Cambodia: Kampot Cement plan to expand put on hold

Cambodia: Kampot Cement plan to expand put on hold
Published: 23 October 2009

Kampot Cement has scaled and pushed back its expansion plans, now aiming to double production capacity in 2012, due to falling demand for the building material, the head of the firm’s minority shareholder said Wednesday.

Khaou Phallaboth, president of Cambodia’s Khaou Chuly Group, which holds a 10 per cent stake in the Kampot-based cement maker, said cement demand had fallen around 20 per cent this year and is likely to remain at the same level next year before beginning to recover in 2011.

The delay is based on ... analysis. The ... market will not be recovered until 2012.

“The delay is based on market analysis,” he said. “The cement market will not recover until 2012,” he said, adding that he anticipated demand would eventually rebound to levels achieved in 2008, at the height of the construction boom in Cambodia.

Around 2.5Mt of cement was used in Cambodia in 2008, he said, generating about US$225m in revenues for sellers.

Kampot Cement announced in September last year that it planned to invest US$200m in expanding its plant to triple production capacity to 3Mt.

Khaou Phallaboth said the company would now invest only US$100m from the beginning of 2012 to double capacity to 2Mt. He expected the expanded facilities to come online at the end of 2012.

Kampot Cement was launched in January 2008 as a US$127m joint venture between the Khaou Chuly Group and Thailand’s largest industrial conglomerate, Siam Cement Group, which is listed on the stock exchange in Bangkok.

The Thai partner controls 90 per cent of the joint venture; however, Khaou Phallaboth said Khaou Chuly Group’s stake would rise to 20 per cent following the investment.

Sihanoukville Autonomous Port said last week that its imports of cement have fallen 23.12 per cent YoY to 37,772t over the first nine months on the back of a slowdown in construction this year that has seen at least 30 per cent of projects put on hold, the UN Development Programme said in a report in May.