The Chip Mong Insee Cement (CMIC) company broke ground on a $262 million factory in Kampot province on Monday, a move expected to intensify competition among firms eager to meet demand from the booming construction sector.
CMIC is a joint venture, formed in 2012, between Chip Mong Group, a local conglomerate, and Thailand’s Siam City Cement.
Chip Mong Group’s first foray into cement production means it will be jostling for market share with a handful of other cement producers in Kampot, including Kampot Cement, co-owned by the local Khaou Chuly Group and Bangkok-based Siam Cement, and the Chinese-funded Cambodia Cement Chakrey Ting Factory, said Nhan Ken, general sales and marketing manager at the Chip Mong Group.
“Kampot is an ideal location for cement factories because of access to the necessary limestone raw material and logistics,” Mr. Ken said. “This means there is competition, but we will be the largest factory and be well placed to compete for demand, which we expect to grow over the next two years.”
“When completed, the plant would have the capacity to produce 5,000 tons of cement per day, close to 1.5 million tons per year,” he added.
Meng Saktheara, a spokesman for the Ministry of Mines and Energy, said that while existing firms might be spurred to increase output to compete with CMIC, they were likely already looking to expand amid rising local demand.
“The interest in building cement factories is no surprise because of the boom in demand from the construction industry linked to the developing real estate market,” he said. “Cambodia also has the raw materials, limestone and mineral-rich soil, particularly in Kampot.”
Price competition among domestic cement producers is already fierce, according to Kim Nen, an executive at local cement importer LMY, and importers have suffered as a consequence.
“Price competition in Cambodia’s cement market has been tougher, and over the past year importers have lost 30 to 40 percent market share,” Mr. Nen said. “Market demand has increased, but because of competition, the price of my cement has fallen about 10 percent to $85 per ton.”
Mr. Nen said the CMIC plant, which is expected to be completed in 2018, would force to domestic prices even lower, eventually squeezing importers out of the market.
“After 2018, importers would lose up to 70 percent market share,” he said. “The Chip Mong factory would put more weight on competition because they are big and have many resources.”
Representatives of Kampot Cement and Cambodia Cement could not be reached for comment.
© 2016, Tej Parikh. All rights reserved.