Birla exects to inspect defunct cement plant in Sri Lanka

Birla exects to inspect defunct cement plant in Sri Lanka
Published: 16 July 2008

A team of officials from India’s Aditya Birla group is to visit Sri Lanka Wednesday with the aim of inspecting the site of a defunct northern cement plant the Indian group wants to invest in.
 
"They are coming tomorrow and their visit to the site has got security clearance," Minister of Construction and Engineering Services Rajitha Senaratne told LBO.
 
Birla has already given the government a proposal on reviving the cement plant in Kankesanturai in the Jaffna peninsula owned by the listed Lanka Cement following talks in Colombo earlier this year.
 
Senaratne said the government was looking at a joint venture with the Birla group where the state’s contribution would be the plant and the site which is a rich deposit of limestone, the basic raw material for cement manufacture.
 
The Birla team is expected to be in the island during July 16 and 19, he said.
 
Senaratne said the government’s aim was to revive cement production in northern Jaffna and ease a severe local cement shortage while providing employment for youth in the north.
 
The Kankesanturai plant is owned by Lanka Cement, a government firm listed on the Colombo bourse, whose shares have been widely traded after reports of the Birla deal.
 
The defence ministry has approved a site inspection by Birla officials in Jaffna which is cut off from the mainland as Tamil Tigers control the land route.
 
Birla’s interest was sparked by the current worldwide shortage of cement owing to a construction boom, especially in emerging economies like China and India, which have sent up cement prices.
 
Senaratne has said Birla’s investment to revive the plant will help raise local cement production to 80 per cent of the island’s requirement from 40 per cent today.
 
The plant is sitting on a rich limestone deposit in Jaffna and had long drawn the interest of other cement producers such as Holcim, and Tokyo Cement, which is partly owned by Japan’s Mitsui.
 
Holcim, the dominant player in the local market with the only fully integrated cement plant making cement from limestone deposits in the north-western Puttalam district, has also given the government a proposal to build a new factory in Jaffna.
 
Holcim has said it prefers the government to call for open, competitive bids to revive the Lanka Cement plant in Kankesanturai.
 
Senaratne, however, has said the government was keen to ensure greater competition in local cement manufacture and prefers not to give the dominant player more control of the market.