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07. August 2006

THAILAND: Rubber giant looks abroad for growth. Thai Hua picks Laos, pursues Michelin deal

Source: Daily "Bangkok Post", Bangkok; 7 Aug 2006

Thai Hua Rubber Plc, one of Thailand's largest rubber
producers and exporters, is investing in Laos and
studying prospects in Burma to raise production and
capitalise on growing global demand.

According to president Luckchai Kittipol, Thai Hua has
signed a joint-venture deal with Laotian NCX Holding
Co to set up Laos Thai Hua Co, with registered capital
of US$20 million. Thai Hua holds 60% and the local
investor the rest.

He said the joint venture would grow rubber on 200,000
rai, covering Vientiane, Savannakhet and Bolikhamxay
provinces. The total investment would reach $100
million, mostly for purchasing rubber seedlings and
maintenance, he added.

The first commercial output is expected by 2012, with
yields estimated at 10,000 tonnes per year, increasing
to 60,000 tonnes in 2016. All of the output would be
exported, mainly to China and Thailand.

Mr Luckchai said the company decided to invest in Laos
because it had found a good partner and had received
agreeable land lease conditions from the Laotian
government for up to 50 years.

Normally, rubber trees have a useful lifespan of about
30 years for tapping.

Meanwhile, Mr Luckchai said the company was in talks
with the tyre maker Michelin, which also has a lot of
experience with rubber plantations in South America
and Africa. A joint venture is expected to be
finalised by the end of this year.

Thai Hua is also looking at investing in Burma, but it
is not certain about the Burmese government's
investment promotion policy and safety.

According to Mr Luckchai, the investment in Burma
would required similar capital to that of Laos for a
plantation of 200,000 rai in the south of the country.

"Plantation areas in Thailand are quite limited at the
moment. We have therefore been looking at Laos and
Burma for new plantation areas," he said.

Locally, Thai Hua will spend 350 million baht on new
plants in Krabi and Nong Khai to make rubber products
for export.

The Nong Khai plant would cost 150 million baht and
produce 30,000 tonnes a year of block and compound
rubber. The two products form the main raw materials
for various industries.

The second project in Krabi would produce concentrated
latex to ship to China, Japan, South Korea, the United
States and the European Union. The 200-million-baht
plant would be able to produce 3,000 tonnes of
concentrated latex per year.

Mr Luckchai said that Thai Hua had been present in the
Northeast of Thailand for a long time. It had set up a
factory to produce natural rubber ribbed smoked sheets
and concentrated latex to absorb rubber from one
million rai of plantations.

The new two plants would bring Thai Hua's production
to nearly 500,000 tonnes of concentrated rubber and
rubber ribbed smoked sheets a year.

The company expects to earn about 25 billion baht from
the export of 300,000 tonnes this year, up 60% from
last year due to soaring world rubber prices.

(Syed Rashid Ali, Karachi, Pakistan)

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