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Myanmar emerges – cement market and project developments: Soe Naing, KBZ Industries (Myanmar)

Filmed at Cemtech Asia 2015, 21-24 June, Grand Hyatt, Bangkok, Thailand

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I will make my presentation, I want to say thanks to Mr. Thomas Armstrong from International Cement Review, Managing Editor and SCG of Thailand. And I'm honored Dr. SK Handoo presentation is also very interested. But we have many questions, after that, I would send email and ask you, yes. Concerning with Myanmar cement industry, so in the past hour explaining about existing factories.

We have semi government sector and government sectors and in the government sector there are three cement factories. Thayet Cement Factory, this is the oldest cement factory. It was started in the year 1935 and then Kyangin Cement Factory and then Kyankse cement factory. These three factories are common and old. But all the three government old cement factories are now going to be privatized. And Kyankae Cement Factory has ready privatized, the other are under process. So, Ministry of Industry, in Kyankse Cement Plant is successfully privatized by COUCH Group of China and they're going to set up 5000 TBD cement plant. And at the end of this year according to their report will be completed. So the big group of Chinese engineers are there and the Kyangin and Thayet cements are under process.

In semi-government, we have Myanmar Economic Corporation, MEC. That is really military own company, and also Myanmar Economic Holding, MEH, it is also military own factories. Nay Pyi Taw City Development, NCDC, so these are semi government factories. So, Myanmar Economic Corporation, MEC has two plants in nean Pa-an a lower Myanmar. Myainggalay Cement Plant, they are about 4, 000 tonnes per day cement plant that is supplied by Asia, Japan and another plant now is about 900 tonne. First, it is 800 tonne from the plants.

FTV, they are running by themselves Myanmar Economic Holding, MEH has three production lines. One is web process production 400 TBD, another is 700 tonne TBD, N.S.P system and the latest one is 1200 TBD, dry process. All our Chinese missionaries. So, at present only one plant 1200 tonne line is running, and Nay Pyi Taw City Development, NCCD is 500 TBD wet process plant.

They have the intention to conversion into dry process but it will be slow. Now, Private cement plants. Private cement plants. They are Triple A Cement Factory. Triple A Cement Factory, Tiger Head Cement Factory and Myanmar Elephant Cement Factory. And Triple A cement factory has, Sorry. How to reverse?Triple A Cement Factory has four production lines, all are wet processed. Two lines in Kyauk Chaw, east of Mandalay and another tow lines is in Kyaukse it is also near Mandalay. They are all wet processed. And Mandalay Cement Industry, that is called Myanmar Sin, Myanmar Elephant. They have three production line, all dry processed small plants, S.P. Klin system about 300 TPD. And Ruby Dragon Cement Plant, it is two production line process in Shan Sate two plants and we pray that this system is also dry process, 1500 tones in Naung Cho near Shan State. It is 1500 TPD but actually it is producing 1,700. And one thing left is Double Rhinos, that is Thantaw Myat Cement Factory, Double Rhinos.

This is owned by [xx] people [xx] people, it's also 500 TPD, and now under commissioning stage. And the KBZ Cement Plant near Pangpet Taunggyi. It is also under commissioning. And Htoo Trading Company, it is Pyin Nyaung, it is under installation, and sorry, the color is mixed and I can't see. Another cement is Apache brand, Apache Cement, it is also in Pyin Nyaung Region and it is 1500 TPD dry process.

It is also successful, they're producing about 1700. And Kampaza is near Taunggyi, Shan State, 1000 TPD, it is under comissioning. Maximum Plant is 500 TPD wet processed, at present is under conversion to dry process. And Maximum Plant II also wet process 500 TPD, a primary-owned by Yodong City Development Committee, YCDC.

And Htoo Training Company is also 1500 TPD in Pyin Nyaung Regions as a township it is under installation. Another one is Puk-link Company and near [xx] where SCG is going to set up 5000 TPD plants. But, I heard that first they will set up, they will finish the cement mode and they will import clinker and then they will make cement, after that they will continue their plant, that is what I've heard from MEC.

The remaining cement projects. There are many cement projects to be legalized. One is Sun Lim Company, so why more township near Myitkyina Kachin State. There is a huge [xx] but they cant realize up to now because of, there is some political matters. And Myanmar Kaung Ton, Bhamo Township. Now, Jade Land Company, Bhamo Township, this is upper Myanmar. They are also the same, they can't realize up to now. And Tamonye Chanta Company, Lasho Township and Tun Tuwin Mining Company, Kalay Township. This Tun Tuwin Mining Company has a huge ransom deposit but it is far away from the market. So, they do not know what to do. Another one is company Asia Phyo Company, Kanbalu Township, United Cement, Pa-an Township, June Cement Industry that is Kyaik Ma Yaw Township. This June Cement Industry is the same mountain, the same [xx] used by SCG, southern part and northern part. But June Cement, it cannot legalized upto now. Zekabar Company is Kyaik Ma Taw Township, it is lower Myanmar. And Farmer Pho Yazar, it is also in Kyaik Ma Taw Township and Nyi Nyar Swan Ah Aung Pan Township that is in Shan State and Tet Lu Company in Thazi Township, Asia World Company Thazi Township and Eden Group Company, Thazi Township also. Min Ah Naw Ya Htar Company, Pinlong Township, Myanmar Naing Group, Kyaukse Township and Ya Htar Company, Pinlong Township, Myanmar Naing Group in Kyaukse Township, 24 Hrs Mining Company in Taninthayi Township. So, many projects are still remaining, still remaining to be legalized. These are the locations of these cement projects. So many, I was told many companies are still remaining to legalized and production capacity of existing plants, the install capacity and accurate production capacity.

Installed capacity is about 5.46 million tonnes, but accurate production is only 3.66. And that is say government plants, the [xx] plants under the process of privatization presently only one production line is active. Kyangin Cement Plant is also under process of privatization and presently one production line is active. And Kyaukse Cement Plant is already privatized, new 5000 TPD is ongoing process, and plant where we completed at the end of 2015 or at early beginning of 2016.

It is the COUCH Group of China and existing 500 TPD plan is running at the rate of 400 TPD. For semi-government sector, Union of Myanmar Economic Holding, UMEHL has three production line this plant is running under J.V. Basis. The planning partner is LVT Company of Thailand whose local agent is MY Associate Company. At present only one production line is active.

Myanmar Economic Cooperation, MEC, there are existing two plants, 904,000 TPD. They are running, they are producing only 80% install capacity because of the price of the liquid gases is very high in Myanmar. For private cement plants, Triple A, Tiger Head and Mandalay Cement Industry. They're also running, but they also produce only 80% installed capacity because new cement plants, there is very strict competition in Mandalay area. New cement plants of 5000 tonnes plan is also running, and new cement plants of 1500 tonnes, also coming in the Mandalay market so they have to reduce their capacity.

Other private cement plants, Apache Cement Plant at the 1500 tonnes, Crown Cement Plant and Ruby Dragon Cement Plant, they're running with full capacity because in their area they can hold their market. And under commissioning plants are Thantaw Myat Cement Plant, that is 5000 TPD at Kyaukse, it is under commissioning. And also Kambawza Cement Plant near Taungyi, they are also under commissioning. So, actual production capacity of Myanmar is only 3.66 million.

Demand and supply of cement. Population of Myanmar according to 2014 is 51 to 52 millions. But formally starting from the government and all the people are saying 60 millions because we have not taken census for long time and in 2014 after census we came to know that it is only 51 to 52 millions.

In Myanmar government that is military gender. They have no statistics, and also most of the news are blocked, so we can not know the true position. But now, it start opening, and so now at the present the capital conjunction of cement about 150 kg. So, demand of cement is about 7.86 million tonne, but the present production capacity is only about 3.6 million tonnes. So, the remaining gap is filled by imported cement, and remaining projects which are not legalized until now are as shown previously that delay of legalization is as the followings:

Short of investment. And Myanmar looked at partners cannot afford totally. They need powering investment, number two is electrical power is not sufficient at present. There are many hydroelectric projects remaining to be completed. For big projects they have to rely on imported coal, because Myanmar coal is only lignite and not sufficient for the whole projects so most supporting investors are waiting for 2015 general elections because stability or political coalition is essential for them.

Future prospect. In Myanmar there are still wet process production line about 17 in number. Out of them, only one line is under process of conversion to dry process and this conversion process is also very much delayed. For the remaining plants market competition is very difficult for them because 17 lines are wet process and many dry process are coming up with higher capacity so for them, they have they're very difficult for them.

Some of the owner have the intention of conversation to dry process but not yet legalized. For the many projects, the owners all are thinking about the capacity. Now they came to realize that the most economical size of the plant is 5000 TPD. During last month and May, F. L. Smidth first made a seminar in Mandalay city. In that event when F. L. Smidth declared that they would serve 5000 TPD plan, complete mechinary only at about 10 million Euro.

Local owners that are interested in this issue.

Cement Market Price.
Cement price in Myanmar is generally 5000 kyats per bag, that is about $100 per tonne. In Yangon market, in Yangon market SCG practice 5,500 to 6,000 kyats. SCG is always leading in Yangon market, because of it's stability of quality and other brand of around five thousand Kyats.

A Mandalay market only local cement brand are available and the price is between 4200 and 4600 kyats. So, the equivalent to dollar is round about 1000 kyats per dollar.

Now on constructing
project of Myanmar government. So, there are many construction project because Myanmar is not at point of changing democracy. So, there is Dawei Special Economic Zone, Dawei Deep Sea Port, Kyaukphu Special Economic Zone and Kyaukphu Deep Sea Port, Thilawar Special Economic Zone and Yangon-Naypyitaw-Mandalay 8 lane Highway. So, concerning with highway I have to tell when I was in India a long time ago in 1985, at that time only India 150 highways at that time. Now, I do not know may be double. In Myanmar one highway that is from Yangon to Mandalay. We need many highways and also Myo THar Myo Thit Development (Mandalay), that is new city in Mandalay. And Yangon New City Project and more SEZ to be developed in Pathein (Ayeyarwaddy Division) and Hpa-an, Myawaddy and Phaya Thonzu in Kagin State and Ponnagyon Development Zone in Rakhine State and about 10 hydro-electric projects. So, many projects are still remaining to be legalized, so cement demand will be very high.

So, conclusion is the above
mentioned projects are only some of training phases. There are many small and medium projects, so dear delegates Myanmar is in the intermediate stage of political changes and the Myanmar people are under the military gender for more than half a century.

Currently, Myanmar government declared to the world that they are changing from military rule to the democratic state. Then, the first bold step is the release Daw Aung San Su Kyi, you all know Aung San Su Kyi from house arrest. After that they continue to release more and more political prisoners. So, they also release the press and media to a considerable extent. After that American lifted some sanctions, then some countries from Europe and Asia also start investing in Myanmar.

So, Myanmar is at the gate of development. To be a develop country it depends upon true political change, it fully depend upon 2015 general election which is very close. But I hope the military people are now beginning to know that [xx] democracy. Myanmar will definitely change into democratic state, but it will change step by step, we have to wait and see.

There may be some risk to invest in Myanmar but who come first will get better chance in very near future. Then Myammar Cement Industry will grow faster. So, welcome to the other delegate to come Myanmar and try to invest in Myanmar, thank you.

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