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Siam Cement acquires Vietnam plant in ASEAN push

Group also raises stake in that nation's first petrochemical complex

Siam Cement Group has been branching out into ASEAN markets.

BANGKOK -- Siam Cement Group has acquired several cement plants in central Vietnam, Thailand's largest materials company said Tuesday, a move that boosts overseas production capacity by 40%.

The company acquired the entire stake in Vietnam Construction Materials, which operates cement production and grounding plants across several locations, for $156 million. Siam Cement's filing to the Thai stock exchange says the enterprise value of the transaction, including net debt and additional investment to improve efficiency, totals $440 million.

With total capacity at 3.1 million tons, this will be Siam Cement's largest production base outside Thailand. Despite a cement supply glut in northern Vietnam, the group says enough demand remains in the central and southern areas.

The company operates cement plants in Cambodia, Indonesia and Myanmar. A new plant in Laos in the trial phase is expected to come online this year, raising the group's capacity abroad to 10.5 million tons, or nearly half of the 23 million tons it boasts at home.

Siam Cement has invested aggressively into members of the Association of Southeast Asia Nations, especially the developing countries that expect stronger economic growth than in Thailand.

Vietnam, which is logging nearly 7% annual growth compared with 3% in Thailand, has been a primary destination. The company already operates a packaging plant in Vietnam through a joint venture with the Japanese Trade Union Confederation, or Rengo, among other investments.

CEO Roongrote Rangsiyopash told an earnings conference in late January that ASEAN is oversupplied for cement, so investment will "be only mergers and acquisitions."

Petrochem complex

Siam Cement recently acquired an additional stake in the planned Long Son petrochemical complex in southern Vietnam from Qatar Petroleum. The Qatari state-owned company decided to back out of the project in 2015 amid falling oil prices. Siam Cement had sought a new partner but apparently decided to take up the stake itself.

The $36.1 million equity transaction lifts the group's direct and indirect stakes in the project to 71%, up from 46%. Vietnamese parties own the rest.

Set to be the first petrochemical complex in Vietnam, the project includes a 1 million ton ethylene cracker with total olefins capacity of up to 1.6 million tons per year. A deep seaport also is to be constructed.

After years of delay, the final investment decision is to come by June. Operations are scheduled to start in 2021 following five years of construction.

Siam Cement said previously that Vietnam imported more than 2 million tons of polyolefins in 2015, with high-single-digit growth rates anticipated in the coming years.

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