Sat, Oct 30, 1999 page18

• Chien Tai wins Philippine approval

  • By Sharon Chuang / STAFF REPORTER
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  After finally meeting all the necessary environmental requirements, Chien Tai Cement Co (建台水泥) has obtained approval to build a cement plant in the Philippines.

  The move follows in the footsteps of Asia Cement Corporation (亞洲水泥) and Chia Hsin Cement (嘉新水泥) Corporation, which have already set up ventures overseas.

  With the expiration of limestone mining rights on the west coast and the rising environmental consciousness of many in Taiwan, cement companies have sought to establish production facilities overseas.

  The plant, in which Chien Tai Cement will make a total investment of US$400 million, is expected to produce 3.3 million metric tons of cement per year. Construction of the plant, located in Cebu in the central Philippines, will start next year.

  Chien Tai Cement had planned to build a cement plant several years ago in Pagasinan, in the northern part of the Philippines, but the plan was withdrawn because of environmental complications. Since then, the company had been looking for another location.

  According to Liu Shih-hsiung (劉世雄), manager of the president's office of Chien Tai Cement, cement produced by the plant will be used mainly for consumption in the Philippines. But the company may ship small amounts of cement back to Taiwan whenever the local supply in the Philippines exceeds demand, he said, adding that such a situation is likely to occur in a few years.

  When asked how the company's imported cement -- which involves high transportation costs -- can compete with local manufacturers such as Taiwan Cement and Asia Cement, Liu said that Chien Tai's cement would remain competitive because production costs in the Philippines are low.

  In addition, "Taiwan Cement and Asia Cement still have to ship their cement from the east coast to the west coast, [which is the main market for cement]," he said.

  Environmental problems and the expiration of limestone mining rights in western Taiwan at the end of 1997 have forced many cement companies to establish overseas bases -- mostly in mainland China and Southeast Asia -- or to seek diversification or become cement importers.

  Industry sources said this trend would turn Taiwan Cement, under the Koo's Group, and Asia Cement, under the Far Eastern Group, into the major players in the Taiwan market.

  With stockpiles of limestone running out, Chien Tai Cement is diversifying into the department store and entertainment business.

  The company is also becoming a cement importer, Liu said. The company will produce 800,000 metric tons of cement and import 800,000 metric tons this year.

  Meanwhile, with an eye toward claiming a share of China's large cement market, both Chia Hsin and Asia Cement are setting up or expanding operations there. Universal Cement is planning to ship limestone back to Taiwan from the Philippines.

  Chia Hsin Cement has set up a factory in Jiangsu provice, China. The factory started production at the end of 1997, and now has an annual production of 1.5 million metric tons. Capacity is expected to reach 5 million metric tons in four years. Meanwhile, Asia Cement is currently building a factory in Jiangxi province.

  "Mainland China has great demand for high quality cement," said Fay Lin (林志成), manager of the finance department of Asia Cement.

  With a total investment of US$200 million, the plant will start production in September next year and is expected to produce 1.5 million metric tons of cement annually.

  Universal Cement has acquired limestone mining rights in the Philippines for a 25-year period. It plans to build a cement wharf in Laoag by the end of this year and ship limestone back to Taiwan.
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