Siam Cement Group (SCG), the country's largest industrial conglomerate, will seek concessions for eucalyptus forestation in Laos and Cambodia to secure raw material supplies for its paper business. Poramate Larnroogroj, managing director of Siam Forestry Co, an affiliate of SCG Paper, said the company had started growing eucalyptus in pilot areas in the two countries.
Siam Forestry decided to look abroad after developing about one million rai of eucalyptus in Thailand, mainly in Kamphaeng Phet, Kanchanaburi and Khon Kaen.
''We have started discussing the possibility of getting the concessions there. It would take two to three years to implement the project,'' he said.
New eucalyptus plantations should be in areas where the wood can be conveniently shipped to SCG Paper's pulp factories in Thailand's northern and northeastern regions, said Mr Poramate.
''We are looking to secure raw-material supplies in the long term after there is no more area for eucalyptus in Thailand,'' he said. ''It is critical to make sure we have enough material for paper production in the future.''
Material security is a major concern as prices of pulp and other raw materials for paper production have surged.
Currently, short-fibre pulp is traded at $725 per tonne, up $40 from the same period last year, while long-fibre pulp prices have risen 15% to $760, pushed by strong demand and tight supply.
Siam Forestry's short-fibre eucalyptus serves SCG Paper's plants while long-fibre pulp is imported from Europe and the United States. SCG Paper has to import scrap paper from the US, Japan, and Singapore because of inadequate supply locally. Imported scrap prices have risen to $250 per tonne from $140 a year ago, while domestic prices are up from four baht a kilogramme to six baht.
SCG Paper, one of the four flagships of Siam Cement, generated total sales of 12.25 billion baht in the first quarter of this year, up 12% year-on-year, thanks to higher product prices. However, net profit fell 20% to 740 million baht due to surging fuel and raw-material costs.