KOH KONG, CAMBODIA : Khon Kaen Sugar Industry Plc (KSL) aims to invest about 15 billion baht over the next five years to double its sugarcane output in Thailand and continuously expand its presence in Cambodia and Laos.
Cambodian Prime Minister Hun Sen presses a button to start production at the new mill in Koh Kong as KSL chairman Chamroon Chinthammit (second from left) looks on.
Thailand's only listed sugar miller expects the group's total revenue to top 20 billion baht from last year's 12 billion baht when the expansion is completed.
Chairman Chamroon Chinthammit said the company would spend 6-7 billion baht to build a new factory complete with a power and ethanol plant in Sa Kaeo. The Bo Phloi mill in Kanchanaburi also requires an investment of 8 billion baht, of which half is being spent on the first phase of construction.
The group currently operates four sugar mills and cane farms in Khon Kaen, Chon Buri and Kanchanaburi, with combined sugar production of 5 million tonnes per crop.
KSL projects that its local sugarcane output will double to 10 million within five years, moving it from the fourth to third place in the country in terms of overall production, said Mr Chamroon.
The company on Monday inaugurated its $100-million sugar mill in Koh Kong, the first of its kind in Cambodia. The group, together with Cambodian and Taiwanese partners, has been granted a 90-year farming concession for 20,000 hectares in Koh Kong along the border of Thailand and Cambodia.
An estimated 240,000 tonnes of sugarcane will be processed in the 2009-10 season, the first year of operation.
"We are aiming for the total production of 2 million tonnes from Cambodia within five years while our crushing capacity in Laos will be expanded to 700,000 tones from 300,000 to 400,000 tonnes at present," Mr Chamroon said.
KSL has also been awarded a concession of 30 years for 10,000 hectares in Laos. The Sawannakhet mill, with total investment of $40 million, began operating at almost the same time as the Koh Kong plant.
Laos and Cambodia are among the 19 developing countries entitled to duty-free sugar exports to European markets. KSL has signed five-year contracts with London-based Tate & Lyle to supply all of its output from Cambodia and Laos at the price of 19 cents a pound.
Ly Yong Phat, one of Cambodia's top businessmen and a close ally of Prime Minister Hun Sen, holds 20% in KSL's joint venture while the Thai sugar miller controls 50%. The remaining 30% is owned by the Taiwanese partner Ve Wong Corp.
Speaking at the opening ceremony, Prime Minister Hun Sen vowed to seek the required land and labour for KSL, which needs 4,000 employees, saying the sugar industry was vital for the Cambodian economy. According to data from Thailand's Commerce Ministry, the country exports 300,000 tonnes of white sugar to Cambodia.
Chalush Chinthammit, KSL's assistant vice-president for business development, said the group expected up to 20% growth in revenue this year, thanks to the high sugar price, now at a 28-year high of 29 cents a pound, and higher production than last year.
Given the current supply shortage, sugar prices will remain on the uptrend, definitely breaking the 30-cent mark by the end of the second quarter, Mr Chalush added.
KSL shares closed yesterday on SET at 14.70 baht, up 50 satang, in trade worth 44 million baht.