New ECC plant to begin production in March

According to local reports, the new P6.78 billion Eagle Cement Corp. (ECC) plant belonging to businessman Eduardo Cojuangco, is set to begin commercial operations in March.

The plant will have a capacity of 1.08 million tpa, which is equivalent to 26.6 million bags of cement. The opening of the plant is well timed among reports of price increases and a tight supply of cement in the market.

The opening of the plant should ease cement prices in the region, however, the company has also committed to produce cement at ex-plant prices, 25% cheaper than the competition. In return the Board of Investors (BOI) has granted the company an “income tax holiday”.

The Department of Trade and Industry has set a guide price of P210 per bag, following apparent overpricing and hoarding since late last year. According to the BOI, when it approved the project in 2006, it said this was to be one of the lowest cost producers of cement complying with standards set by government.

In addition, it has been speculated that government will give more support to the construction sector this year, with the 2010 Investment Priorities Plan (IPP) widening the incentives coverage for steel and cement production.

Under the new plan, new projects do not need to be integrated with mining to qualify for government incentives that include income-tax holiday and duty-free imports of raw materials and equipment.

The plan will therefore cover cement production projects that will begin with clinker as, according to the BOI, this type of project only needs a six-month gestation period, which is important considering the current strong demand for new capacities.