Investing in China

Zaozhuang cement plant

In November 2010 Cimpor constructed a new cement plant in China, representing an investment of almost €100 million. Located in the Shanting district of Zaozhuang City, the new unit has a cement production capacity of 2 million tpa, using its own clinker, and a clinker capacity of 5500 tpd. The plant significantly increases the company’s capacity in China and is the group’s fifth and largest plant in the country. The project started in August 2008 and was delivered after 18 months.

The new Zaozhuang plant is currently investing in a waste heat recovery power plant, aiming to reduce emissions, save water and energy, and deliver significant contributions to sustainable development. Dalian East New Energy Development Co. Ltd will both design and supply this installation.

The new unit benefits from nearby high quality limestone reserves estimated at 140 million t. The Zaozhuang region is rich in both coal and limestone reserves, the principal raw materials needed for cement production. Indeed, the area is so rich in reserves that it is considered to be the local capital for construction material companies. In the cement production ranking for China’s Shandong province, the city is the leader, with an installed production capacity of 60 million tpa.

In addition to natural resources, the plant’s geographical location is also an advantage as it is located near important communication links, including the airports of Xuzhou, Jining and Linyi, the ports of Rizhao, Lanshan and Lianyungang and the Beijing-Shanghai and Beijing-Fuzhou highways. To the south it benefits from the Beijing-Hangzhou strategic canal, which links the city of Zaozhuang to the provinces ofplant is also located close to this important waterway.

A country of opportunities

Cimpor has been operating in China since 2007 and has an overall cement production capacity, across all its units in the country, of some 6 million tpa. The company’s presence in China, an emerging economy with high growth potential, is understood to be an essential link in the group’s internationalisation strategy.

The figures for China’s economic growth leave no room for doubt. In 2010, China’s GDP posted growth of 10.456% against the previous year. Such growth is highly significant, particularly when taking into account that in the same year many other countries, especially those in Western Europe, faced one of the most serious economic crises of recent times.

The industrial and construction sectors contributed most to the country’s GDP growth, accounting for 48%, with steel and cement manufacturers making up the majority of this figure. China is the world’s largest cement manufacturer and the second largest exporter, with a market share of almost 17%. The country consumes more than half of the world’s cement production. In the last few decades the industrial sector, including construction, has seen unprecedented growth. Growing political openness has had repercussions on the economy. As the prominence of sectors becomes inverted, agriculture is losing its importance to industry and services. The weight of industry in the global economy now stands at 51.8%.

Since China joined the World Trade Organisation there has been an increasingly positive attitude towards foreign direct investment (FDI). This attitude, as well as further economic benefits and optimised regulations, such as extremely low labour costs, a tremendous buyer’s market, a sharp increase in buying power and significant ease in FDI laws are expected to entice more foreign companies to invest in the country.

This article is an abridged version of the full article, which appeared in the March 2012 issue of World Cement. Subscribers can access the full article by logging in.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/27022012/investing_in_china/