Lafarge has undertaken to moves to strengthen its cement interests in China. The first involves the building of a second production line at its Dujiangyan works. This US$58m investment will double the cement capacity at the cement plant, which primarily serves the Chengdu market in south-western China, to 2.8m tonnes. It is expected that the additional production line will come on stream towards the middle of 2006. The original 1.4m tonnes per annum production line at Lafarge’s Dujiangyan works was commissioned two years ago.
In addition, Lafarge has signed an agreement with Shui On Construction and Materials Limited, part of the Hong Kong-based contracting, building materials and property group Shui On, covering the Yunnan province in south-western China. This deal gives Lafarge an exclusive nine month option to acquire a 40% interest in a recently formed cement joint venture between Shui On Construction and Materials and the provincial government of Yunnan. The joint venture, presently 80% owned by Shui On Construction and Materials and 20% by the provincial government is acquiring two existing cement works in the province, with two additional production lines currently under construction. Once these come on stream, expected towards the end of this year, the joint venture will have an annual cement capacity of 4.5m tonnes. Shui On Construction and Materials, with a current total cement capacity of 8.0m tonnes and a further 3.5m tonnes under construction is an important potential partner for the worlds largest cement producer in the world’s largest cement market.