Business

Large cement companies set to cash in

By Liu Yiyu (China Daily)
Updated: 2010-08-10 13:49

BEIJING - Large cement makers will benefit from industry consolidation as China accelerates the phasing out of energy-wasting and outdated production capacity, according to industry experts.

China has ordered more than 700 polluting and energy-intensive cement factories to shut down by the end of September.

The Ministry of Industry and Information Technology said this would cut the cement industry's annual production capacity by 107 million tons.

Announcing the closure plans, the ministry published a list of the 762 affected companies on its website.

Companies that fail to comply with the instruction will be barred from obtaining loans, won't get government approval for new investments, won't get access to additional land and will face the withdrawal of their production license and pollution permit, the ministry said.

Qinghai, Shanxi, Beijing are the top three areas with most affected factories, according to Guotai Junan Securities.

"Governments will be the first to benefit from the measure, as it will help them achieve environmental targets and save energy," said Kong Xiangzhong, secretary-general of China Cement Association.

"In addition, large cement companies will benefit from an increased market share."

Kong was confident that the measures could be implemented by the end of September.

However, industry analysts expressed concern at the mandatory shutdown, saying that two months is too little time for such a large-scale closure.

Everbright Securities said in a research note that China's cement output growth is set to decline from the current double-digits to single figures.

The country's cement production was 163 million tons in 2009 and will stand at 185 million tons this year with China's fixed assets investment and property market cooling down, according to the research.

China Daily