China National Building Material (CNBM) said it would quadruple its annual production capacity to 100Mt by early 2009 through the newly announced joint venture Nanfang Cement, plus other acquisitions.
Nanfang, a Rmb10bn investment, of which CNBM is in for a 75% stake, is designed to strengthen the new company’s business in the provinces around Shanghai. The joint venture will offer annual production capacity of 53Mt when established.
CNBM currently has production capacity of 24Mt of cement, while its chief rival, Anhui Conch Cement (914) sold 39.95Mt of cement last year.
CNBM chairman Song Zhiping said the company will continue to expand by "actively acquiring" smaller cement factories.
With CNY1bn to spend on buyouts in the coming year, the company will hunt for firms with return on equity of 10% or more.
The central government has been encouraging cement producers to consolidate by taking over smaller players.