Construction began Thursday on Cambodia’s largest cement factory, a US$82m project aimed at tapping into a growing construction market in the impoverished Southeast Asian country, officials said. The project is a joint venture between Khaou Chuly MKK Co Ltd., a Cambodian construction and engineering company, and Thailand’s Siam Cement Group.

"It is quite a serious and major investment. This is the biggest cement plant ever built in our country," said Khaou Phallaboth, chairman of Khaou Chuly group, which holds a 20 per cent stake in the venture. Siam Cement Group, which produces the Elephant brand cement, has had a "big market presence in Cambodia for the last 15 years," he said.

Prime Minister Hun Sen led government and Thai officials Thursday in a groundbreaking ceremony for the plant’s first production line in Kampot province, about 130 kilometers southwest of the capital Phnom Penh. The joint venture is named Kampot Cement Co. Ltd.

Khaou Phallaboth said the construction will be completed in 2008, at which time another US$100m will be invested to build a second production line. The factory is expected to produce about 1Mta of cement, he said.

Cambodia consumed about 1.5Mt of imported cement last year at an estimated cost of about US$105m. Khaou Phallaboth said he hoped that the locally produced cement would help bring down the cost of construction and real estate prices in Cambodia.

"A lot of construction is going on out there, and a lot of cement needs to be produced. So the (outlook) is quite positive here," he said, adding that one of the major challenges for the operation will be the high cost of electricity.