April 6, 2007, 5.44 pm (Singapore time)

Finding sand suppliers for contractors a lucrative business

FOR the last few years, Madam L Teo has been a real estate agent, matching properties to potential buyers.

In the last few weeks, however, she has ventured into a rather different trade - matching sand suppliers to potential buyers.

Hooking up contractors with sand supplies has turned into a lucrative business overnight after Indonesia banned all exports of sand to Singapore in February, citing environmental concerns and the need to protect its maritime boundaries.

And there are many others like Madam Teo with a sharp eye for business. They have jumped on the bandwagon in the hope of cashing in on temporary shortages.

Another is Mr T Tan, who after many years in the freight forwarding business, decided to dabble in sand supplies.

Most of these middlemen have to rely on their own network of contacts to source deals.

Madam Teo said she had managed to procure sand from 'a neighbouring country', but added that talks are still currently ongoing.

'I think this business is sustainable, especially with our current situation, but logistics and transportation problems still have to be ironed out,' she said.

Contractors say they have been getting a barrage of calls from both individuals and companies who are promising to supply sand at a lower price than the market rate here.

Since the ban, the price of sand has gone up from $25 to $60 per tonne, while that of granite has increased from $25 to $70.

Sand and granite are used to make concrete, the price of which has also shot up from $70 to around $200 per cubic metre.

Mr Tan Swee Hong, executive director of construction firm Lian Beng Group said he has been getting frequent calls from middlemen and is currently considering buying from one of them.

The price and quality of sand from such sources are key concerns, he added.

One concrete supplier who declined to be named said that such middlemen already operated before the ban, but this number has increased dramatically since then.

He said that some act purely as a match-maker between suppliers and buyers, while others will also take care of the logistics of getting the sand to Singapore. Commissions carry for marrying buyers and sellers.

A spokesman for Johor aggregate supplier Afdal Bukit Mor Quarry - an alternative source of sand - told The Straits Times that it has been approached by middle-men and is currently applying to export their aggregate, which is selling from 9 ringgit ($3.90) upwards per tonne.

He said that the company deals with such approaches cautiously and prefers to deal with companies rather than individuals.

The President of the Singapore Contractors Association, Desmond Hill said sand from abroad could cost anywhere between $8 to $15 per tonne. But with transportation costs, this could go up to $45.

He also added that not all contractors are into buying raw materials like sand, since what they really need is concrete.

BCA said aggregate from new sources has to be tested to ensure they meet specified requirements .

A spokesman from testing centre PSB Corporation confirmed that there has been an increase in the number of enquiries for sand testing.

A sand test typically takes 2 weeks to complete, and could cost from $1,000 to $1,500 for a 15 kilogram sand sample.