Bangkok--9 Jan--Master Mind Communications
After three years of strenuous works, L.V. Technology Public Company Limited (LVT), the MAI-listed engineering consultancy with ongoing operations in various parts of the world, is finally completing the construction of a brand-new cement plant at a remote jungle site near the Shan State capital of Taunggyi in northern Myanmar.
The new plant, worth about US$ 75 million or close to 2.5 billion baht and developed by KBZ Industries Ltd (KBZI) which belongs to one of the largest private business groups in Myanmar, has an annual capacity of 500,000 tons that will supply the growing demand for cement in Shan State and the middle parts of Myanmar. Test runs have been conducted since late last year and full commissioning is slated for March this year.
“This is the first brand-new, privately-owned cement plant ever built in Myanmar in several decades,” stated Mr. Hans Jorgen Nielsen, LVT’s founder and former president who has taken direct charge in the supervision of the project from start to finish. “The fact that we have used 100% local workers to build this plant is also an outstanding achievement,” he stated.
As the main engineering consultant, LVT has been responsible for the complete development of the project from conducting site surveys at the start when the areas were still jungles and green fields to drawing the engineering designs, supervising the construction, procuring and installing equipment and machinery.
Signifying a new phase of private investment in basic industries as Myanmar is opening up to the outside world, the new cement plant is developed by a consortium of investors led by KBZI which holds 40% while a group of foreign investors affiliated with LVT has 20% with the remaining 40% shareholdings taken up by local Burmese construction firms. KBZI is part of the Kanbawza Group which has diversified interests in gems mining, banking and insurance and the airlines business. According to Mr. Nielsen, LVT’s net holding in the project is about 7-8%
The project has involved an aggregate investment of about US$75 million or close to 2.5 billion baht which, aside from the main plant, also included related facilities such as gypsum mining and coal mining operations to supply raw materials and energy for the plant.
Though considered a low-tech, basic industry in developed countries, cement is a booming industry in Myanmar which is undergoing an explosive economic boom as political reforms gather momentum while the country opens up to foreign investments.
An efficient, modern production facility like the KBZI plant using the “dry” process enjoys a strong competitive edge over other old and inefficient plants. For instance, the KBZI plant’s production costs of about US$ 45 per ton compares favorably with the average costs of about US$80 per ton at most other old plants which use the inefficient “wet” process. The low cost at the KBZI plant potentially also offers high profit margins in view of the projected US$90 per ton ex-factory price.
Myanmar’s cement industry is seen to carry strong growth potentials because of the huge supply shortfalls against growing demand by the construction industry. Industry estimates put the country’s current annual demand at 6.5 million tons against the domestic production supply of only 2.2 million tons at present, resulting in shortfalls of about 4.3 million tons that are filled by imports mainly from Thailand plus India and Vietnam.