BBMG is spending up to CNY2bn to buy land, mainly in Beijing, in the second half of the year. The cement and building materials manufacturer has stepped up the purchase of inexpensive sites for its own use, paying more than CNY1bn for 1.26Mm2 in the first half.
Its current land bank of 3.88Mm2 – mostly in Beijing, Hangzhou and Hohhot – is expected to be sufficient for two to three years.
The company’s capital expenditure for the second half, excluding land acquisitions, is 3.67 billion yuan.
President Jiang Dewei said the company will continue to benefit from large government spending on infrastructure. BBMG has won tenders for a number of infrastructure projects in Beijing, Tianjin and Hebei province. The firm expects cement demand to remain robust because of the property market boom.
Jiang said BBMG intends to raise its cement production capacity to 30Mt from 20Mt by the end of 2010, adding that Beijing faces a cement shortage of roughly 10Mt.
“Excess supply in a particular region will not necessarily imply the situation is the same elsewhere,”’ said chairman Jiang Weiping.
The chairman said transporting cement over 200km is very expensive. As such Hebei will benefit as a transportation hub for resources, including water, from central China while Beijing will play a similar role for the north and east of the country.