Phinma stages solid comeback in the cement game

Phinma CEO Ramon del Rosario Jr. and director Jose Cuisia Jr. visit Philcement’s cement processing plant and bulk terminal facility in Mariveles, Bataan. —DORIS DUMLAO-ABADILLA

Sometime in 2018, a group of retired cement industry veterans paid a visit to construction materials supplier MRL Builders in Bambang, Nueva Vizcaya. The group was led by Eduardo Sahagun, who retired the previous year as country chief of Holcim Philippines and has since rejoined the Phinma group, which is making a comeback in the industry after a 14-year hiatus through its legacy brand Union Cement.

Sahagun has a soft spot for MRL as he saw it grow from a small store occupying a small rented space to an enterprise that now has its own five-story building and warehouse. It was one of the many distributors visited by Sahagun’s group and enlisted to support Phinma’s return to the cement business.

Phinma does not have its own integrated manufacturing plant yet, so it sources quality cement overseas to ensure supply to its distributors.

But even when the cement supply had yet to come in, MRL was only too willing to book orders on the basis of their faith in Sahagun and his team.

“We believe in the integrity of the people who introduced the product to us,” MRL Builders owner Liwayway Lumang said during the banquet held to celebrate the inauguration of Phinma’s new cement processing plant and bulk terminal in Mariveles, Bataan.

As of December 2019, MRL has sold almost 800,000 bags of Union Type 1 Cement in Nueva Vizcaya at the time when supply depended on shipments from Vietnam, Lumang said.

To ensure the stable supply of cement, Phinma invested $50 million in Song Lam Cement Joint Stock Corp., operator of the biggest state-of-the-art cement plant in Vietnam, which exports cement products to 37 countries. It is part of Vietnam’s largest private cement manufacturing group Vissai, which owns and operates five cement plants.

Phinma bought preferred shares of Song Lam through its cement subsidiary Philcement Corp. (Philcement), which was incorporated in 2017.

Philcement is Phinma’s vehicle for its cement industry comeback and is envisioned to contribute significantly to the growing demand for reliable and quality cement and construction materials in the Philippines.

To date, the Philippines has an estimated annual demand of 32 million metric tons, driven by both the government’s mega infrastructure program, as well as private construction activity. With domestic production at an estimated 27 million metric tons, Phinma sees a supply gap that it could address.

Philcement invested $50 million in the new bulk cement terminal and processing plant in the Freeport Area of Bataan—deemed to be the first of its kind in the Philippines and potentially one of the largest in the world with an initial annual capacity of two million tons of cement. This is where Philcement receives cement from Vietnam, then packages and dispatches it to buyers.

During the inauguration of the Bataan facility, Phinma president and CEO Ramon del Rosario Jr. recalled that it was in cement where Phinma had found its “greatest success.”

Phinma, after all, was founded in 1956 after the acquisition of the Cebu Portland Cement Co. plant in Bacnotan, La Union. The group afterward took over other cement plants in Bulacan, Rizal and Davao. In the early to mid-‘90s, Phinma had a commanding presence in the industry, operating six cement plants in the country and capturing more than half of the market.

When the Asian financial crisis erupted, however, the group divested from the cement sector. Phinma stayed in steel roofing, invested in education and pursued residential property and hotel development.

“Increasing infrastructure development in the country spawned by the previous government administrations and further accelerated by the current administration became Phinma’s signal to reenter the cement industry,” Del Rosario said.

Del Rosario noted that Phinma’s investment in the largest independent cement terminal in the world was a strong signal of the group’s commitment to the country’s infrastructure development program.

“In Phinma, cement is what we know best. Looking at the opportunities from the construction business now, we should prepare to expand, not just in the Philippines, but also in the Asean (Association of Southeast Asian Nations) region. Our Mariveles facility makes Phinma extremely well-placed to take advantage of this growing regional opportunity,” Sahagun said.

This investment in Bataan is just part of a series of big-ticket investments supporting the group’s return to the cement business.

Sahagun, the man at the helm of this comeback bid, is no stranger to Phinma. He held various positions in the group, including audit and treasury, before he was appointed chief financial officer for Holcim Philippines in 2002. He rose to become CEO of Holcim from 2013 until his retirement in 2017. He holds a BS degree in commerce with MBA from the Ateneo Graduate School of Business and a masters degree in management science from Arthur D. Little School of Management in Boston (now Hult International Business School).

Asked about concerns over cement dumping, which triggered the imposition of tariffs, Sahagun said: “I know how to play the game. It’s not me. It’s those who have no experience and are opportunistic.”

It takes only about three days for each cargo to sail from Vietnam to Mariveles. Once reaching the port, the cement can immediately be packed and dispatched to local buyers.

“This plant can dispatch 400,000 bags a day, if there’s a market. Its capacity is not meant for clients to wait,” Sahagun said.

Another terminal for cement shipment will be built in Mindanao by next year. Within five years—during which the group is expected to have developed a critical mass of clientele—Phinma’s Philcement Corp. may be operating a brand-new local integrated cement manufacturing facility, Sahagun said.

Sahagun’s goal is to bring to clients the “highest quality cement you can find in the market” as vouched by someone like him who has spent 40 years in the cement industry.

“This is a proud day for Phinma. Although we never vowed that we shall one day return, we are nonetheless today telling the world that we are back in cement, and like when we first began 63 years ago with a vision to help the nation, we are back with that same burning desire to make it our business to help build the nation by playing a significant role in infrastructure development,” Del Rosario said.