The Siam Cement Group (SCG) will spend Bt10 billion to build a new petrochemical plant in the Map Ta Phut Industrial Estate as part of its Bt30-billion investment plan for this year. It is ready to comply with tightened environmental standards to assure the public of safety.

"Our investment in the petrochemical industry in Rayong province has continued to progress. The environment problem at Map Ta Phut will not derail our investment plan, because we must receive environmental approval. If the Industry Ministry sets out to tighten environmental standards, then we're ready to build our plant to meet the new standards," president Kan Trakulhoon told a press conference yesterday.

The Energy Ministry said there were proposals to put up seven or eight power and petrochemical plants in Map Ta Phut. However, all will must wait for the Industry Ministry to come up with stricter environmental standards, following cancer fears by among residents living in nearby areas. One of the proposals is a natural-gas separation plant by PTT.

Yesterday, the Industry Ministry told the Map Ta Phut Industrial Estate to complete its operation plan for controlling pollution emissions within a month.

The Bt10-billion petrochemical project is part of SCG's total investment budget of Bt30 billion this year - the biggest annual investment budget since the 1997 economic crisis. The rest will go to the group's construction and paper operations. Last year, it invested Bt22 billion.

The project will boost the capacity of subsidiary Thai-MMA for 90,000 tonnes of methyl methacrylate and 20,000 tonnes of continuous cast sheets. SCG will also spend Bt400 million for a lifestyle centre.

Thai-MMA is a joint venture between SCG and the Japanese firm Mitsubishi-Rayon, with each owning 45 per cent.

Investment delay would hurt SCG, which expects to record mild sales growth of only 5 per cent this year, compared with healthy growth of 18.3 per cent last year. The lower sales growth expected for this year is due mainly to a weaker outlook in the petrochemical industry.

Last year, SCG posted a net profit of Bt29.45 billion, dropping 9 per cent year on year, because of higher production costs caused by higher oil prices and a slow-down in the country's construction industry. Kan said the group's paper business recorded total sales of Bt42.64 billion, up 6 per cent year on year, but its net profit declined 3 per cent, due to higher depreciation costs and tax expenses. The cement business posted total sales of Bt44.12 billion, up 6 per cent, due to higher exports, but the net profit was down 6 per cent, due to higher energy expenses.

The petrochemical industry was the major factor in pushing sales to Bt258 billion last year, representing growth of 18.3 per cent. Petrochemicals generated Bt122.64 billion last year, up 43 per cent.

SCG will finance the new investment with its cash flow and by issuing four-year debentures worth Bt15 billion, as approved yesterday by the board of directors. Of that total, Bt6 billion in proceeds from the debentures will refinance its existing debts that expire in April.

Currently, the total debt of the group up as of last month was Bt103 billion. Of that, Bt81 billion was in bonds - of which Bt6 billion will expire in April and another Bt10 billion in October - and the remaining Bt22 billion was borrowed from local financial institutions.

Chalida Ekvitthayavechnukul

The Nation