By Zhu Lei & Xu Hongzhou
"The performance of the cement industry is gratifying in 2007." said Xiong Bilin, a Deputy Director of the Department of Industry under the National Development and Reform Commission (NDRC).
A series of cheering figures support Xiong's point of view. In 2007, the cement industry in China was in good order in terms of economic operation. A number of economic indexes hit record highs. The output of cement increased rose by 9.9 percent year on year to 1.36 billion tons, which accounts for 50.37% of the global output. Incomes from cement sales amounted to over RMB400 billion yuan, and profits made broke through RMB20 billion yuan.
"Such achievements show that the cement market as a whole is bullish. Especially, the year 2007 witnessed a radical transformation of the cement industry: large-sized enterprises got regrouped by region, the elimination of behind-lagging throughput was accelerated, adjustment to the industry structure was boosted and accelerated, substantial progress had been made in terms of market integration." said Xiong Bilin.
In 2007, leading actors in mergers and acquisitions within the cement industry have shifted from foreign funded groups to large domestic enterprises and groups. Several large-sized state-owned enterprises speeded up the construction of their new projects, their purchases, their mergers and expansion; and they managed to get a number of listed domestic cement enterprises incorporated.
Currently, China National Materials Industry Group (Sinoma) is the enterprise that holds a largest number of listed cement companies: In 2006, it became the holding company of Xinjiang Tianshan Cement Co., Ltd.; In 2007, it took control of Ningxia Saima Industry Co., Ltd.; In January 2008, it purchased Tangshan Jidong Cement Company Limited and expressed that it would spend three years making Hebei Provincial Jidong Cement Group Co., Ltd. the biggest cement company in China and one of the top 5 cement groups in the world.
China National Building Material Group Corporation, another national enterprise, is also unreconciled to lag behind. By now, it has already taken Jiangxi Wannianqing Cement Co., Ltd. and Zhejiang Jianfeng Group Co., Ltd. into its control. The efforts of those two large companies seem to have the momentum to change the pattern that Anhui Conch Cement Company Limited outshines others in the cement industry.
Data provided by Xiong Bilin show the positive effects of mergers and acquisitions and restructuring within the industry: Currently, the total output of the 12 biggest cement companies in China account for 25 percent of the national output. Among those 12 groups, the output of Zhejiang Leomax Group is over 10 million tons, that of Shandong Shanshui Cement Group Co., Ltd. amounts to over 20 million tons, that of China United Cement Lunan Co., Ltd. adds up to over 28 million tons, and that of Anhui Conch Cement Company Limited amounts to over 100 million tons.
Xiong noted that mergers, acquisitions, and integration within the cement industry had not only improved the to the industry concentration degree but also boosted the spread of new production technologies that is more environmental friendly and energy saving; meanwhile, the scale of the top corps of cement enterprises had been upgraded. Presently, the technology of new dry process cement production is widely adopted. The proportion of new dry process cement rose from 14.20 percent in 2001 to 55 percent in 2007. It is promising that by the year 2010, the proportion of new dry process cement will reach the goal of 70 percent, a development goal proposed in the 11th Five-Year Plan.
Contrary to the thriving scene of the cement industry, the survival of shaft kiln enterprises was between the beetle and the block in 2007.
As required in the policy from the State Council on the development of the cement industry, by the end of 2008, behind-lagging craftworks, technologies, and production facilities like hollow kilns of various specifications shall be eliminated and the production capacity of shaft kilns shall be further cut down; and shaft kilns shall be completely eliminated in regions where conditions permit. As to the production capacity with an annual scale of less than 200,000 ton and those enterprises that cannot reach the standards in terms of environmental protection or cement quality, local governments at various levels are required to have them closed down, suspend their operation, get them merged with others or shift them to different line of production.
It is further proposed in the Comprehensive Working Program on Energy Saving and Emission Elimination issued by the State Council that during the 11th Five-Year Plan period, altogether 250 million tons of behind-lagging cement production capacity will be eliminated. That is, 50 million tons of behind-lagging cement production capacity will be eliminated each year. The requirements proposed in the Special Plan for the Development of the Cement Industry are even higher: by 2010, the proportion of new dry process cement production capacity shall reach 70 percent. To fulfill such an objective, at least 360 million tons of behind-lagging cement production capacity shall be eliminated.
As the saying goes, "without destruction there can be no construction". In 2007, hollow kilns and wet process kilns, which are highly energy-consuming, were eliminated successively. There were 206 wet process kiln production lines with a production capacity of 35 million tons. At present, except that 5 million tons of wet process kiln production capacity is still in production in regions in the western part of China where the price of coal is relatively cheap, wet process kiln production capacity has been basically washed out elsewhere. In 2007, the behind-lagging production capacity of cement clinker eliminated across China added up to 48.28 million tons; and the behind-lagging cement production capacity eliminated amounted to 80 million tons.
In addition, as the energy-saving project is being boosted, it is in the ascendant to make use of cement kilns in generating electricity power with water heat. By the end of 2006, there had already built up 24 power production lines making simply low-temperature remaining heat; the installed capacity amounted to 112,780 kilowatts and the actual power generating capacity amounted to 127,300 kilowatts. In the first half of 2007, 18 production lines with an installed capacity of 136,500 kilowatts were put into production; in the second half of the year, 31 production lines with an installed capacity of 287,800 kilowatts will be put into production. The total installed capacity of the whole year added up to 537,080 kilowatts. The fact that cement factories make use of remaining heat to generate electricity power is highly positive to energy saving and emission elimination in the cement industry.
Xiong Bilin said that while making layout for the cement industry and guiding it with policies, it was necessary to encourage the eastern part of China to develop new dry process cement production lines with a scale of producing 4,000 tons each day. And a new production line to be built in the middle and western parts must maintain a scale of over 2,000 tons each day. In order to realize the development of the cement industry all over the country, NDRC is vigorously pushing the construction of a cement production line in Tibet.
In 2007, the government had also launched relevant policies emphasizing offer supports for 60 large cement enterprises. Through supports in terms of policies, resource configuration was optimized and the adjustment to the structure of the cement was accelerated. All those facts show that regional markets for the cement industry are taking shape in China.
|
