Sharing the burden - Chinese style

Sharing the burden - Chinese style
Published: 05 May 2004

Chinese cement maker Anhui Conch said it will pay up to 1.875bn yuan (HK$1.766bn) in freight charges from 2004 to 2006 to Shanghai Conch Logistics, a subsidiary of Anhui Conch’s parent.  Under the agreement, Anhui Conch and the logistics unit will set fees and agency commissions for delivery of cement and clinker, coal ash, accessory materials and imported cement production equipment in line with fees approved by the Ministry of Transportation. However, Shanghai Conch Logistics said it may give discounts of 10-20 per cent to the guideline charges set out in the shipping tariff schedule.

Based on the expected shipping volume with Shanghai Conch Logistics of 17Mt in 2004, 26Mt in 2005 and 32Mt in 2006, Anhui Conch is expected to pay 425 million yuan in delivery fees and agency commission for 2004, 650 million yuan for 2005 and 800 million for 2006, the company said. Shanghai Conch Logistics is 10 per cent owned by Anhui Conch and 90 per cent held by Shanghai Conch Trading.

Separately, Anhui Conch expects to pay Shanghai Conch Trading a maximum of 12 million yuan for agency commission between 2004 to 2006, based on sourcing of cement production equipment, and 20.6 million yuan, based on the overseas sales. Shanghai Conch Trading is 60 per cent owned by Anhui Holdings.