Chin Fon Group will invest US$240 million to set up a second kiln at its Haiphong cement plant this year, according to Taiwanese news reports. The group is also considering launching a cement grinding plant in an industrial zone in southern Vietnam. Liu Chang-yi, president of Chin Fon Haiphong, said his company has obtained the approval from Vietnamese central government for the construction of the second kiln. If everything goes smoothly, the second kiln is expected to launch pilot production in the middle of next year at the earliest.
Liu said the construction approval for the second kiln has been delayed because the Vietnamese government is very cautious in screening foreign investments in cement plants. According to the regulations set by the Vietnamese government, Vietnamese capital should hold over 50 per cent stake in any joint venture cement plant with foreigners. But Chin Fon Group currently holds as high as a 70 per cent stake in the Haiphong plant.
To meet the increased demand of the Vietnamese market, Chin Fon Haiphong will invest US$40 million to set up a cement grinding plant in an industrial zone nearby Ho Chi Minh City by the end of this year. The proposed cement grinding plant will have two kilns with total annual production capacity of 1Mta. The first of the two kilns is expected to launch pilot production in the middle of next year.
Chin Fon Haiphong’s first kiln was designed to have an annual production capacity of 1.5Mta of cement in the initial stage of its establishment several years ago. Thanks to the launch of revamping production gears over the past several years, the kiln is currently capable of rolling out 1.87Mta of cement. The company will spend US$1 million to improve upstream material-feeding processes so as to raise the annual output to 2Mta.
Liu said his company is busy with meeting influx of orders. Since the beginning of 2001, the company has stopped selling clinker to downstream firms. On the contrary, starting from 2002 the company began procuring high-quality clinkers from Taiwan and Thailand with an attempt to raise cement production in an effective way.
Chin Fon Haiphong turned out 1.4Mt of clinker and also procured 360,000t of clinker from abroad last year. The company produced 2.2Mt of cement last year, occupying over 10 per cent of the Vietnamese cement market. With pretax earnings of US$13.83m last year, the company is the most profitable cement producer in Vietnam.
Recently Chin Fon Haiphong resolved to suspend imports of clinker to reduce production costs because the international freight fees and cement prices have skyrocketed.
Chin Fon Haiphong sold 450,000t of cement in the first quarter of this year, down seven per cent from the same period of last year. But the company garnered US$2.33 million in pretax earnings in the first quarter of this year, up 48 per cent from the corresponding period of last year. Liu boasted his company will see pretax earnings reach US$15 million this year.