China Resources Cement took a great leap in South China

Byswb

Updated Wed, 09 Dec 2009 00:00:00 GMT

December 7, every employee in the apparently tranquil SDIC Hainan Cement Co., Ltd. was sure that the 12 years old plate on the company gate would soon be replaced by a new one. Just four days before, HK-listed China Resources Cement (CRC) purchased most shares of SDIC Hainan Cement. And this was the former's main step of Hainan expansion.

Under the tranquil appearance, the turn-over has begun with the arriving of new CFO and general manger sent by CRC, Mr. Yu Yi, vice general manager of SDIC Gainan Cement.

However, CRC that is good at capital market wants more.On the morning of December 6, CRC successfully bought Guangdong Yangchun Chunwan Cement Plant at a price of 190.50 mln CNY at an auction held at Guangzhou Trade Square.

As to the SDIC Hainan deal, CRC took over most shares by purchasing 29.30% shares from Hainan Branch of CCB and then 34.14% of SDIC Assests Management Ltd. Chunwan Cement, located in Chunwan Town, Yangchun County of Guangdong, has finished 60% of its cement project construction. And it's predicted to be finished if construction begins after an additional investment of 160 mln CNY. When starting production, it can produce 1 mln tones of cement every year.

"The purchase of Chunwan Cement is only a small part of CRC's South China Expansion Plan," Said Yu Zhongliang, Strategic Director of CRC, "CRC's target if to lift cement production capacity to 50 mln tones and to seize 20-25% of South China's cement market.""

But some expert inside the industry held that Chunwan purchase is necessary for CRC to enter West Guangdong market, which will further enhance its advantageous layout of Nearing River and Sea, as well as its leadership in the local market.

Yu told the reporter that China Resources Group began its cement operation as early as 1986, and built its own cement clinker production base at the end of 2002.By June 30, 2009, CRC has an annual clinker production capacity of 15.70 mln tones, cement 22.50 tonnes, and ready-mixed concrete 12.30 mln cube meter.And it's the largest cement and commercial concrete in South China.

Together with several clinker production bases under construction, "the annual cement production capacity of CRC will exceed 30 mln tones by the first quarter of 2010, that's 500% more than that in 2006." Said Yu Zhongliang."