Dec 6, 2012

Myanmar cement firms prepare for building boom

Just as cement businesses solidified in Thailand over the course of two decades, the same industry is expected to gel in Myanmar.

LV Technology Plc (LVT), the MAI-listed engineering consultancy and equipment provider to the cement market, said there are 14 cement plants in Myanmar with a combined capacity of 3.5 million tonnes per year. Demand is 6 million tonnes.

"There is massive potential for cement growth in Myanmar. The growth trends for the industry will be similar to Thailand, with more direct investments leading to higher demand," said Wisoot Anupunthumetha, an adviser for LVT.

Supervising LVT's business in Myanmar, Mr Wisoot said the first cement plant with production capacity of 200 tonnes per day was set up in Myanmar in 1935. Since then the cement business has moderately expanded but is still insufficient to meet demand, he said.

Myanmar imports 2 million tonnes of cement per year from Thailand, Indonesia and India, said a source at the Kanbawza Project, a new cement plant being built by LVT for KBZ Industries Ltd, a unit of the KBZ Group.

"Current domestic production is insufficient to meet cement demand, but much depends on the government's decision of how many plant permits it will grant," he said, adding the government is in the process of allowing 10 new plants to be constructed over the next two years.

LVT data shows the Myanmar Investment Commission has approved four new privately-owned cement plant projects with a combined capacity of 5,250 tonnes per day, or 1.9 million tonnes per year.

Most of the cement factories in Myanmar use what is called the wet process of production, which is less efficient and consumes more energy. Three of the new plants, for which construction has already begun, will utilise the improved dry process technology.

The market price for cement in Myanmar varies between US$160 to $200 per tonne, which is high compared to other Asean countries, he said.

Over the next three to five years, cement consumption in Myanmar is expected to increase by 10-20% per year based on gross domestic product growth of 5.5% to 6%, he said.

Demand will be driven by large-scale infrastructure projects such as airports, inter-city roads and hydropower dams, as well as new hotels and resorts.

"After the economic sanctions were suspended [last year], businesses in the country grew by 25%, with tourist arrivals between 2011 to the end of this year exceeding 1 million," he said.

Myanmar's per-capita cement use is 70-80 kilogrammes per year.

Mr Wisoot said there is potential for per-capita demand to grow to 200 kg per year, equivalent to 10 million tonnes per year over the next six to eight years.

"We found per capita demand of cement will peak at 600 kg per year once economic development stabilises," he said.

Source: Bangkok Post

 
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