Siam City Cement Plc (SCCC) plans to restart the last two of its six kilns by the end of this year to maximise its production capacity for the first time since the financial crisis of 1997, in the wake of rising demand for cement exports. The company is capable of producing up to 14.5Mt of cement a year, managing director Leo Mittelhozer said yesterday. With a 28-per-cent share of Thailand’s cement market, SCCC is the country’s second-largest cement firm despite the fact that at present it only operates four of its cement kilns with a capacity of 12.3Mta
“Now we are receiving a lot of calls from countries in the Middle East, in addition to those we already export to, asking for our cement, but we cannot service those requests” said Chantana Sukumanont, senior vice-president. Mittelhozer also said that as a subsidiary of the Swiss-based Holcim Group, SCCC should be able to capitalise on the parent company’s existing business network to enlarge its client base in other countries.
SCCC also expects the domestic cement market to grow by 8 per cent this year, buoyed by growing demand. As a result, the company anticipates seeing a rise in domestic and export sales from 9.4Mt last year to 9.9Mt in 2004, said Mittelhozer, adding that 6.5Mt would go to the domestic market and the remainder exported.
The total capacity of cement to be produced in Thailand this year is estimated at 54Mt, of which 25.4Mt will serve domestic consumption (up 8 per cent from last year), 10Mt will be exported and the rest will likely spill over as excess capacity.
To further increase profit margins, SCCC has tried to reduce energy costs by using alternative fuels and raw materials in the production process. “We now can save energy costs by 7 to 9 per cent, and this is expected to grow to up to 20 per cent in the next few years” said Mittelhozer. Energy bills swallow up about 40 per cent of the company’s overall production costs.
Offering a broader strategy for the future, the managing director said: “Its not enough to just sell cement. We need to sell solutions to our customers that effectively give them higher added value. So, ready-mix concrete is a logical business area in which we can be more active.” Thailand’s second-biggest cement producer now owns about 8 per cent of the lotal ready-mix-concrete market. Chantana added that SCCC already has 32 ready-mix-concrete plants across the nation. To extend its market share in this area, she said, the company plans to open four more plants by the end of this year and launch over 10 new plants next year, with a combined investment value of at least Bt500 million.