Financial Times

Holcim in $30m expansion, reduces dust emissions
Holcim Lanka is investing $30 million to expand production and reduce pollution at its main facilities in Puttalam and Galle and build a new bulk cement import and bagging terminal and grinding plant in Trincomalee.

The company, a subsidiary of the Holcim Group, one of the world's biggest cement manufacturers, said cement prices are likely to remain high owing to high raw material processing and shipping costs.

Peter Spirig, managing director and CEO of Holcim Lanka, said such a large investment by the cement multinational is a sign of confidence in Sri Lanka. "We sell everything we produce," he told a news conference. "Sri Lanka's market is growing. So if we want to remain the largest player and keep our market share we have to increase capacity."

Annual production capacity at Holcim Lanka's plants in Pallavi, Puttalam and Galle will increase to 1.4 million tonnes by mid-2005 from a million tonnes now. The company has a 28-30 percent share of Sri Lanka's market in which annual demand is 3.2 million tonnes.

Spirig said there was "tremendous upside potential" in the economy. "Our company has a long-term view," he added. "We're here for good." The company, which has net sales of $52 million a year and employs 700 people, sees good opportunities in reconstruction plans for the north and east as well as in the revival of tourism.

The influx of tourists and plans to build new hotels were "a positive sign," Spirig said. About half the new investment will be spent to expand and upgrade the island's only integrated cement plant in Pallavi, Puttalam where a new clinker grinding line will be installed.

A new filter system will also be in place this week to reduce dust emissions. Spirig said Holcim's kilns in Puttalam were operating at capacity, burning limestone using coal to make clinker.

The company might consider further investments to set up another kiln, which would cost about $60-80 million, in 3-4 years "if there is political stability to warrant such a big investment."

The current investment will also go to expand production at Galle and build a bulk cement import terminal and bagging plant in Trincomalee to supply the eastern province. A large warehouse will be built in Trincomalee in the second stage and later, Holcim will set up its own clinker grinding plant there.

Spirig said the firm is not able to reduce cement prices for the time being because coal prices were rising and the cost of shipping coal and clinker from east Asia to Sri Lanka were also high.

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