The Sri Lanka unit of Holcim has received long-delayed approval for an import facility in the east and also proposed a multi-million dollar plan to revive a defunct factory in the north.
Holcim Lanka chief executive Peter Spirig said the company plans to set up a cement import terminal in the eastern port of Trincomalee and later a grinding mill.
"There has been some delay. We wanted it five years ago. We’ve now got the necessary permits to put up the facility. Construction will start next year."
He said, without elaborating, that the company would be eligible for incentives like tax breaks given by the government for investments in the eastern region.
The government has launched an ambitious effort to revive the economy of the east and is inviting investment after driving out Tamil Tiger rebels from their jungle lairs in the region.
Reconstruction and new building activity in the east will lead to greater demand for cement in the region, now supplied by Holcim’s competitor Tokyo Cement, in which Japan’s Mitsui has a stake.
Holcim’s Spirig also said the firm it still keen on reviving a disused cement plant in the northern Jaffna, sitting on a rich deposit of limestone which has also been eyed by others including India’s Birla group.
The government construction minister Rajitha Senaratne has said the contract to revive the Kankesanturai cement factory in Jaffna, owned by the listed Lanka Cement, would be given to Birla.
But other cement companies are also in the fray, including Hoclim Lanka which insists the government have competitive bidding for the plant.
"Holcim has a keen interest in Kankesanturai," said Spirig, "It offers a good opportunity to make the country self-sufficient in cement.
"I truly believe the government is making an open and fair bidding process for this project in which everyone would have a fair deal."
Sri Lanka now imports about half its cement requirements.
Spirig said the revival of the plant would depend on the absence of hostilities and availability of funds, which he said might be difficult to get owing to the current credit crunch.
The government has said it would look at reviving the plant once it completes military operations against the Tiger rebels in the north.
The Tigers have been pushed back from the Jaffna peninsula which they earlier threatened with artillery and are now getting cornered in the north-eastern part of the island.
Spirig said that reviving the Jaffna plant might require an investment of between US$500 millioin to a US$1 billion, depending on production capacity.
"With the current financial crisis it would now be difficult to find investment for a location like Jaffna," he said.
"But if peace comes, sentiment could change and there could be an upswing in the market. Also, we could see the world economy coming out of the financial crisis in 2010 or 2011.
"Who knows, then it could be a good opportunity to re-look at Kankesanturai. In cement, we’re looking at the long run - a period of decades."