BANGKOK: Leading Thai materials maker Siam Cement Group has accelerated a push into green businesses such as recycling and renewables amid a global and local drive to reduce plastics and other emissions-heavy products that have been a mainstay for the conglomerate.
In July, group unit SCG Packaging announced that it acquired Peute Recycling in the Netherlands. The investment will allow SCG Packaging to quickly expand and grow in the packaging materials recycling business, CEO Wichan Jitpukdee said in the release.
Peute has the capacity to produce 1 million tonnes of recovered paper a year, and handles plastic as well. The plan is to use Peute’s recycled materials in European production, as well as bring Peute’s technology to Asia to create materials for use in food and package deliveries.
Another group unit, SCG Chemicals, acquired a 70% stake in Sirplaste-Sociedade Industrial de Recuperados de Plastico in April. Sirplaste is Portugal’s largest plastic recycler with an annual capacity of 36,000 tonnes.
In addition to these two deals, worth a combined 362.5 billion Thai baht (US$10.1 billion), SCG is making inroads into renewable energy.
SCG Roofing said in April that it would partner with Huawei Technologies to develop efficient solar roof systems, using Huawei’s storage batteries. SCG Ceramics in June launched a carport that doubles as a solar-powered charging station for electric vehicles.
SCG plans to invest 70 billion Thai baht (US$1.93 billion) by 2030 into products and services that help reduce carbon emissions – a push fuelled partly by concerns that it cannot keep growing under its current business model.
The group’s mainstay products, like cement and petrochemicals, require massive amounts of energy to make and result in large amounts of greenhouse gas emissions. Investors’ attitudes toward the group have hardened as they focus more on environmental, social and governance factors.
SCG also operates joint ventures with leading overseas businesses like Toyota Motor, Kubota and Nippon Paper Industries. A delayed response to environmental concerns could hurt is partners’ reputations, impede overseas expansion and hinder the adoption of new technologies.
Founded in 1913, SCG has a proven track record in leveraging acquisitions to quickly reshape operations. Its flagship unit was among the first companies to list on the Stock Exchange of Thailand when it launched in 1975, and the group eventually expanded into over 40 business fields, partly through acquisitions.
But the listed unit fell deep into debt amid the 1997 Asian financial crisis. It had over 200 billion Thai baht (US$5.52 billion) in liabilities as of 1998, a record for a publicly traded Thai company, and led the group to narrow its focus to cement, petrochemicals and paper.
Thai King Maha Vajiralongkorn holds a more than 30% stake in SCG, making him its top shareholder. The group’s leaders historically have been chosen from among its top executives – an anomaly in Thailand, where businesses run by families of Chinese ancestry hold sway.
Current CEO Roongrote Rangsiyopash studied at Thailand’s prestigious Chulalongkorn University before joining the group. He led SCG’s paper business before taking his current post, spearheading its transformation into a comprehensive producer of packaging materials.
SCG booked a 38% jump in net profit to 47 billion Thai baht (US$1.29 billion) in 2021 on a 33% increase in revenue to 530 billion Thai baht (US$14.63 billion). Its chemicals business in particular saw a more than 60% boost in both revenue and profit, after it raised prices in response to the global surge in commodities prices.
The group’s three core businesses continue to enjoy tailwinds for now. Still, uncertainties loom. The Thai government banned free plastic bags at major stores in 2020, and is considering restrictions on single-use plastics at restaurants and other businesses.
Thailand is advocating for a Bio-Circular-Green Economic Model, with a particular focus on creating sustainable industries. In response to the government’s push, SCG announced that it aims to achieve net-zero greenhouse gas emissions by 2050.
But the group’s liabilities had swelled to around 410 billion Thai baht (US$11.32 billion) in 2021, casting a shadow over potential future acquisitions. The group will also need to pay for new emissions-reducing mechanisms at its existing plants. The group faces a major challenge to keep costs down while satisfying increasing environmentally-conscious clients and investors.