Liu Ziming (L), chairman of China Railway Major Bridge Engineering Group Co Ltd, and Zhang Chuan You, general manager of Cambodia Iron & Steel Mining Industry Group, shake hands following a signing ceremony in Phnom Penh, Monday, Dec. 31, 2012. Photograph: Heng Chivoan/Phnom Penh Post

The Cambodia Iron & Steel Mining Industry Group (CISMIG) and the China Railway Group Limited agreed yesterday to build a new railway line with 11 stations as well as an iron and steel factory in Preah Vihear province.

The Memorandum of Understanding between the Groups is worth US$9.6 billion.

“We will start our project in July next year and it will take about four years,” Zhang Chuan Li, Chairman of CISMIG, told the Post yesterday. He added that Chinese and Cambodian experts analyzed the project’s feasibility and its environmental impact in October 2010.

According to the company statements the railway will be 405 kilometres long, from the mining area of Preah Vihear province through the southern provinces of Kampong Thom, Kampong Chnang, Kampong Speu and finally Koh Kong province. It will not connect to the existing lines of Toll Royal Railways.

Zhang Chuan Li told reporters at the signing ceremony that the $9.6 billion investment will be used to build the new railway line, a new port and a new bridge in Koh Kong. The planned iron and steel plant in Preah Vihear will cost $1.6 billion.    

However, he said that the company received 1,300 square kilometres of land concessions from the government and 10 square kilometres would be necessary for the factory in Preah Vihear. The companies did not disclose the exact route of the new line.

Yim Sovann, spokesman for the opposition Sam Rainsy Party, claimed that the government should follow the international bidding process for the approval  of any foreign investment in all industry sectors.

“I don’t want to see companies grab people’s property and destroy natural ressources,” he said. “It will allow corruption, if government and company agree on such projects without a public bidding process.”

Referring to the factory, Zhang Chuan Li explained: “With the factory we  want  to  minimise  the country’s import of steel. We also plan to export to neighbouring countries like Vietnam and Thailand.”

The construction of the factory, which will produce 1 million tonnes of steel and iron per year, will take two and a half years, according to the CISMIG chairman.

The company will not import raw material for the production, but use national mines in Preah Vihear, Rattanakkiri, Kampong Thom and Stung Treng provinces.

Minister of Transportation Tram Iv Tek, who participated in the signing ceremony yesterday morning in Phnom Penh, said the investment will contribute to the development of the Cambodian economy.

“If the investment is successful, it will definitely help the development of Cambodia’s economy. It will not only allow the transportation of resources, but also of agricultural and industrial products as well as passengers,” he said.

Youn Heng, director of the Evaluation and Incentive Department of the Council for Development of Cambodia, confirmed that the CISMIG’s plans were approved by the government in 2010.

Chinese investments in Cambodia, mostly in the garment, textile, agriculture and mining industry. They totalled $9.1 billion between 1994 until the end of July 2012.

On Friday the stretch of railway line from Phnom Penh to Preah Sihanouk province started temporary operations.

The first operations on the southern railway will boost trade activities in the region and attract trade transportation activities, officials said.

To contact the reporter on this story: May Kunmakara at [email protected]