Cambodia: Kampot cement plant delayed by crisis

Cambodia: Kampot cement plant delayed by crisis
Published: 03 November 2008

A move to invest US$200m in the Kampot Cement Co that would triple output by the end of 2009 has been temporarily shelved because of the global downturn in financial markets, a company stakeholder told the Post Sunday.

"Both my companies and a foreign partner, the Siam Cement Group (SCG) in Thailand, have been affected by fluctuations in world markets, so we have decided to delay expansion of operations in Kampot," said Khaou Phallaboth, president and minority stakeholder of the company.

SCG is one of Thailand’s largest conglomerates and has interests in construction materials, transportation and retail.

Kampot Cement was launched in January of this year as a US$127m joint venture with Thailand’s largest conglomerate SCG, which controls a 90 percent share, and Cambodia’s Khaou Chuly Group, which holds the balance of shares. The company currently produces 1Mta of cement, Khaou Phallaboth said.

Market surveys indicate annual demand for cement in Cambodia is nearly 3Mt, generating about
US$270m. Demand has declined about 30 per cent because of a fall-off in construction.

"Currently, demand has declined about 30 per cent because of a fall-off in construction projects," Khaou Phallaboth said.

He added that political instability in Thailand, as well as financial losses and new restrictions on development projects in Cambodia has added to instability in the capital’s once booming construction sector.

Slower global construction demand has driven down cement prices this year.

Siam Cement Pcl has been hit hard by a slow construction and petrochemicals marker.
Thailand’s largest maker of building materials recently had its rating cut to "sell’’ from "hold" by Chaiyatorn Sricharoen, an analyst at Bualuang Securities Pcl, who cited falling petrochemical prices and declining demand for cement and building materials.

In October, SCG posted a 21 per cent YoY fall in third-quarter net profits to US$119m due to divestment tax gains.

Sales increased 15 per cent and operating profits in paper and cement grew up by 69 per cent and 29 per cent respectively, the company said in a statement.