Siam cement unit: Firm eyes Indonesian mine

Siam cement unit: Firm eyes Indonesian mine
Published: 07 September 2005

SCT expands exports as domestic sales fall. SCT, Siam Cement Group’s distribution unit, is planning to spend several billion baht to buy a majority stake in or create a joint venture with a coal mine in Indonesia in the next year.

The move is part of the company’s plan to diversify into energy-related businesses, according to the company’s managing director Kalin Sarasin.

"We are studying ways to form a joint venture or buy a major stake in a coal mine in Indonesia that will serve our business expansion, because when we bid to provide coal to our business partners some of them will specify that bidders have to own a coal mine," Kalin said. "This investment will be a strategic business expansion for the future."

Domestic demand for coal is expected to increase to 15.4Mt by 2009 from today’s 10Mt, 90 per cent of which is imported. Industry is expected to start use more coal to replace bunker oil, the price of which has hit record highs this year. As Siam Cement’s distribution unit, SCT is involved in international trade through a sales network that spans the globe.

The company has sales offices in 17 countries including Cambodia, Burma, Vietnam, Malaysia, Singapore, the Philippines, Hong Kong, Bangladesh, Dubai, Australia, the United States, Laos, Taiwan, Indonesia, India and China where it has two offices. In the next three years it plans to open seven offices, including in the Middle East and South Africa and additional offices in China, the US and India.

Kalin said that the company’s expansion will go a long way to helping it meet its revenue target of Bt80bn in 2010 - nearly a doubling of this year’s expected sales of Bt43bn. Sales are expected to grow 15 per cent this year from last year, half of which are exports.

SCT posted sales of Bt24b in the first half of the year - a 13 per cent increase from the same period last year. Sales growth this year is in large part thanks to the exports, Kalin said.

"We estimated that our sales this year would be close to last year’s Bt36.29 billion because domestic demand dropped following slight economic growth, rising oil prices and increasing interest rate. When we started to expand our export market we received positive feedback and focused on driving our sales growth higher than our estimates," Kalin said.

Popular export products include cement, construction materials such as tiles, steel and sanitary-ware. It also plans to outsource product manufacturing to China and India, which offer lower prices than domestic products.