Cement industry plays an important role in the production of building materials and alongside, plays a vital role in the entire construction value chain. This powerful and diversified sector includes dozens of cement plants throughout Laos, numerous energy and raw material suppliers, as well as engineering companies and equipment suppliers related to cement production. The Laos cement industry, which consists predominantly of medium and large businesses, includes two dozen companies and more than 50 cement plants. Despite certain difficulties associated with high energy prices, economic slowdown and changes in traditional logistics chains, Laos remains attractive for further investment and financing for cement plants.
Viola Funding Limited offers long-term loan and financing of large cement plants in Laos and other Asian countries. We offer a full range of solutions for the cement industry, including financial modeling, lending, project finance, credit guarantees and much more. Contact us to learn more.
The current trends in financing of Laos cement plants
Yearly consumption of cement per capita in different countries of Asia and rest of the world is an extremely heterogeneous parameter.
Countries such as Thailand only need about 20 kilograms per capita annually. In Arab countries, annual consumption can exceed 2,000 kilograms per inhabitant. Cement consumption in Laos is about 350 kilograms per inhabitant per year, which can be considered as an important parameter of the intensity of construction activity in the region.
Production of cements remains an attractive area for investment, as construction on a global scale increases every year. This area is also developing in Laos, as evidenced by cement production statistics over the past decades.
History has it that in 2018, the Laos cement industry, which employs over 12,000 people, produced about 23.6 million tons of cement, with sales of about 2.8 billion dollars. At the same time, cement consumption in the last pre-pandemic 2018 amounted to 29.0 million tons, which is 0.4% higher than in the previous year. In 2020, despite the negative impact of the pandemic, the production reached 35.5 million tons.
Within the ASEAN, Laos is currently toping the largest market for cement.
Financing cement plants in Laos
An important backbone of long-term financing for the construction of cement plants in Laos is project finance, which plays an increasingly important role in the development of the industry.
Project finance is the financing of investments, according to which the source of debt repayment is cash flow, which is formed and accumulated as a result of the implementation of an investment project.
Borrowed funds for project finance (PF) are formed using bank loans, bond issuance, leasing and other sources of financing. Bank loans are currently one of the main sources of attracting funds for financing investment projects. Since the cost of building a modern cement plant in Laos can be counted in hundreds of millions of dollars, in many cases sponsors attract syndicated loans.
The largest cement producers and plants in Laos
Cement production and cement products in Laos is mainly concentrated in the hands of a small number of medium and large businesses, including international companies.
At the same time, cement production in Laos is geographically distributed extremely unevenly, which can be largely explained by the economic history of the country, the development of its infrastructure and the distribution of natural resources.
The list includes; Wanrong Cement is another Chinese joint venture and is Laos’ oldest producer of cement, Jixiang Cement was built by Yunnan Energy Investment Corporation in 2015,Mawlamyine Cement, a subsidiary of Siam Cement.
Investments in the modernization of cement plant in Laos
In recent years, Laos cement industry has consistently invested in the modernization of its plants. When it comes to sustainability, CO2 and NOx emissions, use of alternative fuels and energy efficiency, Laos cement producers remain among the world leaders in innovation.
These investments are carried out in close cooperation with major Asian equipment manufacturers, which play a leading role in the cement and concrete sector. The focus is also on clinker-efficient cements and their use in the production of strong and durable concrete.
All cement manufacturers in Laos are currently working intensively to create clinker-efficient cements with lower CO2 emissions compared to classic Portland cements.
If you are planning to build a large cement plant in Laos or anywhere in the world, please contact us. We offers financing large cement plant projects and other services.
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