Cement Producers expect higher profits in 2008

Aiming to boost their market shares, Taiwanese domestic cement producers, including Taiwan Cement Corp., Asia Cement Corp., Universal Cement Corp. and Goldsun Development & Construction Co., will continue investing in mainland

China this year.

An industry insider estimated the four above-mentioned cement producers will invest a total of over NT$20 billion (US$609.75 million at US$1:NT$32.8) in the mainland this year, with such considerable, continued investment to yield reassuring profits in the mainland next year.

Domestic cement producers with investments in the mainland will see overall production capacity total more than 30 million metric tons in China by 2008, double that in Taiwan.

At present, Taiwan Cement is speeding up the constructing of the second kiln at Yingde cement plant in Guangdong province and the first kiln at Queigang cement plant in Guangxi province. The company said it has invested over NT$5.5 billion (US$167.68 million) in these two plants, including production equipment and heat-driven electricity generating facility.

Taiwan Cement has set a goal to become one of mainland China’s three-largest cement producers with annual production capacity in southern China to reach over 20 million metric tons by 2010. To meet that goal, the company will continue to invest in Queigang cement plant and locate an appropriate site to set up a fourth cement plant. The company said it would invest over NT$10billion (US$304.87 million) in the mainland in the foreseeable future.

Focusing investments on central China, Asia Cement has invested over US$60 million in Jiangxi, Hubei and Sichuan provinces in the first half of this year.

Universal Cement noted it has invested more than US$50 million in a cement plant in Huizhou of Guangdong province, a concrete plant in Huiyang of Guangdong province, and another concrete plant in Huidong of Guanddong province.

Goldsun currently has a production line with daily production capacity reaching 50 million metric tons of cement in Longyan of Fujian province. To expand its market share in the mainland, the company has drafted definite plans to set up a second kiln in that province.

Goldsun said it has chosen Changsha of Hunan province as a production site to facilitate the construction of second cement plant in the mainland. As a cement plant costs at least US$100 million, the company will invest NT$5billion (US$152.43 million) in the mainland in the next two years.

An industry insider predicted that Taiwan Cement will see annual output reach over 20 million metric tons of cement with earnings double to reach 250 million renminbi in 2008. In addition, Asia Cement will see annual production capacity reach over 10 million metric tons with earnings climbing over 50% year-on-year in the mainland in 2008.