Malaysian cement production increases

Increased building activity across Malaysia has led to a surge in demand for cement, leading one of the country's biggest cement manufacturers to step up production.

Cahya Mata Sarawak (CMS) Group - the only cement manufacturer in the state of Sarawak - has announced plans to boost capacity by nearly 60 per cent by opening its third grinding plant, which is due to be commissioned in the first quarter of 2016 following trials at the end of 2015. The move is expected to raise production to 2.75 million tonnes per year.

Group managing director Datuk Richard Curtis told Malaysia's Star newspaper that cement demand in Sarawak has been growing by three to four per cent a year. "We estimate that with increased production capacity, we will be able to meet the demand at least in the next ten years," he said.

Why is demand for cement growing?

The need for more cement is directly related to the upturn in building activity throughout the country. AECOM's latest Asia Construction Outlook report reveals that Malaysia spent $32 billion on construction activity in 2013, while spending growth of 4.2 per cent is expected between 2014 and 2019.

Over the medium term, Malaysia's construction market is tipped to be the second most profitable in Asia, while Kuala Lumpur is predicted to be the third most profitable city or metropolitan area. 

Among the country's major construction projects is the Tun Razak Exchange, a development intended to create one of Asia's most liveable financial districts. Built upon 70 acres of land in the heart of Kuala Lumpur, it will feature a total of 25 buildings, comprising office, residential, hotel, retail, food and beverage, and cultural spaces. The initial phase of the project is scheduled for completion in 2017.

Much of CMS Group's demand has come from road-building and maintenance. The company holds two long-term concessions, involving around 680 km of federal roads and 5,400 km of state roads in Sarawak. 

Mr Curtis revealed CMS is also keen to participate in the Pan Borneo Highway project, a 27 billion Malaysian ringgit ($7.5 billion) initiative that will see the construction of 936 km of road in Sarawak and 727 km in Sabah. The work is scheduled for completion by 2025, although it could be accomplished more quickly through its use of public-private partnerships.

CMS is looking to secure both road construction packages and the supply of materials, with Mr Curtis revealing the company has launched studies to identify potential quarry sites in northern Sarawak.

CMS Group's existing capacity

With the new cement facility yet to open, CMS owns and operates two cement plants boasting annual combined rated production capacity of 1.75 million tonnes. The two plants, located in Kuching and Bintulu, reported a combined average utilisation factor of 85 per cent between 2010 and 2014.

As well as building the new plant, CMS is looking to upgrade its existing factories. Mr Curtis said the company is planning to invest a further 17 million Malaysian ringgits throughout 2015 to bolster its cement distribution capabilities, including an upgrade to its main jetty that will help to improve the handling of raw material imports and the export of bulk and bagged cement.

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