China National Building Material Co Ltd on Thursday announced billions of dollars worth of acquisition plans with the aim of tripling its cement capacity by next year.
Lifting output to 174Mta by 2009 will allow China’s No 2 cement maker to tap the country’s fast-growing building material market.
China produced 1.38bn tonnes of cement in 2007, nearly half the world’s output, and production is expected to rise by eight per cent this year.
China National Building also proposed selling up to 300 million shares to raise about US$623m for acquisitions and investments.
The company will seek shareholder and regulatory approval for the share sale, Chief Executive Officer Thomas Cao told a news conference.
Its 75 per cent-owned unit, Nanfang Cement Co Ltd, has signed 61 memorandums of understanding to buy cement capacity of about 90Mt before the mid-year of 2008.
"Nanfang will contribute CNY13.3bn (US$1.85bn) of capital to the MOU projects, so our share will be about CNY10bn," Cao said.
China National Building, which currently has capacity of 54Mt, announced earlier in the day that Nanfang and its other unit, China United Cement Co Ltd, had agreed to invest a total of CNY6.75bn in 17 acquisitions, which will add a total of 30Mt of capacity.
"The company is expanding and will need money to support its growth," Cao said.
The company would consider all channels of finance for its projects, including the issue of H shares, A shares, domestic bonds and bank borrowings, he added.
Cao said the issuance of H shares would be the quickest way for the company to raise cash. "We would like to secure the projects in the 61 MOU and sign contracts before the first half of this year."
The cash call was the second of the company in 5 months after it raised about US$350 million last August.