Brunei Cement new partnership deal signed

Brunei Cement new partnership deal signed
Published: 05 June 2008

The minister of industry and primary resources (MIPR) Pehin Orang Kaya Setia Pahlawan Dato Seri Setia Dr Awg Hj Ahmad Hj Jumat yesterday officiated and witnessed the signing ceremony of the new partnership between HC Asia Holding GMBH and PJ Corporation Sdn Bhd.

Taking place at the Butra HeidelbergCement premises in Serasa Industrial Site, the event also saw the attendance of deputy minister of development Dato Paduka Dr Hj Mat Suny Hj Mohd Hussein and deputy minister MIPR Dato Paduka Hj Hamdillah Hj Abd Wahab.

Yesterday’s signing ceremony began with the recitation of surah al-Fatihah and a welcoming address by managing director of BHC Mr Jean-Claude Jamar and another speech by chief operating officer of Southeast Asia HeidelbergCement Group and president director of Indocement Mr Daniel EA Lavalle.

Signatories for the new partnership of Brunei Cement were Pg Anak Hj Jaafar ibni Al-Marhum Pg Pemancha Pg Anak Hj Mohd Alam on behalf of PJ Corporation and Mr Lavalle on behalf of Asia Holding GMBH.

PJ Corporation now owns 30 per cent of Brunei Cement, while the remaining 70 per cent is owned by HeidelbergCement Group of Germany. In Mr Jamar’s welcoming speech, he spoke about the history of the company, its objectives and the challenges ahead and the rise of construction activities and demand of cement.

"Brunei Darussalam was following the same boom cycle. The cement decreased from 400kt to 800kt in 1996, a 100 per cent growth in less than four years," he said and adding, "At that time, there were no production facilities here and all the cement was imported and the country faced some inevitable problems such as cement storage, shipping delays, inconsistent quality."

"The price of cement was actually at record high up to B$200/t, much more than what it is today 12 years later," he added. "With this background in mind, it became quite obvious that cement was actually a vital and strategic product for the country’s development and it could not fully depend on the imports and as the policy of the government was already to diversify the economy, it envisioned some entrepreneurs to set up the first cement grinding plant in the country.

Yesterday’s event marked the fourth milestone of the company with the new partnership between the two establishments.

"One of the most important objective of setting up a cement plant is to have a reliable source of supply and that high and consistent quality cement is an equally vital objectives and this plant is committed to continue producing one of the highest quality cement in Asia as per 62.5N Class that results in high strength and long durability," Mr Jamar said.

Creating employment is another objective of the economic diversification and today, the cement plant provides direct employment for 70 people with a ratio of more than 60 per cent locals and there is also an indirect employment through different spin-off activities there are more than 300 families, living indirectly from the company such as truck drivers, suppliers, retailers and dealers.

He also expresses pride that the company has achieved its objectives and is grateful to the His Majesty’s government through MIPR and Ministry of Development for their continuous support.

"The challenges for the company are still very real. One of the biggest challenges remains the size of the market, which shrank after the Amedeo effect from 800k in late 90s to about 220k in 2001," he said.

"Today, the market is about 270kt per annum and means that with an installed capacity of 500kt, the utilisation of the plant is less than 50 per cent and it can largely cope up with any future demand.

"The second challenge is the volume of imported cement that harms the local industry, so the challenge is how to level off the playing field and compete with imported cement in a small market with: a) overcapacity and b) rising of cost of raw material. Those challenges are clear and present dangers need to be addressed for the long term sustainability of the local cement industry in the country," he added.

The new partnership could bring some synergies coming from the international cement expertise of HC combined with Pg Anak Jaafar’s business knowledge of the local market, especially in the concrete business.

The Minister of MIPR later led the signing of a plaque, marking the new partnership. This was followed with a presentation of a donation of US$10,000 to the Al-Muhtadee Billah Fund for Orphans CEO Dato Paduka Hj Alihasim bin Hj Daud by Pg Anak Hj Jaafar and Mr Lavalle.