SMC to invest heavily in cement, mining industries

MANILA, Philippines - Diversified conglomerate San Miguel Corp. (SMC) is investing heavily in the cement business through Northern Cement Corp. (NCC) of SMC chairman Eduardo “Danding” Cojuangco Jr. and nickel mining through Nonoc Mining and Industrial Corp.

SMC president Ramon S. Ang said in a press conference that the company is investing as much as $750 million to beef up the production of NCC by expanding its existing plant in Sison, Pangasinan as well as the construction of new plants in Southern Luzon and Cebu.

Ang said SMC is investing $250 million to triple the capacity of its existing plant in Pangasinan to three million metric tons from one million metric tons.

Furthermore, he added that the company would also spend another $250 million to put up a new plant in Southern Luzon with a capacity of two million metric tons and $250 million more to establish another plant in Cebu.

The SMC chief operating officer made the announcement after the diversified conglomerate injected P3 billion worth of fresh equity to acquire a 35 percent interest in NCC in the first quarter of the year.

With the investment, Ang said the company expects a share of about 30 percent of the total cement market that is currently 90 percent controlled by foreign-owned cement companies.

According to him, SMC is very bullish about the cement industry as the Philippines has a per capita consumption of 170 kilos compared to other countries with a per capita consumption of 1,000 kilos.

“SMC is very bullish in that business,” he added.

He added that SMC intends to put up at least five more cement plants all over the Philippines in the next five years.

“SMC plans to put up more cement plants and become a dominant player in the cement industry,” Ang added.

On the other hand, he revealed that SMC has offered $75 million to the state-run Privatization and Management Office (PMO) to acquire a controlling stake in Nonoc Mining and Industrial Corp. that owns a nickel mine in Surigao.

The diversified conglomerate has entered into a memorandum of understanding with Philnico Mining and Industrial Corp. last December on the settlement of the company’s debt to the national government through the Department of Finance (DOF).

Philnico acquired the refinery from the government in the 1990s, but the national government seized the property back because the company failed to pay the full acquisition cost.

Philnico has an outstanding debt of $263.8 million from the government and P200 million unpaid real property taxes to the city government of Surigao.

SMC is planning to inject $2.5 billion to reopen Philnico’s mothballed refinery plant in Nonoc as payment for the unpaid taxes.

Earlier, the Jinchuan Group Ltd of China offered $1 billion to rehabilitate the refinery but a final deal with Philnico never materialized due to the global financial crisis.

Ang earlier said SMC sees revenues hitting $50 billion over the next five years on the back of the expansion of existing businesses as well as aggressive acquisition program.

He pointed out that the growth in revenues until 2017 would be achieved through acquisitions and expanding the conglomerate’s existing businesses.