F.L.Smidth & Co. wins major contract in Vietnam

Provincial government-owned Ninh Binh Cement Company in Vietnam has placed an order with F.L.Smidth & Co. A/S for a complete cement production line. The value of the contract is about DKK 755m (in excess of EUR 100m). Won against competition from two French suppliers, the contract marks the culmination of a lengthy negotiation process that began in the spring of 1997.

The contract with Ninh Binh Cement Company covers machinery and equipment, spare parts, civil construction drawings, structural steel, supervision and training. Several of F.L.Smidth & Co.'s sister companies are expected to act as subcontractors.

Based primarily on Danish export credits guaranteed by the Vietnamese Ministry of Finance, the contract is included in F.L.Smidth & Co.'s estimated order intake for 2000.

The bulk of the order sum will be credited to income during 2001 in step with equipment supplies being effected, while the balance of the payments will be recognised in connection with the commissioning in the second half of 2002. The effect of the order on this year's earnings is expected to be neutral.

The new production line will be located in the northern province of Ninh Binh, 120 km southwest of the capital city of Hanoi. This will be the customer's first cement plant, with a rated capacity of 4,000 tonnes cement clinker per day and specially designed for the use of locally sourced anthracite coal of a very low gas content. The new plant will meet the highest international standards in terms of energy consumption and environmental impact.

Vietnam's annual cement production is close to 12 million tonnes, while domestic consumption is currently slightly less than 11 million tonnes. With a total population of 77 million people, per capita consumption is thus 142 kg. Vietnam expects domestic demand to grow at the rate of 10-15 per cent per year, which means that cement consumption will reach the level of some 18 million tonnes by 2003.

In 1976, F.L.Smidth & Co. signed a contract for i
ts and the nation's first dry-process plant with Vietnam National Cement Trading Corp. This first production line at the Hoang Thach plant was followed by another line that came on stream in mid 1995, boosting the total output to some two million tonnes cement per year, or 6,500 tonnes per day.

FLS Industries A/S
Corporate Public Relations