China’s cement consumption is seen rising 30 per cent by 2010, but keen competition should send 40 per cent of the nation’s roughly 5000 plants into the red this year, a senior executive of Lafarge Shui On said.
But profitable Lafarge Shui On, the joint venture between global cement leader Lafarge and Shui On Construction and Materials Ltd. , plans to double its annual production capacity to 40Mt in the next few years.
"We are seeing a good prospect," said Cyrille Ragoucy, chief executive officer of Lafarge Shui On.
"You need to follow the market to keep your leadership," he told Reuters in a telephone interview.
China made 1.06bn of cement in 2005, or nearly half of the world’s output, mostly sold domestically.
Lafarge Shui On is the market leader in China’s southwest, with operations in Chongqing, Chengdu and nearby provinces of Guizhou and Yunnan.
Under Beijing’s policy, inefficient and environmentally unfriendly cement plants in China will be closed and the number of players will be lowered to 3,500 by the end of the decade.
Beijing aims to further cut the number of cement producers to 2,000 by 2020, according to the National Development and Reform Commission (NDRC).
China would like to replace inefficient and polluting plants with dry line production facilities that are more efficient on coal and electricity consumption and environmentally friendly.
"They want to boost dry line production to 70 percent (of total capacity) by 2010 from 40 percent now," Ragoucy said.
"That means there are about 300 new plants that need to be built in the next four years," he added.