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Latest China acquisitions and investments

World Cement,

China Knowledge reports that China National Minerals (Sinoma) has agreed to acquire a 22.87% equity interest in Sinoma Changde and a 24.85% equity interest in Sinoma Xiangtan for a total consideration of RMB 81.23 million (about US$ 92.464 million). After the acquisition, both companies will become wholly owned by Sinoma.

Also in the acquisition news is Scitus Cement (China) Holdings, a Hong Kong-based investment company specialising in cement production and related products. It recently signed an agreement to take over Sichuan Zhiquan Special Cement Co Ltd. Scitus Cement was established by a JP Morgan fund management company in 2007 and this latest move signals the company’s intentions in extending its business interests in Sichuan Province, Southwest China.

The agency has also reported that Anhui Conch Cement Co Ltd plans to borrow RMB 4.8 billion from parent Anhui Conch Group at an interest rate of 4.83% and that the loan will become due by 24 January 2013. The funds will be used to develop energy-saving technology, and to optimise capital structure and replenish working capital. Anhui Conch Group has issued RMB 5 billion worth of three-year notes at an interest rate of 4.45% on the interbank market. At the same time it was reported that Anhui Conch Venture Investment Co Ltd, the third largest shareholder of Anhui Conch Cement had bought a further 0.31% or 5.35 million shares and now holds a stake of 5.07% or 89.52 million shares.

China Runji Cement, Inc. (CRJI), a leading producer and distributor of cement in Anhui Province, recently commented that it is benefitting from the Chinese rural economy stimulus that was announced jointly on 31 January 2010 by the Central Committee of the Communist Party of China and the State Council. In particular, the policy document stressed budget expenditure should first support development of the agriculture and rural areas, and fixed-asset investment be channeled into agricultural related infrastructure and projects in relation to rural livelihood. Zhao Shouren, Chairman and CEO of CRJI, said, “Thanks to the rural stimulus policy our sales volume and prices both increased in this low season, we have decided to maintain production during the long holiday of the Chinese New Year to meet growing demand”. As a result of the stimulus the company’s selling price of clinker increased US$1.46 /t in January representing extra monthly revenue of US$ 245 973 based on the current production of 5600 tpd.

Hong Kong-based Prosperity International Holdings plans to invest up to US$ 1 billion in Indonesia’s coal, steel and cement industries, thereby creating up to 5000 jobs. The Prosperity Group’s cement operations in mainland China produce 21 million tpa. It also supplies iron ore to the mainland Its CEO, Mao Shuzhong noted that the Prosperity Group had already invested US$ 20 million in coal mining in Central Kalimantan, Indonesia.”We are looking at the possibility to invest in steel mills and a cement plant in Indonesia, especially where there are no cement plants but demand is rising fast, such as in East Kalimantan, Maluku and Papua” said Mao.

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