC recycling plant has provided 10,000t of artificial plaster to Vicem's But Son plant in Ha Nam.
Vissai Group began work on the Do Luong cement plant in February 2015, which will ultimately become the Song Lam cement plant, in Nghe An with an investment of US$488m. The new 6Mt/yr plant will be developed in two phases, the first of which will see two 6000t/day capacity clinker lines installed, ready for operation in 2016. The second phase will add a third 6000t/day clinker line in 2017 - 2020.
The IMF has forecast that Vietnam's GDP will grow by 5.6% in 2015 and 6% in 2016. Cement and clinker sales are projected to reach 73Mt in 2015, according to the Ministry of Construction. Some 52 - 53Mt is expected to be sold to the domestic market, while 20 - 21Mt will be exported. The VCMA has predicted that 2015 exports could earn US$1bn, 15% higher than in 2014. The major challenges for Vietnam's cement producers in the near future will be the balance of supply and demand, the improvement of infrastructure and ports to enable increased export operations and the cement demand of the ASEAN nations and theAfrican countries to which exports are destined.
1. http://business.asiaone.com/news/majority-businesses-optimistic-about-asean-economic-integration-survey.2. http://minerals.usgs.gov/minerals/pubs/country/2011/myb3-2011-bx.pdf.3. Oxford Business Group, 'The Report: Brunei Darussalam 2009.'4. http://cambodiacementindustry.com/en/asean-cement/cambodia-cement/chinese-firm-acquires-large-stake-kampot-cement-factory.html.5. http://www.phnompenhpost.com/real-estate/local-cement-production-increasing.6. http://laoscementmanufacturers.com/en/asean-cement/laos-cement/lao-cement-producers-urged-prepare-ahead-aec.html.7. http://en.vietstock.vn/2013/12/lao-cement-maker-vows-to-shore-up-domestic-supply-117-165133.htm.8. http://minerals.usgs.gov/minerals/pubs/country/2012/myb3-2012-la.pdf.9. http://laoscementmanufacturers.com/en/asean-cement/laos-cement/new-laos-plant-breaks-ground.html.10. http://en.vietstock.vn/2014/10/lao-cement-eyes-lower-sales-price-117-188275.htm.11. http://minerals.usgs.gov/minerals/pubs/country/2012/myb3-2012-bm.pdf.12. http://www.mmtimes.com/index.php/business/property-news/12358-thai-cement-giant-starts-work-on-mon-state-plant.html.13. http://www.mmbiztoday.com/articles/lack-quality-stunts-local-cement-industry.14. http://www.thaicma.or.th/cms/assets/Uploads/tcma2014.pdf.15. http://www.economist.com/blogs/banyan/2014/10/thailands-economy
Malaysia Posted 8 months ago Cahya Mata Sarawak Berhad is a leading corporation listed on the Main Market of the Malaysian stock exchange, Bursa Malaysia, and is a major private-sector player in Sarawak, the largest State in Malaysia. Cahya Mata Sarawak Berhad has evolved from a single product manufacturer of cement beginning in 1974 to become a corporation focused on its Vision To be the PRIDE of Sarawak & Beyond. Today, our portfolio spans over 35 companies involved in cement manufacturing, construction materials, trading, construction, road maintenance, property development, financial services, smelting, telco infrastructure, education and other services. Cahya Mata Sarawak Berhads (CMS) Cement Division remains one of CMS largest revenue drivers since 1978. CMS Cement Sdn Bhd is Sarawaks sole cement manufacturer, which produces Portland Cement to cater for Sarawaks growing market. Today, CMS Cement Sdn Bhd is joined by CMS Cement Industries Sdn Bhd and CMS Concrete Products Sdn Bhd, providing high quality and steady product supplies for clinker, ready-mix and pre-cast concrete products. Company: CMS Cement Industries Sdn Bhd Year Established: 1978 Address: Level 6, Wisma Mahmud, Jalan Sungai Sarawak 93100, Kuching, Sarawak, Malaysia Kuala Lumpur Office: Level 33 (Suite A), Menara Maxis, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia Phone:+60 8223 8888 / +603 2078 9133 Fax:+60 8233 3828 / +603 2072 5511 Email: [emailprotected] Website: cmsb.com.my Products: Clinker & Cement
Cahya Mata Sarawak Berhad is a leading corporation listed on the Main Market of the Malaysian stock exchange, Bursa Malaysia, and is a major private-sector player in Sarawak, the largest State in Malaysia. Cahya Mata Sarawak Berhad has evolved from a single product manufacturer of cement beginning in 1974 to become a corporation focused on its Vision To be the PRIDE of Sarawak & Beyond. Today, our portfolio spans over 35 companies involved in cement manufacturing, construction materials, trading, construction, road maintenance, property development, financial services, smelting, telco infrastructure, education and other services.
Cahya Mata Sarawak Berhads (CMS) Cement Division remains one of CMS largest revenue drivers since 1978. CMS Cement Sdn Bhd is Sarawaks sole cement manufacturer, which produces Portland Cement to cater for Sarawaks growing market. Today, CMS Cement Sdn Bhd is joined by CMS Cement Industries Sdn Bhd and CMS Concrete Products Sdn Bhd, providing high quality and steady product supplies for clinker, ready-mix and pre-cast concrete products.