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Logo of Phnom Penh Post newspaper Phnom Penh Post - Kampot cement plant delayed by crisis

Kampot cement plant delayed by crisis

A move to invest US$200 million in the Kampot Cement Co that would triple output by the end of 2009 has been temporarily shelved because of the global downturn in financial markets, a company stakeholder told the Post Sunday.

"Both my companies and a foreign partner, the Siam Cement Group (SCG) in Thailand, have been affected by fluctuations in world markets, so we have decided to delay expansion of operations in Kampot," said Khaou Phallaboth, president and minority stakeholder of the company.

SCG is one of Thailand's largest conglomerates and has interests in construction materials, transportation and retail.

Kampot Cement was launched in January of this year as a $127 million joint venture with Thailand's largest conglomerate SCG, which controls a 90 percent share, and Cambodia's Khaou Chuly Group, which holds the balance of shares.

The company currently produces one million tonnes of cement each year, Khaou Phallaboth said.

Market surveys indicate annual demand for cement in Cambodia is nearly three million tonnes, generating about $270 million.

Demand has declined about 30 percent because of a fall-off in construction.

"Currently, demand has declined about 30 percent because of a fall-off in construction projects," Khaou Phallaboth said.
He added that political instability in Thailand, as well as financial losses and new restrictions on development projects in Cambodia has added to instability in the capital's once booming construction sector.

Slower demand

Slower global construction demand has driven down cement prices this year.

Siam Cement Pcl has been hit hard by a slow construction and petrochemicals marker.

Thailand's largest maker of building materials recently had its rating cut to "sell'' from "hold" by Chaiyatorn Sricharoen, an analyst at Bualuang Securities Pcl, who cited falling petrochemical prices and declining demand for cement and building materials.

In October, SCG posted a 21 percent year-on-year fall in third-quarter net profits to baht $119 million due to divestment tax gains.

Sales increased 15 percent and operating profits in paper and cement grew up by 69 percent and 29 percent respectively, the company said in a statement.

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