Integrated clinker and cement manufacturing plant in Lahad Datu.
LAHAD DATU (Sept 19): Never would one imagine that deep within the rainforests of Borneo, next to the Segama River lies the first and only limestone and marble quarry in Sabah.
Developed in the early 90’s and owned by Sabahans, Makin Teguh Sdn Bhd (MTSB) and its group of companies started to operate and produce limestone and marble under the brand of ‘Borneo Marble” since 1992.
The Borneo Marble quarries produce a unique type of marble with exotic colouring ranging from a porcelain creamy white known as Borneo Beige, to an enchanting bluish grey aptly named “Segama Blue” and a deep rich red marble called “RossoSegama”.
Places such as Putrajaya, the Palace of Justice and even Trump Tower in New York feature Borneo Marble in their design.
Despite the alluring beauty of Borneo Marble, the nature of the marble business is such that only 30% of production is selected for polishing, and the rest becomes waste material. In the early days, MTSB would use the waste material for the manufacture of tiles as well as road construction.
MTSB had in fact developed most of the infrastructure leading to the quarries using ancient Roman road building technology which utilises crushed limestone mixed with aggregates from nearby stone quarries which is compacted and when mixed with water over time creates a hardened road base.
The availability of a huge stockpile of cement grade limestone waste accumulated from 30 years of marble quarrying operations and news related to cement shortage in 2007 prompted MTSB to consider expanding their business downstream by applying for a cement manufacturing license, which was granted to MTSB in 2011.
After doing detailed feasibility studies and considering the various infrastructure challenges, work on the site commenced in 2017.
MTSB’s Lahad Datu integrated clinker and cement manufacturing plant is designed using the latest Chinese technology with great emphasis towards environmental protection and efficient energy use. It is the first integrated cement plant in Malaysia which uses renewable fuels such as heavy fuel oil derived from refined recovered oils, palm kernel shells and bio char.
The plant also employs a heat recovery system that is able to generate part of its energy requirements and recycles all of its water which relies heavily on rainwater collection which is stored and treated internally. The plant is part of an integrated limestone processing complex (ILPP) which aims to create an economic value chain utilising natural resources to produce a range of limestone derived products such as crushed limestone powder, aggregates, hydrated lime, clinker, cement, concrete and other related products for local use as well as export.
The ILPP will employ up to 250 Malaysians on site and will train Malaysians especially local Sabahans in all aspects of the limestone and cement manufacturing business. Construction of the plant was carefully planned so as to avoid disruption to the natural terrain of the site and at the same time, developing the infrastructure such as roads and electricity supply at its own cost for the mutual benefit of all the local villages and nearby plantations.
Borneo Oil Berhad (BOB) owns limestone quarries adjacent to the ILPP and due to the strong synergy between the parties, BOB had recently acquired up to 29.3% equity interest in MTSB. This alliance will enable the parties to leverage on each other’s strength in order to position the group towards future expansion. This alliance will enable BOB to expand its quarrying operations downstream to boost the group’s overall profitability.
The ILPP will be the first integrated cement plant is Sabah with an annual capacity of 230,000 MT/annum and is able to cater to the demand for cement in the East Coast of Sabah which is estimated at 300,000 MT/annum.
Sabah has an annual demand of between 1.2 million to 1.4 million metric tons of cement. These numbers do not include the future development projects planned on the East Coast of Sabah, and the demand in the BIMP-EAGA region with a population of 23 million at close proximity to the East Coast of Sabah. These potential is further enhanced by the recent declaration of the POIC port by the Sabah State Government which is a game changer for the eastern part of Sabah given its well equipped and comprehensive facilities and strategic location along the Lombok- Makassar shipment route.
The recent Covid-19 pandemic and unprecedented series of global events have once again highlighted that Sabah must steer itself towards self-sufficiency in all critical sectors, cement production being one of them. Cement is the back bone of the construction and development industry. As such, the local manufacture of clinker and cement using mainly local resources will reduce exposure to international currency fluctuations and reliance of foreign imports.
On Monday, MTSB and BOB celebrated a momentous occasion by hosting a ‘Kiln Firing Up Ceremony” to mark the commencement of ILPP.
The event was officiated by BornOil Executive Director Joseph Ambrose Lee.
“The outlook for Sabah’s clinker and cement industry is favourable given the high cement prices in Sabah compared with the rest of Malaysia and ILPP’s proximity to the Brunei — Indonesia — Malaysia — Philippines East ASEAN Growth Area (BIMP-EAGA),” said Ambrose.
“The already high price of cement in Sabah has been made worse in recent months due to the drastic increase in logistics costs and fluctuation in foreign exchange rates, which is why the commencement of operations of Sabah’s only ILPP is a timely one as our beloved state can no longer afford to rely on 100% imported clinker and cement,” he added.
Ambrose also explained that there are strong synergies between BornOil’s existing limestone quarrying business operations and the ILPP, among which include the ILPP being situated adjacent to BornOil’s limestone quarry lands.
BornOil is today the largest private owner of limestone reserves of cement grade quality in Sabah and has heavily invested in the resource.
MTSB has also entered into a long-term supply contract for limestone with BornOil’s subsidiaries on the current stockpile and overburden waste from existing quarrying operations to supplement the ILPP’s initial limestone feedstock requirements.
“This supply of current stockpile and recovery waste for downstreaming activity is also in line with the BornOil group’s initiative towards zero waste and reusing/upcycling ail materials,” said Ambrose.
“This synergistic alliance will enable MTSB and BornOil to pool their combined limestone resources and position the BornOil group for future expansion.
“The acquisition presents an opportunity for the BornOil group to move downstream its quarrying resources to further boost profits,” he added.