Consunji’s DMCI to foray into cement business
THE CONSUNJI family is venturing into the cement business deemed a strategic investment for DMCI Holdings, Inc. given its interests in mining and construction.
DMCI President and CEO Isidro A. Consunji said in a briefing in Palawan over the weekend the conglomerate is spending $ 300 million to put up a 40-megawatt power plant and cement facility in Semirara island in Antique.
Apart from hosting DMCI’s coal mining operations, Semirara island also has more than 1 billion tons of limestone - one of the materials used in manufacturing cement - in reserve.
DMCI is in the process of securing the necessary permits for this venture, Mr. Consunji said. Construction of the power plant and the cement facility will take about three years.
The plant will have one cement line with an annual production capacity of 2.4 million metric tons (MT) that can accommodate future expansion. The target output represents roughly half of newly listed Eagle Cement Corp.’s production capacity of approximately 5.1 million MT a year.
DMCI believes it can compete in the cement market despite the need to ship its products from Semirara island.
“Mahal ang aming distribution (cost) pero mura ang production cost. The expensive part of cement-making is energy. Our plan is to use low-grade coal to fuel kiln to create power,” Mr. Consunji said.
DMCI plans to put up a terminal within Semirara Mining and Power Corp.’s Calaca plant in Batangas to serve the requirements of southern Luzon where it intends to sell more than half of its capacity. Only about 10-15% of the total output will support DMCI’s internal requirements.
“Nauubusan na ng pillars ang DMCI. Wala ng kwento so we want put another flavor,” DMCI Chief Finance Officer Herbert M. Consunji said in the same briefing.
DMCI started as a construction company before expanding into allied business such as power generation, coal and nickel mining, and residential development.
“DMCI’s move has huge strategic fit. Its backward linkage for them as they are contractors. (It) also taps synergy with mining, a key core competence of the group. They are coal (and) nickel miners through Semirara and DMCI Mining Corp.,” First Metro Investment Corp. Assistant Vice-President and Head of Research Cristina S. Ulang said in a mobile phone message.
Dominated by foreigners, the cement industry has seen a number of local players such as DMCI, Eagle Cement, San Miguel Corp., and Aboitiz Equity Ventures, Inc. invest heavily in this sector because of the massive demand spurred by booming private real estate activity and government’s efforts to ramp up infrastructure development.