Siam Cement Group (SCG), Thailand's largest industrial conglomerate, will start construction of its first cement plant in Myanmar in the second half of this year after the Myanmar Investment Commission (MIC) recently gave it the green light.
The US$400-million factory marks an important move in Myanmar by SCG, which is open to other investments there by its building materials unit.
Kan Trakulhoon, the president and chief executive, said the MIC recently approved the cement plant, with an annual production capacity of 1.7 million tonnes, after submitting a request three years ago.
SCG will bring this matter before the board of directors in two months to finalise the investment, he said.
"I believe the final investment value will be about $400 million. Now that we have approval, we can start the project immediately. Operations will commence in 2015," said Mr Kan.
SCG exports 1.8 million tonnes of cement to Myanmar each year.
Mr Kan said the first phase of the new factory will produce slightly less than that export volume, but capacity will be expanded later on.
The cement factory will be located in Mawlamyine, the country's fourth-largest city.
It is 300 kilometres southeast of Yangon and only 130 km from Mae Sot on the Thai side of the border.
The site is close to the limestone hills, the main raw material in cement production.
Mr Kan pointed to the many construction projects in Myanmar and said there will only be more in the near future, thus raising demand for cement and building materials.
SCG is mulling a construction materials factory in the neighbouring country.
"We started by exporting cement to Myanmar until we were confident of the market, then decided to build our own factory there. It will be the same with building materials," said Mr Kan, adding that SCG may partner with local investors.
He declined to speculate further on the possible building materials factory or local partners.
SCG will likely expand cement production in all neighbouring countries that are important export markets rather than at home, as Thailand's domestic demand has been less than supply ever since the 1997 financial crisis.
Besides Myanmar, the company is building a 1-billion-baht greenfield cement plant in Sukabumi in Indonesia's West Java province.
It is also expanding second-line production in Cambodia as that country invests more in infrastructure.
SCG's Asean assets are worth $2 billion or 15% of the total.
Shares of Siam Cement (SCC) closed yesterday on the SET at 444 baht, down 12 baht, in trade worth 542 million baht.