Chia Hsin Cement Corp., one of Taiwan’s major cement manufacturers, recently announced it would invest US$100m to build the second kiln at the Jing Yang cement plant owned by its China subsidiary Jing Yang Cement Co., in the first quarter of this year. Chia Hsin said it would also build a second kiln of a cement plant owned by another subsidiary Jiangsu Union Cement Co., in the middle of next year. With this, the company will see its cement output in mainland China amount to 10Mta in 2006.
Construction of the second kiln at Jing Yang cement plant was originally scheduled to be launched in the beginning of next year. Thanks to the listing of Jing Yang Cement on the Hong Kong Stock Exchange, China Hsin recently decided to begin construction of the kiln in the first quarter of this year to tap the business opportunities released by the fast-growing mainland cement market.
Chia Hsin said construction of the second kiln of Jing Yang cement plant would involve only investment in production equipment and expanding transport wharves. Accordingly, total investment in the second kiln will be only half of that of the first one.
The first kiln of Jing Yang plant is capable of rolling out 2.85Mta of cement per year. By the end of this year, the kiln will boost the annual output to 3.1Mta. After the second kiln is completed, Jing Yang Cement will see annual cement output reach 6Mta.
Currently Chia Hsin holds a 92 per cent stake in Jing Yang Cement and the ratio will be reduced to about 70 per cent after the latter completes a fund-raising project in Hong Kong in the foreseeable future. Despite the reduction in shareholding ratio, Chia Hsin is expected to obtain returns of between NT$400m (US$11.94m) and NT$500m (US$14.92m) from investing in Jing Yang this year, about the same level as last year. Thanks to the continued cement price hikes in domestic and mainland markets, a domestic institutional investor estimated Chia Hsin to post more than NT$800m (US$23.88m) in overall earnings this year.