Taiwan Cement plans for southern China

Taiwan Cement plans for southern China
Published: 13 December 2005

With one new plant already scheduled to open next February in Yingde, Guangdong Province, mainland China, Taiwan Cement Corporation, Taiwan’s largest producer of cement, recently announced it would invest RMB1.5 billion (US$185m) to establish another new plant in Kueigang, Guangxi Province. Reports Taiwan Economic News.  The new investments in the Kueigang plant will likely push the company’s overall annual cement output in the mainland past 20Mt by 2008. At that time, the company will be poised as the largest cement producer in the southern China region.  
 
In the past, Taiwan Cement adopted a cooperative strategy with mainland China’s Conch Group to set up joint-venture projects there. But in 2002 Taiwan Cement set up a large-sized cement plant in Yingde by itself; the new plant is expected to begin mass production no later than February next year. In the early stage of its establishment, the Yingde plant will have an annual output of 4.5Mt. By 2008, the plant will see annual production capacity rise to 9Mt. The output of the Yingde plant will be mainly supplied to the market of Pearl River region.  
 
Taiwan Cement also noted that the output of its planned Kueigang plant would be mainly sold to the market in Guangxi Province. In addition to the domestic market in Guangxi Province, the plant may also export products to Vietnam.  
 
Besides the Yingde and Kueigang cement plants in the mainland, Taiwan Cement has also established cement-grinding plants in Wuhu of Anhui Province, Liuzhou of Guangxi Province, Xuxhou of Jiangsu Province, and Fuzhou of Fujian Province. The plants in Wuhu, Liuzhou, and Xuzhou plants are joint ventures between Taiwan Cement and mainland producers; only the Fuzhou plant is solely owned by Taiwan Cement itself.  
 
Taiwan Cement said that its capital spending in the mainland has reached US$80m this year, and that the amount would be raised to US$200m next year.  
 
The company said it saw its Liuzhou and Fuzhou plants become profitable in November, and predicts that the Wuhu plant will generate more than 10 million renminbi (US$1.23m) this year. The company predicted it wouldn’t make a profit from its overall investments in the mainland until 2006.  
 
Looking to the global cement market, Taiwan Cement predicted the US market would see imports of cement grow at the pace of three per cent annually in the next two years. The company estimated the markets of Africa and the Middle East would see cement demand grow five per cent and 10 per cent this year, respectively.  
 
With a total output of 10.75Mt of cement in Taiwan, Taiwan Cement estimated it would export over 500,000t of cement products next year.   Based on a projection that the export price of cement would increase by US$3/tonne, Taiwan Cement looks poised to see profits grow by NT$500 million (US$14.88m) next year from this year’s level.