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Mixed fortunes in Southeast Asia: Thailand and Myanmar

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Turmoil in Thailand

Once again, for several weeks from September to the end of November 2013, Thailand was subjected to serious floods, although not on the same scale as those that crippled much of the country in late 2011. Siam Cement Group (SCG), Thailand’s top industrial conglomerate, expected that the floods would cut full-year growth in cement sales to 5%. About 50% of the cement manufactured in the country is used in the residential sector, 30% in infrastructure and the remainder in the industrial sector. Currency volatility also weakened prospects of achieving the revenue predicted for the year. Asia Cement Plc., a subsidiary of Italcementi, maintained its 2013 revenue projection despite the slowing economy and political conflicts. TPI Polene, the country’s third largest player, is looking to complete construction of its fourth line at Saraburi by 2015. ThyssenKrupp Industrial Solutions won the contract to supply the new kiln line. The capacity of the plant will be increased by 33% to 12 million tpa by 2026.

Matters came to a head in December when Prime Minister Yingluck Shinawatra dissolved parliament and called for new elections to be held on 2 February. A climate of uncertainty could cause reductions or delays in new investment in the private sector. However, demand for building materials is predicted to pick up this year as homeowners set about repairing flood-damaged properties.

Government boosts cement JVs in Myanmar

According to Myanmar’s Ministry of Industry, the government has chosen 13 companies, including firms from Thailand and Germany, to establish joint ventures for state-owned cement plants. The Ministry had offered tenders to local and foreign firms to operate the plants. The winning firms comprise: Shwe Taung Cement Co. Ltd; Max Myanmar Manufacturing; Asian Cement Public; Ultra Group of Companies; Shwe Khit Aung; Ferrostaal; Mother Industrial; Myint Investment Group; Myanmar Cement & Mineral Production; Global Star; Diadem (Myanmar) and Myanmar Jidong Cement.

The Myanmar Investment Commission has approved the construction of nine cement plants. On completion of these projects, the Ministry of Industry expects that almost 10.53 million tpa of cement will be produced. The 15 existing plants, three state owned and the rest privately owned, can produce 4.02 million tpa of cement.

The Siam Cement Company will invest US$388 million for its first fully integrated plant in Myanmar. Semen Indonesia also plans to construct a plant worth US$200 million and India-based Ramco Cement is said to be in discussions with the government over the possibility of building a new facility.

One in, one out

Press reports from Laos in November 2013 speculated that Thailand’s Siam Cement Group is the mystery cement company that will co-invest with Lao-Phatthana Cement Industry Co., a unit of the Souksomboon Group, in building a new US$330 million plant in the Khammouane province. The plant is due to be completed in 2015 – 2016. As SCG is looking to expand its operations throughout Southeast Asia, it would seem logical that there was some truth in the rumours. Cement demand in Laos is approximately 3.5 million tpa, but supply stands at just 1.7 million tpa. The country has to make up the shortfall by importing from Thailand and China. When completed, the Khammouane plant will produce 2.2 million tpa of ordinary and mixed cement, with half serving the Laotian market and the rest exported. The Laotian economy is growing vigorously with infrastructure projects such as roads, railways and dams being developed ahead of the Asian single market in late 2015.

The news from Cambodia is not so encouraging. In August 2013, Siam City Cement suspended a cement plant project valued at about US$200 million due to political unrest and better investment opportunities in Myanmar. There has been unrest since the general election at the end of July and confidence in the economy had fallen by 51% in the post-election period. However, it is not all gloom and doom. The Chinese funded Cambodia Cement Chakrey Ting cement plant is expected to come online this year.

Written by Paul Maxwell-Cook. This is an abridged version of the full article, which appeared in the February 2014 issue of World Cement. Subscribers can view the full article by logging in.

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