SET-listed Millcon Steel Plc expects to suffer 100 million baht in losses from a delay in commercial operations at its plant in Myanmar.
The plant, with a production capacity of 50,000 tonnes a year, is ready to go operational but still needs a licence from the Myanmar government, said president and chief executive Sittichai Leeswadtrakul.
He said the licence should have been granted in March. For unknown reasons, however, the Myanmar government has put off the date until May, asking for more paperwork.
"We expect to lose 100 million baht from the two-month delay," Mr Sittichai said, adding that the snag would likely prevent the company from reaching its target of 1 billion baht in revenue from Myanmar this year.
The delay has raised concerns that the company may fail to start producing steel and deliver it to its clients on time.
Millcon first started investing in the plant last year, and has poured 400 million into the facility.
The steel plant, located on the Thilawa Industrial Esatate in Myanmar, is a joint venture of Millcon and General Engineering Plc (GEL), a concrete materials maker. Once it goes operational, it is expected to produce steel for construction and prefabricated concrete materials.
Millcon and General Engineering each own 45% of the plant, while local partners own the remaining 10%.
Mr Sittichai said the company expects steel consumption demand in Myanmar to grow substantially every year in line with the economy.
"Myanmar steel demand is at three million tonnes a year. It is a market with great opportunity for steel makers to invest in as sales volume is expected to rise every year," he said.
For its operation in Thailand, Milcon has production capacity of 1.3 million tonnes of steel a year, plus an additional 480,000 tonnes of special wire rod per year.
The company is also seeking a local partner in Vietnam to create a joint-venture to produce high-value products.
In Indonesia, Millcon plans to expand its retail channel via e-commerce and has joined with Builk Asia Co on that project.
"In Indonesia, we has no plans to invest in the steel plant but the company has started a feasibility study to invest in Indonesia in order to capitalise on the large market, which has 250 million people," said Mr Sittichai.