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Khon Kaen plant set to go online in January

Khon Kaen plant set to go online in January

091204_09
Chamroon Chinthammit, Khon Kaen Sugar Industry Pcl president, stands outside the company's Bangkok office. The Thai firm is set to begin production at Koh Kong's first sugar plant next month. BLOOMBERG

New facility in Koh Kong province will produce sugar for export to Europe from May, says manager at Thailand-based company

This is the first sugar plant in the province. This investment will provide jobs to local people.

CAMBODIA’S first sugar plant will begin producing unrefined “brown” sugar for export to European markets early next year, an official of Thailand’s Khon Kaen Sugar Industry Public Company said Thursday.

“We plan to begin shipping sugar to European markets in May,” said Korn Posayanond, Khon Kaen’s research and business-development manager.

The firm grows sugarcane on 20,000 hectares in Sre Ambel district of Koh Kong province, and is wrapping up construction on a processing plant ahead of an official launch planned for January 25.

It will be several years before the plant is able to produce refined “white” sugar, said Korn, adding that “for now, about 25,000 tonnes of unrefined sugar will be produced annually for the EU”.

In three years the firm plans to be operating at a planned full capacity of 60,000 tonnes per year, he said.

At that time, Korn anticipates, it will supply between 10 and 20 percent of the total sugar sold in Cambodia's domestic market.

The 20,000 hectares under cultivation will yield up to 800,000 tonnes of unprocessed sugarcane per annum, he said.

The project has generated about 3,500 jobs to cut and process the crop, of which 90 percent went to Cambodians, and the remainder mostly to Thai nationals in middle and upper management, Korn said.

“People have the energy to work, but they don't have employment. Now we’ve helped them with jobs,” he said.

Construction of the US$90.6 million sugar plant began in 2007.

Thailand’s Khon Kaen Sugar Industry Public Company owns 70 percent of shares in the enterprise, and Taiwan’s Vewong Corporation holds the remaining 30 percent.

“This is the first sugar plant in the province. This investment will provide jobs to local people,” Koh Kong’s newly appointed Governor Bunlert Pramkerson said Thursday.

In June, Philip Securities assessed that Khon Kaen’s operations in Cambodia and Laos had run into “more difficulties than previously thought by … [Khon Kaen] management” due to scarcity of labour, particularly skilled workers, resulting in a lower yield at sugar plantations.

Such problems could lead the Thai firm to book losses of another 50 million baht (US$1.51 million) in 2010, Philip added, with production anticipated to remain below break even levels.

“In our view, these two overseas operations would remain at risk though KSL [Khon Kaen Sugar] has already solved the above problems, as production costs are expected to rise,” the Singapore-based securities firm said.

On August 19, Bangkok-based TRIS Rating held Khon Kaen at A- with a “stable” outlook, taking account the “regulatory and operational risks” of the company’s expansion plans into Cambodia and Laos, as well as the volatility of world sugar prices and supply.

The outlook was based on the firm’s maintaining its market position in Thailand. After 60 years in operation, Khon Kaen is the oldest and fourth-largest sugar producer in the Thai market.

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