Sand dredging licenses have been greatly limited as the Ministry of Mines and Energy address the environmental impact of unregulated dredging. In consequence, sand prices have risen as the associated transportation costs take their toll, according to developers and producers of construction materials.
While the Ministry of Mines and Energy conducts the impact study to assess the risk dredging has on riverbanks and water flow, there has been an obvious spike in prices for sand and mixed cemenet, said the general manager of Borey River Town, Teng Rithy. According to him sand prices have increased 10 to 20 per cent since the restriction has taken affect.
Phnom Penh Port, the only company currently holding sand dredging licenses for a site in Peam Ror area in Prey Veng province, with a second site in Rokar Koung, Kandal province, announced that the rise in prices is the result of two factors: a dip in sand quality and an increase in transportation costs.
Ann Sopanha, manager of CPAC Cambodia—a company that produces mixed cement—said that mixed cement has increased from $2 to $3 per cubic meter over the last three or four months, adding up to an overall increase of 50 per cent.
Sour Soufang, general manager of Borey Rith, told Post Property that the increased price for mixed cement and sand could strongly affect the development of borey projects that are dependent on the abundance of relatively cheap materials.
“The current increase of sand prices is not so big yet. However, if [the price] keeps increasing, it will strongly affect residential developments in the Cambodian construction sector because mixed cement is a major construction material,” she said.
“Residential prices will increase with the sand price increase, but we cannot require the house owners to pay for [this],”she said. “I request the government to discuss this problem, as well as decrease the price of sand, because I believe all Borey developments will be affected by this,”she added.
Sour Soufang confirmed to Post Property that her company Borey Rith currently paid between $62 to $85 per truck load of seven cubic meters of sand – with an assumed base price of $3 per cubic meter, transportation costs account for at least two thirds of the load’s value.
Hy Pavy, director of Phnom Penh Port—which is currently the only company authorised by the Ministry of Mines to dredge sand—said that one cubic meter of sand was currently priced at $3, while every five kilometers trucked away from the Chaktomok area (where the port is located), incurs an additional $1.50 for transportarion costs. The farther sand has to travel, the prices rise accordingly, he explained.
While Borey River Town general manager, Rithy, appreciates the government’s attempt to crack down on environmentally harmful sand dredging projects, he critizised the Ministry of Mines and Energy’s lack of solutions to stabilize prices and transportation costs. “This [crackdown] is good for natural resources, but the ministry should think about the construction sector as well, because such an increase of sand and mixed cement [prices] affects the construction sector a lot,” he said.
“Before they stop dredging, they should calculate the amount of sand required in the construction sector, since it is a vital sector pushing the national economy,” he added.
Though the supply of sand was sufficient to satisfy the demand, said Hy Pavy, the quality of the sand the company dredges was of inferior quality. The fine sand required to produce mixed cement, he said, was mainly found deep in the river bed and dredging it would probably affect the riverbank. As a consequence, Phnom Penh Port dredges in shallow water where the sand has a high share of coarse grains that is unsuitable for mixed cement production. Thus, depot owners have to strain coarse sand by themselves to obtain the sand they need - a necessary additional step which may justify the increased of prices.
Realising that the ban on dredging is beginning to shake the construction industry, the Ministry of Mines and Energy has announced a new bidding process for licenses – despite not having completed the environmental impact study.
Bidding for new dredging licenses will be conducted on May 29. It would allow four selected private companies to dredge sand in four areas in Kandal. The dredging license lasts two years. Between 20,000 and 30,000 cubic metres of sand can be dredged and sold for between $4.50 and $5 per cubic metre under the terms of the licenses.
Although there are 39 private companies applying and bidding for these licenses, they are required to thoroughly research the quality of the sand and the market impact, explained the Secretary of State at the Ministry of Mines and Energy, Dith Tina.
According to him, companies must also put down a $50,000 deposit for the license. If the companies perform irregular or illegal acts during the two-year the license, the ministry would confiscate both the license and the deposit.
“If those companies do not serve for all interests that the ministry provides, the license will be sequestered,” he said.