Cambodia Iron and China Railway invest US$11b in Cambodia projects

Thursday, 03 January, 2013,
The South China Morning Post
Reuters in Phnom Penh

Cambodia Iron and China Railway will join hands on the rail, steel and port projects

 

Two Chinese firms have reached a deal to build a 400-kilometre rail line, a steel plant and a sea port in Cambodia worth a combined US$11.2 billion.

It would be by far the biggest-ever investments in the impoverished country.

Cambodia Iron and Steel Mining Industry had contracted China Railway Group to build a railway to link a steel plant in Preah Vihear province in the north to a port at the southern commercial island of Koh Kong, the Cambodia-based firm's chairman, Zhang Chuan Li, said yesterday.

The rail link and port would cost US$9.6 billion to build, and the steel plant US$1.6 billion.

Cambodia Iron and Steel is a Chinese firm based in Phnom Penh and established in 2006.

The deal is the latest sign of China expanding its footprint in the frontier economies of a booming Southeast Asia as the United States vies for influence in the region.

Loans and investment have won China some useful political allies in the 10-member Association of Southeast Asian Nations, which is set to become an integrated trade community by 2016.

All three projects in Cambodia would start this year and take up to four years to complete, Zhang said.

"There is an important demand for transport of mined materials for export to China and to the world," he said.

Zhang was unable to provide details about where the financing for the Cambodian rail, steel and port projects would come from.

The agreement was made on Monday and came three days after Sinomach China Perfect Machinery Industry and Cambodian Petrochemical announced they would jointly build a US$2.3 billion oil refinery, Cambodia's first, capable of processing five million tonnes of crude a year.

Chinese companies are also set to build a US$7 billion, 400km high-speed-rail link through neighbouring Laos and are trying to win contracts to build new lines in Thailand.

Zhang said a groundbreaking ceremony for the railway would be held by the end of this month and construction of the steel plant would start in July.

A 3km bridge would connect an island in the southern coastal province of Koh Kong with the mainland, and the project would boost the economies of the four provinces covered by the link, the company said in a statement.