Holcim Philippines is reopening its grinding plant in Mabini, Batangas, next year because of the strong local demand for cement. Holcim said it is optimistic that demand for cement will continue to flourish, especially with the government's infrastructure projects and boom in housing.
Upon its reopening in 2013, the grinding plant with an existing capacity of 7.7Mta Holcim will spend around PHP400m (US$9.4m) to rehabilitate the factory with an additional 0.5Mta capacity.
The Mabini plant, which was acquired in 2003, will be the company's second facility in Batangas after its terminal in Calaca, Batangas, was reactivated last year.
Holcim Philippines chief operating officer Roland van Wijnen said the planned reopening of the grinding facility shows its commitment to deliver an adequate supply to the domestic market.
“South Luzon is one of the fastest-growing areas in the country and we expect this growth to continue, fuelled by both public and private construction. We want to be sure we have the facilities ready to deliver volumes when and where these are needed,” he said in the statement.
In the 1Q12, Holcim Philippines' sales grew nearly 20% compared to the previous year, due to a steady stream of private and public construction projects. Net sales in the first quarter stood at PHP6.6bn (US$156.2m), from PHP5.7bn (US$135m) during the same period in 2011.
Volumes may be growing, but the company's profits have been eroded by high production costs, especially electricity and coal. Mr Van Wijnen noted the company has not achieved the price levels needed to recover from these costs.
"Prices are still below what they were in 2010, which puts us in a difficult situation as we are faced with increased cost of inputs, particularly electricity and coal," he added.
Since the start of the year, Holcim had already hiked the price of its average 40kg cement bag by 5%, but this is still below 2010 levels, Eduardo A Sahagun, Holcim senior vice-president for sales, said at a briefing yesterday.
Holcim is hoping better prices will be achieved this year, and is implementing measures to improve operational efficiencies and increasing use of alternative fuels and raw materials.
“This year will be a good year. With a bit of luck, we’ll see double-digit growth, or at least, the higher end of single-digit growth. Our main concern is still the ever-rising costs of production, which we will try not to pass on to the market,” Mr Van Wijnen said at the same press briefing.
The company, which has two plants in Mindanao, is also keeping a close eye on the power crisis in the region. It said it is putting in place measures to address any disruption in power supply.
