On July 15, 2015, the merger between the two major building material manufacturers, Lafarge and Holcim, had been finalised. The merger allows LafargeHolcim to obtain the global market leadership in its core business segments cement, concrete and aggregates and to gain presence in 90 countries.
Myanmar Business Today takes this as an opportunity to hear from Nicolas George, country CEO of LafargeHolcim in Myanmar, about the history and strategy of its local brand Star Cement, the effects of the recent merger and to review developments in the construction material production.
LafargeHolcim had already shown long-standing commitment to Myanmar and received approval by the Myanmar Investment Commission (MIC) back in 1997. The company consequently established a cement factory under its subsidiary, the Thilawa Cement and Building Materials Ltd, at Thilawa Terminal and introduced its brand Star Cement to the Myanmar market. However, due to a difficult environment, LafargeHolcim was forced to discontinue its operation.
“When LafargeHolcim resumed its full operation in Myanmar in July 2014, we built our strategy on providing high-quality products, innovative solutions and on differentiating our company though providing exceptional support to any type of final users – from individual homebuilders, to small retailers, batching plants and international contractors. We work directly with the users of Star Cement and provide additional services for instance a technical team for batching plant assistance, mix design optimisation, on-site storage for contractors and retailers and trainings,” Nicolas George explains.
Under a joint venture, LafargeHolcim set up its 20,000MT cement repacking plant at Thilawa Terminal employing around 200 workers. The cement is mainly delivered to the final customers in Yangon, Ayeyarwaddy and Bago regions in bulk or bags.
“LafargeHolcim currently entirely imports its cement in bulk in pneumatic vessels through its own sourcing. This unique system in Myanmar is the safest, most environmentally friendly and it operates under any weather condition, which is essential to reduce port congestion. It also contributes to the streamlining of our supply chain and reduces the lead time between cement production and delivery to construction site in order for our customers to always receive fresh cement.”
In Myanmar, LafargeHolcim has already gained project reference in providing cement for a number of developments such as Star City, Daewoo Amara Hotel, Times City and the construction of several bridges in and around Yangon. Apart from the cement business, since June 2015, LafargeHolcim started to develop its concrete activity through the management of project batching plant for developers with high quality standards.
Regarding the merger to LafargeHolcim, Nicolas George outlines that there will be no deviations from the growth strategy of the company in the market including the establishment of domestic production.
“In Myanmar, we only see positive effects, as we will have more opportunities for sourcing, as both – Lafarge and Holcim factories will be available to supply the market and as the technical service capabilities are extended. Finally, the merger gives us more support to develop faster in the strategic Myanmar market.”
In general, the Myanmar cement industry had been relatively fragmented with a unique pattern of small production sites in the past. The significantly increased domestic demand to a prospective level of 10MT in 2015, however, led to further concentration and the establishment of production facilities of internationally comparable scale. The South of Myanmar, accessible by sea, is currently mostly supplied through imports, while in Northern areas are served by domestic supply. A recent slowdown of the cement demand in the second quarter of 2015 down to the level of the previous year may be explained by the low construction activity of the real estate market, in particular for the high-end segment as well as by the upcoming elections. However, the overall market trend is positive.