Kampot Cement plan to expand put on hold

(Posted by CAAI News Media)

Thursday, 22 October 2009 15:00 Nguon Sovan

Company says bottom has fallen out of market, and that it will slow down investment in growth

KAMPOT Cement has scaled and pushed back its expansion plans, now aiming to double production capacity in 2012, due to falling demand for the building material, the head of the firm’s minority shareholder said Wednesday.

Khaou Phallaboth, president of Cambodia’s Khaou Chuly Group, which holds a 10 percent stake in the Kampot-based cement maker, said cement demand had fallen around 20 percent this year and is likely to remain at the same level next year before beginning to recover in 2011.

--------------------------------------------------------------------------------

The delay is based on ... analysis. The ... market will not be recovered until 2012.

--------------------------------------------------------------------------------

“The delay is based on market analysis,” he said. “The cement market will not recover until 2012,” he said, adding that he anticipated demand would eventually rebound to levels achieved in 2008, at the height of the construction boom in Cambodia.

Around 2.5 million tonnes of cement was used in Cambodia in 2008, he said, generating about US$225 million in revenues for sellers.

Kampot Cement announced in September last year that it planned to invest $200 million in expanding its plant to triple production capacity to 3 million tonnes.

Khaou Phallaboth said the company would now invest only $100 million from the beginning of 2012 to double capacity to 2 million tonnes. He expected the expanded facilities to come online at the end of 2012.

Kampot Cement was launched in January 2008 as a $127 million joint venture between the Khaou Chuly Group and Thailand’s largest industrial conglomerate, Siam Cement Group, which is listed on the stock exchange in Bangkok.

The Thai partner controls 90 percent of the joint venture; however, Khaou Phallaboth said Khaou Chuly Group’s stake would rise to 20 percent following the investment.

Sihanoukville Autonomous Port said last week that its imports of cement have fallen 23.12 percent year-on-year to 37,772 tonnes over the first nine months on the back of a slowdown in construction this year that has seen at least 30 percent of projects put on hold, the UN Development Programme said in a report in May.