Republic Cement to raise capacity
Republic Cement and Building Materials Inc., the joint venture of Aboitiz Equity Ventures Inc. (AEV) and Irelandheadquartered CRH International, will start raising the capacity of its cement plants to 10 million tons per day as soon at it finishes the efficiency improvement by the middle of 2018.
The joint venture is currently undertaking the first phase of upgrades in its cement plants which is to aimed to raise their efficiency level to produce the maximum capacity of seven million tons per day, Aboitiz Equity Ventures Inc. (AEV) chief finance officer Manuel Lozano said in a recent interview.
“We’re doing what we call de-bottlenecking. They’re fixing the old equipment so capacity will improve,” he said. “That’s the first investment, it’s getting everything running at full capacity.”
Lozano said internally generated cash is enough to finance the de-bottleneck phase of its manufacturing network with plants in Bulacan, Teresa in Rizal, Taysan in Batangas, Danao in Cebu, and Iligan City in Mindanao.
The cost of the first phase is part of the $300 million capacity expansion over the next five years announced last June, bulk of which is allocated for the expansion of the existing capacity to produce 10-10.5 million tons per day, the company executive added.
“By sometime next year, we’ll start building the new capacity,” he said. “Once we look at expansion, we’re gonna probably have to finance that.”
The capacity upgrade will take around two to three years or until 2020 to 2021.
Lozano said the expansion project would allow the company to take advantage of the strong and growing demand for cement stemming from the implementation of infrastructure projects.
“It depends on the infrastructure (development). If it grows the way it was growing in the last few years when there was more infrastructure projects, demand could reach 36-37 million tons,” he said.
The Duterte administration has laid down a P8-trillion public infrastructure plan from 2017 until 2022, ushering in the era of the golden age of infrastructure for the country.
“We’re hearing more projects moving. I think you’ll see a lot more government projects, I’ve heard of a few bridges. It will be good. If that starts to move, then the demand for cement. If they start doing that, other projects will start to move. if you talk to DOF (Department of Finance), DOTr (Department of Transportation), they want to spend the money. I just don’t know how fast they’ll move,” Lozano said.
In a recent report prepared by the Cement Business Advisory Ltd., the Philippine cement industry needs an additional 11.55 million tons of capacity to address consumption requirements until 2025.
As of 2016, the local cement industry has an estimated annual clinker and cement capacity of 20.6 and 28.63 million tons, respectively, but the industry was only able to produce 16.8 million tons of clinker and 23.1 million tons of cement.