50307 posts
Cahya Mata Sarawak's stable transition
This week, Malaysia-based Cahya Mata Sarawak Berhad (CMS) reported FY17 revenues up four per cent at MYR11.16bn (US$415.7m). Revenues improved with the first full year operation of the company's 1Mta grinding section, which has converted its clinker plant at Mambong, outside Kuching, to an integrated works. Opened in November 2016, the MYR190m facility has raised CMS's overall cement capacity by 60 per cent to 2.75Mta (read the full article in ICR May 2017.)
There also has been a structural change at the top of the company. Isaac Lugun has been redesignated as group chief executive officer (corporate) and Goh Chii Bing as group chief executive officer (operations). Both were appointed to their current positions on 1 August 2017 but took full control on 1 January 2018 when Richard Curtis retired. Mr Lugun oversees strategic investments and corporate affairs while Mr Bing manages four core business operations – cement, construction and road maintenance, construction materials and trading, and property.
Going forward, the outlook looks positive for CMS. The domestic market on Sarawak is about to peak and CMS is well-positioned to benefit. Last autumn, the company's utilisation rate was at 60 per cent, but FY18 demand is expected to push this up to 80 per cent, reported The Edge Malaysia.
The company is supplying cement for the Pan Borneo Highway projects and the Baleh Hydroelectric Dam in Kapit. The construction of the highway in Sarawak is expected to require 20Mt of aggregates as well as 1Mt of cement. The Baleh Dam in Kapit is a 188m-high concrete dam that will require 500Mm3 of concrete to construct.
"To me, the peak [for the Pan Borneo Highway] will probably be seen in 2H18 and 1H19. Then, as soon as that tapers off, demand from Baleh dam will kick in – that will come in beautifully after the highway," Isaac Lugun commented.
No immediate plans for exports
The possibilities for cement exports though are less certain. In September last year, the company's then Group Managing Director, Richard Curtis, said exports are unlikely to amount to more than two per cent of annual sales volume, although CMS is continually looking for opportunities.
While the location of CMS's operations in Sarawak, which lacks deepwater ports, restrict the posibilities for exports, this disadvantage also brings an advantage for the company. It is difficult for importers to gain a foothold on the island, where CMS is the sole cement producer.
However, the company has made good progress. Cement sales no longer need the support of imports. The newly integrated plant at Mambong lowered production costs by approximately four per cent in 2017, while increased efficiency at the Bintulu and Pending plants and lower raw material costs have improved revenues.
Aggregate and concrete developments
Meanwhile, CMS is adding a new production line at its Sibanyis quarry in Kuching, which will add 1.5Mta of capacity to the quarry’s existing 2.4Mta of aggregate production. This second line will start in June 2018 to meet demand for the central and northern region of the Pan Borneo Highway.
The cement division remains the company's core sector but saw an eight per cent fall in profit before tax in cement sales volume in 2017. Some 30 per cent of the company's business is generated through cement and the CMS product range is moving from a single Portland cement product to also offer a high-performance concrete.
"The new product is expected to contribute up to 10 per cent of revenue. CMS Cement could produce high performance cement from the supply of silica at lower cost through OM Materials as it is a byproduct of smelting," CMS said.
Portland cement has competition
CMS is not the only Malaysian cement producer looking at alternatives to ordinary Portland cement (OPC); Sabah Cement has signed an agreement in January 2018 with Ecoolis Sdn Bhd for a 10-year supply of ecologically-processed pozzolan from a byproduct of oil palm production. The new blended cement will be used for infrastructure projects in Sabah.
Sabah Cement expects to buy 10,000tpa of pozzolan for its blended cement production at the company's bulk cement terminal in Lahad Datu. The company has invested MYR5m in new machines for the processing to be carried out at the terminal.
Know the answer to this question? Join the community and register for a free guest account to post a reply.