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Holcim defers $550M cement plant investment in PH

/ 05:53 PM February 21, 2014

MANILA, Philippines—The country’s leading cement maker, Holcim Philippines, has put on hold the construction of a new cement plant costing as much as $550 million in Norzagaray, Bulacan, to review leeway in supply chain management arising from the proposed integration in 2015 of Southeast Asian economies.

The new plant was originally targeted to add 2.5 million metric tons to Holcim’s annual production capacity by 2016. As of late last year, Holcim was already shortlisting contractors to build the new plant.

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At a recent briefing, however,  Holcim Philippines chief executive officer Eduardo Sahagun said the plan to set up a new cement plant was still part of the company’s roadmap. “It’s not a question of will it still be built? It’s a question of when,” Sahagun said, adding that studies were now being conducted to determine the best course of action.

Sahagun said the creation of the Association of Southeast Asian Nations (Asean) Economic Community by next year would allow Holcim to absorb excess capacity from units in other markets like Vietnam.

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Being a global company and especially with this regional integration, Sahagun said, strategic planning was now being made not just from the perspective of a single country. He said Holcim’s rosy outlook on an upswing in demand trajectory from the Philippines had not changed, adding that it’s the supply equation under review.

Cement market size in the Philippines is about 20 million metric tons a year, with Holcim having a market share of about one-third, Sahagun said.

In terms of labor and power costs as well as coal sources, he said, other neighboring markets like Vietnam offered lower costs. However, he said Holcim Philippines could compensate for higher variable costs by boosting productivity.

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TAGS: Business, cement plant investment, Holcim
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